The U.S. Department of Housing and Urban Development (HUD) suspended funding for the Virgin Islands Housing Finance Authority (VIHFA) following an investigation.
The suspension was due to findings of widespread financial mismanagement, inadequate fraud controls, false certifications, and improper payments uncovered during a HUD-initiated investigation.
Nearly 10 years after VIHFA received $1.9 billion in HUD disaster recovery funding, VIHFA has spent less than one-third of the funds, the HUD investigation found. Further, evidence suggests that officials spent those funds on administrative kickbacks and allegedly fraudulent schemes instead of on families or communities recovering, according to HUD.
“Virgin Islands Housing Finance Authority 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. Effective immediately, VIHFA is suspended from receiving another cent as we investigate. Working with the White House Task Force to Eliminate Fraud, we are putting every grantee on notice: there are real consequences for abusing taxpayer dollars,” HUD Secretary Scott Turner said.
Among the instances of mismanagement, HUD found that VIHFAʻs former chief operating officer, who oversaw disaster recovery programs, is serving a federal prison sentence after being convicted of fraud, money laundering, and criminal conflict of interest.
Also, despite receiving nearly $2 billion in federal dollars, VIHFA has completed just 2 percent of single-family rental rehabilitation projects and 0% of single and multifamily housing projects.
HUD’s Office of Inspector General deemed that VIHFA’s fraud risk management processes were “at or below the lowest desired goal state.” Also, VIHFA sought $6.2 million in disaster-related costs that FEMA had already paid. HUD also alleges that VIHFA has repeatedly made false certifications claiming an effective compliance program and may have submitted additional false certifications to obtain further funding.