The U.S. Department of Housing and Urban Development on Thursday stopped millions in funding to the Los Angeles Homeless Services Authority over allegations of fraud and widespread mismanagement.
The Trump administration’s probe of LAHSA earlier this year prompted the funding suspension, HUD Secretary Scott Turner said Thursday. The agency is alleging false statements by LAHSA officials along with inadequate financial management and the city-county joint agency’s lack of safeguards against conflicts of interest.
LAHSA leads the Los Angeles Continuum of Care, which has received nearly $1 billion in taxpayer dollars over the last five years. Despite receiving more federal assistance than any other jurisdiction in the nation, Los Angeles remains the epicenter of the nation’s “drug-fueled homelessness crisis,” according to HUD.
“Under President Trump’s leadership, HUD will fund results, not corrupt failure or the homeless-industrial complex,” Turner said in a statement. “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.”
The funding suspension will be final if LAHSA does not contest HUD’s notice by requesting a hearing, according to a letter dated June 11 from HUD Deputy Secretary Andrew Hughes to LASHA CEO Gita O’Neal. LAHSA must file a written request for the appeal hearing within 30 days of receipt of the notice.
LAHSA officials issued a statement following the federal announcement.
“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,” according to a statement from LASHA.
The organization countered that efforts to establish oversight policies have already resulted in significant fixes and reforms to LAHSA’s internal controls, which officials said are “accountable and viewable to the public.”
The agency is also starting to implement independent consultant KPMG’s recommendations to modernize financial systems and prevent future accounting discrepancies.
“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 LA outperforming the nation by reducing homelessness over the last two years,” according to LAHSA.
“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,” the agency’s statement continued.
Los Angeles Mayor Karen Bass expressed concern about HUD’s funding freeze.
“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,” according to a statement from her office.
“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,” the statement said.
Los Angeles County Supervisor Lindsey Horvath described HUD’s decision as a publicity stunt.
“I have been calling for change and accountability at LAHSA, but if this administration desires accountability, too, they should work WITH LA County,” the District 3 supervisor said in a statement.
“While they focus on stunts and retribution against Los Angeles — a community that rejects their apocalyptic MAGA agenda — we’re staying focused on results for our most vulnerable,” Horvath added.
HUD investigators found what agency officials said was a “clear pattern of fraud.”
In August 2023, LAHSA could not determine whether the agency used funding to pay for empty hotel rooms because of a failure to document when people left transitional motel housing, HUD reported.
A November 2024 audit by Los Angeles City Controller Kenneth Mejia found LAHSA failed to spend approximately $513 million in homelessness funding budgeted for that year, HUD officials cited.
HUD’s letter to LAHSA’s chief executive referenced the 2025 resignation letter of former LAHSA CEO Va Lecia Adams Kellum. Her decision to leave came after the LA County Board of Supervisors moved $300 million and hundreds of workers away from the homeless agency into the county’s new Department of Homeless Services and Housing.
An investigation by LAist, cited in the HUD letter, revealed that Kellum signed a $2.1 million contract with a nonprofit organization that employed her husband.
LAHSA also has faced criticism for late payments to service providers, inadequate records and failures to more accurately monitor contracts and spending.
In January, federal prosecutors levied fraud charges against the CEO of a nonprofit that received LAHSA funds.
The agency has implemented new protocols and created online publicly available online dashboards to address the recently outed problems.
Over 72,000 people were experiencing homelessness countywide in January during this year’s Greater Los Angeles Homeless Count, with nearly 44,000 in the city of LA.
In June, Gov. Gavin Newsom cited HUD data when he announced California’s largest drop in unsheltered homelessness compared with anywhere else in the nation last year and the state’s largest decline in unsheltered homelessness since 2009.
Los Angeles saw a 10.3% drop in unsheltered homelessness, the largest regional drop nationwide, according to HUD’s data.
In 2024 the LA region saw the first decline in homelessness in recent years, when LAHSA’s January 2025 count recorded a 4% decrease in unhoused county residents, and the city of Los Angeles saw a 3.4% drop two years ago.
Unsheltered homelessness — individuals and families living on streets, vehicles, tent encampments or other unsheltered circumstances — declined by 9.5% in the county in 2025 compared with the previous year. Homeless counts have found a 14% reduction over the last two years.
An 8.5% increase of unhoused individuals entering shelters and temporary housing has also occurred.
In the city of LA, unsheltered homelessness reduced by 7.9% last year, and it has decreased 17.5% since 2024, according to LAHSA. Also, data for the city showed a 4.7% increase in unhoused individuals entering temporary housing.
