Rep. Chaka Fattah denies wrongdoing after indictment

PHILADELPHIA (WPVI) -- Rep. Chaka Fattah (D-Pa.) vowed to remain in office and fight the charges against him after his indictment in an alleged racketeering case.

Congressman Fattah was at work in Washington when the indictment was handed down.

He smiled broadly as he walked out of his office Wednesday evening and waited for the elevator as cameras looked on.

Earlier, he briefly emerged from his office to deny the allegations.

"I've never been involved in any wrongdoing, any unlawful activity, any misappropriation of federal funds. I've spent my time helping people. We've helped at least 25 million, that we can count. I'm going to spend my time helping millions more. These are allegations and that the people involved in it are innocent until proven otherwise," Fattah said.

In a new statement, Fattah denied wrongdoing and wrote that he's "confident" he'll be cleared of charges.

"As I have previously stated, I have never participated in any illegal activity or misappropriation of taxpayer dollars as an elected official," he wrote.

"This will not be a distraction from my service to the people that elected me, and I am confident that I will be cleared of these charges."

Though he intends to stay in office, Fattah confirms he's stepped down from his role as the top Democrat on the House Appropriations Subcommittee on Commerce, Justice and Science.

Fattah was indicted Wednesday in a racketeering case stemming from the alleged misappropriation of hundreds of thousands of dollars in federal, charitable and campaign funds after his failed 2007 run for mayor.

LINK: Read the full indictment from the U.S. Attorney

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.

Prosecutors said the charges covered several schemes, including the use of federal grants and charitable contributions to Fattah's educational foundation to pay back $600,000 of a $1 million loan from a wealthy campaign supporter and arranging a federal grant in lieu of a $130,000 payment to a political consultant.

Four others are also charged in this case.

According to U.S. Attorney Zane Memeger, the four other people charged are: Lobbyist Herbert Vederman, 69, of Palm Beach, Florida; Fattah's Congressional District Director Bonnie Bowser, 59, of Philadelphia; Robert Brand, 69, of Philadelphia; and Karen Nicholas, 57, of Williamstown, New Jersey

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

The congressman is also accused of using campaign funds to repay the $23,000 student loan debt of his son, Chaka Fattah Jr., a man with his own legal troubles.

"To execute this scheme, and to conceal it, Congressman Fattah and Bonnie Bowser arranged for his campaigns to make payments to a political consultant company, which in turn used the funds to satisfy a student loan that belonged to Congressman Fattah's son," Memeger said.

In response to the indictment, House Minority Leader Nancy Pelosi said "The charges in the indictment against Congressman Chaka Fattah are deeply saddening. 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."

Fattah remains free pending a yet-unscheduled court date.

The allegations, as released by the U.S. Attorney, are as follows:

"The indictment alleges that, in connection with his failed 2007 campaign to serve as mayor of Philadelphia, Fattah and certain associates borrowed $1 million from a wealthy supporter and disguised the funds as a loan to a consulting company. After he lost the election, Fattah allegedly returned $400,000 to the donor that the campaign had not used, and arranged for Educational Advancement Alliance (EAA), a non-profit entity that he founded and controlled, to repay the remaining $600,000 using charitable and federal grant funds that passed through two other companies, including one run by Brand. To conceal the contribution and repayment scheme, the defendants and others allegedly created sham contracts and made false entries in accounting records, tax returns and campaign finance disclosure statements.

In addition, the indictment alleges that after his defeat in the mayoral election, Fattah sought to extinguish approximately $130,000 in campaign debt owed to a political consultant by agreeing to arrange for the award of federal grant funds to the consultant. According to the allegations in the indictment, Fattah directed the consultant to apply for a $15 million grant, which he did not ultimately receive, on behalf of a then non-existent non-profit entity. In exchange for Fattah's efforts to arrange the award of the funds to the non-profit, the consultant allegedly agreed to forgive the debt owed by the campaign.

The indictment further alleges that Fattah misappropriated funds from his mayoral and congressional campaigns to repay his son's student loan debt. To execute the scheme, Fattah and Bowser allegedly arranged for his campaigns to make payments to a political consulting company, which the company then used to lessen Fattah's son's student loan debt. According to the allegations in the indictment, between 2007 and 2011, the consultant made 34 successful loan payments on behalf of Fattah's son, totaling approximately $23,000.

In another alleged scheme, beginning in 2008, Fattah communicated with individuals in the legislative and executive branches in an effort to secure for Vederman an ambassadorship or an appointment to the U.S. Trade Commission. In exchange, Vederman provided money and other items of value to Fattah. As part of this scheme, the indictment alleges that the defendants sought to conceal an $18,000 bribe payment from Vederman to Fattah by disguising it as a payment for a car sale that never actually took place.

Finally, the indictment alleges that Nicholas obtained $50,000 in federal grant funds that she claimed would be used by EAA to support a conference on higher education. The conference never took place. Instead, Nicholas used the grant funds to pay $20,000 to a political consultant and $10,000 to her attorney, and wrote several checks to herself from EAA's operating account."