FIRST ON FOX: The Trump administration suspended a U.S. territory's housing-finance authority from receiving further federal funding after the Department of Housing and Urban Development cited years of alleged financial mismanagement, dire audit findings and the conviction of a former executive in a disaster-recovery contracting scheme.
The suspension over alleged waste and abuse at the Virgin Islands Housing Finance Authority (VIHFA) comes as HUD Secretary Scott Turner, a member of the White House Task Force to Eliminate Fraud, ramps up the administration's scrutiny of federal grant recipients following a series of high-profile investigations nationwide.
"The Trump administration is changing the game when it comes to who we entrust with taxpayer dollars. Organizations riddled with corruption, mismanagement and crime will no longer be allowed to squander billions," Turner, a former NFL cornerback, told Fox News Digital.
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"[VIHFA] officials cannot be allowed to prioritize kickbacks over helping families recover from disasters. I promised that HUD would be a faithful steward of the American people's hard-earned money, and we are keeping that promise."
Turner said the suspension is "effective immediately," as the HUD chief's deputy Andrew Hughes fired off a 13-page letter to VIHFA official Dayna Clendinen laying out HUD's findings and alerting that they are barred from future federal procurement while an investigation takes place.
When approached for comment, a representative who picked up the phone at VIHFA on Monday directed Fox News Digital to a full voicemail box. Fox News Digital then reached out via VIHFA's contact page for comment.
Fox News Digital also reached out to Del. Stacey Plaskett, D-V.I., and Democratic Virgin Islands Gov. Albert Bryan's office for additional comment.
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In the letter, HUD claimed the nearly-$2 billion appropriation to VIHFA was intended for recovery after Hurricanes Irma and Maria devastated the American archipelago in 2017 - calculated to about $20,000 per USVI resident.
"Nine years later, because of VIHFA's blatant mismanagement of these critical disaster funds, USVI citizens still do not have the housing and electrical power they were promised nearly a decade ago," the agency said, citing the prevalence of blue-tarped roofs and shoddy infrastructure, including a teetering power grid in the time since.
HUD said audits found disaster recovery spending lagged badly while administrative spending consumed a disproportionate share of available funds. The agency also cited the former COO's criminal kickback scheme as evidence of weak internal controls.
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VIHFA's former chief operating officer, Darin Richardson, was sentenced in March to 36 months in prison after being convicted of bank fraud, money laundering, making false statements and criminal conflict of interest. Prosecutors said Richardson received $107,000 from a contractor in connection with the scheme. HUD said the misconduct occurred "during execution of his duties" at VIHFA.
That contract was later inflated by 50% from $3 million to $4.5 million, HUD said in its letter, adding that much of the lumber then was allowed to rot in the tropical sun.
HUD said Richardson's conduct, standing alone, was sufficient to call into question VIHFA's responsibility to receive additional federal funds.
HUD informed VIHFA it has "substantial evidence" of failure-to-comply with aid obligations, a lack of internal controls over financial matters, fraud risks and conflict-of-interest situations.
"[VIHFA] has failed to implement effective fraud controls despite the indictment and conviction of its former COO in a federal contracting fraud scheme. It has repeatedly made false certifications to HUD that it has proficient financial controls, has safeguards to prohibit conflicts of interest, has not obtained duplicate federal benefits, and complies with applicable laws and regulations," HUD alleged in their suspension notice.
HUD cited multiple audits spanning a decade that raised "significant concerns" about funding-related activities - which collectively questioned millions in costs and uncovered weak financial controls, inadequate project oversight, poor fraud-risk management and inaccurate reporting. A 2026 audit concluded VIHFA had failed to implement a structured fraud prevention framework despite overseeing $1.9 billion in disaster recovery funding.
Further condemning the "glacial" pace of storm recovery, HUD found that only 2% of planned single-family rentals, 16% of single-family homeowners and 19% of multifamily rental projects had been completed since the storms struck nearly a decade ago.
None of 329 housing-work mitigation projects had been finished, while HUD found a "yawning gap" between high expenditures by VIHFA on administrative concerns and low expenditures on residents and their homes.
"Whether poor management or something worse, the consequences are unacceptable- the residents of the USVI who were devastated by disaster are not getting what they need from VIHFA," HUD wrote to the authority. VIHFA spent $52.6 million on administrative costs alone, according to its report.
HUD also found VIHFA's divisions unwisely "operate in silos," hindering communication and fraud-risk management.
The agency told VIHFA that the HUD inspector general's office also found that employees had personal knowledge of fraud or suspected fraudulent activity - but then VIHFA failed to conduct further investigations or alert its senior management.
The auditing apparatus of VIHFA only notified then-directors of the divisions involved, who allegedly "sat on the findings" according to HUD's recounting of a 2023 IG probe.
That along with the material facts behind Richardson's convictions bolster Turner's decision to cut off VIHFA, the agency wrote.
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"An officer corruptly awarding disaster clean up contracts violates, at minimum, HUD rules on oversight of contractors," HUD said, citing Richardson's kickbacks of at least $107,000 in one case.
VIHFA will have 30 days to request a hearing on the matter or HUD's funding suspension will be final, Hughes said.
The suspension marks the latest front in the feds' anti-fraud campaign, which has now stretched from the massive Feeding Our Future prosecution in the cold northern reaches of Minnesota now to the southern, sunny confines of Charlotte Amalie.
