The Trump administration has suspended the Virgin Islands Housing Finance Authority (VIHFA) from receiving future federal funding, citing alleged financial mismanagement, significant audit findings, and the conviction of a former executive involved in a disaster-recovery contracting scheme. The Department of Housing and Urban Development (HUD) stated the suspension is effective immediately.
HUD Secretary Scott Turner, who leads the White House Task Force to Eliminate Fraud, announced the action, emphasizing a commitment to scrutinizing federal grant recipients. "Organizations riddled with corruption, mismanagement, and crime will no longer be allowed to squander billions," Turner said in a statement. "The Trump administration is changing the game when it comes to who we entrust with taxpayer dollars."
A 13-page letter from HUD Deputy Andrew Hughes to VIHFA official Dayna Clendinen detailed the findings and informed the authority that it is barred from future federal procurement pending an investigation. VIHFA officials did not immediately respond to requests for comment.
The nearly $2 billion in federal appropriations to VIHFA was designated for recovery efforts following Hurricanes Irma and Maria, which devastated the U.S. Virgin Islands in 2017. According to HUD, significant delays in housing and power restoration persist nearly a decade later due to VIHFA's alleged mismanagement.
Audits conducted over the past decade have raised concerns about disaster recovery spending, with administrative costs consuming a disproportionate amount of available funds. HUD also pointed to the conviction of former VIHFA Chief Operating Officer Darin Richardson, who was sentenced to 36 months in prison for bank fraud, money laundering, false statements, and criminal conflict of interest. Prosecutors stated Richardson received $107,000 in kickbacks from a contractor, a scheme HUD claims occurred during his official duties.
HUD's letter highlighted a lack of effective internal controls at VIHFA, including a failure to implement fraud controls despite Richardson's conviction. The agency also alleged that VIHFA repeatedly provided false certifications to HUD regarding its financial controls, conflict-of-interest safeguards, and compliance with federal laws and regulations.
Further compounding the issues, HUD found that recovery projects have progressed at a slow pace. As of HUD's assessment, none of the 329 planned housing-work mitigation projects had been completed. The agency also noted a significant disparity between VIHFA's administrative expenditures, totaling $52.6 million, and the low expenditure on direct resident and home-based recovery efforts.
HUD's investigation also revealed that employees had personal knowledge of suspected fraudulent activity but failed to conduct further investigations or alert senior management. A 2023 probe by the HUD Inspector General indicated that findings of potential fraud were not adequately addressed.
VIHFA has 30 days to request a hearing on the suspension, after which it may become final. The suspension is part of a broader federal anti-fraud campaign targeting the misuse of disaster relief and other federal funds.