Prosecutors: U.S. Rep. Chaka Fattah led 'white-collar crime spree'

WPVI logo
Monday, June 13, 2016
EMBED <>More Videos

A veteran congressman on trial in a racketeering case ran a "white-collar crime spree" that stretched from Philadelphia to Washington, D.C., a prosecutor told jurors Monday.

PHILADELPHIA (WPVI) -- A veteran congressman on trial in a racketeering case ran a "white-collar crime spree" that stretched from Philadelphia to Washington, D.C., a prosecutor told jurors Monday.

U.S. Rep. Chaka Fattah, an 11-term Democrat from Philadelphia, is accused of taking an illegal $1 million campaign loan from a friend to fund a failed 2007 mayoral bid and using a federal grant to repay most of it.

Justice Department lawyer Jonathan Kravis said in his closing argument that Fattah also used nonprofit funds to enrich his family and friends.

Defense lawyers say the plots were hatched by two political consultants who have pleaded guilty in the case and testified against Fattah. The defense acknowledged Fattah may have gotten himself in financial trouble after a failed 2007 mayoral bid, but they said any help from friends was above board.

Co-defendant Herbert Vederman, a former deputy mayor, helped support Fattah's South African nanny and paid $18,000 for a Porsche owned by Fattah's TV anchor wife that never left their garage, prosecutors said. The congressman needed the $18,000 for a down payment on a Poconos vacation home in 2010, they said. He then lobbied the White House for Vederman to score an ambassadorship and put his girlfriend on his congressional payroll.

"The nanny, the Porsche and the Poconos, they weren't part of a bribery scheme," Silver said. "Those were all overreaches by the prosecution."

Fattah, 59, lost his bid for re-election in the April Democratic primary. His trial has been underway for about a month.

"These conspirators engaged in what can only be described as a white-collar crime spree, from Philadelphia all the way to Washington, D.C.," Kravis told jurors. "There were so many schemes in this case we needed numbers to keep track of them."

The $1 million loan for the mayoral campaign came from Albert Lord, the former CEO for Sallie Mae. Fattah had been the early favorite for the race, but his plan to fund the race with help from a few wealthy donors hit a snag over new campaign finance limits that Fattah unsuccessfully fought to overturn.

So he instead funneled the loan from Lord through his political consultant, investigators said. Some $200,000 was used on primary day alone to try to get out the vote. Fattah nonetheless finished fourth.

When Lord called in the loan, Fattah's consultant returned $400,000 that was never spent. He then took $600,000 in NASA grant money awarded for math and science programs to an education nonprofit he controlled and routed it through his consultant to pay the balance, Kravis told jurors.

The campaign loan was just one of several alleged schemes prosecutors outlined during the trial. They say Fattah was aided in his endeavors by current and former staffers who ran his district office or the nonprofits; by Vederman, a wealthy businessman who now lives in Palm Beach, Florida; and by political consultants Greg Naylor and Thomas Lindenfeld, who pleaded guilty.

The other co-defendants are Bonnie Bowser of Philadelphia, who ran his district office; Karen Nicholas of Williamstown, New jersey, who ran the education nonprofit Fattah started; and Robert Brand of Philadelphia, a businessman married to a former Fattah staffer. All have pleaded not guilty.

"Congressman Fattah repeatedly abused his office for his own personal and political gain," Kravis said. "He took bribes. He committed fraud. He even stole money from his own campaigns. But he didn't do it alone."

Jurors are expected to begin deliberations after closing arguments conclude.