HUD Halts Millions in Funding to Philadelphia Housing Authority

Feb. 8, 2011 — -- Federal housing officials have suspended millions of dollars in funding to the Philadelphia Housing Authority as federal investigators continue to examine a wide array of allegations of questionable payments made by the nation's fourth largest public housing agency.

In a letter to the Philadelphia Housing Authority, the Department of Housing and Urban Development notified PHA that it would withdraw money for contracts related to "labor and employment legal services" until the agency can provide additional information documenting the expenses.

The suspension, first reported by the Philadelphia Inquirer, comes after a joint investigation by ABC News and the Center for Public Integrity found that the Department of Housing and Urban Development has struggled to combat waste, mismanagement and corruption mismanagement in the more than 3,000 public housing agencies nationwide it funds, including the Philadelphia Housing Authority.

CLICK HERE TO WATCH A NIGHTLINE REPORT ON TROUBLED PUBLIC HOUSING

Under the leadership of former executive director Carl Greene, the Philadelphia housing authority spent lavishly on gifts for managers and a party with belly dancers, and secretly spent more than $500,000 in housing authority funds to settle sexual harassment claims against Greene. Greene was forced out of his $306,000 per year job in September after the housing authority's board of commissioners concluded that he was a "true serial sexual harasser" whose sought to conceal the payments from the board.

CLICK HERE TO READ A STATEMENT FROM CARL GREENE'S LAWYER

The housing authority, which receives most of its annual budget of $345 million from the federal government, has attracted the scrutiny of Congressional and federal investigators as a scandal involving allegations of waste, misconduct, and questionable spending unfolded this fall. Under Greene, the Philadelphia Housing Authority had spend more than $33 million in fees to politically-connected law firms over a three year period, according to the Inquirer.

The ABC News joint investigation found that the problems extend beyond Philadelphia, from an executive in New Orleans convicted of embezzling more than $900,000 in housing money around the time he bought a lavish Florida mansion to federal funds wrongly being spent to provide housing for sex offenders or to pay vouchers to residents long since dead.

CLICK HERE TO READ THE CENTER FOR PUBLIC INTEGRITY'S INVESTIGATION

"We're failing these tenants, we're failing the taxpayers," said Kenneth Donohue, who recently retired as the HUD inspector general in charge of rooting out waste, fraud and abuse from the federal housing program.

CLICK HERE TO READ ABOUT EXCESSES AT THE PHILADELPHIA HOUSING AUTHORITY

The same month as one of the housing authority's parties, 12-year-old Ebony Gage suffered a near-fatal asthma attack that occurred after her mother says poorly trained housing authority inspectors failed to properly inspect her home for dangerous mold. The PHA later settled with Ebony's mother for $9.6 million, but denied any wrongdoing.

CLICK HERE TO WATCH A VIDEO ABOUT EBONY GAGE

A HUD spokeswoman declined to comment on Tua's allegations, citing a lawsuit brought by Sanford public housing tenants who are fighting the housing authority and HUD on the proposed demolition of two of the five projects.

John Solomon is executive editor of the Center for Public Integrity, a nonprofit, investigative reporting outlet in Washington, D.C.

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