Trump Administration Suspends Disaster Funding for USVI Housing Authority Amid Fraud Allegations

The Trump administration has suspended disaster recovery funding for the U.S. Virgin Islands' housing authority, accusing the agency of widespread financial mismanagement, fraud and allowing billions of dollars intended for hurricane recovery to go largely unused.

Housing Secretary Scott Turner announced the funding freeze after a Department of Housing and Urban Development investigation alleged "widespread financial mismanagement, inadequate fraud controls, false certifications and improper payments" at the Virgin Islands Housing Finance Authority. The investigation remains ongoing.

In a July 20 letter, HUD said the authority's failures had deprived Virgin Islanders of roughly $1.3 billion in aid approved by Congress.

On X, Turner accused officials of prioritizing "kickbacks over helping families recover from disasters."

HUD also alleged the authority spent more than half of its disaster grant funding on administrative costs, attempted to seek $6.2 million from HUD for expenses already reimbursed by the Federal Emergency Management Agency, and made little progress on key rebuilding projects.

According to the department, only two of 95 planned single-family rental rehabilitation projects have been completed, none of 329 planned single- and multifamily housing projects have moved forward, and just 2% of funding earmarked for electrical grid recovery had been spent as of May.

The department further alleged the authority had been "an abysmal steward of taxpayer funds."

Turner also highlighted the case of the housing authority's former chief operating officer, who oversaw disaster recovery programs and is now serving a federal prison sentence after being convicted of fraud and money laundering.

Turner said the former executive inflated a lumber contract from $3 million to $4.5 million, accepted a $107,000 kickback and allowed the lumber to "rot in the sun, rendering it useless."

The housing authority did not immediately respond to requests for comment. It has the right to appeal HUD's decision to suspend funding.

The funding freeze comes nearly nine years after Hurricanes Irma and Maria devastated the U.S. territory in 2017. HUD said the Virgin Islands received $1.9 billion in disaster recovery funding but has spent only about $570 million, less than one-third of the allocation.

The housing authority has faced growing scrutiny in recent months. Its executive director resigned in February after lawmakers questioned why $4.2 million remained unused despite a September deadline to spend the money.

"The Housing Finance Authority is not building," Sen. Kurt Vialet told the St. Thomas Source at the time. "You can't be upset at senators being frustrated."