Congressman Chaka Fattah Indicted on Federal Public Corruption Charges

Longtime Congressman Chaka Fattah and four of his associates were indicted Wednesday for their alleged participation in a racketeering conspiracy scheme.

The United States Attorney says Fattah and his associates were involved in several schemes that involved a misappropriation of federal, charitable and campaign funds to further their own political and financial interests. The 29-count indictment includes charges against: Fattah, Bonnie Bowser of Philadelphia, Karen Nicholas of Williamstown, New Jersey, Herbert Verderman of Palm Beach, Florida, and Robert Brand of Philadelphia. The charges include racketeering conspiracy, bribery, conspiracy to commit wire, honest services and mail fraud, money laundering conspiracy, money laundering, bank fraud, false statements to a financial institution, and multiple counts of mail fraud, wire fraud and falsification of records.

Wednesday's indictment specifically alleges a misappropriation of funds surrounding Fattah's failed 2007 run for Mayor of Philadelphia. Following his defeat in the election, the US Attorney alleges Fattah and a number of associates returned an unused $400,000 portion of a $1 Million dollar donation to a wealthy donor. Then they repaid the remaining $600,000 using federal grant and charitable funds from a non-profit Fattah founded and controlled, after they had passed the funds through two other companies.

The indictment also alleges that funds from Fattah's Mayoral and Congressional campaigns were also misappropriated to repay his son's student loan debt. Investigators say Fattah and Bowser arranged for his campaigns to make payments to a political consulting company, which were instead used to lessen Fattah's son's loan debt. The indictment states that 34 loan payments were successfully made and totaled approximately $23,000.

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Following his defeat in the Mayoral election, the indictment alleges that Fattah sought to eliminate a debt owed to a political consultant with an arrangement for an award of federal grant funds to the consultant. Fattah allegedly directed the consultant to apply for a $15 million federal grant on behalf of a non-profit entity that did not exist at that time. Despite not receiving the grant funds, the consultant allegedly agreed to forgive the debt due to Fattah's efforts.

Another allegation centers around Karen Nicholas, stating that she obtained $50,000 in federal grant money that she claimed was for a conference on higher education hosted by EAA. According to the indictment, that conference never happened, and Nicholas used the funds to pay a political consultant as well as her own attorney. Nicholas also allegedly wrote several checks to herself from the EAA's operating account.

"The public expects their elected officials to act with honesty and integrity," said by United States Attorney Zane David Memeger . "By misusing campaign funds, misappropriating government funds, accepting bribes, and committing bank fraud, as alleged in the Indictment, Congressman Fattah and his co-conspirators have betrayed the public trust and undermined faith in government."

The case is being investigated by the FBI and IRS-Criminal Investigation.

Just last year a former Fattah aide, Gregory Naylor, pleaded guilty to federal charges for his role in a pair of campaign finance schemes. Court documents say Naylor issued a phony invoice of more than $193,000 to a candidate in the 2007 mayor's race. The court documents didn't name the candidate, but Naylor was a top adviser to Fattah's 2007 mayoral bid.

Congressman Chaka Fattah (PA-02) issued the following statement on today's actions by the U.S. Attorney's office in Philadelphia:

"This has been an eight-year effort by some in the Department of Justice to link my public service career to some form of wrongdoing. With today's charges, this misguided campaign has now moved from speculation to specific allegations.

"As I have previously stated, I have never participated in any illegal activity or misappropriation of taxpayer dollars as an elected official. 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. I will proudly continue to serve my constituents and look forward to helping millions more.

"Per House rules and precedent, I have stepped aside from my role as Ranking Member on the Appropriations Subcommittee on Commerce, Justice, and Science.

"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."