California’s Latest HUD Fiasco: Another Massive Abuse Of Taxpayer Dollars

A damning U.S. Housing and Urban Development (HUD) report exposed $5.8 billion in questionable rental assistance payments in FY 2024 under the Biden administration—over 11 percent of nearly $50 billion disbursed nationwide.

The 183-page Agency Financial Report detailed payments to about 30,000 deceased tenants, thousands of potentially ineligible non-citizens, and over 200,000 recipients exceeding income limits. California, New York, and Washington, D.C., had the largest concentrations of these improper payments.

HUD Secretary Scott Turner called it “massive abuse of taxpayer dollars. The Trump administration is now cracking down by pausing funds, issuing criminal referrals, and deploying AI fraud detection through the HUD Unified Grants System.

“A massive abuse of taxpayer dollars not only occurred under President [Joe] Biden’s watch, but was effectively incentivized by his administration’s failure to implement strong financial controls resulting in billions worth of potential improper payments,” Secretary Turner said in a statement.

“HUD will continue investigating the shocking results and will take appropriate action to hold bad actors accountable. Additionally, the Department is advancing efforts made under President Trump’s first administration to strengthen program integrity and ensure taxpayer-funded assistance serves the vulnerable communities it was intended for.”

As The Globe previously reported, these reforms extend to homelessness programs and triggered a legal backlash from Governor Gavin Newsom.

“Governor Newsom filed a lawsuit today as part of a multi-state coalition challenging the Trump administration’s sudden slash of funding for permanent housing programs, threatening housing access for tens of thousands of vulnerable Californians.”

Compare Newsom’s statement with U.S. Department of Housing and Urban Development (HUD) Secretary Scott Turner’s:

In accordance with President Trump’s Executive Order, “Ending Crime and Disorder on America’s Streets,” this Notice of Funding Opportunity restores accountability to homelessness programs and promotes self-sufficiency among vulnerable Americans. It redirects the majority of funding to transitional housing and supportive services, ending the status quo that perpetuated homelessness through a self-sustaining slush fund.

That’s really what Gavin Newsom is upset about – his homelessness slush fund is coming to an end after wasting $37 billion to subsidize homelessness, $37 billion of taxpayer funding, while failing to track how those billions were spent.

Gov. Newsom spent $37 billion on homelessness since 2019, according to the March 5, 2025 report from the California Legislative Analyst’s Office. Who knows what that total is now.

On November 25, 2025, Newsom joined a multistate lawsuit against HUD’s changes to the 2025 Continuum of Care (CoC) funding rules, labeling them “cruel cuts” that threaten permanent housing for vulnerable Californians—seniors, families, veterans, and the disabled.

The suit targets new caps, of which Newsom calls “cruel cuts” on permanent supportive housing spending, requirements for self-sufficiency and accountability (per Trump’s executive order on street disorder), and a shift toward proven strategies over strict “Housing First” models.

As a result, California stands to lose $250–300 million from its $683 million CoC allocation, risking thousands of housing units and a never-ending slush fund of disappearing money.

For a comparison of likely and related fraud within this slushfund, there is evidence and recent legal precedent across the country in New York.

The NY Post reports:

By February 2024, midway through the 2024 fiscal year, federal prosecutors in the Southern District of New York ended up charging 70 current and former employees of the New York City Housing Authority — the largest in the country — for taking cash kickbacks from contractors.

US Attorney Damian Williams declared that the end of the decade-long scheme, comprising as much as $2 million in corrupt payments and $13 million in no-bid contracts, was “the largest single-day bribery takedown in the history of the Justice Department.”

NYCHA provides rental assistance to more than half a million New Yorkers and took $3.86 billion in HUD funding in 2023, per a March 2025 HUD OIG audit, which found federal funds going to it were at “greater risk of fraud” due to a lack of safeguards and guidance.

California, with $8.3 billion in HUD aid supporting 560,000 households in 2023, the highest rent prices in the nation, approximately 187,000 homeless, perhaps diverting funds from fraud to effective programs could help far more residents?

An audit conducted by the California Legislative Analyst’s office determined that eight state agencies were “High Risk” for fraud, waste and abuse, and many of the agencies cited were found to be “High Risk” for consecutive years. The amount of “High Risk” agencies have doubled under Newsom’s watch. Evidently, corrective actions were simply ignored.

California received twice the funds as the NY City Housing Authority. How many millions were in corrupt payments and no-bid contracts that may lead to the next and even larger single-day bribery takedown in the history of the Justice Department?

According to U.S. Attorney Bill Essayli, the investigation has begun, is ongoing, and initial indictments have been filed.