Trump Administration Freezes Federal Funding to LA Homeless Agency Amid Fraud Probe
The Trump administration has paused funding to the Los Angeles Homeless Services Authority while investigators examine allegations involving the agency’s financial controls, oversight practices, and management of taxpayer-funded programs.
The action places a major administrator of homelessness programs in Southern California under heightened federal review as investigators examine how public funds have been managed within homelessness initiatives across Los Angeles County.
According to the U.S. Department of Housing and Urban Development (HUD), the funding pause will remain in effect while the agency’s inspector general conducts its investigation.
In a letter sent to LAHSA Board Chair Wendy Greuel and CEO Gita O’Neill, HUD cited concerns involving alleged conflicts of interest, financial management deficiencies, oversight failures, and findings identified through audits and court proceedings.
Federal officials said the agency’s participation in federal programs has been suspended pending the outcome of the review.
According to HUD, the agency has received nearly $1 billion in federal funding since 2021.
Among the concerns identified by federal officials was the resignation of former LAHSA chief executive Va Lecia Adams Kellum after questions arose regarding the distribution of $2.1 million in federal funds to a nonprofit organization employing her husband.
HUD also referenced audit findings that raised concerns about contract administration and financial oversight practices within the agency.
Federal officials also pointed to prior court findings involving shelter funding requests, arguing the case highlighted broader concerns about reporting practices and operational oversight.
According to HUD, a federal judge concluded that LAHSA sought funding connected to an 88-bed shelter that was operating well below capacity and considered placing the agency into receivership.
Audit findings referenced by HUD indicated that thousands of housing placements under LAHSA’s responsibility could not be fully verified through available records.
Federal officials also noted that a substantial share of contracts connected to those placements reported no expenses during the prior year, raising additional questions about monitoring and accountability.
Audits referenced by HUD identified additional operational challenges, including delayed payments to service providers and record-keeping deficiencies that complicated contract oversight.
Federal officials also cited a review by the Los Angeles City Controller’s Office that found approximately $513 million in budgeted funds remained unspent during fiscal year 2024, a situation attributed to staffing shortages and outdated technology systems.
HUD Secretary Scott Turner said the administration intends to emphasize accountability and measurable results when allocating federal resources for homelessness programs.
In a statement, Turner said taxpayer-funded initiatives should demonstrate effective stewardship of public funds and produce outcomes for the populations they serve.
The federal review comes as Los Angeles city and county officials have already begun reevaluating LAHSA’s role in administering homelessness services.
According to the Washington Examiner, city leaders have explored contracting directly with service providers, while county officials have moved to establish a separate homelessness department and redirect portions of homelessness funding away from the agency following multiple audits and oversight concerns.
At the same time, local officials have pointed to recent data showing declines in homelessness figures.
LAHSA reported that homelessness fell for a second consecutive year across Los Angeles County in 2025, although more than 72,000 individuals were still experiencing homelessness throughout the region according to the latest count.
HUD officials said federal participation will remain suspended pending the outcome of the investigation, with future funding decisions expected to depend on the agency’s findings.
The review remains ongoing, and no timetable has been announced for its completion.
The action places a major administrator of homelessness programs in Southern California under heightened federal review as investigators examine how public funds have been managed within homelessness initiatives across Los Angeles County.
According to the U.S. Department of Housing and Urban Development (HUD), the funding pause will remain in effect while the agency’s inspector general conducts its investigation.
In a letter sent to LAHSA Board Chair Wendy Greuel and CEO Gita O’Neill, HUD cited concerns involving alleged conflicts of interest, financial management deficiencies, oversight failures, and findings identified through audits and court proceedings.
Federal officials said the agency’s participation in federal programs has been suspended pending the outcome of the review.
According to HUD, the agency has received nearly $1 billion in federal funding since 2021.
Among the concerns identified by federal officials was the resignation of former LAHSA chief executive Va Lecia Adams Kellum after questions arose regarding the distribution of $2.1 million in federal funds to a nonprofit organization employing her husband.
HUD also referenced audit findings that raised concerns about contract administration and financial oversight practices within the agency.
Federal officials also pointed to prior court findings involving shelter funding requests, arguing the case highlighted broader concerns about reporting practices and operational oversight.
According to HUD, a federal judge concluded that LAHSA sought funding connected to an 88-bed shelter that was operating well below capacity and considered placing the agency into receivership.
Audit findings referenced by HUD indicated that thousands of housing placements under LAHSA’s responsibility could not be fully verified through available records.
Federal officials also noted that a substantial share of contracts connected to those placements reported no expenses during the prior year, raising additional questions about monitoring and accountability.
Audits referenced by HUD identified additional operational challenges, including delayed payments to service providers and record-keeping deficiencies that complicated contract oversight.
Federal officials also cited a review by the Los Angeles City Controller’s Office that found approximately $513 million in budgeted funds remained unspent during fiscal year 2024, a situation attributed to staffing shortages and outdated technology systems.
HUD Secretary Scott Turner said the administration intends to emphasize accountability and measurable results when allocating federal resources for homelessness programs.
In a statement, Turner said taxpayer-funded initiatives should demonstrate effective stewardship of public funds and produce outcomes for the populations they serve.
The federal review comes as Los Angeles city and county officials have already begun reevaluating LAHSA’s role in administering homelessness services.
According to the Washington Examiner, city leaders have explored contracting directly with service providers, while county officials have moved to establish a separate homelessness department and redirect portions of homelessness funding away from the agency following multiple audits and oversight concerns.
At the same time, local officials have pointed to recent data showing declines in homelessness figures.
LAHSA reported that homelessness fell for a second consecutive year across Los Angeles County in 2025, although more than 72,000 individuals were still experiencing homelessness throughout the region according to the latest count.
HUD officials said federal participation will remain suspended pending the outcome of the investigation, with future funding decisions expected to depend on the agency’s findings.
The review remains ongoing, and no timetable has been announced for its completion.
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