Trump admin cuts off LA homelessness agency funding amid fraud allegations
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SPECIAL: A top Trump agency official is defunding the Los Angeles agency responsible for coordinating billions of dollars in homelessness spending after accusing it of “blatant fraud,” “unintentional mismanagement” and a continued failure to protect taxpayer money, Fox News Digital has learned.
The Department of Housing and Urban Development (HUD), a member of the White House fraud task force led by Vice President J.D. Vance, immediately suspended federal funding for the Los Angeles Homeless Services Authority (LAHSA), while HUD’s inspector general is investigating potential wrongdoing by the agency and its leaders, according to a letter to LAHSA’s board chair Wendy Greuel and CEO Gita O’Neill obtained and reviewed by Fox News Digital.
The letter details conflicts of interest, financial mismanagement, fraud, lack of oversight and more from the homelessness agency, which is facing takeover efforts by the city and county.
The move puts one of the nation’s largest homelessness bureaucracies under direct federal scrutiny, following criticism that billions have gone to homelessness programs in Los Angeles and the crisis continues on the streets. LAHSA receives funding at the city, county, state and federal level, with the group receiving nearly $1 billion from the federal government alone since 2021, according to HUD.
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A person walks through large piles of trash at a large homeless camp near East 14th Street in downtown Los Angeles, California, on September 25, 2025. (Allen J. Schaben/Los Angeles Times via Getty Images)
“Suspending LAHSA’s participation in federal government programs is a necessary step to accomplish this critical mission in Los Angeles,” HUD wrote in its letter. “LAHSA’s failures were so serious and widespread that Los Angeles County withdrew its funding to the agency, and the City of Los Angeles is considering doing so as well.”
Va Lecia Adams Kellum, LAHSA’s former top administrator, resigned last year after it was revealed that she was party to transferring $2.1 million in funds from federal funds under LAHSA’s control to her husband’s Santa Monica-based nonprofit employer.
HUD said a federal judge last year concluded that LAHSA had engaged in “blatant fraud” after it allegedly continued to request funds for an 88-bed shelter even though it knew the shelter was operating at roughly half capacity.
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HUD stated in its letter that the judge was considering placing LAHSA under receivership.
LAHSA’s inability to verify the existence of the approximately 2,300 housing spaces for which it is responsible is another problem plaguing the homelessness provider, according to HUD. In 70% of the contracts for these sites, no expenditure was disclosed compared to the previous year.
Amid ongoing concerns about crime and quality of life issues, homeless camps line the boardwalk at Venice Beach in Los Angeles. The Los Angeles Homeless Services Authority will conduct its annual snapshot count to assess the number of homeless people in the area. (Reuters)
Meanwhile, LAHSA’s public audits revealed a pattern of routinely late payments to service providers and inadequate record keeping, hindering monitoring of contracts, including a $5 million cash advance sent to five different service providers, according to the Associated Press. According to HUD, in November 2024, the City Controller’s Office found that LAHSA did not spend $513 million in budgeted public funds in fiscal year 2024 due to staffing shortages and outdated technology.
Other audits concluded that LAHSA’s poor record keeping failed to accurately determine or calculate how much its spending benefited the homeless population in Los Angeles.
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Federal Trade Commission Chairman Andrew Ferguson, a member of the White House Fraud Elimination Task Force, praised HUD Secretary Scott Turner, President Donald Trump, and Vance’s leadership on the issue, who served as chairman of the fraud task force established earlier this year.
“Los Angeles doesn’t care about helping the homeless, but the Trump Administration does,” Ferguson told Fox News Digital. “It is unconscionable that Los Angeles wastes billions of taxpayer dollars that should be used to house our nation’s most vulnerable. Instead of providing shelter and care for the homeless, Los Angeles used these funds to line the pockets of left-wing NGOs. Such a disgrace ends today.”
Los Angeles Mayor Karen Bass and Los Angeles officials cited the latest homeless count data as evidence that the crisis is improving; LAHSA reported that homelessness nationwide dropped for the second year in a row in 2025, and Bass said this is the first time in the city’s recent history that homelessness has decreased two years in a row.
But the numbers still show more than 72,000 people experiencing homelessness across Los Angeles County, and critics continue to argue that modest declines don’t erase years of runaway spending, encampments and repeated audit findings that the county’s homelessness system fails to adequately track whether taxpayer dollars are producing results.
Los Angeles Mayor Karen Bass advances to runoff for re-election as Mayor of Los Angeles (Getty Images)
HUD’s federal action comes after Los Angeles city and county officials began moving away from LAHSA, The Associated Press reported last year.
While the city council has moved to explore spinning off the agency and contracting directly with providers, the county has moved to divert hundreds of millions of dollars in annual homelessness funding away from LAHSA and to a new county department, citing the need for stronger accountability after a series of audits.
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“HUD cannot ignore LAHSA’s wanton mismanagement of public funds. HUD’s mission is to reduce the epidemic of homelessness in America,” the agency wrote in a letter to LAHSA leadership on Thursday. The statement was included. “Transferring billions of dollars from American taxpayers to an organization under investigation and suspected of gross misuse of federal funding and ‘blatant fraud’ does nothing to reduce homelessness. In fact, diverting dollars from valuable programs to LAHSA will only worsen the homeless crisis.”
