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June 21, 2016

Rep. Chaka Fattah found guilty of all racketeering, fraud, money laundering charges

Lame-duck Democratic congressman is scheduled to be sentenced Oct. 4 in federal court in Philadelphia

Courts Racketeering
Carroll - Chaka Fattah Concession Speech Thom Carroll/PhillyVoice

U.S. Rep. Chaka Fattah arrives with his family at the Local 1199C Hospital & Healthcare Workers Union where he gave his concession speech, Tuesday, April 26, 2016. The 11-term congressman lost to state Rep. Dwight Evans in the Democratic primary, and on Tuesday, June 21, 2016, a federal jury found him guilty of racketeering charges.

A jury has found U.S. Rep. Chaka Fattah guilty of all the racketeering charges against him.

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.

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.

The jury's verdict was announced early Tuesday afternoon. He is scheduled to be sentenced Oct. 4. He will remain free on bail until then.

Fattah had little reaction to the verdict, but he kept a smile on his face as he conferred with his lawyers afterward. He later released the following statement: 

“This is an extraordinarily difficult day for me and my family. A jury has decided that based on the evidence presented to them that I am guilty of charges presented by the government. Today’s decision notwithstanding, it has been my privilege to serve the constituents of the Second Congressional District for over 20 years. We have done important work and passed legislation that has helped tens of millions of young people achieve their dream of a college education, ensured that hundreds of thousands of families facing foreclosure have been able to remain in their homes, and millions suffering from brain related diseases now have hope that a cure or a treatment is closer today than yesterday. I continue to be proud of that record. While today’s outcome isn’t what we had hoped, I respect our nation’s judicial system. I want to thank the people of the Second Congressional District for the honor of serving them.” 

U.S. Attorney Zane David Memeger said Fattah and his co-defendants "betrayed the public trust" and undermined its faith in government. 

"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," Memeger said in a statement.

Prosecutors will seek jail time for Fattah, Memeger said in an afternoon press conference. But he declined to specify a length until the recommended sentencing guidelines are calculated.

"We will ask for a sentence within that range, possibly above that range," Memeger said.

During the trial, federal prosecutors described Fattah's actions as  a "white-collar crime spree" that stretched from Philadelphia to Washington, D.C.

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.”

Assistant U.S. Attorney Jonathan Kravis said in his closing argument that Fattah also used nonprofit funds to enrich his family and friends.

Defense lawyers say the plots were hatched by two political consultants who have pleaded guilty in the case and testified against Fattah. The defense acknowledged Fattah may have gotten himself in financial trouble after a failed 2007 mayoral bid, but they said any help from friends was above board.

Co-defendant Herbert Vederman, a former deputy mayor, helped support Fattah's South African nanny and paid $18,000 for a Porsche owned by Fattah's wife  – former NBC 10 news anchor Renee Chenault-Fattah –that never left their garage, prosecutors said. The congressman needed the $18,000 for a down payment on a Poconos vacation home in 2010, they said. He then lobbied the White House for Vederman to score an ambassadorship and put his girlfriend on his congressional payroll.

"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."

Velderman and two other co-defendants – Karen Nicholas, 58, of Williamstown, New Jersey, and Robert Brand, 70, of Philadelphia – were found guilty of participating in the racketeering conspiracy. Nicholas ran the education nonprofit Fattah started. Brand is a businessman married to a former Fattah staffer. They each also were convicted of related charges.

Bonnie Bowser, 60, of Philadelphia, was acquitted of RICO conspiracy but convicted of bank fraud, falsification of records and money laundering, among other charges. Bowser ran Fattah's district office.

Kravis told jurors, "These conspirators engaged in what can only be described as a white-collar crime spree, from Philadelphia all the way to Washington, D.C. There were so many schemes in this case we needed numbers to keep track of them."

The $1 million loan for the mayoral campaign came from Albert Lord, the former CEO for Sallie Mae. Fattah had been the early favorite for the race, but his plan to fund the race with help from a few wealthy donors hit a snag over new campaign finance limits that Fattah unsuccessfully fought to overturn.

So he instead funneled the loan from Lord through his political consultant, investigators said. Some $200,000 was used on primary day alone to try to get out the vote. Fattah nonetheless finished fourth.

When Lord called in the loan, Fattah's consultant returned $400,000 that was never spent. He then took $600,000 in NASA grant money awarded for math and science programs to an education nonprofit he controlled and routed it through his consultant to pay the balance, Kravis told jurors.

The campaign loan was just one of several alleged 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, a wealthy businessman who now lives in Palm Beach, Florida; and by political consultants Greg Naylor and Thomas Lindenfeld, who pleaded guilty.

"Congressman Fattah repeatedly abused his office for his own personal and political gain," Kravis said. "He took bribes. He committed fraud. He even stole money from his own campaigns. But he didn't do it alone."

Like Fattah, Vederman and Brand will be sentenced on Oct. 4. Nicholas and Bowser will be sentenced on Oct. 5.


The Associated Press contributed to this report.