The Department of Housing and Urban Development (HUD) has immediately suspended federal funding to the lead homeless agency in Los Angeles amid allegations of “obvious fraud” and “wanton mismanagement.”
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HUD’s inspector general, Brian Harrison has also launched an investigation into the Los Angeles Homeless Services Authority (LAHSA) and its leadership, Fox News Digital reported Thursday.
The scandal-plagued agency has received nearly $1 billion in federal funding since 2021, even as the homeless crisis exploded on city streets.
The White House Task Force to Eliminate Fraud, led by Vice President JD Vance, said in a statement on X Thursday that it is “taking bold action alongside HUD to target and eliminate massive potential fraud against American taxpayers.”
The inspector general sent a letter sent to LAHSA’s board chair Wendy Greuel and its CEO Gita O’Neill, reportedly detailing “conflicts of interest, financial mismanagement, fraud, lack of oversight, and more from the homelessness agency, which has faced efforts by the city and county to take it over.”
“HUD cannot ignore LAHSA’s wanton mismanagement of public funds. HUD’s mission is to reduce the plague of homelessness in America,” the IG’s letter said, according to Fox. “Turning over billions of dollars from American taxpayers to an organization under investigation and suspected of gross misuse of federal funding and “obvious fraud” does nothing to reduce homelessness. Indeed, diverting dollars from worthy programs to LAHSA merely makes the homeless crisis worse.”
One conflict of interest cited involves a former LAHSA executive directing $2.1 million to her husband’s Santa Monica-based nonprofit.
Former LAHSA CEO Va Lecia Adams Kellum, resigned last year after the blatant conflict of interest was discovered.
A former LAHSA employee who was fired after complaining about the agency’s gross mismanagement accused Kellum of trying “without success to delete two emails sent to her by Mayor Karen Bass,” according to the Los Angeles Times.
The whistleblower also alleged that Kellum became “extremely inebriated and got a ‘lap dance’ from a female consultant that she had just hired to do work for LAHSA” while attending a conference in Washington, D.C.
Kellum had a base salary of $430,000 per year during her tenure, according to LAist, while her successor, interim CEO Gita O’Neill, reportedly made approximately $370,000 last year.
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Scott Brady, Executive Director of the White House Fraud Task Force condemned O’Neil’s salary on X, saying: “In other words, taxpayers paid for the high six-figure salary of an executive running a fraud-filled organization (also paid for by taxpayers).”
Notably, a federal judge concluded last year that LAHSA had committed “obvious fraud” after it repeatedly requested full funding for an 88-bed shelter even though the agency knew the shelter was only operating at half-capacity.
According to HUD, LAHSA failed to verify nearly 2,300 housing sites for which it was responsible and “70 percent of the contracts for those sites did not disclose any expenses over the prior year.”
Moreover, in November 2024, the City Controller’s Office found that LAHSA also failed to spend $513 million in budgeted public funds in fiscal year 2024.
In addition to the now terminated federal funding, LAHSA also receives funding at city, county, and state levels.
“Under President Trump’s leadership, HUD will fund results, not corrupt failure or the homeless industrial complex,” HUD Secretary Scott Turner said in a statement to Fox. “Year after year, hundreds of millions of taxpayer dollars were funneled to LAHSA with little accountability. Meanwhile, homelessness skyrocketed. Taxpayers will no longer bankroll an organization that puts its own self-interests ahead of the Americans it was created to serve.”
On X, Turner made a similar statement, only blunter: “Taxpayers will not bankroll LA’s fraud-filled homelessness industrial complex,” he wrote.
“It is unconscionable that Los Angeles has wasted billions of taxpayer dollars that was supposed to be used on housing our nation’s most vulnerable. Instead of providing a roof and care for the homeless, Los Angeles has used these funds to line the pockets of left-wing NGOs. Such a disgrace ends today,” stated Andrew Ferguson, Chairman of the Federal Trade Commission, and Vice Chairman of the White House Fraud Task Force. “Los Angeles didn’t care about helping the homeless, but the Trump Administration does,” he said.
“For years American taxpayers have been sending billions to Los Angeles,” said Scott Brady, Executive Director of the White House Fraud Task Force. “The result? Fraud and corruption. That ends today.”
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