By Jorge Casuso
June 16, 2026 -- The Federal government announced Thursday it will no longer fund the Los Angeles Homeless Services Authority (LAHSA) effective immediately.
In a 13-page letter to LAHSA, the Department of Housing and Urban Development (HUD) cited "wanton mismanagement of public funds," "severe and pervasive failures" and "obvious fraud" for suspending its funding.
Over the last five years, the agency -- which has repeatedly come under fire for its mishandling of public funds -- has received more than $1 billion from HUD, including $220 million during the fiscal year that ended June 30.
“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.
“Year after year, hundreds of millions of taxpayer dollars were funneled to LAHSA with little accountability. Meanwhile, homelessness skyrocketed," Turner said.
"Taxpayers will no longer bankroll an organization that puts its own self-interests ahead of the Americans it was created to serve.”
According to Turner's letter, HUD has evidence of LAHSA's "repeated false statements and its irresponsible actions and failures, including its lack of financial management, internal controls, and safeguards against conflicts of interest."
The HUD-initiated investigation found that LAHSA engaged in a "clear pattern of fraud" that included:
* Failing to spend $513 million in public funds budgeted during fiscal year 2024 that LAHSA attributed to a "lack of staff and old technology;"
* Failing to provide documentation during a 2025 assessment "to verify the existence of nearly 2,300 housing sites for which it was responsible," with 70 percent of the contracts disclosing no expenses;
* Failing to make timely payments in recent months to service providers that were owed roughly $69 million, with many of the payments more than 90 days overdue, prompting LA County to withdraw $350 million a year starting on July 1;
* Failing to meet a March 2026 deadline for filing its federally mandated Single Audit "because it could not timely produce financial records to its auditor," who "found further failures of bookkeeping and accounting."
The Single Audit released last month noted that the agency’s former CEO Va Lecia Adams Kellum resigned "after she and LAHSA violated federal conflict-of-interest rules by committing more than $2 million in federal funds under LAHSA’s control to her husband’s employer."
"HUD has reason to suspect that LAHSA's conflict of interest violations are not limited to the conflict related to its former CEO and her husband but are systemic," the letter said.
A LAHSA spokesperson told Fox News that HUD's action "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."
In a statement after Fox News broke the story, the office of LA Mayor Karen Bass said she 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," her office said.
"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 highly touted reduction in LA County's homeless population in 2024 and 2025 comes after LAHSA assumed full control of the annual census, which has been marred by a marked drop in volunteers and a series of technical glitches since the agency took over.
A report by the Santa Monica-based RAND Corporation released last October found that the "official homeless counts increasingly underestimate the number of people living on the street in three key LA neighborhoods."
The results of the 2026 Santa Monica homeless count on January 22 -- which was conducted for the third year without the City's participation -- have not yet been released.