Philadelphia Housing Authority Failed to Account for Millions in Federal Funding

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Longstanding Problems At PHA

Greene had been widely heralded for his leadership in revitalizing many of the city's crime-ridden public housing projects, but former employees and housing residents say that Greene's highly-publicized success masked longstanding internal problems at the agency.

A 2007 lawsuit exposed deficiencies within the housing authority's program to help low-income families afford safe and sanitary housing in the private rental market.

Twelve year old, Ebony Gage, suffered severe brain damage from an asthma attack while living in a home under the authority's subsidized housing program, more commonly known as Section 8.

Gage's mother, Angelique McKinney, told ABC News that poorly trained housing authority inspectors failed to detect dangerous mold that had built up from years of unrepaired water leaks throughout the house. She says that the housing authority employees handling her case were unresponsive to her pleas for help.

"Nobody cared. The representatives down there, they look at you like, 'Oh well, it's not our problem,'" said McKinney.

CLICK HERE to watch a video about Ebony Gage.

Deposition testimony in the case revealed that several housing inspectors and other Section 8 program employees were largely unaware of the harmful effects of mold.

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"They weren't trained on how to identify mold. They didn't know what mold looks like. Many of the inspectors actually say that they didn't know there was testing available to test a home for mold," said Mike Trunk, an attorney for the family.

Philadelphia Housing Authority Paid $9.6 Million

The housing authority settled the case for $9.6 million last May, but did not admit any wrongdoing.

"There were no judicial findings or admissions supporting the allegations," said PHA spokeswoman Nichole Tillman. "PHA continues to be concerned about the health of its residents and goes above and beyond what is legally required. PHA has long had mold inspection and remediation procedures in place."

In another pair of lawsuits filed this fall, former employees and Section 8 landlords claimed that they were coerced into making payments to non-profit "slush funds" set up by Greene and top aides to fund parties and lobbying.

The housing authority's interim executive director, Michael Kelly, told ABC News that he believes the agency to be in good shape, but said that he is working to build a "culture of respect" among employees.

"There are opportunities to build up the culture of the organization and to build up the public confidence by making sure what we do here is done in a very transparent and accountable manner," said Kelly. "This is not an agency that will tolerate this kind of management by coercion."

Greene's attorney, Clifford Haines, said in a letter to ABC News that Greene's decision to give "briefcases" to "the people who performed exceptionally well" "makes PHA no different from hundreds of other agencies, business and corporations throughout the Commonwealth of Pennsylvania and the country that occasionally reward their employees."

Haines also said that allegations alluded to in ABC News reporting "are now the subject of litigation either by Mr. Greene or others." Said Haines, "The formal discovery process will reveal facts that strongly contradict what has been said and published by members of the press."

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