By JOHN McCARTHY / V.I. Free Press News Reporter
CHARLOTTE AMALIE — In what has rapidly escalated into one of the most severe federal enforcement actions in modern territory history, the U.S. Department of Housing and Urban Development (HUD) has branded the U.S. Virgin Islands Housing Finance Authority (VIHFA) an entity “riddled with corruption, mismanagement, and crime”—with national coverage labeling the territory the “Minnesota of the Caribbean.”
The moniker, referencing sweeping mainland federal fraud crackdowns, comes on the heels of a 13-page administrative order signed by HUD Deputy Secretary Andrew Hughes and issued by HUD Secretary Scott Turner, suspending VIHFA from receiving any additional federal funds effective immediately.
The suspension freezes access to the remainder of $1.9 billion allocated to the territory following Hurricanes Irma and Maria—a sum equating to roughly $20,000 for every USVI resident.
“Virgin Islands Housing Finance Authority officials cannot be allowed to prioritize kickbacks over helping families recover from disasters,” Secretary Turner said in a public statement. “Nine years later, because of VIHFA’s blatant mismanagement… USVI citizens still do not have the housing and electrical power they were promised.”
THE DAMNING NUMBERS: 0-FOR-329
While local officials have attempted to frame the action as an administrative dispute, the specific audit figures detailed in HUD’s order outline a historic failure of agency execution:
- Zero Completed Housing Projects: Out of 329 planned mitigation and housing construction projects, HUD revealed that VIHFA has completed zero.
- Overhead vs. Execution: Of the $570 million spent by VIHFA so far (just 29% of its total allocation), over 55% ($52.6 million) was consumed purely by agency administrative costs rather than direct aid to displaced families.
- 2% Grid Progress: Nine years after the storms, VIHFA has managed to expend just 2% of its assigned electrical power grid disaster recovery funds.
KICKBACKS, ROTTING LUMBER & IGNORED FRAUD
The federal suspension heavily cited the criminal conviction of former VIHFA Chief Operating Officer Darin Richardson, who accepted a $107,000 kickback after inflating a disaster-aid lumber contract from $3 million to $4.5 million. According to HUD officials, millions of dollars worth of lumber acquired under the deal was subsequently left to rot in the tropical sun.
Furthermore, HUD’s Office of Inspector General revealed a culture of internal silence. Audits found that lower-level VIHFA employees had direct knowledge of suspected fraudulent activity, but internal division directors “sat on the findings” rather than escalating them to law enforcement or senior management.
HUD also cited instances where VIHFA made “false certifications” regarding its fraud controls and attempted to claim duplicate benefits for funding already covered by FEMA.
30-DAY APPEAL CLOCK TICKING
The Territory has 30 days to formally appeal HUD’s decision, which Governor Albert Bryan Jr. confirmed his administration intends to do. However, with Senate President Milton Potter facing calls to convene a legislative Committee of the Whole, and Delegate Stacey Plaskett pressing federal agencies on structural reform, the territory faces an uphill battle to restore federal trust before the suspension becomes permanent.
WHAT WE KNEW AND WHEN WE KNEW IT:
1. The Shocking Construction & Completion Numbers
- Project Zero: Out of 329 planned single and multifamily housing projects funded after Hurricanes Irma and Maria, the VIHFA has completed ZERO.
- Rental Rehab Failures: Out of 95 planned single-family rental rehabilitation projects, only 2 have been completed in nine years.
- Grid Recovery Stagnation: As of May, VIHFA had spent only 2% of its allocated electrical grid recovery funding.
2. Financial Mismanagement & “Double Dipping”
- Burn Rate vs. Admin Costs: Out of the $1.9 billion allocated, VIHFA spent only $570 million (29%). Crucially, of the funds actually spent, over 55% went strictly toward VIHFA’s internal administrative costs rather than direct aid to residents.
- Double Billing FEMA: HUD specifically accused the VIHFA of attempting to claim $6.2 million in disaster-related funds that FEMA had already paid out.
3. The Darin Richardson Kickback Scheme Details
- While we knew former Chief Operating Officer Darin Richardson was convicted of federal fraud/money laundering, HUD Secretary Scott Turner publicly detailed the exact mechanism on X: Richardson inflated a HUD-funded lumber contract from $3 million to $4.5 million, took a $107,000 kickback, and “let the lumber rot in the sun, rendering it useless.”
- HUD’s Inspector General also revealed that internal VIHFA staff had personal knowledge of the suspected fraud but failed to notify senior management or conduct internal investigations.
4. National Comparison & Fox News Angle
- In federal correspondence, HUD officials referred to the USVI’s handling of federal funds as the “Minnesota of the Caribbean,” linking the oversight action to broader federal anti-fraud crackdowns (such as the Feeding Our Future investigation in Minnesota).