Richman said her predecessor, Karen Newton-Cole, appointed Kelvin Jeremiah, then PHA's director of audit and compliance, to investigate.
"We did everything you'd normally do during an investigation of this sort," said Jereon Brown, a HUD spokesman. Jeremiah pulled travel and credit card records and reviewed schedules and purchases.
"He felt that there had been no misuse of federal funds in any way and that it was a consensual affair," Richman said of Jeremiah's investigation, which wrapped up in May.
Both Lim and Kelly admitted the affair, which started in October 2011 and ended about six months later, Richman said.
Lim resigned May 31 and told staffers that she was returning to her native Singapore to care for a sick relative. As to Kelly's resignation, "We did not question the soundness of that. We thought it was appropriate for him to do that," Richman said.
Kelly did not respond to numerous phone messages left by the Daily News at his home in Washington. But he told the Inquirer that he had "a lapse of judgment and a personal family failure. I failed my family, my friends, my colleagues."
Washington Mayor Vincent Gray hired Kelly Monday to head the district's Department of Housing and Community Development. Gray spokesman Doxie McCoy said Tuesday that Kelly, before his appointment, "shared that he had a consensual relationship" with a PHA staffer and that HUD had investigated it.
"He made a personal mistake," McCoy wrote in an email. "Mr. Kelly is a talented and committed public servant who is dedicated to expanding affordable housing in the District, and we stand behind his nomination." HUD officials have now asked Jeremiah to replace Kelly in Philadelphia.
Lim joined PHA in August 2009 after she met Carl Greene in a bar, according to PHA sources. Lim, who holds a Ph.D. in industrial/organizational psychology, a master's in government administration and a master's in occupational psychology, started as a senior adviser earning $95,000.
At a PHA event held at the John F. Street Community Center in late summer of 2009, Greene and Lim were "dirty dancing," according to several staffers there.
"They were rubbing against each other. She was sliding up and down his body, very seductive moves," said an employee who requested anonymity.
After Greene was fired, Kelly bumped Lim's salary to $125,000 in January 2011 when she took over PHA's human-resources department, nine months before the affair began, Richman said.
Kelly, who left his job as head of New York City's housing authority to lead PHA, had run housing agencies in Washington, New Orleans and San Francisco.
HUD took over PHA after its five-member board resigned, facing criticism for not overseeing Greene and not knowing that he secretly settled the three sexual-harassment complaints, totaling more than $600,000.
Kelly was credited with many reforms at PHA, the fourth-largest public-housing agency in the country with an annual budget of $375 million.
Multiple federal agencies are investigating whether PHA under Greene misused millions in federal tax dollars. n
Contact Barbara Laker at 215-854-5933 or email@example.com