Feds accuse Philadelphia congressman Fattah of corruption

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Posted: Jul 29, 2015 5:36 PM
Feds accuse Philadelphia congressman Fattah of corruption

PHILADELPHIA (AP) — U.S. Rep. Chaka Fattah paid off a campaign loan with charitable donations and federal grants, funneled campaign money to pay down his son's student loan and disguised a lobbyist's bribe as payment for a car he never sold, prosecutors said Wednesday in announcing a racketeering indictment against the congressman.

The 11th-term Democrat led a conspiracy that engaged in bribery, fraud, money laundering and other crimes, and netted him hundreds of thousands of dollars, federal investigators said.

The 29-count indictment describes four distinct schemes, two involving efforts to pay down debt from Fattah's failed 2007 mayoral bid in Philadelphia. The Justice Department charges that Fattah used federal grants and donations to his educational foundation to pay back part of a wealthy campaign supporter's $1 million loan and that he helped arrange a $15 million federal grant for a nonexistent nonprofit in lieu of a $130,000 payment to a political consultant toward the campaign debt.

Fattah vowed to remain in office and fight the charges but stepped down from his leadership post as the top Democrat on the House Appropriations subcommittee that oversees spending for Commerce, Justice, Science and related agencies.

"This isn't Deflategate," Fattah said of the yearslong investigation. "I've never been involved in wrongdoing, any unlawful activity (or) any misappropriation of federal funds."

House Minority Leader Nancy Pelosi, D-Calif., said in statement the charges "are deeply saddening" but said she would not ask him to step down.

"Congressman Fattah has been a tireless and effective advocate for America's hard-working families across more than 20 years of distinguished service in the House," Pelosi said.

Fattah, 58, was not arrested and no court date was set for his initial appearance.

The case had already ensnared two former aides, who have pleaded guilty to charges linked to Fattah's campaign debt, and his son, who awaits trial on an overlapping case that includes charges he misspent $930,000 in federal education funding.

Fattah said that "subpoenas have been flying" around him for eight years as the FBI, IRS and Justice Department investigated. He nonetheless maintained a busy public schedule and side-by-side with top Democrats, catching a ride to a Philadelphia event earlier this month with President Barack Obama on Air Force One.

In the indictment, prosecutors said the Democrat and his district director, Bonnie Bowser, passed mayoral and congressional campaign funds through a political consulting company to make 34 student loan payments on behalf of his son totaling $23,000.

Fattah's wife, a Philadelphia news anchor, is accused of helping hide an alleged $18,000 bribe from a lobbyist through a sham sale of her 1989 Porsche. Renee Chenault-Fattah, who is not charged in the case, is on leave from the NBC affiliate, the station announced Wednesday.

The couple used money from the purported car sale to help get a mortgage for a Poconos vacation home, the indictment said.

The car was supposedly sold to lobbyist Herbert Vederman, Fattah's longtime campaign finance director, U.S. Attorney Zane Memeger said. Vederman, in exchange for the $18,000, wanted an ambassadorship or a seat on the U.S. Trade Commission, the prosecutor said. FBI agents found the car in the garage at Fattah's Philadelphia home 26 months after the supposed sale, the indictment said.

Karen Nicholas, a former member of Fattah's congressional staff and the CEO of his Educational Advancement Alliance, obtained $50,000 in federal grants for a higher education conference that never took place, authorities said. Fattah was supposed to be the keynote speaker.

Instead, they said, Nicholas used the money to pay a political consultant, an attorney and several checks to herself from the charity's operating account.

Bowser, Vederman, Nicholas and Philadelphia businessman Robert Brand have also been charged.

"The public does not expect their elected officials to misuse campaign funds, misappropriate government funds, accept bribes or commit bank fraud," Memeger said at a morning news conference. "These types of criminal acts betray the public trust and undermine faith in government."

Fattah is the second sitting federal lawmaker to be indicted this year on corruption charges. Sen. Bob Menendez of New Jersey, also a Democrat, was indicted on federal corruption charges less than four months ago.

In January, New York Republican Michael Grimm resigned his seat after his indictment last year.

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Associated Press writers Michael R. Sisak in Philadelphia and Laurie Kellman in Washington contributed to this report.