Fired PHA chief Carl R. Greene: Gone but hardly forgotten

Carl R. Greene has moved on.

The deposed head of the Philadelphia Housing Authority now rents out his luxury condominium at the Naval Square gated community in Southwest Center City.

In April, a deed records a Carl Greene buying a similar-looking townhouse for $320,000 in another handsome gated community called Brownstones, in the Atlanta suburb of Decatur, Ga.

Records show a longtime PHA friend of the housing executive at that address. But what Greene is doing - and where - is a mystery even to people here who worked closely with him.

It was just a year ago that Greene's legion of public and personal troubles vaulted onto the front page after the IRS slapped him with a $52,000 tax lien, and he missed three mortgage payments totaling $7,295.89, leading Wells Fargo Bank to foreclose on his condo.

While Greene, who earned $306,370, quickly paid these bills, they invited closer scrutiny of his 13-year reign at PHA. Within days, sordid stories began welling up of sexual harassment of his staff that had led to huge secret cash settlements. There were accounts of lavish parties, imperious behavior, and political favoritism.

Within a month, they had grown to a tidal wave that swept him from the helm of the nation's fourth-largest public-housing agency, with 80,000 of the city's most impoverished citizens as tenants.

In the year since, multiple federal agencies - including the FBI and the U.S. Department of Housing and Urban Development (HUD) - have launched investigations into whether the Housing Authority under Greene misused millions in federal tax dollars.

Investigators and auditors are scrutinizing everything from Greene's costly reliance on outside lawyers - $38.5 million in billings during the last four years alone - to a PHA nonprofit that provided tenant services, and another that became an unregulated kitty financing Greene's pet ventures and amassing $66 million.

At HUD, the Office of Inspector General also is continuing a criminal investigation of former Mayor John F. Street, PHA's former chairman, who appointed himself to the job and later voted on contracts worth millions for the law firm employing his son, Sharif.

For years, Greene was protected by powerful allies, including Street and former Gov. Ed Rendell, who recruited Greene from Detroit and whose former law firm (to which Rendell has returned) made millions representing the agency.

"The problems at the Housing Authority all come back to a lack of oversight," said Sen. Charles Grassley (R., Iowa), whose staff has been investigating PHA. "The local board didn't seem to question or scrutinize the executive director. HUD wrote the checks and didn't pay attention to how the money was spent.

"It took a bonfire for the local board and HUD to start getting the message."

The problems here have reverberated across the country. Greene's extravagance led cost-conscious congressmen to look at cutting HUD's budget and stripping PHA of its specially granted flexibility to spend tax dollars.

The federal housing agency has increased its monitoring of public-housing agencies nationwide. And local authorities have also looked at pay and perks for top officials, which played a role in the removal of housing directors in Chicago and Los Angeles.

"The lessons learned in Philadelphia will definitely shape how HUD conducts its business," said Jereon Brown, a HUD spokesman.

The thousands of pages of invoices, audits, and records that investigators are sifting through present a picture of PHA under Greene as a runaway agency with little oversight, unchecked spending, and silent enablers who saw much, did little, and sometimes profited handsomely.

PHA considered itself "answerable to no one," said the deputy inspector general at HUD, Michael P. Stephens, in a Nov. 23, 2010, letter to the federal housing agency.

One area HUD is investigating is whether Greene used any federal funds to cover hush-hush settlements of $648,000 to three women who accused him of sexual harassment. Greene has denied the allegations, but was fired in September for keeping PHA's board in the dark about the complaints and payments. Street called him a "serial sexual harasser."

And a fourth settlement is in the works. PHA is offering a former interior designer $500,000 to put to rest her claim that Greene sexually harassed her.

Greene will not discuss the events of the last year, according to his attorney, Clifford Haines. Anything he has to say, he added, will occur "in the context of court proceedings."

"Carl continues to be significantly impaired by the stories that continually appear about him or PHA," Haines said. "Until there's some resolution of all of that, it's safe to say it's difficult for Carl to move on in his life."

After his foreclosure became public, Greene sought medical treatment and counseling for "stress-related exhaustion." He has not been heard from since.

In multiple probes of PHA, federal investigators are awaiting a mother lode of documents: 24,100 pages of legal invoices from six firms.

U.S. District Judge Anita Brody approved the release of the billings in June, and the invoices of two firms have been reviewed by HUD. But Greene is appealing the release of all the invoices, claiming it would violate his attorney-client privilege. The matter is pending.

PHA, meanwhile, is not waiting for the court's decision. The new executive director, Michael P. Kelly, has directed the staff to review every legal bill for the last five years.

The legal invoices could provide a road map of how PHA spent tens of millions on outside lawyers in recent years - an "outrageous" amount that tops all other housing authorities, HUD's Stephens said.

Controlling more than a billion dollars in construction, Greene was one of the most powerful developers in the city, keeping politically wired lawyers in his thrall and on the clock.

At one meeting with federal auditors, PHA was represented by one staff attorney and six outside lawyers, each earning more than $300 an hour. For another audit, a lawyer was paid to follow a HUD inspector during two days of site visits.

Even at special events, Greene made sure his lawyers were close. At his behest, lawyers attended dinners and ribbon-cuttings, some of whom billed for their time.

Among the Who's Who of lawyers working for PHA:

Ballard Spahr, which billed PHA for $11.7 million in work from 2007 to 2010, more than any other law firm. The firm has long been associated with Rendell and his former chief of staff, John Estey, who has worked with PHA.

Former City Controller Jonathan Saidel, also a lawyer, who was paid more than $150,000 over two years as the go-to man between Greene and city politicians. PHA recently replaced the federal funds it used to pay Saidel with nonfederal money.

The former Democratic nominee for attorney general, James J. Eisenhower, a partner at Schnader Harrison, who was Greene's chief legal strategist. PHA recently asked his firm to reimburse $14,822.50 in fees, including $2,582 for three lawyers to attend an antiviolence rally, and $2,919 for two lawyers to go to a business expo of public-service agencies.

Former Mayor Street, meanwhile, approved the hiring of his son's law firm, the now-defunct Wolf, Block, Schorr & Solis-Cohen L.L.P., while he was chairman of PHA. Wolf Block billed PHA for more than $1 million for the younger Street's work between 2000 and 2008.

After WolfBlock went out of business in 2009, Sharif Street tried to resume work for the PHA at another firm, according to recent letters between PHA and HUD. It was only then that Greene raised concerns about the possible conflict of interest.

Greene hired Schnader, Harrison, Segal & Lewis to review the propriety of this arrangement. Schnader Harrison concluded that in light of the elder Street's position on the board of PHA, "it would not be appropriate."

The result was that Sharif Street - who did not respond to requests for comment - has done no more work for the agency.

At this time last year, Greene, 54, was at the height of his game. Described by many as brash and domineering with a razor-sharp mind, Greene had succeeded in attracting $126 million in federal stimulus money, giving an extra boost to his construction plans.

For the last two years, while other developers were struggling with the economic slowdown, PHA was on a building streak. It renovated more than 300 empty rowhouses, revived a charred apartment house into new senior housing in North Philadelphia, and tore down the Paschall project in West Philadelphia for new townhouses.

Under Greene, PHA remade whole neighborhoods from the rubble of high-rise public-housing projects like Mill Creek, Tasker Homes, and Martin Luther King.

But the strategy came at a cost.

During Greene's tenure, PHA aggressively diverted money earmarked for rent subsidies for poor families to fund new construction.

This year, almost half the money the agency gets from HUD - $173 million - is for rent vouchers. Of that, PHA will use only 62 percent for actual housing assistance, a low rate compared with other large housing authorities. The rest will be shifted to, among other things, capital projects ($20 million) and operations ($10 million).

PHA can move money around like that because it has special designation as a "Moving to Work" agency. Only 33 housing authorities out of 3,300 are in the program, conceived by Congress in the 1990s to deregulate public housing.

At PHA, however, it was a recipe for abuse.

HUD's deputy inspector general said in a Feb. 25 memo to the federal housing agency that Greene "overrode management controls as a normal course of business."

Greene dismantled the oversight and checks and balances within PHA and created a management system that began and ended with him.

Since 2007, the agency had no fully functioning office of general counsel. Instead, Greene outsourced key assignments to a stable of high-priced lawyers, who handled everything from real estate deals to settlements of harassment complaints.

In his lawsuit, Greene now claims that the details of that work are confidential.

"Greene was excessively hiding behind the attorney-client privilege," said John White Jr., PHA's executive director from 1993 to 1997 and now the head of a nonprofit provider of behavioral health services.

Without tight internal controls, Greene was able to create a free-spending culture that went beyond lawyers to staff meetings supplied with catered salmon dishes; entertainment, including belly dancers, at training sessions; annual management retreats to an upstate getaway; and luxury gifts for senior staff, such as $796 Tumi luggage.

It was a lifestyle unimaginable to the poor people Greene was hired to serve in a city where available public housing does not come close to meeting the need. There are 100,000 families and individuals on the waiting list for public housing and rent subsidies.

"Those funds could have - and should have - been used to provide housing assistance to people who are desperately in need of it," said Barbara Sard, a housing-policy analyst for the Center on Budget and Policy Priorities.

Greene may be gone, but his tenure remains an object lesson for "anyone who has an interest in the use of public funds and the agencies that receive them," said White. "Complacency is dangerous."