Congressman Fattah guilty on all charges in corruption case

- The jury in the Rep. Chaka Fattah trial found the Pennsylvania Congressman guilty on all charges.

The veteran Pennsylvania congressman was convicted Tuesday in a month-long racketeering case that largely centered on various efforts to repay an illegal $1 million campaign loan related to his unsuccessful 2007 mayoral bid.
He made no comment when he left the courtroom.
Fattah was found guilty of all counts against him, including racketeering, fraud and money laundering. His lawyers had argued that the schemes were engineered without Fattah's knowledge by two political consultants who pleaded guilty in the case.

His lawyers told jurors 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.

The 59-year-old Democrat had been in Congress since 1995 and served on the powerful House Appropriations Committee. But he lost the April primary and his bid for his 12th term. His current term ends Jan. 2.
Fattah had little reaction to the verdict, but he kept a smile on his face as he conferred with his lawyers afterward.
He will remain free on bail. A judge set sentencing for Oct. 4.
Prosecutors said Fattah routed federal grant money and nonprofit funds through his consultants to pay back the illegal loan.
Justice Department lawyer Jonathan Kravis said in his closing argument that Fattah also used federal grants and nonprofit funds to enrich his family and friends. 
Defense lawyers acknowledged Fattah might have gotten himself in financial trouble after a costly 2007 mayoral bid, but they said any help from friends amounted to gifts, not bribes. 
Many of them came from co-defendant Herbert Vederman, a wealthy friend who had dreams of scoring an ambassadorship. U.S. Sen. Bob Casey, a Democrat, testified that he never took the pitch from Fattah too seriously, even though Fattah once bent the president's ear about it. Democrat Ed Rendell, a former mayor and governor, was called to defend Vederman, his former deputy mayor. He said Vederman was qualified for the job and accused prosecutors of cynically misreading the help he lent Fattah. 
Vederman helped support Fattah's South African nanny and paid $18,000 for a Porsche owned by Fattah's TV anchor wife. 
"The nanny, the Porsche and the Poconos, they weren't part of a bribery scheme," Fattah lawyer Samuel Silver argued in closings. "Those were all overreaches by the prosecution." 
The campaign loan was just one of several 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, 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. The jury on Tuesday came back with a mixed verdict for them.
The jury started deliberating on Wednesday. Then, Friday, a juror was dismissed. No explanation was given, but an alternate replaced that person, and U.S. District Judge Harvey Bartle III ordered jurors to begin deliberations again.
This year, his namesake son got sent to prison for five years in a related fraud case, and his wife lost her TV anchor job after being linked to a bribery count in the indictment. Renee Chenault-Fattah has not been charged.
Fattah blamed his family's travails on a lengthy FBI investigation that he considers a witch hunt.

DEVELOPING NEWS: Stay with FOX 29 News and for reaction to the verdicts.

Statement from the U.S. Attorney’s Office, Eastern District of Pennsylvania:

A federal jury today found Congressman Chaka Fattah Sr., 59, guilty of all charges against him.  He and three of his four associates were found guilty of taking part in a racketeering conspiracy involving several schemes that were intended to further their political and financial interests by misappropriating federal, charitable and campaign funds, among other schemes.  The verdicts were announced today by United States Attorney Zane David Memeger, FBI Special Agent-in-Charge William Sweeney, and IRS Criminal Investigation Special Agent-in-Charge Akeia Conner.

Fattah, Robert Brand, 70, of Philadelphia, Karen Nicholas, 58, of Williamstown, NJ, and Herbert Vederman, 70, of Palm Beach, Florida were found guilty of participating in a racketeering conspiracy.  Fattah was also found guilty of conspiracy to commit bribery, bribery, conspiracy to commit wire fraud, conspiracy to commit honest services fraud, mail fraud, money laundering conspiracy, money laundering, bank fraud, false statements to a financial institution, six counts of mail fraud, and five counts of falsification of records.

Herbert Vederman was also convicted of conspiracy to commit bribery, bribery, bank fraud, making false statements to the Credit Union Mortgage Association, falsification of records, and two counts of money laundering.

Robert Brand was also convicted of conspiracy to commit wire fraud.

Karen Nicholas was also convicted of conspiracy to commit wire fraud, two counts of wire fraud, and two counts of falsification of records.

Bonnie Bowser, 60, of Philadelphia, was acquitted of RICO conspiracy but convicted of conspiracy to commit bribery, bank fraud, making false statements to the Credit Union Mortgage Association, falsification of records, and money laundering.

U.S. District Court Judge Harvey Bartle III scheduled sentencing hearings for October 4, 2016 for Fattah, Vederman and Brand; and October 5, 2016 for Nicholas and Bowser.

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 returned to the donor $400,000 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 created sham contracts and made false entries in accounting records, tax returns and campaign finance disclosure statements. 

Following 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.  Fattah directed the consultant to apply for a $15 million grant (which ultimately he did not 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 agreed to forgive the debt owed by the campaign.

Fattah misappropriated funds from his mayoral and congressional campaigns to repay his son’s student loan debt.  To execute the scheme, Fattah arranged for his campaigns to make payments to a political consulting company, which funds the company then used to lessen Fattah’s son’s student loan debt.  Between 2007 and 2011, the consultant made 34 successful loan payments on behalf of Fattah’s son, totaling approximately $23,000. 

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 United States Trade Commission.  In exchange, Vederman provided money and other items of value to Fattah.  As part of this scheme, the defendants sought to conceal an $18,000 bribe payment from Vederman to Fattah by disguising it as a payment for a sham car sale.

Karen Nicholas was found guilty of obtaining $50,000 in federal grant funds that she falsely 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, $10,000 to her attorney, and also wrote several checks to herself from EAA's operating account.

“Chaka Fattah Sr. and his co-defendants betrayed the public trust and undermined our faith in government,” said Memeger. “Today’s verdict makes clear that the citizens of the Eastern District of Pennsylvania expect their public officials to act with honesty and integrity, and to not sell their office for personal gain.  Hopefully, our elected officials in Philadelphia and elsewhere hear today’s message loud and clear.”

“The corruption demonstrated by Congressman Fattah and his co-defendants is yet another sad example of the type of behavior that corrodes citizens' faith in their government,” said FBI Special Agent- in-Charge William Sweeney. “The FBI is firmly committed to ensuring that public officials and their co-conspirators who choose to use their positions for personal gain rather than provide the honest services the community rightly expects will be investigated and brought to justice. The community deserves nothing less.”

“Convictions, like the one returned against these five defendants today, send a loud and clear message that people who willfully defy the law will be fully investigated, prosecuted, and subjected to the full punishment of the law for their actions,” said Special Agent-in-Charge Akeia Conner, IRS Criminal Investigation.

“Congressman Fattah corruptly abused his office for his own personal and political gain,” said Assistant Attorney General Caldwell.  “He took bribes, committed fraud and even stole money from his own campaigns.  In short, Congressman Fattah and his codefendants deprived the people of eastern Pennsylvania of their right to the honest services of their elected representative.  Today’s convictions should send a message that the Justice Department will vigorously investigate and prosecute political corruption wherever it takes place, and uphold the principles of honesty and integrity that are the foundation of our government.”

This case was investigated by the FBI and IRS-Criminal Investigation. Assistance was provided by the Department of Justice Office of the Inspector General, the NASA Office of Inspector General and the Department of Commerce Office of Inspector General. It is being prosecuted by Assistant U.S. Attorney Paul L. Gray, Trial Attorneys Eric L. Gibson, and Jonathan Kravis of the Criminal Division’s Public Integrity Section. 

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