The Urban Affairs Coalition is suing one of its subcontractors in federal court for defamation and revealing trade secrets, after she alleged its executives turned a blind eye to misspending of government grant funding.
UAC runs homeless shelters and other programs for the city of Philadelphia, and serves as an umbrella organization for more than 50 smaller nonprofits. It is asking a federal judge to bar software consultant Karen Nicholson from disparaging it and is demanding at least $150,000 in damages.
UAC filed the lawsuit May 5. It comes after Nicholson spent more than a year making online posts and filing complaints with government agencies related to her claim that she is owed $35,000 for software work she did for UAC, plus additional compensation she alleges was skimmed from her paychecks.
Nicholson, who is based in Ohio, was hired and paid by a contractor for UAC. She says he fired her in August 2023, after she complained about her paycheck bouncing.
She says she later found evidence that the contractor skimmed hundreds of thousands of dollars that should have gone to her and other workers. She alleges that UAC should compensate her for what she’s owed and should have been a better steward of the millions of dollars in public funds it manages.
She also points out that the contractor, Delaware software company owner Jacques Latoison, has been sued repeatedly over the past decade for unpaid local, state and federal taxes.
“It boggles the mind that our tax dollars are given to a tax cheat, and everybody knows it, and nothing can be done,” Nicholson said in an interview. “Urban Affairs was responsible to make sure that they didn’t give money to somebody irresponsible.”
An Urban Affairs Coalition spokesperson said any dispute Nicholson has is with Latoison, not UAC, and her claims are without merit.
“She has launched a smear campaign based on demonstrably false and defamatory allegations,” spokesperson Anthony Campisi said. “This includes creating a website containing stolen and misrepresented information and contacting members of the media in an attempt to spread these falsehoods.”
Latoison did not respond to requests for comment.
A storied history, and previous complaints
Nicholson said she went after the Urban Affairs Coalition in part because she believes Latoison has no money to compensate her, and because she was a de facto UAC employee. She says she rarely had direct contact with the contractor and mainly reported to two UAC executives.
The organization she’s targeting is politically prominent and has a storied history. Formed in 1969 by Philadelphia community leaders to coordinate investment in Black and other disadvantaged communities, it celebrated its 55th anniversary in November with a banquet at the Pennsylvania Convention Center that drew nearly 1,000 attendees. They included Mayor Cherelle Parker, who received an award, and keynote speaker Gov. Josh Shapiro, the Philadelphia Tribune reported.
UAC now calls itself “A Home for Nonprofits” and says it serves as a fiscal sponsor for more than 50 organizations. That means it essentially absorbs them, manages their grant funding, personnel matters, legal affairs and taxes, and collects fees for providing those services.
It also helps launch new nonprofits, administers grant programs for city agencies, runs a summer youth employment program, and gives away turkeys at Thanksgiving, among other initiatives. The organization’s programs were budgeted to receive $19.2 million from the city over the past year, including $6.2 million to oversee homeless shelters and $5 million for the Community Crisis Intervention Project, an anti-violence program.
Through its Economic Development Projects (EDP) division, UAC also earns revenue by tracking contractor diversity on projects at many of the city’s most prominent institutions and businesses, such as Children’s Hospital of Philadelphia, the Philadelphia Museum of Art, SEPTA, and the school district. It’s often hired to collect data showing the organizations are meeting government grant requirements, and is paid for that work with public dollars.
UAC reported receiving $144 million in grants and other revenues in 2021 and $74 million in 2022. The EDP division has over the years helped manage projects worth more than $9 billion, according to its website. Including workers at the nonprofits it manages, UAC has more than 500 employees.
The organization has previously faced scrutiny over its financial affairs. In 2012, the state Inspector General concluded it may have mismanaged $1.5 million in grants, and the funding was frozen, the Inquirer reported.
More recently, UAC was the subject of a federal class action lawsuit alleging it broke the law by not paying overtime to employees in an anti-violence program it oversaw. The organization denied any wrongdoing, but in 2023 agreed to pay $380,000 in a settlement involving 100 workers.
Lagging payment and alleged discrimination
Nicholson said she was hired by Latoison in November 2021 to move 20 years of UAC’s financial data into Oracle NetSuite, its new business software system. According to her account and to emails she provided, she was closely supervised by UAC executive Kevin Satterthwaite and EDP deputy director Carlos Jones, who heads EDP.
Satterthwaite frequently emailed and phoned her, including on evenings and weekends, and she was in constant email contact with Vanessa Cheeseborough, an administrator who worked under Jones, Nicholson said.
Yet she sent her invoices to Latoison, who has a Chester, Pa.-based company called The Hierarchy that has been running UAC’s email and applications servers since at least 2008, according to records provided by Nicholson. Otherwise she rarely spoke with him, she said.
The arrangement initially worked, but she alleges Latoison began taking longer and longer to pay her. By February 2022 it was taking nearly two months for her to receive her paychecks. He told her he was waiting for money from UAC, she says, so she checked with Cheeseborough.
“She said, ‘He’s a liar, we pay him every seven days. He’s been sitting on the money,’ ” Nicholson said.
She also discovered she was being paid much less than some Black male employees doing similar work for Latoison and UAC, she said. When she complained about the late payments, Latoison told her that “minorities need to pay their bills before whites,” said he “hated Caucasians,” and made other abusive comments, according to an EEOC complaint filed by Nicholson’s attorney.
When she told Cheeseborough and Jones about Latoison’s apparently discriminatory behavior, they said Latoison had been “doing this for years,” per the EEOC complaint. Cheeseborough mentioned that women who previously complained about him were “ultimately ‘forced out’” of UAC for doing so, Nicholson said in the legal filing.
A history of dodging taxes
Nicholson says she continued doing her work, putting in 60 to 75 hours a week, and eventually getting paid.
But in April 2023 her paycheck bounced and Latoison told her his company was having tax compliance problems, she said. “We’re in court with the feds from the IRS,” he said, according to Nicholson. “Kevin is helping me move money around into an account so I can pay you.”
Nicholson said Latoison’s company has earned $4 million from UAC since 2013, much of it ultimately coming from federal grants that are channeled through the city of Philadelphia, according to billing records she analyzed.
But despite those earnings, he has a long history of not paying taxes on his income.
In 2015, the city of Philadelphia filed a Municipal Court complaint alleging The Hierarchy hadn’t filed Business Income and Receipts Tax returns for four years. At the time, any company that did business in Philadelphia had to file a return, even if it didn’t make a profit.
The city won a $10,000 judgment, which it was still trying to collect in 2020. City officials could not discuss the status of the case because of state confidentiality laws, a Revenue Department spokesperson said.
In Delaware, where Latoison lives, the state Division of Revenue has won at least eight court judgments against him since 2005, totaling nearly $48,000.
Public records from New Castle County show 11 federal tax liens against him over the same period, the most recent from January 2023. One lien, for taxes due in 2017, showed him owing $64,319, while another from 2018 was for $41,596.
Accusations of inflated billing
In summer 2023, Nicholson contacted Cheeseborough and asked to speak directly with Jones, one of the UAC executives who supervised her work, she said. He was surprised to hear Latoison hadn’t paid her in months, and didn’t believe her conclusion that the contractor was pocketing the money he’d been given by UAC to compensate her, she said.
Jones said, “What are you talking about? I’ve been friends with Jacques for 20 years, and he would never steal money,” according to Nicholson.
Jones sent her financial records showing UAC had deposited the full amount she was owed into Latoison’s bank account, she said. But she was not receiving the funds.
Jones told her he would have to do a “criminal investigation” of Latoison’s handling of the money, and asked her not to discuss the matter with anyone, she said. “He said, if I can get him to give you your paycheck, will you be quiet?” Nicholson recalled. He promised she wasn’t being fired, she said.
Nicholson “was an [UAC] employee anyway,” Jones told her, according to her EEOC complaint.
He had his assistant contact her, using a Gmail account rather than a company email account, to make sure he had all the reporting on her current work projects, she said. Shortly thereafter, Latoison fired her.
In the two years since, she’s spent many hours sorting through Hierarchy and UAC financial databases, trying to understand their relationship.
In addition to handling email and other technical services, Latoison served as a payroll processor for her and for a number of others involved in UAC projects, including youth participating in certain work programs.
Nicholson says she eventually discovered that Latoison had been routinely rounding up employee hours before he forwarded timesheets to UAC, adding fictional work hours, and billing UAC at higher rates than employees were paid out. For example, UAC was giving him $90 for each hour she worked, while paying her $55 and pocketing the difference, she says.
He also billed UAC for all of the hours she worked — which often reached 70 hours or more per week — but only paid her for 40 hours and kept the rest of the money himself, she alleges.
She said Latoison raked in $191,000 for doing little more than sending her timesheets to UAC. “Literally, I entered my own time, and all he had to do was press a button,” she said.
State and federal inquiries continue
Nicholson has pursued several avenues to try to pressure Latoison or UAC to compensate her for what she says she’s owed.
She passed on information to a Delaware Division of Revenue investigator who was pursuing Latoison for unpaid taxes, she said. She filed a wage theft complaint with the city of Philadelphia, which she said went uninvestigated, and contacted the Pennsylvania Department of Labor, which she said declined to get involved because she’s based in another state.
She concluded that suing Latoison would be a waste of time, she said, because he likely has no money to pay her if she won a court case. Instead, she said, she’s focusing on UAC and its responsibility as her de facto employer.
In the formal complaint her lawyer filed with the EEOC, she alleged that UAC knowingly allowed Latoison to underpay her and discriminate against her. At one point, an EEOC investigator told a UAC lawyer, “I do not see any evidence that reflects [Nicholson] did not work for [UAC],” according to a letter Nicholson obtained through a Freedom of Information request.
But the agency ultimately decided not to sue UAC, for reasons that were not specified, and instead issued a standard letter saying she had a right to sue on her own.
Her hopes now lie in part with a division of the Pennsylvania Department of State that oversees charities. It has investigated her complaint against UAC and is considering whether to seek administrative penalties or otherwise prosecute the case. However, a spokesperson said the agency does not have the authority to require restitution to employees. Nicholson also recently filed a similar complaint with Ohio’s attorney general.
She has corresponded with a U.S. Department of Labor investigator about her pay complaint, and about issues related to UAC’s payment of youth workers on a project involving the Philadelphia Youth Network, according to emails she provided.
She’s been holding off on suing UAC in the hope that the U.S. Department of Labor eventually goes after them, as it has done previously with companies accused of misclassifying or underpaying workers. She’s also contacted UAC’s insurer in an effort to collect the allegedly withheld funds.
Sept. 25 update: The Urban Affairs Coalition amended its lawsuit in August 2025 to describe previous accusations of misconduct against Karen Nicholson, the software consultant at the center of this dispute. In 2016, in connection with a pay dispute, an IT staffing agency accused her of disclosing confidential information, and a court granted the company preliminary injunctions against her. UAC has made similar accusations against Nicholson. In 2019, she was convicted of harassment in connection with a dispute involving Facebook messages and an autism nonprofit in Washington County and was ordered to pay a fine. She was subsequently charged with stalking and fled to Ohio, where she lives now. A bench warrant for her arrest remains outstanding. After this most recent amendment, Nicholson’s lawyer filed a motion to dismiss the case.
