Investigation widens on Philly Housing Authority contractors and lawyers

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A document circulated the Department of Housing and Urban Development, includes new details about the federal government’s investigation into allegations of financial irregularities in the Philadelphia Housing Agency, while under the direction of its former executive director, Carl R. Greene.

Greene was fired in September, after its governing board learned that the agency secretly paid $648,000 to settle claims of three women who accused him of sexual harassment. One of those women, who settled her claim for $350,000, has since filed another claim for $600,000, alleging further intimidation and harassment after she left the agency.

In the five months since Greene was fired, a total of 10 lawsuits have been filed against the PHA, charging Greene and the organization with sexual harassment, fraud, theft and wrongful termination.

The HUD document, obtained by the Philadelphia Inquirer under the Freedom of Information Act, is a request for bids from auditing firms that it plans to hire, and augment the effort currently in process by its own internal auditors.

The audit scope of engagement is to examine the agency for evidence of “fraud, waste, and abuse,” to determine is anyone “misappropriated assets for personal gain,” and whether the agency was overcharged for services, including legal work and tenant services. The HUD audit of the PHA will cover the period from April 1, 2005 through March 31, 2010.

The audit also seeks to determine if all PHA policies and procedures were adhered to, and if legal and accounting standards were followed, including by “non-federal agencies” doing work for the agency.

Auditors are also expected to examine transactions between PHA and related entities. A non-profit, controversial agency called the Pennsylvania Association of Public Service Agencies, was formed by Greene after he left the PHA and has since collapsed under scrutiny by HUD officials.

HUD spokesman, Jereon M. Brown said that the audit assignment is expected to be awarded next month, most likely to a large, national CPA firm with forensic expertise. The last time a full forensic audit was conducted occurred in 2007, when HUD took over the local operations of the Miami-Dade County Housing Authority. There, federal investigators found several developers who were involved in stealing monies from the agency through fraudulent development deals.

The HUD document also disclosed that other agencies, including the Justice Department and the FBI are conducting their own investigations of the alleged corruption in the PHA under Greene.

The U.S. Attorney’s office in Philadelphia recently subpoenaed records from two nonprofits affiliated with PHA. The firms are Tenant Support Services Inc., run by Asia Coney, a public-housing resident leader and an associate of Greene’s, and the Philadelphia Asset & Property Management Corp., which manages 1,600 public-housing units financed via private and public sources.

Under a separate investigation, is PHA’s payment of what many consider to be excessive legal fees paid to outside firms during the last several years. Between 2007 and 2010 alone, $33 million was paid to 20 Philadelphia law firms. Greene got rid of most of the agency’s in-house lawyers, and turned over the legal work to high-priced outside firms. In 2002, HUD questioned the practice, but didn’t take any action.

The inquiry into its legal fees is being headed by U.S. Sen. Charles E. Grassley, the ranking Republican on the Senate Finance Committee.

PHA interim director Michael P. Kelly said the agency will cooperate fully with the finance committee, and asked all the firms to release non-confidential records and information including personnel used, rates and a description of services. He also vowed to bring much of the legal work back into the agency and strike an “appropriate balance” between in-house lawyers and outside counsel. This year, he said, legal fees have been reduced by about 15 percent.

Greene was the executive director of the agency since 1998, previously employed in the same position with the Detroit Housing Commission. Before that, he worked with other major city housing authorities in senior positions, including Atlanta and Washington, D.C. For the year 2010, Greene was to earn $350,000, more than the salaries of the mayor of Philadelphia and the Governor of Pennsylvania, combined.

The Philadelphia Inquirer

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