FBI seizes records of Rep. Fattah’s son

Posted: February 29, 2012

Federal authorities are investigating why a company owned by the son of U.S. Rep. Chaka Fattah was paid $450,000 by an education firm that has received millions in contracts from the Philadelphia School District, according to sources familiar with the probe.

Agents from the FBI and U.S. Treasury Department served two search warrants early Wednesday for Chaka Fattah Jr.'s records, the first at his apartment at the Residences at the Ritz-Carlton. They also seized Fattah's records and a computer from the Logan Square law office of David T. Shulick. He is president of Delaware Valley High School, a for-profit company that contracts with school districts to educate students with discipline problems.

The younger Fattah, 29, known as "Chip," is owner of a consulting company called 259 Strategies L.L.C. that works as a subcontractor for Shulick's companies. Fattah Jr. has working space at the law office.

The $450,000 payment from Shulick's company is more than 10 percent of the approximately $4 million that Delaware Valley will receive from the School District this year.

"We are cooperating with the investigation," said attorney Ronald A. Sarachan, who jointly is representing Fattah with Gregory P. Miller. "We've been in communication with the government."

Sarachan said he was "hopeful" that the investigation would be quickly resolved.

Shulick, who was interviewed Wednesday morning by agents at his home, said he was told that neither he nor Delaware Valley were the focus of the investigation.

"It doesn't have anything to do with the school," Shulick said. "We have nothing to hide, and we let them in and let them search [Fattah Jr.'s] office unfettered."

In a later e-mailed statement, Shulick said Fattah Jr. "is being victimized merely because his last name is 'Fattah.' "

" . . . He is dealing with issues that nobody without the last name 'Fattah' would have to deal with," Shulick wrote.

The FBI has been asking questions about Fattah Jr.'s business operations for at least a year.

In January 2011, agents went to the South Florida home of Mikel Jones, a lawyer and childhood friend of Fattah Sr., as part of an investigation into Jones' finances.

During a daylong conversation, they also asked Jones why he had paid more than $90,000 to 259 Strategies and to American Royalty, another Fattah Jr. firm that provided luxury services to well-heeled clients, according to an FBI document that summarized the conversation.

It surfaced last year in a federal fraud case against Jones. He was convicted and is appealing.

Jones, who ran a personal injury law firm, told the agents that he hired the younger Fattah to help expand his business - and because Fattah had "access," the document said.

The FBI said Jones told them Fattah "had some good ideas, but he could not remember any of them offhand."

"I know what this looks like, but there was no quid pro quo," Jones told the agents, the document said.

"Did I overpay him? Was it a good investment, strictly speaking? No, but I was desperate and he had access," Jones said. The nature of that access was not described.

In an interview with The Inquirer last year, Fattah Jr. said his work for Jones had nothing to do with providing access to his father or anyone else.

"I came up with a lot of ideas," he said. "Mr. Jones was a client of my concierge service, and I also acted as a management consultant in terms of finding new clients for his personal injury firm, period."

Fattah declined to go into detail on his work for Jones, but said that many of the payments from clients were used to purchase goods or services for them. American Royalty charged membership fees.

"We might get a call at 3 a.m. saying a client needs a jet in the morning," he said in a 2007 interview with the Philadelphia Business Journal. "We have access to one of the top private jet companies in the country, so we're able to make that happen."

In 2007, the Capital Grille restaurant in Philadelphia filed a police report alleging that American Royalty had failed to pay a $15,000 bill. Fattah settled the tab, saying it was run up by a client.

Federal agents arrived about 6:40 a.m. Wednesday outside Fattah's home, and at Shulick's office shortly after 10 a.m. They left the law office about 50 minutes later, carrying a Dell desktop computer and boxes of records.

Sources with knowledge of the investigation said that while some agents were serving search warrants and collecting documents at Fattah Jr.'s residence and the law office, other agents were conducting interviews with other people, including Shulick.

Shulick said he believes that the inquiry is focused on the younger Fattah, who has been doing work for Shulick since 2009, according to documents and interviews. Shulick said Fattah Jr. works as "a contracted employee" for the law firm, the school, and his charity, the Judith B. Shulick Memorial Foundation, named for his mother.

Last May, when Shulick threw out the first pitch at a Phillies game, Fattah Jr. posted a video on YouTube.

Earlier this month, Fattah Jr. appeared before the York City school board pitching a $1.5 million contract for Delaware Valley and describing himself as the company's director of business development, according to a published report.

Rep. Fattah has been a supporter of Shulick's schools as well.

He sought a $375,000 federal transportation grant to replace the school's fleet with "green clean fuel burning vehicles," according to his website. The grant was not approved.

Rep. Fattah, whose district covers parts of Philadelphia and Montgomery County, is the senior Democrat on the House Appropriations Committee and has long pushed for education funding.

"I stand by my son," he said in a statement. "Nothing came of the request for funds, and my son had nothing to do with any request for funds." He said he would "await the results of the investigation before making further comment."

His spokesman, Ron Goldwyn, said the investigation does not involve Fattah Sr. or the congressional office.

Rep. Fattah also wrote a letter to Philadelphia school administrators in support of a proposal to send 100 students to Shulick's school in the 2007-08 academic year.

He called Delaware Valley High a "results-oriented school" and said it was "precisely the type of opportunity that our school district should be capitalizing on."

Philadelphia schools' chief executive at the time, Thomas Brady, said he remembered meeting with Shulick. He said he wasn't sold on Delaware Valley, but added that he received no pressure from Fattah or anyone else.

Since 2003, Shulick has contributed more than $300,000 to state and federal races, including more than $12,400 (with his wife) to Fattah's campaign and PAC in 2010.

In 2010, he gave $29,500 to State Sen. Vincent Hughes, Fattah's close ally in Harrisburg, and, with Fattah, he held a fund-raiser in his law office for City Council candidate Cindy Bass, a former Fattah congressional aide who was subsequently elected.

Shulick's law office website has pictures of him posing with President Obama and Gov. Corbett and, previously, with former Gov. Ed Rendell.

He gave to Rendell and to Republicans. Corbett named him to his transition team, and he served as chair of an education subcommittee.

Shulick said there was nothing wrong with any of his contributions. As for Fattah, Shulick said the congressman supported him because of Delaware Valley's "long, stellar track record" of saving money for districts and keeping their most troubled students from dropping out.

The state legislature passed a bill in 1999 that allowed school districts to contract with for-profit companies to run their alternative disciplinary schools.

Shulick was on the State Department of Education committee that set up the guidelines for alternative education. Delaware Valley was among the early companies to receive state approval.

In 2002, Bristol Township became the first district to send students to Delaware Valley's school in Northeast Philadelphia.

Delaware Valley received its first Philadelphia contract the next year and remained a relatively small player in the district's alternative education program for several years. Its first contract for the 2003-04 academic year was for only 77 of the 4,801 students sent to alternative education schools. The district paid Delaware Valley $394,320 that fiscal year, according to contract documents.

This year, Delaware Valley has 500 Philadelphia students in its two programs, and is being paid a total of $4.1 million for the fiscal year, district records show.

Shulick said his school has succeeded because it has "consistently and repeatedly outperformed" competitors - even while charging less per student.

"You get a lot of attention when you are the cheapest and the best," Shulick said. "We really are."


Contact Martha Woodall at 215-854-2789 or martha.woodall@phillynews.com.

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