The U.S. government has announced the immediate suspension of funding for the U.S. Virgin Islands’ housing authority following a federal investigation that uncovered systemic corruption. The move comes as residents in the U.S. territory continue to struggle with recovery efforts nearly a decade after being devastated by two major hurricanes.
U.S. Housing Secretary Scott Turner stated that despite the territory receiving $1.9 billion in disaster recovery funding nine years ago, only $570,000 has been utilized to date. This represents less than one-third of the allocated funds. In a letter sent on July 20 to the head of the U.S. Virgin Islands’ Housing Finance Authority, the U.S. Department of Housing and Urban Development (HUD) asserted that the territory’s failure has deprived residents of approximately $1.3 billion in intended assistance.
The ongoing HUD investigation has identified multiple failures, including widespread financial mismanagement, false certifications, inadequate fraud controls, and improper payments. In a post on X, Turner criticized officials at the authority, accusing them of prioritizing "kickbacks over helping families recover from disasters." The HUD letter further described the agency's performance as an "abysmal steward of taxpayer funds."
Data from the investigation reveals that the authority has completed only two of the 95 planned single-family rental rehabilitation projects and zero of the 329 planned single and multifamily housing projects. Additionally, as of May, only 2% of funding designated for electrical grid recovery had been spent, while more than half of the grant money earmarked for administrative costs had already been exhausted.
The U.S. Virgin Islands remains in a difficult recovery state following the impact of Category 5 Hurricane Irma in September 2017, followed just two weeks later by Category 5 Hurricane Maria, which struck St. Croix. The authority maintains the right to appeal the funding suspension by requesting a formal hearing.
The controversy is exacerbated by past legal issues involving the authority’s leadership. A former chief operating officer, who previously oversaw disaster recovery programs, is currently serving time in federal prison for fraud and money laundering. According to Turner, this individual inflated a lumber contract from $3 million to $4.5 million to secure a $107,000 kickback, leaving the materials to rot in the sun.
Local leadership has faced mounting pressure regarding these delays. In February, the executive director of the housing authority resigned amid questioning from local legislators regarding $4.2 million in idle funds. Senator Kurt Vialet had previously expressed frustration over the lack of progress, stating that the authority was failing to build despite the urgent needs of the community.
