HUD suspended the U.S. Virgin Islands' housing finance authority from all federal funding after a 13-page letter laid out years of alleged fraud, false certifications, and a convicted executive, while hurricane victims still wait for promised repairs.
HUD Secretary Scott Turner announced the immediate suspension of the Virgin Islands Housing Finance Authority from receiving any further federal dollars, citing what the department called "substantial evidence" of financial mismanagement stretching back nearly a decade. The action bars VIHFA from future federal procurement while an investigation continues.
The numbers behind the suspension are staggering. Congress appropriated nearly $2 billion to VIHFA for recovery after Hurricanes Irma and Maria tore through the American territory in September 2017, roughly $20,000 for every resident of the islands. Nine years later, according to HUD's own letter, only 2% of planned single-family rentals have been completed. Just 16% of single-family homeowner projects are finished. Multifamily rental projects sit at 19%. And of 329 housing-work mitigation projects, not a single one has been completed.
Meanwhile, VIHFA spent $52.6 million on administrative costs alone.
The suspension follows the conviction of former VIHFA Chief Operating Officer Darin Richardson, who was found guilty of bank fraud, money laundering, making false statements, and criminal conflict of interest. Richardson was sentenced to 36 months in federal prison. Prosecutors said he received $107,000 from a contractor in connection with the scheme, and HUD's letter noted that one contract was inflated by 50%, ballooned from $3 million to $4.5 million.
HUD Deputy Andrew Hughes sent the 13-page suspension letter to VIHFA official Dayna Clendinen. The letter did not hold back about what the department found.
As Fox News Digital reported, the HUD letter stated:
"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 letter went further, accusing VIHFA of systematic dishonesty in its dealings with the federal government:
"[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 described Richardson's conduct, corruptly awarding disaster cleanup contracts, as violating "at minimum, HUD rules on oversight of contractors." The letter noted that the misconduct occurred during the execution of his official duties at the authority.
Richardson's conviction was not the only red flag. A 2023 probe by HUD's inspector general found that VIHFA employees had personal knowledge of fraud or suspected fraudulent activity within the organization. But VIHFA failed to conduct further investigations or alert senior management. The auditing apparatus only notified the directors of the divisions involved, and those directors, HUD's letter alleged, "sat on the findings."
A separate 2026 audit concluded that VIHFA had still failed to implement a structured fraud prevention framework, despite overseeing $1.9 billion in disaster recovery funding. Years of warnings, a federal conviction, and an inspector general investigation had not been enough to prompt basic financial controls.
HUD's letter framed the failure in blunt terms:
"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."
Turner, a former NFL cornerback who also serves on the White House Task Force to Eliminate Fraud, cast the suspension as part of a broader administration effort to hold federal grant recipients accountable. He did not frame it as a one-off.
Turner said:
"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."
He added that 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."
The suspension gives VIHFA 30 days to request a hearing. If the authority does not respond within that window, the funding cutoff becomes final.
Fox News Digital reached out to Democratic Virgin Islands Gov. Albert Bryan's office and to Del. Stacey Plaskett, the territory's non-voting member of Congress, for comment. Neither provided a response. Fox News Digital also contacted VIHFA directly; a representative directed them to a full voicemail box.
The silence from the territory's elected leaders is notable given the scale of the allegations. Nearly $2 billion in taxpayer money was sent to help hurricane victims rebuild their homes and restore electrical power. Nine years on, the vast majority of that rebuilding has not happened. A senior executive went to prison for taking kickbacks. Auditors found fraud that went unreported. And the agency kept certifying to the federal government that everything was fine.
The VIHFA suspension is part of a wider pattern of HUD action under Turner. The department previously announced an investigation into the city of Boston over alleged discriminatory housing practices. Turner has also referenced having "boots on the ground" in Minnesota, where the administration has pursued fraud cases tied to pandemic-era aid programs.
Two billion dollars can rebuild a lot of homes, or it can disappear into inflated contracts, administrative overhead, and voicemail boxes that never get checked. The people of the Virgin Islands got the second version, and it took a new administration to finally say enough.
