Fattah Case Was Built Over Years

Throughout his two decades in Congress, Chaka Fattah has repeatedly touted two accomplishments:

The millions in federal education funding he has secured and distributed through nonprofits he created, and the tight-knit group of allies he cultivated to run his political and charitable networks.

"Programs that I've initiated have helped at least 25 million people," he said in an interview last week. "I've helped millions of young people go to college, and I've been very involved."

But now, with Fattah having been indicted in a case that could send him to prison for decades, those same achievements could prove central to the Philadelphia Democrat's undoing.

Last week, prosecutors unveiled a sprawling racketeering conspiracy case against Fattah and four associates, alleging that for years he used federal grant money and charitable donations he controlled to line the pockets of his family and members of his inner circle.

Fattah has denied the charges against him and dismissed the investigation as nothing more than a political witch hunt. He also says he will continue to seek reelection.

Even so, the charging documents filed by prosecutors reveal a meticulous investigation - one pieced together over years of work, involving cases against seven other defendants and drawing upon reams of federal audit documents and subpoenaed financial records.

Several Fattah allies, facing legal trouble of their own, are believed to be cooperating in the probe. They include his onetime chief of staff, a high-profile Washington political consultant, and the cofounder of a luxury concierge service.

Prosecutors allege that Fattah was pulling the strings behind several schemes to misappropriate grant money, campaign cash, or charitable donations. Still, his indictment contains few references to wiretaps, e-mail exchanges, or text messages that might implicate him directly.

What's more, the congressman is still fighting prosecutors' attempts to obtain seven years of his personal e-mails, arguing that they are protected under laws shielding legislative work from federal law-enforcement scrutiny.

Investigators say they began targeting Fattah after receiving a tip in March 2013, but the elements of the case against him have been slowly accumulating for years.

Here is how it came together:

Fattah has long credited his political success, at least in part, to a small cadre of confidantes and advisers he has groomed on his own way up the ladder - a group the congressman has referred to in the past as "Fattah people."

Many have followed him from jobs in congressional offices to high-paying positions at his affiliated charities. Some of those relationships date back to Fattah's school days at Overbrook High School.

Karen Nicholas, one of Fattah's codefendants in the indictment handed down Wednesday, began her career in 1995 as a constituent liaison in Fattah's congressional office, and went on to run the Educational Advancement Alliance, or EAA, a nonprofit that Fattah established in 2004.

But as early as 2008, several key "Fattah people" began to find themselves facing legal trouble.

That year, a routine U.S. Justice Department audit of EAA prompted questions about the congressman's role in the organization and how its grant money was being spent.

Cheryl Mobley, Fattah's chief of staff during his days in the Pennsylvania Senate, was later charged and pleaded guilty to failing to file tax forms on nearly $107,000 the charity paid her as an educational consultant - a salary prosecutors described as improper use of grant money.

While dodging her tax obligations, investigators said, Mobley used those funds to buy luxury cars, including a $55,000 van with a fold-out leather sofa, a flat-screen TV, and a theater sound system.

Three years later, the FBI found itself at the doorstep of another Fattah family friend, Mikel Jones. A personal-injury lawyer who grew up with the congressman, Jones was charged with defrauding a hedge fund and misspending city money to launch a Philadelphia law firm.

That case did not directly involve Jones' ties to Fattah. But when FBI agents arrived at Jones' Boynton Beach, Fla., home in January 2011, the 10-hour interview meandered to topics such as his role helping to manage a Caribbean student-exchange program Fattah had created and funded with congressional earmarks, and the more than $90,000 Jones paid in 2005 to consulting companies run by Fattah's son Chaka "Chip" Fattah Jr.

Asked what the younger Fattah did for Jones to earn those fees, the lawyer was hard-pressed to provide answers, according to a 2011 FBI memo outlining that conversation. The bottom line, Jones said, was that having the son of a congressman on your payroll opened doors.

"I know what this looks like," he said, according to the memo. "But there was no quid pro quo. . . . Was it a good investment, strictly speaking? No, but I was desperate and he had access."

Chip Fattah's business dealings would later become the focus of a full-scale investigation in their own right.

A self-described "entrepreneur, socialite, and lifestyle mogul," the younger Fattah, 32, ran multiple consulting firms that agents now say existed mostly to defraud clients.

They included his education consulting firm, 259 Strategies, and a high-priced concierge service, American Royalty, which promised customers golf club reservations or private jet rentals in a pinch.

Last year, a federal grand jury indicted Fattah Jr. on charges of bank and tax fraud, alleging that he falsified business records to secure nearly $200,000 in business loans. He blew the money, prosecutors said, on a $600,000 condo at the Ritz-Carlton, fancy cars, and mounting gambling debts.

"This entire investigation has been politically motivated," Fattah Jr. said in a recent interview, vowing to fight the case. "If my dad wasn't the congressman, nobody would be going after me."

It was Fattah Jr. himself, though, who tipped off investigators to another scheme with which he has been charged.

In a 2012 meeting with Philadelphia School District officials, he implicated himself and his then-employer, David T. Shulick - who held a $4.1 million district contract to run a disciplinary school and programs for dropouts, the FBI said.

In an attempt to collect a whistle-blower reward and take over the contract, Fattah Jr. allegedly told district officials that he and Shulick had stolen hundreds of thousands of dollars by inflating budgets.

Shulick, unlike Fattah Jr., has not been charged. He has said he has "nothing to hide."

Shulick told The Inquirer in a 2012 interview that he entered the congressman's political orbit in hopes of increasing his work with the school district.

"If you live in Philadelphia, you've got to support the politicians. Period," he said.

Shulick cohosted a 2010 political fund-raiser for the congressman with another Fattah ally who has attracted prosecutors' attention: Herbert Vederman, Fattah's onetime campaign finance director.

A former deputy mayor under Ed Rendell and a lobbyist at the law firm Stradley Ronon Stevens & Young, Vederman was charged alongside the congressman last week and accused of funneling bribes to Fattah and his wife.

In exchange, prosecutors say, Fattah repeatedly tried to land him an ambassadorship with the Obama White House.

According to the indictment, Vederman's gifts included college tuition payments for the congressman's au pair, "stacks of cash" given to Fattah Jr., and an $18,000 contribution toward a Poconos vacation home - a bribe prosecutors say Fattah disguised as payment in a sham sale of a 1989 Porsche convertible owned by Fattah's wife, longtime NBC10 anchor Renee Chenault-Fattah. She kept the car even after money changed hands, according to the indictment.

The investigation of Fattah Jr.'s finances also led agents to their first significant crack inside his father's political operation.

Between 2007 and 2011, several payments toward the younger Fattah's more than $100,000 in college debt were made by a political consulting firm run by his father's former chief-of-staff, Gregory Naylor.

A fixture in Philadelphia Democratic politics since the 1980s, Naylor has since admitted that he funneled more than $22,000 from Fattah's campaign coffers to Drexel University and Sallie Mae, which held the college debt. He did this, he said, at Fattah's behest.

But while pleading guilty in August 2014 to federal charges related to that scheme, Naylor also admitted his role in another crime that now forms the backbone of the congressman's indictment.

While running Fattah's failed 2007 mayoral campaign, Naylor and others helped secure an illegal $1 million campaign loan that the struggling candidate badly needed.

The plan, as laid out by prosecutors, involved wealthy donor Al Lord, a former Sallie Mae chief executive, advancing the money as a personal loan to Thomas Lindenfeld, a Washington-based political strategist whose work has helped propel into office such politicians as former Mayor John F. Street and President Obama.

At the time, Lindenfeld, a longtime Fattah ally, was working on the congressman's mayoral bid. He passed the money on to Naylor's consulting firm to buy TV ad time and poll workers in the race's final days.

But once Fattah lost the Democratic primary to Michael Nutter, Lord called in the debt.

According to the indictment against the congressman, Fattah directed associates to pay it back with charitable funds and federal grants he helped steer to EAA, his scholarship nonprofit.

Karen Nicholas, the former Fattah staffer who was running the charity, allegedly diverted $600,000 by drawing up phony contracts with a company owned by another longtime Fattah supporter. Prosecutors say the funds were passed through that firm back to Lindenfeld and then Lord.

Nicholas has denied the allegation.

But during an August 2014 hearing in federal court, Lindenfeld admitted his part in the scheme.

He and Naylor have been cooperating with the investigation ever since, and both have put Fattah in the FBI's crosshairs.

The challenges now facing Fattah are steep.

His role as an education advocate has been questioned. The bonds that have kept his "Fattah people" loyal for years are beginning to fray. And the 29-count indictment handed up Wednesday threatens to end his political career.

Still, Fattah has expressed confidence that the case against him is one that he can beat.

"They've spent a great deal of resources in this very enthusiastic effort," he said on his way to a House vote on Wednesday. "I think I'll stand by my original position, which was as an elected official, I have never been involved in any illegal activity or misappropriations of funds."

For now, at least, he refuses to be cowed.

"We'll see what the facts are, all right?"

215-854-2608@jeremyrroebuck

Inquirer staff writers Jonathan Tamari and Martha Woodall contributed to this article.

The Road to the Indictments

2008: FBI agents question employees and consultants from Educational Advancement Alliance (EAA), a nonprofit started by U.S. Rep. Chaka Fattah to help low-income students get scholarships. Some subpoenas served.

MAY 2009: Federal agents serve subpoenas for EAA financial records.

2010: Agents question former Fattah staffer Cheryl Mobley, who received her job at EAA though "her political connection," the government says.

JANUARY 2011: FBI agents interview lawyer Mikel Jones, who is a lifelong friend of Fattah's and paid Fattah's son, Chaka "Chip" Fattah Jr., more than $90,000 as a consultant. Jones said that he "needed access," but that the young Fattah's work wasn't worth the money.

APRIL 2011: Mobley indicted on federal tax charges.

MAY 2011: Jones indicted on federal charges of money laundering and fraud.

NOVEMBER 2011: Jones convicted on federal charges of money laundering and fraud.

FEBRUARY 2012: FBI and IRS agents raid home and office of Fattah Jr.

MARCH 2012: Mobley pleads guilty to federal tax charges.

JULY 2012: Jones sentenced to 42 months in prison for money laundering and other charges.

MARCH 2013: FBI says it received the "tip" that launched the formal investigation targeting Rep. Fattah.

JULY 2014: Fattah Jr. charged with bank fraud and related charges.

AUGUST 2014: Matthew Amato, a former roommate of Fattah Jr.'s, pleads guilty to making false statements to obtain loans. Amato agrees to cooperate with the investigation.

AUGUST 2014: Gregory Naylor, a close Fattah ally, charged in connection with an illegal $1 million campaign loan, pleads guilty and agrees to cooperate.

NOVEMBER 2014: Thomas Lindenfeld, a close Fattah ally, charged in connection with the $1 million loan, pleads guilty and agrees to cooperate.

JULY 29, 2015: The U.S. Attorney announces charges against U.S. Rep. Chaka Fattah and four of his close associates — Robert Brand, Herbert Vederman, Karen Nicholas, and Bonnie Bowser.