HUD Suspends Funding to Virgin Islands Housing Authority, Withholding Nearly $1.3 Billion in Disaster Aid

The U.S. Department of Housing and Urban Development suspended further federal funding to the U.S. Virgin Islands Housing Finance Authority on July 20, 2026. The agency cited widespread financial mismanagement, inadequate fraud controls, false certifications and improper payments.

HUD had allocated nearly $1.9 billion to the authority between 2018 and 2021 to aid recovery after Hurricanes Irma and Maria struck the territory in 2017. As of the suspension date, the authority had spent only $570,000 of those funds, depriving Virgin Islanders of roughly $1.3 billion in intended assistance, according to the suspension letter.

The authority completed only two of 95 planned single-family rental rehabilitation projects and none of 329 single- and multifamily housing projects.

It spent just 2 percent of its electrical grid recovery funding as of May 2026 and directed more than half of grant funds to administrative costs. The authority also sought $6.2 million in disaster-related funds that FEMA had already paid. Former Chief Operating Officer Darin Richardson was sentenced in March 2026 to 36 months in federal prison after his conviction on fraud, money laundering, making false statements and criminal conflict of interest charges.

He inflated a lumber contract from $3 million to $4.5 million and received a $107,000 kickback, leaving the lumber to rot and become unusable. Executive Director Dayna Clendinen resigned in February 2026 amid questions about approximately $4.2 million in unspent funds with a September deadline approaching. Senator Kurt Vialet stated that the Housing Finance Authority is not building.

Housing Secretary Scott Turner wrote on X that officials prioritized kickbacks over helping families recover from disasters. He added that the Trump administration would no longer allow organizations riddled with corruption, mismanagement and crime to receive federal funds. The authority has 30 days from July 20 to request a hearing on the suspension.