JOLIET (STMW) — The chief financial officer of the Joliet Housing Authority and her husband have been charged in scheme that defrauded the Chicago Housing Authority of nearly $200,000.

Charlene Potts, who worked for a private contractor hired by the CHA, wrote fraudulent checks that went to her husband between 2005 and 2008, a complaint filed by Cook County prosecutors said.

Potts had the authority to process payments to various lenders, landlords and tenants and used her login information to issue the bogus payments to Scott Washington, who is now in the process of divorcing her, according to court testimony Wednesday.

Washington was not a Section 8 tenant, CHA vendor or landlord who would have paid from CHA funds, Assistant Cook County State’s Attorney Deidre Dyer said.

All the checks issued to Washington were allegedly cashed at currency exchanges in Cook County or in Washington’s bank before they were quickly withdrawn, the Chicago Sun-Times is reporting.

The couple was arrested earlier this week on $50,000 arrest warrants.

Washington, who appeared in court with a Nike sweatshirt and maroon shorts, had his bail reduced to $25,000 Wednesday.

Cook County Judge Laura Sullivan kept Potts’ bail at $50,000.

Potts, 42, of Richton Park, is charged with being the organizer of a financial crimes enterprise.

Washington, 48, of Park Forest, has been charged with continuing a financial crimes enterprise. He is a supervisor at USF Holland, a trucking company in McCook, according to a police report.

A relative of Potts’ denied the allegations following the hearing,

CHA spokesperson Wendy Parks issued a statement saying CHA initiated the investigation of what she called “potential financial improprieties” that culminated in Potts’ arrest, then referred to the U.S. Department of Housing and Urban Development and the state’s attorney’s office.

Noting that Potts was employed by a CHA vendor before 2008, she said, “Since that time, CHA has replaced the vendor and initiated stringent managerial and financial controls over its payment processes, including extensive accounting and quality control procedures.”

She added, “The Chicago Housing Authority is committed to transparency and accountability and has a zero tolerance policy for the misuse of funds by our vendors, private contractors or employees.”

In the wake of Potts’ arrest, Joliet Mayor Tom Giarrante said Michael Simelton, interim CEO of the housing authority, is reviewing Potts’ work in Joliet.

“He is having an audit and checking our books and he sees nothing erratic about them,” Giarrante said. “ … So it seems like the Joliet housing authority is fine. This (legal trouble for Potts) is all solely from the Chicago Housing Authority.”

Joliet Councilman Terry Morris, who sits on the housing authority oversight committee, said he was “very much surprised” to hear of Potts’ arrest.

Morris said Potts was hired by the Joliet Housing Authority in early 2010 as a temporary employee, helping new residents move into the Liberty Meadows development.

Potts was hired full-time later in 2010, but did not start working with the agency’s finance department until August 2011, Morris said.

“She seemed to have been helping [the agency], I guess. Not that she came and was the savior … but she seemed to work well with the board of commissioners,” Morris said.

Morris confirmed that the Joliet Housing Authority will meet in a special session Thursday concerning termination of an employee.

Potts’ alleged scheme makes the scandal that claimed the CHA’s former CEO Lewis Jordan look like chicken feed.

A few months after taking office, Mayor Rahm Emanuel forced Jordan’s resignation amid allegations that he misused an agency-issued credit card.

The card issued to Jordan had been used to pay for costly meals at Gibson’s and other posh restaurants. The findings prompted Emanuel to cut from 500 to 30 the number of credit cards used by local government agencies.

Charles Woodyard, public housing chief in Charlotte, N.C., made the giant leap to Chicago with a promise to “think outside the box” and provide more support services for displaced CHA residents.

Woodyard needed creative and unconventional thinking to succeed in his his new, $216,000-a-year job.

The $1.6 billion Plan for Transformation that tore down CHA high-rises and replaced them with mixed-income communities had already fallen five years behind schedule because of the collapse of the real estate market.

(Source: Sun-Times Media Wire © Chicago Sun-Times 2013. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)