Key facts
- The U.S. government suspended funding for the U.S. Virgin Islands' housing authority.
- An investigation revealed widespread financial mismanagement and corruption.
- Only $570,000 of $1.9 billion in disaster recovery funds has been spent.
- The authority completed minimal housing rehabilitation and recovery projects.
- Significant funds were allocated to administrative costs rather than recovery efforts.
The U.S. government has suspended all federal funding for the U.S. Virgin Islands' housing authority, citing widespread corruption and mismanagement of disaster recovery funds. U.S. Housing Secretary Scott Turner announced the decision, stating that nine years after receiving $1.9 billion for hurricane recovery, the territory has only spent a fraction of it.
A U.S. Department of Housing and Urban Development (HUD) investigation found "widespread financial mismanagement, inadequate fraud controls, false certifications and improper payments," according to a July 20 letter. The agency noted that the authority has deprived residents of approximately $1.3 billion intended for their recovery.
Turner accused officials of prioritizing "kickbacks over helping families recover from disasters." The investigation revealed that the housing authority completed only two of 95 planned single-family rental rehabilitation projects and zero of 329 single and multifamily housing projects. 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 authority is also accused of seeking $6.2 million in funds already paid by the U.S. Federal Emergency Management Agency (FEMA). The report highlighted that the former chief operating officer overseeing disaster recovery programs is in federal prison for fraud and money laundering, having inflated a lumber contract and taken a $107,000 kickback.
In February, the executive director of the housing authority resigned amid scrutiny over $4.2 million in funds remaining idle as a deadline to use them approached. Local legislators expressed frustration over the lack of progress in rebuilding efforts.