US Suspends Sending Funds to Virgin Islands Housing Authority, Citing Corruption

The U.S. government moved Monday to suspend funding for the U.S. Virgin Islands Housing Finance Authority after investigators uncovered what officials called widespread corruption, leaving residents still struggling to rebuild from the twin Category 5 hurricanes that slammed the territory nearly a decade ago.

Housing Secretary Scott Turner announced the suspension, saying an investigation by the Department of Housing and Urban Development (HUD) found “widespread financial mismanagement, inadequate fraud controls, false certifications and improper payments.” The probe remains ongoing.

Nine years after Congress approved $1.9 billion in disaster recovery money, the authority has spent just $570 million, representing less than one-third of the total.

“This failure has, to date, deprived Virgin Islanders of roughly $1.3 billion worth of assistance that Congress intended them to have,” the department said in a July 20 letter to the head of the Virgin Islands Housing Finance Authority.

The letter went further, declaring the authority’s “record demonstrates that it is an abysmal steward of taxpayer funds.”

The authority did not immediately return a request for comment.

The numbers show a stalled recovery. Investigators found the authority completed only two of 95 planned single-family rental rehabilitation projects and none of 329 single- and multi-family housing projects. As of May, it had spent just 2 percent of its electrical grid recovery funding. At the same time, more than half the grant money set aside for administrative costs had already been spent.

The authority also sought $6.2 million in disaster-related funds that the Federal Emergency Management Agency had already paid.

Turner accused officials on social media of prioritizing “kickbacks over helping families recover from disasters.”

The authority’s former chief operating officer, Darin Richardson, who oversaw disaster recovery programs, is currently in federal prison after convictions on fraud and money-laundering charges. According to Turner, that official inflated a lumber contract meant to rebuild hurricane-damaged homes from $3 million to $4.5 million, took 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, Eugene Jones Jr., resigned as local legislators pressed questions about $4.2 million that remained untapped with a September spending deadline approaching. State 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 by the St. Thomas Source, a local news site.

Hurricane Irma, a Category 5 storm, struck the U.S. Virgin Islands in September 2017. Roughly two weeks later, Hurricane Maria, also a Category 5, hit St. Croix. The territory has yet to fully recover.

The Associated Press contributed to this report