Shortly before he was fired as the Philadelphia Housing Authority's executive director in September, Carl R. Greene was hard at work building his newest nonprofit, the Pennsylvania Association of Public Service Agencies.

It had the laudatory, but vague, mission of helping the region's public agencies save money through shared services and best practices.

Now it is unraveling as federal auditors examine PHA's books and officials at the U.S. Department of Housing and Urban Development say federal money appears to have been misspent.

Greene, fired for failing to report a series of sexual-harassment claims against him, is PAPSA's president.

He was joined at the top of the organization by three powerful lawyers who served on the boards of PAPSA's constituent agencies, and whose law firms have earned big fees from PHA.

John Estey, chairman of the Delaware River Port Authority and a partner at Ballard Spahr, was PAPSA's treasurer. In his role as chairman, he was one of the three DRPA officials who approved a $90,000 payment to PAPSA for association "dues."

Robert L. Archie, chairman of the School Reform Commission and a partner at Duane Morris, was PAPSA's secretary. The school commission had budgeted $35,000 for membership in PAPSA but withheld payment as Greene's troubles gained public attention.

Patrick J. O'Connor, Temple University's board chairman and vice president of Cozen O'Connor, was PAPSA's vice president. Temple did not contribute dues.

PHA contributed $50,000 in dues, and the Philadelphia Parking Authority chipped in $25,000, although it is asking for its money back.

Despite its short life, PAPSA provides a glimpse of how Greene raised money by tapping loosely regulated public entities, including PHA.

Under its agreement with the member entities, PAPSA could have lobbied for them; it held a small-business fair at the Convention Center this year to educate local firms about doing business with PAPSA members and other agencies.

"It certainly does show how good old boys can funnel public dollars to nongovernmental agencies," said Barry Kauffman, executive director of Common Cause Pennsylvania. "They're just working the system."

Zack Stalberg, president of the Committee of Seventy watchdog group, said PHA and other state-related agencies typically "make their own rules."

"It's the Wild West," said Stalberg, noting that state-related entities often have little oversight.

Greene, who has been in seclusion since his dismissal, did not respond to requests for comment about PAPSA, which was incorporated in April. His attorney, Clifford E. Haines, referred a reporter to PHA for answers to questions.

Archie and Estey did not respond to repeated requests for interviews. O'Connor declined to comment.

Nichole Tillman, a PHA spokeswoman, said Friday that PAPSA was "a collaborative effort by several state-related agencies, including PHA, to improve the efficiency of all its members by sharing best practices and certain resources, such as public information, financial management, human resources, and strategic planning."

Tillman defended the use of an additional $29,207 in federal funding - apart from PHA's $50,000 membership payment - for start-up legal work performed by Estey's firm.

These legal fees, she said, were "in line with the mission of the housing authority."

But officials at HUD, which oversees PHA, said the expenditure of tax money violated government regulations. Donna White, a HUD spokeswoman, said housing officials around the nation avoided using federal money for such legal fees or contributions because they "know it is not allowed."

Jereon M. Brown, another HUD official, said he was "sure that was known."

"The use of federal funds to hire a law firm to organize . . . the Pennsylvania Association of Public Service Agencies is clearly not an allowable expense," Brown said. "This expenditure, and numerous other housing authority expenditures, will be heavily scrutinized during the forensic audit."

After repeated calls from The Inquirer seeking information about PAPSA's funding, Estey wrote in an e-mail to PAPSA's member organizations on Nov. 21: "I think we have no choice but to consider dissolution."

He attributed that to "recent events and what I believe is biased media coverage," presumably reporting on the sexual-harassment claims settled by Greene and his dismissal by PHA's board - which said it had never been apprised of the settlements.

In addition to a "forensic audit" by HUD, federal authorities are conducting a wide-ranging criminal probe of PHA, including two other PHA-related nonprofits created by Greene.

In addition to his duties as PAPSA's treasurer, Estey has worked more than 650 hours as a lawyer for PHA since 2008, with billings of at least $230,000, records show.

At the DRPA, spokesman Edward Kasuba said Estey could not remember who had proposed to him that PAPSA's dues would total $90,000. The DRPA never received any invoice for dues, which covered three years, Kasuba said.

Instead, they were included on a list of scores of other bills, sandwiched between a $464 charge for the Pennsauken Sewerage Authority and a $28,179 bill for the Pennsylvania unemployment tax.

The DRPA board approved the whole list of bills in a single vote without ever formally discussing the $90,000 payment. That had to happen only for payments of $100,000 or more.

In September, under pressure from Gov. Christie, DRPA reduced the amount of what could be spent without board approval to $25,000.

At PHA, Greene could spend up to $100,000 without board approval.

PHA's board never discussed the agency's $50,000 dues to the association and wasn't told about the agency's $29,207 payment to Estey's law firm.

In response to Estey's e-mail recommending dissolution of PAPSA, O'Connor, its vice president, whose law firm has received more than $1 million in PHA business since 2007, voiced his agreement.

"I concur in the suggestion that it be dissolved. Although it was a worthy organization which would benefit the citizens of the region, I concur with the winding down of the operations given the current situation," O'Connor said, according to records obtained from the Parking Authority.

The Parking Authority agreed, as well, saying it "is in agreement with the proposal to dissolve."

Dennis Weldon Jr., the Parking Authority's general counsel, said his agency had joined because it wanted to team up with other state-related entities. But it already had signaled it was leaving the association.

In an Oct. 28 letter, Weldon said the authority should get nearly all of the $25,000 that it had chipped in "because the activities of PAPSA have been limited and the organization has encountered very little in terms of expenses."

Weldon sent the letter to Estey and Archie.

Estey's e-mail said PAPSA had spent $31,272 on a June 2 small-business expo and $15 on banking fees, "leaving $133,713" of the money it had collected.

Archie, PAPSA's secretary, has a long relationship with PHA. His law firm's website says he completed $268 million worth of "recent transactions" involving PHA properties.

It said Archie also had represented PHA in selling 150 units of affordable housing in Philadelphia.

Since 2008, Archie has worked as a lawyer for PHA for about 800 hours, with total billings of about $275,000, PHA records show.

Initially at a meeting last December, the School Reform Commission approved a resolution to join with other state-related entities "to create cost savings, efficient processes . . . at no cost to the School District."

In June, the commission voted to budget $35,000 for a membership in the Pennsylvania Association.

Archie abstained in voting on the $35,000, saying his law firm worked for PHA. No check was issued because of Greene's troubles.

Before that vote, the members of the commission were told that six other agencies, including the Philadelphia Regional Port Authority, the Southeastern Pennsylvania Transportation Authority, and the Pennsylvania Convention Center Authority were part of the Pennsylvania Association.

But those three authorities were never members, officials at the agencies said.

It wasn't for lack of trying.

School district spokesman Fernando Gallard said Archie had approached Convention Center director Ahmeenah Young and SEPTA board member Herman M. Wooden in an attempt to get their agencies to join.

Wooden passed the request to SEPTA chairman Pasquale T. Deon Sr., who said he had decided not to join.

Deon said SEPTA had participated in the Small Business Expo, which drew about 400 business officials, but "did not provide any financial support" to the association.

"Although SEPTA supported the concept of a loosely organized association for public service agencies to discuss common interests and share best practices, we declined formal membership," Deon said in a statement.

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