The US government has suspended funding for the US Virgin Islands’ housing authority after an investigation found widespread corruption, as residents still struggle to recover from two major hurricanes that hit nearly a decade ago.
US Housing Secretary Scott Turner said that nine years after the US territory received $1.9 billion in disaster recovery funding, it has spent only $570 million — less than a third of the funds.
A HUD investigation found “widespread financial mismanagement, inadequate fraud controls, false certifications and improper payments.”
“This failure has, to date, deprived Virgin Islanders of roughly $1.3 billion worth of assistance that Congress intended them to have,” stated a July 20 letter HUD sent to the housing authority.
What HUD Found
The investigation found the housing authority completed only two of 95 planned single-family rental rehabilitation projects and zero of 329 single and multifamily housing projects.
The authority had spent only 2% of its electrical grid recovery funding as of May. Meanwhile, it spent more than half the grant funds slated for administrative costs.
The authority also sought $6.2 million in disaster-related funds that FEMA had already paid.
HUD’s letter said the authority’s “record demonstrates that it is an abysmal steward of taxpayer funds.”
Kickbacks and Corruption
The authority’s former chief operating officer, who oversaw disaster recovery programs, is in federal prison after being convicted on fraud and money laundering charges.
Turner wrote on X that the former COO inflated a lumber contract meant to rebuild hurricane-damaged homes from $3 million to $4.5 million and took a $107,000 kickback “and let the lumber rot in the sun, rendering it useless — a waste of taxpayer funds.”
Turner accused officials of prioritizing “kickbacks over helping families recover from disasters.”
The Hurricanes
The US Virgin Islands were struck by Hurricane Irma, a Category 5 storm, in September 2017. Roughly two weeks later, Hurricane Maria, also a Category 5 storm, struck St. Croix. The territory is still struggling to recover.
The Authority’s Response
The housing authority’s director and spokesperson did not immediately return messages seeking comment. The authority has the right to appeal the suspension by requesting a hearing.
In February, the executive director resigned as local legislators questioned why some $4.2 million remained idle. Sen. Kurt Vialet accused the former director of “just sitting there with a smug look.”
“The Housing Finance Authority is not building. You can’t be upset at senators being frustrated,” Vialet was quoted as saying.
The Bottom Line
The US has suspended $1.9 billion in disaster recovery funds for the US Virgin Islands’ housing authority after an investigation found widespread corruption and mismanagement. Nearly a decade after Hurricanes Irma and Maria, the territory has spent only $570 million of the funds. The authority completed just two of 95 planned housing projects, and its former COO is in prison for fraud. The authority can appeal the suspension.
