LAHSA faces $200 million federal funding suspension over mismanagement claims

The Los Angeles Homeless Services Authority (LAHSA) is facing serious allegations and a suspension of nearly $200 million in federal funds after the federal government accused the agency of failing to track when individuals left temporary motel housing, mishandling of government funds and lacking documentation to verify housing projects under its oversight.  

The U.S.Department of Housing and Urban Development (HUD) said that LAHSA has 30 days from June 11 to request a formal hearing to contest the allegations and the suspension of Continuum of Care funding, according to a letter sent to the agency executives. 

“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. None of this would be possible without the leadership of [HUD] Secretary [Scott] Turner,” said Scott Brady, White House Task Force Executive Director. 

According to a HUD investigation, LAHSA, which leads the largest federally funded Continuum of Care in the nation for homeless services, demonstrated clear patterns of fraud and mismanagement. 

Some of those findings include: 

• In August 2023, LAHSA could not determine whether it used funding to pay for empty hotel rooms, because it failed to record when individuals exited transitional motel housing; 

• In November 2024, the L.A. County’s Auditor-Controller found that LAHSA misused government money by using it to pay for services provided under another government funders’ contract weeks before LAHSA received grant funds to cover the particular cost;

• During a 2025 assessment, LAHSA failed to provide documentation to verify the existence of nearly 2,300 housing sites for which it was responsible; 

• LAHSA made false certifications and did not have its own internal written conflict-of-interest policy until September 26, 2025, even though it certifies that it would comply with these requirements and would establish safeguards to prohibit conflict of interest; 

• 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.

In a written statement provided to CALO News by LAHSA’s spokesperson Christopher Yee, the agency said that measures have already been taken to correct many of the concerns raised by HUD. 

 “Local oversight actions have already resulted in strong repairs and reforms to LAHSA’s internal controls, which are accountable and viewable to the public. We are also beginning to implement KPMG's recommendations to modernize our financial systems and prevent similar findings from occurring again,” the agency stated. 

The Los Angeles-based agency also criticized HUD’s review, arguing that if a fair review of LAHSA’s current and future practices were conducted, they would clearly see how their systems allow for them to clearly track the work and investments.

“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 added in the statement. 

LAHSA also added that its current systems have resulted in L.A. outperforming the nation by reducing homelessness over the last two years. 

“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 statement said. 

LAHSA now has 30 days from June 11 to formally contest HUD’s findings. A final decision on the funding suspension will be based on evidence and arguments that both parties may submit. If LAHSA does not respond, the suspension of funding will become final, potentially affecting funding for homeless housing and services throughout Los Angeles.