A longtime Philadelphia congressman who was indicted Wednesday paid off a campaign loan with charitable donations and federal grants, funneled campaign money to pay down his son's student loan debt and disguised a lobbyist's bribe as payment for a car he never sold, federal prosecutors said.
Democratic U.S. Rep. Chaka Fattah and four associates were charged with racketeering conspiracy stemming from an investigation dating back to 2013. They also were charged with bribery, conspiracy to commit wire, honest services, bank and mail fraud, and money laundering, among other things.
Prosecutors say the charges covered several schemes. They allege 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 after his failed 2007 mayoral run.
"The public does not expect their elected officials to misuse campaign funds, misappropriate government funds, accept bribes or commit bank fraud," U.S. Attorney Zane Memeger said. "These types of criminal acts betray the public trust and undermine faith in government."
Fattah responded to the allegations outside his offices on Capitol Hill:
"I'll stand by my previous statement that I've never been involved in any wrongdoing, any unlawful activity and any misappropriation of federal funds," said Fattah while saying he and his attorney would still needed to read over the entire indictment.
"For the last 21 years, I have represented the people of Philadelphia in Congress with honor and dignity, helping millions of families through my efforts focused on education, employment, mortgage relief, and health care," Fattah later said in a prepared statement. "I will proudly continue to serve my constituents and look forward to helping millions more.
"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."
The 58-year-old remained free pending a yet-unscheduled court date.
- READ: Entire indictment
Under indictment, Fattah was stepping down from his post as the top Democrat on the House Appropriations subcommittee that oversees spending for Commerce, Justice, Science and related agencies.
House Minority Leader Nancy Pelosi, D-Calif., said in statement the charges "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," Pelosi said.
Despite a long-running federal investigation, Fattah 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.
Prosecutors said the 11th-term 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.
To cover up the transactions, there was a scheme to portray an $18,000 bribe from Florida lobbyist Herbert Vederman, who sought an ambassadorship or a seat on the U.S. Trade Commission, as a car payment, Memeger said. FBI agents found the car in the garage at Fattah's Philadelphia home 26 months after the sale, the indictment said.
On Page 4 of the 85-page indictment under the category of “Affiliates of the Fattah Enterprise,” “Person E” is named as “the spouse of defendant Chaka Fattah Sr.” Congressman Fattah is married to NBC10 News in Philadelphia anchor Renee Chenault-Fattah.
On Page 18, the indictment alleges "Person E" was involved in the fabricated sale of her 1989 Porsche 911 Carrera, the proceeds from which were used to secure a mortgage on a Pocono Mountains vacation home.
Later in the indictment, it also mentions an email exchange between "Person E" and Vederman from Jan. 2012 where "Person E" wrote, “I think its (sic) great you are interested in purchasing the Porsche. I had talked to a coworker this past summer but would much rather it be in your possession… Asking for $18,000 which is a steal…” A little more than a week later, "Person E" signed off as the “seller” on a Bill of Sale that named Vederman as “Buyer,” said the indictment.
Memeger 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. Fattah was supposed to be the keynote speaker.
Instead, Memeger 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.
Chenault-Fattah, who isn't facing any charges, is currently on leave from NBC10.