Philadelphia Housing Authority chief Michael P. Kelly says he expects to quickly enact a "fundamental restructuring" of the agency's nonprofit tenant organization to restore public confidence after allegations of misused funds.

The organization - Tenant Support Services Inc. - is led by Asia Coney, who earns $108,000 a year, while living in public housing.

Kelly said PHA would decide by June 30 whether to renew its $1.4 million contract with the tenant group for the third and final year.

"It's too important an organization for us not to have the public trust," said Kelly, who took over operation of the agency after the ouster in September of longtime executive director Carl R. Greene.

Last Tuesday, a former PHA official charged in a federal lawsuit that Coney - a longtime Greene ally - and her assistant, Jeanette Jacobs, misappropriated thousands of dollars from the nonprofit group.

Independently, a former bookkeeper for the tenant group made similar allegations about Coney and Jacobs in an interview last week with reporters.

Coney and Jacobs declined comment Monday.

Kelly stressed that Coney's recent $6,000 salary increase - boosting her pay to $108,000 - had been automatically issued under PHA's 2009 contract with the tenant group.

Jacobs was listed as having a salary of $50,180 in 2009.

Vincent Morris, who served as PHA's liaison to the tenant group until April 2010, charged in a whistle-blower lawsuit last week that Coney and Jacobs each took extra payments of $9,998 from the tenant group's payroll fund.

Morris also said the group bought electronic toys for low-income children in 2009, but alleged that Jacobs had been taking the "Xboxes cq and or PlayStations and giving them to her son - who was selling them on eBay."

The former PHA bookkeeper, who oversaw the tenant group's spending in 2006 and 2007, said Jacobs repeatedly asked her to approve checks made out to "cash" in amounts ranging from several hundred dollars to more than $1,000.

"I started seeing these checks, and the payee was 'cash.' That's not normal," said the bookkeeper, who spoke with reporters on the condition that her name not be used.

She said that she told her supervisor, Dianne Rosenthal, about the checks, but that nothing was done.

"The strangest part of it was the lack of outrage, the lack of follow-through," she said. "In any other organization, meetings are going to be scheduled, and heads are going to roll."

Rosenthal, who was removed in February from her post as PHA's assistant director for finance, could not be reached for comment.

Her attorney, Ronald H. Levine, said Monday that the allegations of lapsed vigilance were "baseless."

Contact staff writer Mark Fazlollah at 215-854-5831

or mfazlollah@phillynews.com.