In LAHSA v. Donald Trump, et al, Los Angeles Homeless Services Authority (LAHSA) and the Los Angeles Continuum of Care (LA CoC) filed a lawsuit against the federal government, naming President Donald J. Trump and the U.S. Department of Housing and Urban Development (HUD) as defendants. This suit is in response to the June 11, 2026 abrupt order from HUD that had suspended LAHSA’s mandated role as the collaborative applicant that had been managing the region’s federal homelessness grant applications. HUD explained this defunding by pointing to a two-decade history of “obvious fraud”, gross financial mismanagement, undisclosed conflicts of interest, and a severe failure to pay local shelter providers $69 million (according to the overdue balance specified in LA County Auditor-Controller’s review in 2026). The latter has meant that many shelters were already on the brink of bankruptcy before HUD blocked LAHSA’s funds.
The recent appeal is primarily objecting that the defunding occurred after LAHSA had already been funded by HUD for the 2024-6 period. The sudden withdrawal means the Los Angeles region anticipated receiving $239 million federal funding that will no longer be accessible, leading to a looming crisis among LA shelters. The first filing was successful in convincing the California U.S. District Court to issue a preliminary injunction o force HUD to reinstate LAHSA’s role and to disburse the promised $239 million. However, the latest September 2026 ruling in the U.S. Court of Appeals for the Ninth Circuit denied the motion to remove LAHSA (because it was too abrupt, given that HUD knew about corruption in LAHSA across the past decades), but upheld HUD’s right to block paying the $239 million (because HUD had invited shelters to apply directly with them, instead of using LAHSA as a corrupted gatekeeper). Though the latter excuse is problematic because HUD has admitted it had not received any successful direct applications through its special portal from shelters that now cannot apply through LAHSA: these small entities have not hired any grant writers after decades of allowing LAHSA to handle this work for them.
Back in the 2007 HUD audit, regulators found that LAHSA failed to conduct onsite fiscal monitoring of project sponsors, lacked required documentation, paid for ineligible expenses, and had poor cash management controls. Then in the 2022 HUD audit, it found that LAHSA had allowed $3.5 million in Continuum of Care (CoC) grant awards expire unused, missed performance deadlines, and lacked documentation for over $870,000 in internal payroll and rent costs. Fraud allegations against LAHSA accuse it of over-requesting funding from HUD and inappropriately shifting cash balances between different grants to mask deficits. And a 2026 review found that LAHSA had undisclosed conflicts of interest in direct personal ties between LAHSA’s CEO and awardees.
While LAHSA is a notoriously corrupt example, HUD has filed similar funding blocks against many other agencies and states that have no such records of corruption. In response, the attorneys general of states including Washington, New York California and Rhode Island have successfully sued HUD to block their attempts to rapidly change funding rules. These successful lawsuits have explained that HUD has attempted to decrease funding by 90% while implementing pre-conditions on homelessness aid (i.e., mandatory job training or drug treatments). Federal judges have blocked these rule-changes nationwide.
There have been a few failed attempts to stop corruption at LAHSA, such as the LA City Council’s 2023 issue of restrictions when it learned LAHSA was not tracking when homeless people left hotel housing, and thus was receiving public funds for empty hotel rooms. And in 2025, the LA County Board of Supervisors voted to defund LAHSA starting on July 1, 2026 because it was routinely late in paying shelters (the source of the $69 million figure), which had caused 284 layoffs. HUD’s attempts to suddenly withdraw funding has been met with expected blocks by courts because they threaten to leave thousands of homeless people stranded. It seems as if HUD’s organizers are deliberately attempting to prove corruption investigations or funding withdrawals from mismanaging entities is impossible by applying a maximally irrational approach in their ironic attempt. The LA homelessness funding system is indeed in need of an overhaul as the homeless are being blocked access to resources that are being eaten up by corrupt middlemen. But switching middlemen by instead forcing the homeless or the minor homelessness agencies to apply directly through a far more inefficient and likely more corrupt federal portal is obviously the wrong approach. There must be some way to disburse assistance systematically. There should be buildings that just provide housing to those who can meet minimum requirements to prove they need it. Homelessness is solved by providing homes, not by wasting most of the funding for this problem on self-dealing administrators.
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