PHILADELPHIA Three years after Carl R. Greene was fired as executive director of the Philadelphia Housing Authority, new details have emerged in an ongoing federal criminal probe into whether he used public assets for personal gain.
The information is included in a motion to dismiss a defamation lawsuit filed by Greene in September 2011 against the parent company of The Inquirer and the Philadelphia Daily News.
Lawyers for the newspapers submitted documents - including federal grand jury subpoenas, confidential PHA correspondence and reports, and excerpts from depositions - that together describe a range of areas being scrutinized by the FBI, the U.S. attorney, and other investigators.
The documents filed in Common Pleas Court also cast new light on Greene's tenure as PHA's chief as well as his personal financial problems.
Greene received pension payments in 2009 and 2010 totaling more than $222,000 that PHA, in a letter to his lawyer, called "improper." PHA's board had neither authorized nor approved the payments, the letter states. PHA has turned over documents on the pension payments to the U.S. attorney and the FBI.
In a deposition dated Aug. 20, Greene said he had not filed federal or state tax returns since 2002, and neither had his business, CRG Consulting Inc.
CRG Consulting received an $80,000 contract with Drexel University in 2008 to develop course work. In 2009, PHA's board approved the sale of a property to Drexel, but did not know of the consulting relationship, according to Greene's deposition. Greene said he was told by PHA's general counsel that he was not required to disclose his business ties to Drexel at the time of the sale.
PHA has responded to a federal grand jury subpoena for records relating to the Drexel land deal, according to the documents.
In his libel complaint, Greene alleges that The Inquirer and the Daily News falsely reported that he was the subject of criminal investigations. Greene says the newspapers ruined his reputation, caused him emotional distress, and left him unemployable. The suit was filed against Philadelphia Media Network, a company later purchased by Interstate General Media, current owner of the newspapers.
Clifford Haines, an attorney for Greene, declined to comment on any of the information contained in the newspapers' motion to drop the lawsuit.
"We will be addressing those issues in our formal response to the court," Haines responded in an e-mail. "It would be inappropriate to discuss them at this point."
He added that his office and Greene "have not been notified of any federal investigation. We (Mr. Greene or our office on his behalf) have not received any subpoena."
Haines said that he did not know who or what the government was interested in and that other subpoenas "shed no light on that. To speculate on the nature or extent of any federal interest is just that - speculation."
In an interview with Law360, a legal publication, Haines dismissed the information included in the motion filed by the lawyers for the newspapers.
"The viciousness of the attacks on Mr. Greene is unparalleled and in many instances already proven to be inaccurate and untrue," he told Law360. "None of it, in our opinion, belongs in a pleading and is professionally disturbing. We assume that the court will be able to see through the mounds of material and discern the true issues to be decided."
Patricia Hartman, a spokeswoman for U.S. Attorney Zane David Memeger, said she could "neither confirm nor deny the existence or the nonexistence of an investigation."
As PHA's executive director for almost 13 years, Greene was one of the most prolific developers in the city. He marshaled private and public money to replace aging public housing and revived impoverished neighborhoods, building vibrant new communities of affordable housing.
He received accolades from politicians, as well as national recognition from the development community.
But his career came to a halt on Sept. 23, 2010, when PHA's five-member board of commissioners discovered that the agency had settled three sexual harassment complaints against him without its knowledge.
At the time, Greene's personal financial problems also came to light. He missed five mortgage payments in 2010, forcing his lender to foreclose on his South Philadelphia townhouse. He later covered the late payments.
In December 2009, the IRS also filed a $52,000 tax lien against him for unpaid taxes in 2002, 2003, 2005, and 2006. Greene paid off the lien in March 2010.
The Pennsylvania Department of Revenue, meanwhile, has a lien of about $150,000 against Greene for the years 2001 to 2010, according to documents in the newspapers' motion, plus a new lien filed Nov. 12.
When a lawyer for the newspapers asked in a deposition Aug. 20 why he had not filed tax returns, Greene said, "I really don't have a - a reason that I can articulate. I mean, I really do not."
Greene was fired as PHA's executive director in September 2010. He then sued PHA in federal court for wrongful termination. The trial began in January but was halted after the sides agreed that PHA would pay Greene $625,000.
On the eve of the trial, PHA's lawyer, Steven Engelmyer, presented Haines with a letter spelling out the "improper" pension payment to Greene of more than $222,000.
While the issue never came up in the wrongful-termination trial, lawyers for the newspapers received a copy of the confidential document in discovery.
In it, Engelmyer said the payment was not authorized by either Greene's employment agreement, executive bonus plan, or agency benefit plan, nor was it approved by PHA's board of commissioners.
In a deposition Nov. 13, Kelvin Jeremiah, PHA's current president, said the authority had provided the FBI and the U.S. Attorney's Office with documents relating to pension payments to Greene. He said he had met with investigators for the FBI and U.S. attorney on "multiple occasions" from August 2011 to September 2013.
Investigators have also questioned a former PHA executive, Keith Caldwell, about the pension payments, according to his deposition taken Oct. 2. Caldwell said he was interviewed in 2012 by a panel of two FBI agents, two representatives of the U.S. attorney, and two investigators with the Office of Inspector General of the Department of Housing and Urban Development. He said they asked about a variety of topics, including the pension payments.
A federal grand jury subpoena dated April 2, 2013, required PHA to turn over Greene's payroll records to the U.S. Attorney's Office, including W-2 forms and paycheck printouts from 2007 to the end of his employment.
The pension matter relates to the enrollment of Greene and three other senior staffers in a "defined-benefit" plan in 2010.
It's not uncommon for public agencies to allow employees to "buy" years of credit for service at other municipal agencies for their defined-benefit plans. This allows them to increase the value of their eventual pension payments. Typically, public employees have to come up with the money themselves.
Documents show that in the case of Greene, an actuary calculated how much it would cost to purchase credit for the nearly 10 years he had worked at housing authorities in Washington, Atlanta, and Detroit. The sum was $134,431.91.
Instead of coming up with the funds on his own, Greene received the money from PHA. In an internal PHA audit Aug. 21, 2012, the authority said the amount was "grossed up" to $222,980.46. PHA effectively paid Greene's federal taxes for him, the audit said.
Over the course of a week, Greene received two checks with a combined net income of $134,431.92.
The three other senior staffers, who received combined payments of about $400,000, directed their funds to their defined-benefit pension plans as required.
Greene did not, according to the documents.
The payments "were made without proper authorization," Engelmyer wrote in his letter.
James McAneny, executive director of the Public Employee Retirement Commission, which monitors public pension plans in Pennsylvania, said in an interview that the payments to Greene were "most unusual."
Typically, if a public agency is going to spend money to compensate a senior executive, it is with the full knowledge of its directors, he said. Also, while some public agencies will offer to pay for extra years of service for pension credit, it usually is as a perk when recruiting executives.
"We have not seen another authority in the commonwealth do anything like this," McAneny said.
Another area of interest for federal investigators, according to the documents in the legal filing, is the activities of Greene's private business, CRG Consulting.
In 2008, CRG Consulting was hired by Drexel to develop a curriculum for a residential-property-management program. The next year, PHA voted to sell a North Philadelphia property at 850 N. 11th St. to Drexel for $250,000.
Under an agreement with PHA, Drexel operated a community health center on the site.
On Aug. 16, 2012, the U.S. attorney served a grand jury subpoena to PHA for all files, appraisals, valuations, and other documents relating to the sale.
At the time of the board's vote on the land deal, commissioners did not know about Greene's business ties to Drexel.
"The PHA general counsel gave me a legal opinion that there was no conflict," Greene said in his deposition, "and they provided that legal opinion to Drexel."
James Katsaounis, a Drexel spokesman, said the university was "cooperating fully with the government's investigation and has been informed that neither Drexel nor any of its employees is being investigated."
He declined further comment "because this is an ongoing investigation by the U.S. attorney."
In another CRG Consulting matter, freelance writer Natalie Pompilio was served a subpoena in March by the U.S. attorney for all of her records regarding Greene and CRG Consulting, according to a copy of the document in the newspapers' motion.
Pompilio, a former reporter for The Inquirer and the Daily News, was given a contract to write a book about Greene's PHA tenure for Temple University Press. She was supposed to be paid $30,000 from CRG Consulting. The project was canceled after Greene's firing.
In a deposition Nov. 12 by the newspapers' lawyers, Pompilio said she had been interviewed by investigators for the FBI, the U.S. attorney, and the criminal division of the IRS. Pompilio, who was told she was a witness and not a target, was questioned about payments from CRG and its failure to issue her an IRS Form 1099.