HUD OIG Finds VIHFA Lacks Effective Fraud Risk Management Over Nearly $2 Billion in Grants

The title of a March 24 report of the Housing and Urban Development Office of the Inspector General lays out the document’s premise in stark terms: “The U.S. Virgin Islands Housing Finance Authority's Fraud Risk Management Practices Are At or Below The Lowest Desired Level.”

The findings come from an audit of the agency’s framework for preventing, detecting, and responding to fraud as it administers almost $2 billion in block grant funding. The high level conclusion? “VIHFA does not have fraud risk management processes to prevent and detect fraud risks,” the report states, referring to fraud prevention practices at the agency as “ad hoc” or worse. The audit, conducted between April and June 2025, covered the agency’s operations from September 2018 through March 2025.

According to the HUD OIG report, while anti-fraud efforts at VIHFA do exist, they are “unstructured and reactive.” On a holistic level, the agency “has not effectively established a program to combat fraud,” the report says. The internal divisions within the agency “appear to operate in silos which hinder communication and the effective management of fraud risks,” it continues. The friction in internal communication has led to the established policies against fraud, waste, and abuse not being adequately implemented across the agency, the OIG found.

The report notes that of ten VIHFA officials interviewed during the audit, eight of them “did not know what types of fraud schemes their programs are susceptible to.” At least one official told the audit team that they wished for more fraud training, but felt that they could not voice that desire to management "because fraud is a sensitive subject at VIHFA and around the island now.” The agency has been accused of faking bids and fabricating records in a procurement dispute set for trial later this year. Last month, former agency COO Darrin Richardson was sentenced to prison last month for his role in a $4 million fraud scheme involving HUD funds. Even after his conviction in 2025, “interviewed officials did not know or have a clear understanding of the process to follow when reporting instances of fraud or suspected fraud,” the audit found.