Full Breakdown
HUD Suspends Federal Funding to Los Angeles Homeless Services Authority Over Fraud Allegations
6/13/2026, 1:07:14 AM
Suspension of Federal Funding
On June 11, 2026, the Trump administration’s HUD announced immediate suspension of federal funds to LAHSA pending an Inspector General investigation. The action halts $69 million (8 % of LAHSA’s FY 2025-2026 budget). HUD cited “severe and pervasive” financial mismanagement, conflicts of interest, and possible violations of federal law.
Background & Audit Findings
LAHSA, a joint city-county agency created in 1993, administers the Los Angeles Continuum of Care and has received nearly $1 billion in HUD funding since 2021. Recent audits (Nov 2024 county auditor, March 2025 court-ordered review, 2024 City Controller) documented late contractor payments, $513 million unspent in FY 2024, inadequate expense reporting for ~2,300 housing sites, and a $2.1 million conflict-of-interest involving a former CEO’s spouse’s nonprofit. A federal judge previously found “obvious fraud” in an 88-bed shelter contract.
Stakeholder Reactions
HUD Deputy Secretary Andrew Hughes said the agency’s “false statements” and lack of safeguards threaten the public and people experiencing homelessness. LAHSA spokesperson Ahmad Chapman asserted that “nearly all” issues have been corrected and that it is modernizing payment systems with KPMG. Mayor Karen Bass’s office urged HUD to work with the city to keep funding, warning that “threatening federal funds does nothing to house people.” County Supervisor Kathryn Barger called the suspension “deeply concerning” but consistent with long-standing problems. Supervisor Lindsey Horvath labeled the move a “publicity stunt” and demanded joint accountability. Jerry Jones of the Greater LA Coalition on Homelessness and Council President Marqueece Harris-Dawson described the action as politically motivated.
Conflicting Reports & Gaps
HUD references $944 million-$1 billion in total federal dollars over five years, while LAHSA notes $69 million for the current year. LAHSA maintains most audit findings have been addressed; HUD maintains “severe and pervasive” deficiencies remain. The Inspector General’s investigation and any hearing request have not yet been disclosed.
Verbatim Quotes
- “CLICK HERE TO DOWNLOAD THE FOX NEWS APP "HUD cannot ignore LAHSA’s wanton mismanagement of public funds.” — Andrew Hughes, HUD Deputy Secretary
- “Diverting dollars from worthy programs to LAHSA merely makes the homeless crisis worse.” — Andrew Hughes, HUD Deputy Secretary
- “This appears to be a blatant attempt to pull yet more resources from Los Angeles, a city they have targeted time and again, when it is clear that LAHSA has either corrected or is in the process of correcting nearly all of the issues raised,” — Ahmad Chapman, LAHSA spokesperson
- “Mayor Bass, too, has grave concerns about LAHSA and zero tolerance for mismanagement and negligence, which is why she previously directed the city to evaluate how to move away from the agency. Threatening federal funds does nothing to house people and jeopardizes the progress Mayor Bass has led to reduce homelessness for two years in a row, after it only went up in Los Angeles for years. Ultimately people will lose their lives. We urge HUD to work with the City of Los Angeles to provide the necessary funding to reduce homelessness.” — Karen Bass, Mayor of Los Angeles (office)
- “Taxpayers will not bankroll LA’s fraud-filled homelessness industrial complex.” — Scott Turner, HUD Secretary
What’s Next
HUD’s Inspector General will conduct a formal review; LAHSA may request a hearing within 30 days. County and city officials are exploring direct funding mechanisms for service providers. The investigation’s outcome will determine whether federal dollars are reinstated, permanently barred, or restructured.
