Key facts
- The U.S. Department of Housing and Urban Development (HUD) suspended funding to the Virgin Islands Housing Finance Authority (VIHFA).
- The suspension is due to widespread financial mismanagement, inadequate fraud controls, and improper payments related to disaster recovery funds.
- VIHFA has spent less than one-third of the $1.9 billion in Community Development Block Grant-Disaster Recovery funds received since 2017.
- The authority completed minimal housing rehabilitation and development projects, with only 2% of electrical grid recovery funding spent.
- Former COO Darin Richardson is imprisoned for fraud, having accepted a $107,000 bribe and inflated contract values.
The U.S. Department of Housing and Urban Development (HUD) has suspended all federal funding to the U.S. Virgin Islands' Housing Finance Authority (VIHFA) following an investigation into widespread corruption and mismanagement of disaster recovery funds. HUD Secretary Scott Turner announced the suspension, citing inadequate fraud controls, false certifications, and improper payments tied to federally funded programs.
An investigation into nearly $1.9 billion in Community Development Block Grant-Disaster Recovery funding revealed that VIHFA has spent less than one-third of the allocated funds nearly a decade after Hurricanes Irma and Maria struck the U.S. Virgin Islands in 2017. HUD Deputy Secretary Andrew Hughes stated that the authority has violated its obligations, failed to adhere to procurement standards, and made false statements regarding its financial management.
The authority is accused of diverting funds to administrative kickbacks and fraudulent schemes rather than disaster recovery efforts. It completed only 2% of planned single-family rental rehabilitation projects and none of its planned single or multifamily housing developments. Furthermore, only 2% of electrical grid recovery funding had been spent as of May, while more than half of the grant funds were allocated to administrative costs.
The suspension remains in effect while HUD's Office of Inspector General continues its investigation. The former Chief Operating Officer, Darin Richardson, who oversaw many of the disaster recovery programs, is currently serving a federal prison sentence for fraud, false statements, money laundering, and criminal conflict of interest.