Section 8 landlords sue Philadelphia Housing Authority

Posted: November 13, 2010

Landlords from across the region sued the Philadelphia Housing Authority on Friday, alleging that the agency fraudulently took their money for an illegal lobbying fund and for the "personal enrichment" of PHA employees.

In the federal lawsuit, eight property owners seek payments of $10,000 to $100,000 for each person required to pay for training to participate in the Housing Choice voucher program.

Between 2008 and August 2010, PHA required landlords participating in the federally funded voucher program to pay $200 each for a training course. The property owners were required to pay the fee to a PHA-affiliated nonprofit agency, the Pennsylvania Institute of Affordable Housing Professionals, which former PHA Executive Director Carl R. Greene organized to do lobbying work, according to interviews and PHA records. The institute is also named as a defendant in the suit.

Attorneys representing several PHA officials named as defendants said they had not yet seen the suit, which is seeking class-action status. They said they could not comment until they had reviewed the filing.

PHA issued a statement Friday, saying that the training courses had been "extremely beneficial to the city's neighborhoods. Properties are better maintained."

"PHA requires its landlords to invest in themselves and their property-management knowledge base through this daylong course," the statement said.

It denied the suit's contention that PHA employees enriched themselves.

"It is inaccurate and untrue to suggest that anyone at PHA has personally gained from the fees paid for this course," the statement said.

The classes were provided by the local office of the Institute of Real Estate Management, a well-known national organization.

The suit also names as defendants three current PHA executives: Diane Rosenthal, assistant director of finance and administration; Linda Staley, executive general manager; and Carolyn Carter, assistant executive director of operation and also president of the Pennsylvania Institute of Affordable Housing Professionals.

Also named as defendants are three former executives: Michael Leithead, who served as deputy executive director; Kirk Dorn, who was PHA's spokesman for years and secretary of the Pennsylvania Institute of Affordable Housing Professionals; and Greene, who was fired in September for failing to inform the PHA board of three sexual-harassment claims against him that had been settled for $648,000.

Finally, the suit names Asia Coney, who was vice president of the Pennsylvania Institute of Affordable Housing Professionals. She also serves as the $102,000-a-year director of PHA's tenant association.

The suit contends that the "defendants fraudulently used the training courses as a pretext to generate funds for the personal enrichment of the defendants, to pay for activities for PHA employees, to lobby for federal funds, and to promote political initiatives."

It did not suggest how the PHA defendants allegedly enriched themselves.

The suit contends that PHA violated rules of the voucher program, also known as Section 8, because PHA never told the federal government it was charging the landlords for courses or diverting money to the lobbying fund.

It says an estimated 4,000 landlords from Pennsylvania and New Jersey were forced to pay the fee.

HUD spokeswoman Donna White has said PHA did not have approval to charge landlords for a training course.

PHA spokeswoman Nichole Tillman has acknowledged that the agency never informed HUD of the $200 charge but did notify the federal government that it was requiring the training course. She has said none of the money from the landlords was used for lobbying.

Darrell M. Zaslow, an attorney for the Homeowner's Association of Philadelphia, said the association was not a party to the suit, although all of the landlords involved are members.

"It appears that there have been improprieties," said Zaslow, one of three attorneys for the plaintiffs. "We're trying to get justice."

The plaintiffs' other lawyers are Michael Pileggi and L. Kenneth Chotiner, who both had worked as attorneys for PHA. They have filed a series of suits against PHA since they left the agency several years ago.

James Lipschutz, a board member of the Homeowners' Association and one of the plaintiffs, said he paid the $200 required as a Section 8 landlord only because PHA said he would be suspended from the program unless he took the training course.

Friday's suit was the second involving the Pennsylvania Institute of Affordable Housing Professionals. In September, former Greene aide Jenelle Scott alleged that she and other nonunion employees were coerced to pay up to $100 a year each to the same nonprofit to keep their jobs.

Scott is represented by attorneys Pileggi and Chotiner, who also seek class-action status in her filing.

PHA acknowledges that nearly $100,000 collected from employees went to the nonprofit from 2006 to 2010.

The employee-contribution program was stopped in August. At the same time, PHA told landlords to start sending their payments directly to PHA rather than to the nonprofit.


Contact staff writer Mark Fazlollah at 215-854-5831 or mfazlollah@phillynews.com.

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