White House fraud task force halts federal funding to LA's largest homeless agency after audit reveals $37 million unaccounted for

The Trump administration cut off federal dollars to the Los Angeles Homeless Services Authority on Thursday after a 2024 audit found the agency could account for barely a quarter of the tens of millions in taxpayer cash it received, and after a federal suspension letter flagged an alleged conflict of interest involving the agency's former CEO and her husband's nonprofit.

Out of $50.79 million handed to LAHSA to distribute to homeless service providers, the agency could document only $13.78 million. The remaining $37 million was unaccounted for, the New York Post reported.

The administration's new task force on fraud, connected to the office led by Vice President JD Vance, announced the funding halt as part of what it called a wider crackdown on "fraud and corruption." HUD worked alongside the task force, and HUD Secretary Scott Turner left no room for ambiguity about the agency's view of LAHSA's track record.

"LAHSA's record of fraud, failure, and flagrant mismanagement has abused hundreds of millions of tax dollars per year."

That was Turner's assessment. And the numbers back him up, at least on the question of where the money went.

The audit trail: $2.3 billion in homeless spending under review

The $50.79 million figure was not an isolated finding. It emerged from a far broader review of $2.3 billion in homeless spending across Los Angeles, ordered in 2024 by U.S. District Judge David O. Carter. That review grew out of a lawsuit filed by the LA Alliance for Human Rights, a coalition of homeowners, businesses, and homeless individuals who sued in 2020 seeking to trace where the money was actually going.

The answer, at least for the portion routed through LAHSA, appears to be: nobody can say for certain.

Several organizations that received LAHSA-distributed funds had millions in what the audit described as unrecovered advances. People Assisting the Homeless (PATH) had $8.23 million outstanding. LA Family Housing had $4.5 million. Volunteers of America Los Angeles owed $3.42 million. And the Venice-based St. Joseph Center, previously run by the woman who would become LAHSA's CEO, carried about $2.5 million in unrecovered advances.

Those four organizations alone account for nearly $19 million in advances that were never recovered. The pattern is not one bad actor. It is systemic.

The CEO, her husband, and the missing waiver

The federal suspension letter issued Thursday went beyond the audit's accounting gaps. It specifically named Va Lecia Adams Kellum, who served as LAHSA's CEO during the period in question and previously led St. Joseph Center. Federal officials accused LAHSA of approving more than $2.1 million in federal funding for a nonprofit that employed Adams Kellum's husband in a senior role, without ever obtaining a required conflict-of-interest waiver.

Federal officials allege the relationship was not disclosed. Adams Kellum resigned last year after the federal government began asking questions about her dealings with her husband. She had been earning just under $500,000 per year.

The name of the nonprofit, the name of Adams Kellum's husband, and the full details of the alleged arrangement remain unclear. But the federal government considered the facts serious enough to cite in a formal suspension letter, a step that typically precedes debarment from future federal contracts.

This is not the first time public officials have faced damaging findings over the misuse of federal funds meant for vulnerable populations. The pattern repeats because the oversight never catches up to the spending.

Criminal charges already filed in separate case

The Department of Justice has already brought criminal charges against Alexander Soofer, a Westwood businessman whom prosecutors accused of stealing more than $23 million intended for homelessness programs. That case predates Thursday's action but underscores the scale of alleged fraud surrounding LA's homeless spending apparatus.

When asked whether findings in HUD's suspension letter had triggered additional criminal investigations, a DOJ spokesman gave the standard non-answer: "Per DOJ policy, we can neither confirm nor deny the existence of investigations."

That response leaves open the question of whether the Adams Kellum matter or the broader audit findings will produce further prosecutions. The administration's willingness to bypass traditional political channels when it sees institutional failure suggests the pressure on LAHSA and its network of subcontractors is unlikely to ease.

Local officials scramble, but their own records complicate the defense

The response from Los Angeles city leaders has been a study in contradictions. Mayor Karen Bass's spokesperson acknowledged "grave concerns about LAHSA" and said the mayor has "zero tolerance for mismanagement and negligence." The spokesperson added that Bass had previously directed the city to evaluate how to move away from the agency entirely.

But the same spokesperson then pivoted to warning that the federal funding halt would endanger lives.

"Threatening federal funds does nothing to house people and jeopardizes the progress Mayor Bass has led to reduce homelessness for two years in a row, after it only went up in Los Angeles for years. Ultimately people will lose their lives. We urge HUD to work with the City of Los Angeles to provide the necessary funding to reduce homelessness."

The tension in that statement is worth pausing over. The mayor's own office says LAHSA is so poorly run that the city should move away from it. Yet the same office argues the federal government should keep sending money to the very agency the mayor wants to abandon. You cannot simultaneously declare an agency unfit and demand it continue receiving hundreds of millions in federal grants.

Nithya Raman, a mayoral candidate who chairs the Los Angeles City Council's Homelessness and Housing Committee, also weighed in. A spokesperson for Raman said the funding suspension "directly threatens the housing stability of Angelenos who are housed right now because of this funding, with no plan to ensure they don't end up back on our streets."

Raman's committee reviews homelessness contracts, funding allocations, performance reports, and policy recommendations before they advance through City Hall. That oversight role raises its own questions: if the committee was reviewing contracts and performance reports, what did it know about the $37 million gap? What did it do about it?

Raman offered a telling admission in the same statement, saying the funding crisis was "exactly what I have been concerned about, and why I have pushed for years for the City to build the capacity to manage our own contracts, programs and dollars." If she has been pushing for years, the implication is clear, the city knew its contracting apparatus was broken and failed to fix it.

The accountability gap

Los Angeles has spent $2.3 billion on homelessness in recent years. The city's homeless population, by the mayor's own spokesperson's admission, rose for years before Bass took office. The audit shows tens of millions flowing through an agency that could not document where the money landed. A CEO earning nearly half a million dollars a year allegedly steered $2.1 million to a nonprofit employing her husband without disclosing the conflict. A separate defendant faces criminal charges for allegedly stealing $23 million from the same pool of homeless funds.

And the local officials who oversaw all of this now say the real threat is the federal government asking where the money went.

The growing pattern of federal scrutiny directed at officials who treated public funds as a personal or political resource is not a coincidence. It reflects a deliberate choice by the current administration to follow the money, even when the trail leads into politically protected territory.

HUD told the Post that the LAHSA example reflects a broader pattern of failures by the agency. The fraud task force's involvement signals that the administration views this not as a bookkeeping error but as a systemic breakdown in how federal homelessness dollars are managed in Los Angeles.

Whether the DOJ ultimately brings additional charges remains to be seen. But the facts already on the table, $37 million unaccounted for, an alleged undisclosed conflict of interest, millions in unrecovered advances scattered across multiple nonprofits, and a separate $23 million theft prosecution, paint a picture of an agency and a local oversight structure that failed at every level.

The people who suffer most are not the bureaucrats or the nonprofit executives. They are the homeless residents of Los Angeles who were supposed to benefit from that $2.3 billion, and the taxpayers across the country who funded it. The familiar objection that accountability itself is the real danger rings hollow when the alternative is writing blank checks to agencies that cannot explain where the last check went.

When billions vanish and the people sleeping on sidewalks never see the benefit, the problem is not too much oversight. It is that oversight arrived years too late.