In a statement explaining their decision to suspend federal funding and investigate the V.I. Housing Finance Authority, the U.S. Housing and Urban Development Department cited “findings of widespread financial mismanagement, inadequate fraud controls, false certifications, and improper payments.”
The federal agency noted that VIHFA has received $1.9 billion in disaster recovery funds meant to help the territory rebuild after hurricanes Irma and Maria. Almost nine years later, the local semiautonomous agency has spent less than a third of that. HUD Secretary Scott Turner was quoted as saying that organizations “riddled with corruption, mismanagement, and crime will no longer be allowed to squander billions.”
“Virgin Islands Housing Finance Authority officials cannot be allowed to prioritize kickbacks over helping families recover from disasters,” he stated. “I promised that HUD would be a faithful steward of the American people’s hard-earned money, and we are keeping that promise. Effective immediately, VIHFA is suspended from receiving another cent as we investigate.”
A 13-page letter sent by HUD Deputy Secretary Andrew Hughes to VIHFA Chief Disaster Recovery Officer Dayna Clendinen Monday offered a searing appraisal of the territory’s efforts to recover from the 2017 hurricanes.
“Nine years later,” Hughes wrote, “because of VIHFA’s blatant mismanagement of these critical disaster funds, USVI citizens still do not have the housing and electrical power they were promised nearly a decade ago.”
The letter went on to note the arrest and conviction of former VIHFA Chief Operating Officer Darin Richardson, who was arrested in June 2024 and charged with receiving a $107,000 kickback from a contractor to whom he awarded a HUD-funded contract to manage lumber meant for disaster recovery projects. In May, Richardson was sentenced to three years in prison. The case against two subcontractors who were ultimately responsible for managing the lumber, Davidson and Sasha Charlemagne, has not yet gone to trial.
“To add incompetence to the corruption, VIHFA’s neglect then allowed that lumber to rot in the tropical sun, rendering the lumber unusable and a complete waste of taxpayer funds,” according to Hughes’s letter. “Under these circumstances, it would be irresponsible for the federal government to continue to conduct business with VIHFA.”
The federal agency accused VIHFA of violating its obligations to distribute and manage taxpayer funds while repeatedly failing to meet federal procurement standards and making false statements about its financial management controls and safeguards against conflicts of interest.
“HUD will not accept this record of empty promises and abject failures,” according to the letter, which added that the federal agency’s Inspector General’s Office is investigating potential offenses by the agency, its officers, directors and employees. “VIHFA is suspended from future participation in procurement and nonprocurement transactions, effective immediately, pending the outcome of that investigation. This action applies to any transaction involving VIHFA as a participant or principal, with HUD and throughout the Executive Branch of the Federal Government.”
Monday’s letter recapped findings from multiple audits conducted over the last decade. The most recent of those was released in April and accused VIHFA’s anti-fraud activity of being “disorganized, uncontrolled, and reactive, while other anti-fraud activities expected in a fraud risk management program were absent altogether.”
After referring to the territory’s pace of recovery as “glacial to practically nonexistent” Monday, HUD noted that VIHFA has only spent 29 percent of the $1.9 billion it appropriated. Of that percentage, VIHFA spent 55% on administrative costs alone.
“The yawning gap between VIHFA’s high expenditures on its own administrative costs and low expenditures on the residents of the USVI, who it is supposed to serve, suggests, at minimum, poor management of CDBG-DR funds and is evidence that VIHFA is not presently a responsible program participant,” according to the letter.
The letter concluded by arguing that VIHFA’s funding suspension is necessary to protect the integrity of HUD programs and that the agency’s most recent audit “suggests that no improvement is likely.”
“It is not in the public interest to perpetuate the status quo, i.e., to permit VIHFA to continue to receive additional millions of dollars of federal funds when the evidence suggests that VIHFA is not in compliance with HUD requirements and not presently responsible to participate in government programs,” the letter stated.
The Virgin Islands government and VIHFA have 30 days to contest HUD’s findings. Gov. Albert Bryan Jr. said during a weekly press briefing Monday that they will appeal the suspension.
