Chaka Fattah, Jr. indicted for fraud; faces up to $13M in fines

CENTER CITY (WPVI) -- The son of congressman Chaka Fattah has been indicted on bank fraud, tax and theft charges, accused of stealing federal funds for city schools and using business loans to pay off mostly personal expenses, including more than $30,000 in gambling debts, federal prosecutors announced Tuesday.

Bail was set at $50,000. Fattah was released on his own recognizance.

Only Action News was there just after 8:00 a.m. Tuesday as 31-year-old Chaka Fattah Jr. arrived at the federal courthouse at 6th and Chestnut Streets in Center City Philadelphia.

As he walked into the courthouse, Fattah told Action News he has done nothing wrong.

"I just think this entire investigation has been politically motivated, and I'm looking forward to my day in court," Fattah said.

Rep. Chaka Fattah released the following statement Tuesday afternoon:

"Assistant United States Attorney Paul L. Gray and FBI Special Agent Richard J. Haag and their involvement in the charging of my son raise concerns about the fair administration of justice in this case.

"With these charges we have now moved from speculation to specific allegations. This will bring the matter closer to a day in which my son can defend himself in court and I am confident the facts will clear his name. I have full confidence in my son; I love him and stand by him today and every day."

The alleged activities happened between 2005 and 2012.

A federal indictment accuses Fattah of lying about his income to obtain more than $200,000 in business loans.

He used one $50,000 loan, intended "for working capital to support business operations," to pay down more than $15,000 in credit card debt and pay off more than $33,000 in casino gambling debt, prosecutors said.

He is also charged with theft of federal funds from the city school district, filing false income tax returns in 2005, 2006, 2008 and 2009, and failing to pay $51,000 in taxes on time in 2010.

His consulting companies - 259 Strategies and Chaka Fattah Jr. & Associates - billed themselves as providing educational consulting, diversity consulting, audit services, technical assistance and community relations, along with research and computer consulting, the indictment said.

The government said he inflated expenses related to at least $930,000 in federal funds he received for a charter school program for at-risk middle school students.

The unsealing of the indictment comes more than two and a half years after FBI and IRS agents raided Fattah's condo and nearby office, carting off documents and a computer.

At the time of the February 2012 raid, Fattah was told he was being investigated for tax issues, but no charges were announced or filed.

In April 2014, Fattah announced he was suing the IRS for $10 million, arguing that the investigation, which had lasted 2 and a half years, had ruined his ability to make a living.

"I have been successful in my business. I've earned every dollar legitimately and I don't think this is the way an investigation is typically handled. They've spent millions of dollars working on this for two-and-a-half years," Fattah said.

If convicted of all charges, Fattah faces jail time, a fine of up to $13 million, restitution to the IRS, and five years of supervised release.

-------

The Associated Press contributed to this report