By Daniel Kelley
PHILADELPHIA (Reuters) - The son of a Philadelphia congressman turned himself in to federal authorities Tuesday to face charges that he defrauded banks, the U.S. Small Business Administration and the city's cash-strapped school district.
Chaka Fattah Jr., son of 10-term U.S. Representative Chaka Fattah, received eight loans totaling $141,000 from five banks to pay for expenses associated with a business he ran, according to court documents. They charge he used the money to buy jewelry, make car payments and pay gambling debts.
When banks came to collect in 2010, prosecutors contend that Fattah Jr. lied to them and to the Small Business Administration, which insured the loans. He claimed that his company, 259 Strategies, had gone out of business, and that he had income of just $2,500 per month.
Investigators said the company earned between $6,250 and $37,500 monthly through another firm that provided alternative educational services to "at-risk" Philadelphia youth.
The other firm, identified in court documents only as "Company 1 Southwest" provided annual budgets to the school district, which paid the firm according to its expenses. Fattah is charged with inflating Southwest's expenses between 2010 and 2012 by overstating employee benefits costs by $170,000, submitting inflated teacher salaries and charging the district for non-existent employees.
Representative Fattah is not charged or mentioned in the indictment and his office was not immediately able to comment.
(Editing by Scott Malone and Dan Grebler)