New York City has filed a lawsuit against the Trump administration, seeking to recover $80.5 million in federal funds that were clawed back by the Federal Emergency Management Agency (FEMA).
The funds, originally allocated to cover migrant shelter costs, were withdrawn from a city bank account without notice on February 11, according to court documents filed Friday in Manhattan federal court. The lawsuit names President Donald Trump, Treasury Secretary Scott Bessent, and Homeland Security Secretary Kristi Noem as defendants.
“On Tuesday, February 11, 2025, at 4:03 p.m., the long arm of the federal government reached into a central bank account of the City of New York and grabbed $80,481,861.42,” the complaint states. “It took these funds from the City without any advance notice that it would be doing so and without communicating any decision or rationale to the City.”
The withdrawal follows a social media post by Trump adviser Elon Musk, who claimed that $59 million of the FEMA funds had been used to house migrants in “luxury” hotels. “Sending this money violated the law and is in gross insubordination to the President’s executive order,” Musk wrote on February 10.
The next day, Noem confirmed the reversal, stating, “I have clawed back the full payment that FEMA deep state activists unilaterally gave to NYC migrant hotels.”
The city has rejected these claims, calling Musk’s statements “filled with inaccuracies” and disputing allegations that a Venezuelan gang had used the Roosevelt Hotel, a major migrant shelter, as a base of operations.
Mayor Eric Adams defended the lawsuit, arguing that the funds were rightfully allocated to the city.
“The $80 million that FEMA approved, paid, and then rescinded—after the city spent more than $7 billion in the last three years—is the bare minimum our taxpayers deserve. And that’s why we’re going to work to ensure our city’s residents get every dollar they are owed,” Adams said in a statement.
City officials said the withdrawal was executed through the Automated Clearing House (ACH) payment system, which allows senders to reverse transfers within a short time frame under certain conditions. The lawsuit argues that FEMA’s reversal violated federal regulations and the terms of the Shelter and Services Program grant.
On February 19, a letter from FEMA acting director Cameron Hamilton warned that the agency could withhold an additional $188 million in migrant support funds, citing concerns over potential misuse. The lawsuit claims the letter was an after-the-fact justification for what it calls an unlawful “money grab.”
The case, filed in the U.S. District Court for the Southern District of New York, seeks the return of the funds and an injunction preventing further withdrawals from city accounts.
