The U.S. Department of Housing and Urban Development (HUD) announced Monday it has suspended funding for the U.S. Virgin Islands’ Housing Finance Authority following an investigation into systemic corruption, despite ongoing recovery efforts from hurricanes nearly a decade ago.
U.S. Housing Secretary Scott Turner revealed that nine years after the territory received $1.9 billion in disaster recovery allocations, only $570,000—less than 1%—had been utilized. A HUD investigation uncovered “widespread financial mismanagement, inadequate fraud controls, false certifications, and improper payments,” with findings still under review.
A July 20 HUD letter to the authority’s leadership stated the unspent $1.3 billion in funds “deprived Virgin Islanders of assistance Congress intended,” adding that the agency has shown “an abysmal stewardship of taxpayer resources.” To date, the authority has completed just two of 95 planned single-family rental rehabilitation projects and none of 329 single- and multifamily housing initiatives. Electrical grid recovery funding saw only 2% expenditure as of May, while over half of administrative grant funds were reportedly consumed.
The authority is also accused of improperly seeking $6.2 million in disaster aid already reimbursed by FEMA. Former Chief Operating Officer Richard Speight, who oversaw recovery programs, is currently incarcerated for fraud and money laundering related to a $1.5 million kickback scheme involving inflated contracts. Turner alleged on X that Speight manipulated a lumber contract for hurricane rebuilding, inflating costs from $3 million to $4.5 million and pocketing $107,000, while allowing materials to deteriorate unused.
In February, Executive Director Gary Malloy resigned amid scrutiny over $4.2 million in unused funds. Territory Senator Kurt Vialet publicly criticized the authority’s inaction, stating, “You can’t be upset at senators being frustrated” when recovery remains stagnant.