The U.S. government announced Monday that it has cut off funding to the U.S. Virgin Islands’ housing authority after investigators uncovered extensive corruption — even as residents there continue to struggle with recovery from two powerful hurricanes that struck nearly a decade ago.
U.S. Housing Secretary Scott Turner revealed that nine years after the territory was awarded $1.9 billion in disaster recovery money, officials have managed to spend only $570,000 — less than one-third of what was allocated.
Turner pointed to a Department of Housing and Urban Development investigation that uncovered what he described as “widespread financial mismanagement, inadequate fraud controls, false certifications and improper payments.” That investigation remains ongoing.
In a letter dated July 20, HUD wrote to the head of the U.S. Virgin Islands’ Housing Finance Authority, stating: “This failure has, to date, deprived Virgin Islanders of roughly $1.3 billion worth of assistance that Congress intended them to have.”
The housing authority’s director and its spokesperson had not responded to requests for comment as of the time of this report. The authority does have the right to challenge the suspension by asking for a formal hearing.
On social media platform X, Turner accused housing authority officials of choosing “kickbacks over helping families recover from disasters.”
The U.S. Virgin Islands was battered by Hurricane Irma, a Category 5 storm, in September 2017. About two weeks later, another Category 5 hurricane — Maria — struck the island of St. Croix. The territory has been working to rebuild ever since.
In its July 20 letter, HUD described the housing authority’s track record as that of “an abysmal steward of taxpayer funds.”
Investigators found that of 95 planned single-family rental rehabilitation projects, only two have been completed. Additionally, zero out of 329 planned single and multifamily housing projects have been finished.
As of May, the authority had used just 2% of the funding set aside for electrical grid recovery, investigators also found.
At the same time, the authority had already burned through more than half of the funds designated for administrative costs, according to the HUD letter.
The authority also faces accusations of seeking $6.2 million in disaster-related funding that the Federal Emergency Management Agency had already paid out.
Federal officials also highlighted that the authority’s former chief operating officer, who was responsible for overseeing disaster recovery programs, is currently serving time in federal prison after being convicted on charges that include fraud and money laundering.
Turner wrote on X that the former official inflated a lumber contract meant to help rebuild hurricane-damaged homes — pushing the cost from $3 million up to $4.5 million — and pocketed a $107,000 kickback “and let the lumber rot in the sun, rendering it useless — a waste of taxpayer funds.”
In February, the executive director of the housing authority stepped down amid questions from local lawmakers about why approximately $4.2 million in funds had been sitting untouched as a September spending deadline approached.
At the time, Sen. Kurt Vialet publicly criticized the former director, accusing him 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 by the St. Thomas Source, a local news outlet.
