That did not sit well with Kelvin Jeremiah, PHA's president and chief executive.
Nelson "earned almost 10 times the average income of the residents she stole from," Jeremiah told the judge, urging a sentence of six months in prison - the maximum Nelson would face under federal sentencing guidelines. "I believe in the rule of law and the rule of justice."
But Diamond cut him off: "I'm well aware of the people she hurt."
Jeremiah stormed out of the hearing moments after.
Later, he said he was "utterly disgusted" by the judge's decision.
"We cannot deter white-collar crimes in this city if the propensity is not to sentence someone to prison," he said.
Explaining his decision, the judge cited her addiction to prescription opiates - a vice that drove her to commit crimes so obvious there was no little doubt she would eventually be caught.
"This is her last clear chance to avoid a lifetime in prison," the judge said. "I think her life is a tragedy, and I don't want to contribute to it."
Nelson admitted in February that she had deposited $7,974 in money orders from PHA tenants into her personal bank account between June 2010 and January 2012.
According to prosecutors, she changed the name on the rent checks from the authority to her own. As a result, many PHA tenants were cited for failing to make their rent payments and some received eviction notices.
A PHA internal investigation placed the extent of Nelson's theft closer to $8,616 and also revealed she had lied about receiving a degree from Drexel University.
Assistant U.S. Attorney Sozi Pedro Tulante voiced no objection Friday to the judge's decision to spare Nelson prison time. He had previously recommended in court filings that Nelson receive a prison term. So, too, did her own grandfather, who told probation officers Nelson once stole $100,000 from him to feed her drug habit.
Nelson's probationary sentence comes after several other former PHA officials received stiff prison terms for stealing from the federally funded authority.
Last year, two former employees were sentenced to prison, one for six months and the other for 13, for bilking the agency out of nearly $350,000 in building supplies they later sold to private contractors.
And in 2012, former contracts manager Kerri Bizzell was sentenced to more than seven years behind bars for an extortion scheme in which she solicited $25,000 in kickbacks from contractors looking for PHA work.
For her own part, Nelson told the judge Friday that she was receiving treatment for her addiction and hoped to make amends.
"I don't know if I'll ever truly forgive myself for what I've done," she said. "I don't think saying sorry is enough."
Inquirer staff writer Jennifer Lin contributed to this article.