NEW YORK — New York City Mayor Eric Adams filed a lawsuit Friday against President Donald Trump and others in his administration over $80 million the White House removed from a city bank account without permission, after Elon Musk threatened the withdrawal on X.
The clawback earlier this month flummoxed local officials and instilled fear the Trump administration could wreak havoc on the municipal purse of a Democratic city with a $115 billion budget.
Friday’s suit marks a rare instance of public opposition to the Republican White House from a Democratic mayor who has gone to great lengths to avoid criticizing the president as he sought Trump’s assistance in his federal corruption case, which Trump’s Justice Department has moved to dismiss.
That dynamic that has led to calls for Adams to be removed, prompted the resignation of top aides and spurred Gov. Kathy Hochul to propose legislative guardrails around his leadership this week.
In its suit, the city is alleging Trump’s team violated federal laws, grant terms and regulations when they reversed the transfer of $80.5 million that had already made its way into a City Hall bank account. Congress approved the funds, which were earmarked for immigrant services. City attorneys are asking for the cash to be restored and for the Trump administration to be enjoined from a similar seizure going forward.
“Defendants have acted lawlessly, but have attempted, after the fact, to mask this fact with a semblance of following procedure,” city Corporation Counsel Muriel Goode-Trufant wrote in a complaint filed in federal court.
Goode-Trufant alleges federal officials had no grounds to claw back the cash when they invoked a provision in federal banking laws to reverse its payment. The funding was provided through an initiative called the Shelter and Services Program (SSP) run by the Department of Homeland Security.
“The statements could not be clearer: Defendants’ purpose for grabbing back the funds was not related to the City’s specific expenditures at all, but to thwart the very purpose of the SSP,” Goode-Trufant wrote.
She alleged DHS and FEMA removed the money without following the applicable procedures per federal law, and sent the city a letter laying out concerns money was going to illegal activities — without providing any concrete examples — after the feds had already seized the cash.
“The letter is meant to look like it affords the requisite administrative process when, in fact, the decision has already been made to deny payment to the City because Defendants do not want to pay the City for providing the very services to the very people for the very purposes that Congress appropriated the funds and FEMA awarded the grants and approved and made the payments,” Goode-Trufant wrote.
The city further claimed Trump officials misrepresented their intentions in a separate legal case regarding the federal government’s authority to freeze funds earmarked for states.
DHS and FEMA did not immediately respond to a request for comment.
The saga began at 5 a.m. Feb. 10, when Elon Musk said in a post on X that DOGE had discovered $57 million sent by FEMA for “luxury hotels in New York City to house illegal migrants. Sending this money violated the law and is in gross insubordination to the President’s executive order.” He added the money was meant for disaster relief for Americans.
While the money was paid out by FEMA, it originated from a DHS program meant to reimburse state and local governments for services for non-citizen immigrants. In other words, it had nothing to do with disaster relief. And rather than a luxury hotel, the funds were used to pay a FEMA-approved per-person rate for lodging, according to the suit, in this case at the Roosevelt Hotel in Midtown Manhattan.
Homeland Security Secretary Kristi Noem had said the Roosevelt was being used as a base for the Venezuelan gang Tren de Aragua. The NYPD has said the gang has been recruiting members from city shelters and that members of an offshoot organization have stayed at the Roosevelt.
Despite Musk’s mischaracterization of the payment, the Trump administration sacked four FEMA officials responsible for carrying out the transfer.
A day after Musk’s post, city officials said they discovered $80 million missing from their bank account — along with a $15,000 overdraft fee that City Hall said has since been cancelled.
According to Friday’s lawsuit, the money had been transferred to the city account on Feb. 4.
Jeff Coltin contributed to this report.
