New York City Mayor Eric Adams' government has filed a lawsuit against the Trump administration, seeking to reclaim over $80 million in federal funding that was allocated under former President Joe Biden to support the city's efforts in housing asylum seekers.
The lawsuit, filed in Manhattan federal court, alleges that the funds were rescinded without notice or due process, describing the action as an unlawful "money grab." The lawsuit also contends that the administration's action violated federal regulations and the terms of the Shelter and Services Program (SSP) grant, which was intended to reimburse the city for costs already incurred in providing shelter to migrants.
Adams' legal challenge comes just days after the The Justice Department's decision to dismiss corruption charges against him for federal bribery and fraud charges.
According to city officials, FEMA initially transferred the funds—totaling approximately $80.5 million—into a New York City bank account on February 4. However, following a social media post by Elon Musk that criticized the allocation of federal funds for migrant assistance, the Trump administration took steps to rescind the payment, as The New York Times explains.
On February 11, city accountants discovered that the money had been withdrawn overnight through an Automated Clearing House (ACH) reversal—a common banking mechanism typically used for correcting erroneous transactions.
City Comptroller Brad Lander accused the administration of "weaponizing government payments" and asserted that his office had pressured Adams to move forward with legal action. "After my office discovered that Elon Musk and his DOGE goon squad stole $80 million out of the City's coffers, we successfully pressured Mayor Adams to allow the City's lawyers to sue the federal government to get our money back," Lander said in a statement.
Adams defended the lawsuit, stating that the cost of managing the influx of over 231,000 asylum seekers should not fall solely on New York City. "Without a doubt, our immigration system is broken, but the cost of managing an international humanitarian crisis should not overwhelmingly fall onto one city alone," he said. He further asserted that FEMA's funding was "the bare minimum our taxpayers deserve."
The Trump administration's justification for rescinding the funds remains contested. Kristi Noem, the Secretary of Homeland Security, took credit for the reversal, claiming that FEMA officials had improperly allocated the funds to New York City.
A subsequent letter from FEMA's acting director, Cameron Hamilton, warned that additional funding—totaling over $188 million—might also be withheld due to concerns that SSP funds were being used to support "entities engaged in or facilitating illegal activities." The letter cited a media report alleging that a Venezuelan gang had taken control of a major migrant shelter in the city, a claim New York officials have denied.
City lawyers argue that the administration's stated concerns were merely a pretext for permanently withholding funds based on political opposition to New York's migrant assistance programs. In addition to seeking the return of the rescinded $80.5 million, the lawsuit aims to prevent further federal withdrawals from city bank accounts.
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