Prosecutors: Chaka Fattah took illegal $1M campaign loan

- U.S. Rep. Chaka Fattah took an illegal $1 million loan to prop up an ailing mayoral bid and obtained federal funds and charity grants to pay most of it back, federal prosecutors said Monday as they outlined their racketeering case on the opening day of his trial.

Fattah, a Philadelphia Democrat, went on trial just weeks after losing a primary race to retain the congressional seat he had held for two decades. The loss comes in a year that has seen his namesake son go to prison for five years in a related fraud case and his wife lose her TV anchor job after being linked to a bribery count in the indictment.

Renee Chenault-Fattah has not been charged, and both husband and wife insist they did nothing illegal. Chaka Fattah, 59, blames his family's travails on a lengthy FBI investigation that he considers a witch hunt.

Monday morning, he answered questions from FOX 29's Jeff Cole as he entered federal court at about 8:45am. Fattah said he was thankful for his family, grateful for his legal team and he thanked the voters who supported him.

Federal prosecutors painted a starkly different picture.

"The congressman stole from federal agencies, from taxpayers, from nonprofit groups he created to pay his political debts," Assistant U.S. Attorney Paul Gray said in opening statements. "He even stole from his own campaign."

Four associates are also on trial while two others pleaded guilty and are expected to cooperate. Fattah's lawyers told jurors that campaign consultants Greg Naylor and Thomas Lindenfeld acted alone.

"The government's case rests on the word of those two convicted felons," defense lawyer Mark Lee said. "Chaka Fattah's lifestyle is not on trial. Philadelphia politics are not trial. (Congressional) earmarks, donations, grants to nonprofits are not on trial."

The seven-figure campaign loan, which exceeded donor limits for the 2007 Philadelphia mayor's race, is one of five schemes outlined in the racketeering indictment. The others include the use of nonprofits Fattah set up as "pass throughs" for federal grants to reach Fattah's family and friends, prosecutors said.

The loan came from a close Fattah friend, Albert Lord, who earned a fortune from the Charming Shoppes and then became a CEO for Sallie Mae. After Fattah lost the 2007 mayoral race, and the economy turned sour, Lord sought to have the loan repaid, prosecutors said, so Fattah returned the $400,000 left over and steered charitable grants and federal funds to Lord to repay the other $600,000.

The defense asked Monday whether friends can really bribe other friends or whether checks from co-defendant Herbert Vederman to Fattah's family were nothing more than favors. Lawyer Robert Welsh, representing Vederman, said his client helped out Chaka "Chip" Fattah Jr. simply because the young man was "in the throes of a gambling addiction."

He said the case falls apart when looking at the sequence of events surrounding Fattah Sr.'s pitch to President Barack Obama for Vederman to be named an ambassador or Vederman's supposed $18,000 purchase of Chenault-Fattah's Porsche. Prosecutors say the car never left her garage.

"They do not add up to bribes. They add up to examples of people helping out each other," Welsh said.

Fattah, an 11-term Democrat, has represented the Philadelphia region for two decades and served on the powerful House Appropriations Committee. He lost his recent primary bid for reelection.

FOX 29's Steve Keeley reports four former aides also are going to trial with Fattah. That means there will be one prosecution opening statement and five defense opening statements.

Two other aides have pleaded guilty and they're expected to testify against Fattah. Also, his namesake son is serving a five-year prison term in a related case.

 DEVELOPING NEWS: Stay with FOX 29 News and for continuing coverage of Fattah’s trial.


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