Philadelphia congressman orchestrated series of frauds: prosecutor
By Joseph Ax
(Reuters) - Representative Chaka Fattah of Pennsylvania and several associates orchestrated a series of fraudulent schemes to enrich the congressman and preserve his political career, federal prosecutors said at the start of his corruption trial on Monday.
"The congressman stole from federal agencies, from taxpayers, from nonprofit educational groups he created," Assistant U.S. Attorney Paul Gray told a Philadelphia jury. "He even stole from his own political campaigns."
But defense lawyers said the government's case relied almost entirely on the word of two convicted felons who received favorable plea deals.
"Congressman Fattah had nothing to do with any of it," said Mark Lee, a lawyer for Fattah.
The 59-year-old Fattah, an 11-term congressman who represents parts of Philadelphia, lost the Democratic primary in April under the cloud of a wide-ranging indictment charging him with racketeering, bribery and fraud.
Some of the alleged schemes stemmed from Fattah's unsuccessful 2007 mayoral campaign, when prosecutors say he accepted a secret and illegal $1 million loan from Al Lord, former chief executive officer of student loan servicer SLM Corp, known as Sallie Mae.
Following the race, Fattah convinced Karen Nicholas, who ran his nonprofit educational organization, to transfer charitable and federal grant money to pay Lord back, Gray said.
Separately, Fattah owed consultant Thomas Lindenfeld more than $100,000. With no funds to repay him, Fattah encouraged Lindenfeld to apply for federal money for a nonprofit that didn't exist, prosecutors said.
In a third scheme, Fattah funneled campaign money through another consultant, Gregory Naylor, to pay off his son's student debt, prosecutors said. The son, Chaka Fattah Jr., was convicted in an unrelated fraud case and sentenced earlier this year to five years in prison.
Both Lindenfeld and Naylor have pleaded guilty in exchange for testifying against Fattah.
Prosecutors also said Fattah accepted bribes from a close friend, retired businessman Herb Vederman, who was seeking a U.S. ambassadorship. Fattah personally appealed to President Barack Obama to appoint Vederman to an international post.
"Congressman Fattah used Herb Vederman as a human ATM machine whenever he needed a little money," Gray said.
But lawyers for Fattah and Vederman said prosecutors had "cherry-picked" evidence to suggest a bribery scheme when the two men simply acted out of friendship.
Nicholas, Vederman and two other Fattah associates, consultant Robert Brand and campaign treasurer Bonnie Bowser, are co-defendants in the trial, which is expected to last eight weeks.
(Reporting by Joseph Ax; Editing by David Gregorio and Jeffrey Benkoe)
