Employees disclosed the weekly pay deductions last month. The suit, however, alleges for the first time that the nonprofit was established as a fund to lobby against funding cuts by the U.S. Department of Housing and Urban Development.
Such lobbying would violate HUD regulations, which prohibit housing authorities from using federal money to lobby Congress. The complaint alleges that by "unlawfully taking" pay from employees, PHA was indirectly using federal money to pay for lobbying.
HUD, which provided most of PHA's funding, declined to comment on the suit.
Michael Pileggi, attorney for the plaintiff, said he was seeking class-action status for the lawsuit. About 300 nonunion employees were contributing to the nonprofit until earlier this month, when the board stepped in.
Nichole Tillman, a spokeswoman for PHA, declined to address the allegations. "PHA has not been served with the complaint and therefore does not have a comment," she said.
At the center of the allegations is the Pennsylvania Institute of Affordable Housing Professionals, a nonprofit created by Greene and his senior staff in 2006. In a subpoena that signaled the start of a federal investigation, the U.S. Attorney's Office three weeks ago demanded records from several entities controlled by PHA, the institute among them.
Kirk Dorn, a former PHA spokesman and former president of the institute, acknowledged in an interview that lobbying was always a goal of the nonprofit.
However, Dorn said the funding for the nonprofit came from "employee donations, not federal funds," and so did not violate the federal regulations.
Moreover, Dorn said, the intended lobbying against proposed cuts in 2007 never took place.
In interviews, several former and current employees of PHA said they felt they had to participate or risk hurting their careers.
Where the deducted money went has not been revealed. The agency has not responded to a request for detailed records. In interviews, employees said that the institute did sponsor some social events for them, including bowling parties and outings to baseball games, and that over the summer it threw a birthday party for City Councilwoman Jannie L. Blackwell.
The lead plaintiff in the lawsuit, filed in U.S. District Court here, is Jenelle Frances Scott, a former administrative assistant to Greene.
Scott was fired in April. She said that PHA had cited her failure to return to work after an accident, but that her dismissal was part of a pattern of harassment by managers.
Now working at a day-care center in North Philadelphia, Scott said she had felt pressure to pay into the nonprofit. "I want my money back," she said.
In 2008, Scott was transferred from Greene's office to the agency's Section 8 department, which handles federal rent subsidies. She said one of her duties had been to collect payments of $200 apiece from hundreds of Section 8 landlords for training. She said she had been told to instruct landlords to make checks payable to the institute at the center of the allegations. According to the PHA website, landlords are still required to make that payment.
"I knew that was wrong," Scott said.
Len Trower, a former construction contract coordinator who was reassigned to a lesser job as a housing inspector, said he had been "advised very strongly" by his supervisor to contribute. Instead of making weekly deductions, he opted to pay by check twice a year.
After a few payments, Trower said, he stopped. "This was my way of rebelling," he said. "Employees should not be pushed around. It's a very subtle form of intimidation."
Named as defendants in the lawsuit are PHA, the nonprofit institute, Greene, and members of his senior staff: Diane Rosenthal, assistant executive director; Richard Zappile, chief of police, public safety, and risk management; and Dorn, the former communications manager.
State records list Dorn as president of the institute. That position is now held by Carolyn Carter, a PHA assistant executive director.
Greene, 53, has been suspended by the agency's board pending an investigation into secret settlements of sexual-harassment complaints against him.
Contact staff writer Jennifer Lin at 215-854-5659 or email@example.com.