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Friday, November 6, 2015
Philadelphia Congressman's Son, Chaka Fattah Jr., Convicted of Fraud and Tax Charges
The U.S. Justice Department released the below link:
A federal jury today convicted Chaka Fattah Jr., 32, of Philadelphia, of 22 of 23 counts in connection with a scheme to defraud banks, the Internal Revenue Service (IRS) and the Philadelphia School District of hundreds of thousands of dollars. Senior U.S. District Judge Harvey Bartle III of the Eastern District of Pennsylvania scheduled a sentencing hearing for Feb. 3, 2015. The defendant faces a substantial term of imprisonment, restitution to the IRS, fines, a special assessment and supervised release.
Between 2005 and 2012, Fattah Jr.: made false statements to banks to obtain loans; made false statements to banks and the Small Business Administration (SBA) to settle loans for less than what was owed; filed false federal income tax returns; failed to pay federal taxes; and stole from the Philadelphia School District, which had received federal funds for its operations.
The evidence at trial showed that Fattah Jr. obtained numerous business lines of credit through false and fraudulent statements to local banks and used the funds primarily for personal expenses – including car payments, gambling debts, restaurant and club expenses, utilities, clothing, electronics, retail purchases, charitable donations, jewelry, legal fees and personal credit card expenses – rather than business expenses, as the loan terms required. These false statements involved fictitious earnings information that Fattah Jr. supplied for entrepreneurial companies which he claimed that he operated, including 259 Strategies LLC (259 Strategies) and Chaka Fattah Jr. & Associates. Fattah Jr. claimed that 259 Strategies provided educational consulting, diversity consulting and audit services, technical assistance, community relations and organizational development services to a select group of clients. He claimed that Chaka Fattah Jr. & Associates performed research and consulting concerning the development of computer centers.
In 2011, Fattah Jr. received a loan from United Bank for $50,000 intended for “working capital to support business operations.” Instead, he used the funds to make car payments, to pay down more than $15,000 in personal credit card debt and to pay more than $33,000 in gambling debts at area casinos. The charges total approximately $206,000 in bank loans received through false misrepresentations or fraud.
Fattah Jr. defaulted on several lines of credit and provided false information to two banks, to the SBA, which had insured the bank loans, and to an SBA investigator in order to attempt to settle the debts for less than what was owed. Fattah Jr. falsely claimed that 259 Strategies was out of business at the time he was attempting to settle his debts in 2010, and that he was earning only $2,500 per month. In fact, during 2010, 259 Strategies was intact and, through this company, Fattah Jr. was earning between $6,250 and approximately $37,500 per month.
Fattah Jr. also stole funds supplied by the federal government to the Philadelphia School District, while acting as the chief operating officer of a Philadelphia company that provided educational services to “at risk” and other students through contracts with the school district. Fattah Jr. provided false expense information and inflated salary figures for teachers and administrative staff on budgets submitted to the school district, which made payments consistent with the budgets provided and concealed the theft of the funds from the school district.
For tax years 2005, 2006 and 2008, Fattah Jr. filed false federal income tax returns and failed to pay federal income tax on a timely basis of approximately $51,141 on more than $150,000 in reported income during 2010.
The case was investigated by the FBI, IRS-Criminal Investigation and the U.S. Department of Education, with the cooperation of the Philadelphia School District’s Office of Inspector General. It is being prosecuted by Assistant U.S. Attorney Paul L. Gray and Trial Attorney Eric Gibson of the Criminal Division’s Public Integrity Section.
Paul Davis is a writer who covers crime. He has written extensively about organized crime, street crime, sex crime, cyber crime, drug crime, white collar crime, crime fiction, crime prevention, espionage and terrorism. His 'On Crime' column appears weekly in the Washington Times. He is also a regular contributor to Counterterrorism magazine. His work has also appeared in the Philadelphia Inquirer, Philadelphia Daily News and other newspapers, magazines and online publications. As a writer, he has attended police academy training, gone out on patrol with police officers, accompanied detectives as they worked cases, accompanied narcotics officers on drug raids, observed criminal court proceedings and visited jails and prisons. He has covered street riots, mob wars and murder investigations. Paul Davis' online "Crime Beat" column offers his Q&As with cops, crooks, crime writers and others. Paul Davis has been a student of crime since he was a 12-year-old aspiring writer growing up in South Philadelphia. He enlisted in the U.S. Navy when he was 17 in 1970 and served on the aircraft carrier USS Kitty Hawk during the Vietnam War. He also served two years on the Navy harbor tugboat USS Saugus at the U.S. nuclear submarine base at Holy Loch, Scotland. Following his Navy service, he performed security work as a Defense Department civilian and he later became a full-time writer. Paul Davis' On Crime and Crime Beat columns, crime fiction and magazine and newspaper pieces can be read on this website. His full bio can be read by clicking on the above photo.