Here’s what Trump just did.
HUD says the U.S. Virgin Islands Housing Finance Authority failed to properly manage nearly $2 billion in disaster recovery funding, prompting the Trump administration to suspend future federal support while an investigation continues.
The Trump administration has suspended future federal funding for the U.S. Virgin Islands Housing Finance Authority (VIHFA) after the Department of Housing and Urban Development (HUD) cited years of alleged financial mismanagement, weak oversight, and significant concerns about how disaster recovery funds were handled.
HUD officials said the suspension is effective immediately and comes as the administration increases oversight of federal grant recipients through the White House Task Force to Eliminate Fraud.
“The Trump administration is changing the game when it comes to who we entrust with taxpayer dollars,” HUD Secretary Scott Turner told Fox News Digital. He added that organizations affected by corruption, financial mismanagement, or criminal misconduct “will no longer be allowed to squander billions.”
Turner also said HUD is committed to protecting taxpayer money and ensuring disaster recovery funds are used for their intended purpose.
HUD Suspends Future Federal Funding
HUD Deputy Secretary Andrew Hughes sent a 13-page letter to VIHFA Executive Director Dayna Clendinen outlining the department’s findings. According to the letter, the agency is prohibited from receiving additional federal procurement funding while the investigation remains active.
Fox News Digital reported that attempts to obtain comment from VIHFA were unsuccessful after reaching a full voicemail box. Requests for comment were also submitted through the agency’s website, along with inquiries to Delegate Stacey Plaskett, D-V.I., and the office of Virgin Islands Governor Albert Bryan.
Nearly $2 Billion in Disaster Recovery Funding
Following Hurricanes Irma and Maria in 2017, Congress approved nearly $2 billion in disaster recovery funding for the U.S. Virgin Islands to help rebuild homes, restore infrastructure, and assist communities affected by the storms.
According to HUD, many of the promised recovery projects remain unfinished nearly a decade later.
The department said damaged homes, temporary blue-tarp roofs, and aging electrical infrastructure continue to affect many residents despite the substantial federal investment.
Audits Raised Years of Financial Concerns
HUD said multiple audits identified significant weaknesses in financial oversight, project management, reporting, and fraud prevention.
According to the department, administrative spending consumed a sizable share of available funding while recovery projects advanced slowly.
A 2026 audit found that VIHFA still had not put a formal fraud prevention system in place, despite managing roughly $1.9 billion in federal disaster recovery funding.
HUD also stated it has “substantial evidence” that the authority failed to comply with certain federal grant requirements, lacked sufficient internal financial controls, and did not adequately address potential conflicts of interest.
Former Executive Convicted in Federal Case
Federal officials also pointed to the criminal conviction of former VIHFA Chief Operating Officer Darin Richardson.
Richardson was sentenced in March to 36 months in federal prison after being convicted of bank fraud, money laundering, making false statements, and conflict-of-interest violations.
Prosecutors said Richardson accepted more than $107,000 in kickbacks from a contractor connected to disaster recovery work while serving at the housing authority.
HUD also alleged that one contract tied to the case increased from $3 million to $4.5 million, while purchased construction materials were reportedly left exposed and deteriorated before being used.
The department said Richardson’s conduct alone raises serious concerns about whether the agency should continue receiving additional federal funding.
Recovery Projects Lag Behind
HUD’s review also highlighted the slow pace of rebuilding efforts.
According to the department:
- Only 2% of planned single-family rental housing projects have been completed.
- Just 16% of homeowner recovery projects have been finished.
- Only 19% of multifamily housing developments have been completed.
- None of the 329 planned housing mitigation projects had been completed at the time of the review.
HUD also reported that VIHFA spent approximately $52.6 million on administrative expenses while comparatively little funding reached residents waiting for housing repairs and reconstruction.
Inspector General Findings
HUD said its Office of Inspector General found instances in which employees reportedly had knowledge of suspected fraud but failed to elevate concerns or initiate additional investigations.
According to the department, some findings were shared only within individual divisions and were not escalated to senior leadership, limiting oversight and accountability.
HUD argues that these issues, combined with Richardson’s conviction, demonstrate ongoing weaknesses in the authority’s internal controls and contract oversight.
What Happens Next?
VIHFA has 30 days to request an administrative hearing to challenge the suspension. If no successful appeal is made, the funding suspension could become permanent.
The action represents another step in the Trump administration’s broader effort to strengthen oversight of federal spending and increase scrutiny of agencies responsible for managing taxpayer-funded grant programs.
If upheld, the suspension could significantly affect future federal funding for disaster recovery projects in the U.S. Virgin Islands while investigators continue reviewing the agency’s financial practices.
