The U.S. government has suspended funding for the U.S. Virgin Islands' housing authority following an investigation into widespread corruption and financial mismanagement. The move comes as residents continue to grapple with the aftermath of two devastating Category 5 hurricanes that struck the territory in 2017.
U.S. Housing Secretary Scott Turner announced the suspension, stating that despite receiving $1.9 billion in disaster recovery funding nearly a decade ago, the territory has only managed to spend $570,000. A U.S. Department of Housing and Urban Development (HUD) investigation uncovered "widespread financial mismanagement, inadequate fraud controls, false certifications and improper payments."
In a letter to the housing authority, HUD indicated that this failure has deprived Virgin Islanders of approximately $1.3 billion intended for their recovery. The investigation also found that the authority had completed only two of 95 planned single-family rental rehabilitation projects and none of the 329 single and multifamily housing projects. Furthermore, as of May, only 2% of electrical grid recovery funding had been utilized, while more than half of the grant funds were allocated to administrative costs.
The authority is also accused of seeking $6.2 million in disaster-related funds that had already been disbursed by the U.S. Federal Emergency Management Agency. The investigation is ongoing.
Adding to the concerns, the former chief operating officer for the U.S. Virgin Islands' housing authority, who was responsible for disaster recovery programs, is currently serving a federal prison sentence for fraud and money laundering convictions. According to Turner, this former official inflated a lumber contract from $3 million to $4.5 million and accepted a $107,000 kickback, resulting in the lumber becoming unusable.
Earlier this year, the executive director of the housing authority resigned amid scrutiny from local legislators regarding $4.2 million in idle funds nearing a September deadline for their use. Senator Kurt Vialet expressed frustration, noting the authority's lack of progress in building projects.