Trump Administration Suspends Federal Funding to Los Angeles Homeless Services Authority Amid Fraud Investigation

HUD Deputy Secretary Andrew Hughes sent a letter to LAHSA board chair Wendy Greuel and CEO Gita O'Neill on Thursday announcing the immediate suspension of federal funding, which currently amounts to roughly $69 million — about 8% of LAHSA's annual budget — mostly through the Continuum of Care permanent housing subsidy program. HUD cited a pattern of documented failures including a federal judge's finding of 'obvious fraud' related to LAHSA billing for an 88-bed shelter operating at half-capacity, a former CEO's role in directing $2.1 million to her husband's nonprofit employer, an inability to verify nearly 2,300 housing sites, $513 million in unspent public funds in fiscal year 2024, and chronic late payments to service providers. The suspension will remain in place pending the outcome of a HUD inspector general investigation, after which funding could be restored or LAHSA could be permanently barred. Los Angeles County had already voted to withdraw approximately $300–$350 million in annual funding from LAHSA, effective July 2026, redirecting it to a new county homelessness department, and the city council is exploring bypassing the agency entirely. LAHSA countered that it has corrected or is correcting nearly all issues raised and pointed to two consecutive years of declining homelessness counts, though more than 72,000 people remain unhoused in LA County. Mayor Karen Bass warned the suspension could cost lives, while local officials and advocates expressed alarm about disruption to currently housed individuals relying on federal subsidies. HUD Secretary Scott Turner framed the action as a refusal to fund what he called the 'homeless industrial complex,' while critics including LA County Supervisor Lindsey Horvath — who herself led the county's funding withdrawal — accused the administration of pursuing publicity over genuine accountability.