Federal funding for Los Angeles’ homelessness response agency was suspended after an investigation revealed fraud and mismanagement, the U.S. Department of Housing and Urban Development (HUD) announced Thursday.
The investigation by the HUD Office of Inspector General (OIG) uncovered “repeated false statements, its irresponsible actions and failures” by the Los Angeles Homeless Services Authority (LAHSA), according to a statement from the federal department.
Despite reaching $1 billion over the last five years, HUD officials said the city has failed to reduce homelessness due to “LAHSA’s repeated false statements and its irresponsible actions and failures.”
“Despite receiving more federal homelessness funding than any other jurisdiction in the nation, Los Angeles remains the epicenter of the nation’s drug-fueled homelessness crisis,” the federal agency said in a statement.
Among the allegations, LAHSA did not keep track of the unhoused who left transitional motel house, yet it kept paying for empty hotel rooms, according to HUD.
Also in 2025, LAHSA wasn’t able to provide verification paperwork to show where the 2,300 housing sites are located, the report said.
The homelessness agency is also accused of fabricating certifications although it did not have internal policy to prevent conflict of interest until Sept. 26, 2025.
During the five-year period, homelessness in LA increased 100% and free housing for homeless went up 212%, HUD claimed.
LAHSA officials pushed backed on the federal government’s claims, stating that its actions could put thousands of formerly homeless people back on the street.
“LAHSA received a letter from HUD announcing a suspension of CoC funding. After initial review, this appears to be a blatant attempt to pull yet more resources from Los Angeles, a city they have targeted time and again, when it is clear that LAHSA has either corrected or is in the process of correcting nearly all of the issues raised,” according to a statement from LASHA.
The organization maintained that local oversight actions have already resulting in strong repairs and reforms to LAHSA’s internal controls, which officials said are “accountable and viewable to the public.”
“If HUD’s Inspector General actually conducts a fair review of LAHSA’s current and future practices, they will clearly see how our systems now allow us to clearly track the work and investments that have resulted in LA outperforming the nation by reducing homelessness over the last two years,” LAHSA said in it’s statement.
The Westwood man is accused of stealing $23 million, some of which came straight from LAHSA, authorities said. Conan Nolan reports for the NBC4 News at 6 p.m. on Friday, Jan. 23, 2026.
In response to the announcement, Mayor Karen Bass’s Office said she has “grave concerns” about LAHSA, highlighting she has already directed the city to evaluate how it can move away from the agency.
“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,” the mayor’s office said in a statement. “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.”
City News Service contributed to the report.