‘Gross misuse of federal funding’: HUD cuts off funds to LA homeless services agency over fraud concerns

After losing county funding, Los Angeles’ primary homeless services agency has lost federal funding due to its failure to address potential fraud.

The Task Force to Eliminate Fraud, alongside the Department of Housing and Urban Development, sent a letter on Thursday to the Los Angeles Homeless Services Authority to inform the agency that it was immediately suspending funding amid an ongoing probe by HUD’s inspector general. The IG’s office is investigating any potential offenses by the LAHSA and its leadership, according to Fox News Digital, which obtained a copy of the letter.

'Taxpayers will not bankroll LA’s fraud-filled homelessness industrial complex.'

The department reportedly outlined in its letter conflicts of interest, financial mismanagement, fraud, and oversight failures.

HUD has given the Los Angeles Continuum of Care, which is led by the LAHSA, nearly $1 billion over the last five years.

“Suspending LAHSA’s participation in federal government programs is a necessary step in accomplishing that critical mission in Los Angeles,” the letter read, according to Fox News Digital. “LAHSA’s failures have been so severe and pervasive that Los Angeles County has withdrawn its funding for the agency, and the City of Los Angeles is considering doing so as well.”

“HUD cannot ignore LAHSA’s wanton mismanagement of public funds. HUD’s mission is to reduce the plague of homelessness in America,” the agency’s letter continued. “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.”

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HUD’s letter quoted a federal judge who stated last year that the LAHSA had committed “obvious fraud” after it allegedly sought full funding for an 88-bed shelter despite maintaining only roughly half occupancy.

HUD also noted that a former top LAHSA official, Va Lecia Adams Kellum, was caught up in a conflict-of-interest scandal. The LAist reported in Feb. 2025 that the executive signed contracts that funneled $2.1 million to a nonprofit where her husband held a senior leadership position. The LAHSA told the outlet that Adams Kellum was “completely recused” from any business related to the nonprofit, and the contracts were inadvertently given to her for signature.

The LAist reported that the LAHSA has an $828 million budget this fiscal year, 46% of which comes from Los Angeles County, 35% from the city of Los Angeles, 11% from the federal government, over 8% from California, and a smaller amount from private philanthropy.

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L.A. County voted last year to cut $300 million in funding from the LAHSA, beginning in July. The county has formed a new department to address homelessness, which it believes will increase accountability by “streamlining bureaucracy to stretch our dollars further, and improving care for people experiencing homelessness.”

HUD Secretary Scott Turner stated that the agency “will fund results, not corrupt failure.”

“While hundreds of millions of taxpayer dollars were funneled to LAHSA with little accountability, homelessness skyrocketed,” Turner wrote. “Taxpayers will not bankroll L.A.’s fraud-filled homelessness industrial complex.”

“For years, American taxpayers have been sending billions of dollars to Los Angeles to house the homeless and other vulnerable Americans. The result? Fraud and corruption. That ends today,” White House Task Force Executive Director Scott Brady stated, according to a HUD press release.

The LAHSA confirmed receipt of HUD’s letter and warned that the department’s actions “could put thousands of formerly homeless people back on the street,” the agency said in a statement provided to Blaze News.

“After initial review, 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,” the agency said. “Local oversight actions have already resulted in strong repairs and reforms to LAHSA’s internal controls, which are accountable and viewable to the public.”

The LAHSA noted that it is also modernizing its financial systems.

“If HUD’s inspector general actually conducts a fair review of LAHSA’s current and future practices, they will clearly see how our systems now allow us to clearly track the work and investments that have resulted in L.A. outperforming the nation by reducing homelessness over the last two years,” the statement continued. “While the review plays out, our immediate priority is to explore all available options to ensure that federal funds continue to support the thousands of people who have been housed through LAHSA and our broader rehousing system.”

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