Housing Agency Spent Thousands of Dollars on Belly Dancers, Luxury Bags

Jan. 27, 2011 — -- The nation's fourth-largest housing authority spent lavishly on gifts for managers and a party with belly dancers, and its executive secretly spent more than $500,000 in housing authority funds to settle sexual harassment claims, but it allegedly ignored complaints of unsanitary conditions that nearly killed a 12-year-old resident.

The excesses of the Philadelphia Housing Authority, however, are not unique. As Nightline found in a joint investigation with the Center for Public Integrity, the federal government's low-income housing programs, which cost taxpayers $26 billion a year, are plagued by theft, mismanagement and corruption at local levels, including millions spent on housing for sex offenders and dead people, and all too often fail the 3 million families who rely on them for a clean, safe place to live.

CLICK HERE TO READ THE CENTER FOR PUBLIC INTEGRITY'S STORY ON PUBLIC HOUSING

In Philadelphia, under the leadership of former executive director Carl Greene, the local housing authority spent $17,000 for a 2006 event, including $1,200 for a troupe of belly dancers. Photos of the event, obtained by ABC News, show Greene dancing with the exotically dressed women. A Philadelphia Housing Authority (PHA) spokeswoman said the event, which also included yodelers and karaoke, was a part of the housing authority's "diversity awareness" training.

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The same month, a 12-year-old girl living in the city's federally-subsidized housing suffered a near-fatal asthma attack after, her mother says, poorly trained housing inspectors failed to properly check her home for dangerous black mold.

"I'm telling them over and over again that these problems are going on and nobody's fixing anything. It's like they ignored everything I said," said Angelique McKinney, the girl's mother.

Greene also used housing authority funds to buy gifts, including a $16,000 purchase from Nordstrom for $800 Tumi travel bags for himself and 19 of his top managers in 2009.

"For 12 years, 13 years he's had free reign at the housing authority, and I can't explain it," said Michael Pileggi, a former housing authority attorney who now represents former PHA employees suing Greene and the housing authority. "It appears there was no fiscal oversight."

"If we discover during the audit that PHA has inappropriately used taxpayer dollars to fund other such activities at the expense of those greatly in need of housing, HUD will respond to the full extent permitted by law," said Melanie Roussell, a HUD spokeswoman, in a statement.

"They weren't trained on how to identify mold. They didn't know what mold looks like. Many of the inspectors actually say that they didn't know there was testing available to test a home for mold," said Mike Trunk, an attorney for the family.