Fattah Jr. sued over $56,000 United Bank loan

Chaka Fattah Jr. is under probe. 6ABC
Chaka Fattah Jr. is under probe. 6ABC (Chaka Fattah Jr.)
Posted: March 23, 2012

The son of U.S. Rep. Chaka Fattah, whose political-consulting business is already under FBI investigation, has been sued for failing to repay a $56,000 bank loan.

Chaka Fattah Jr. received the loan Dec. 30 from United Bank, apparently a refinancing of another United loan from earlier in the year, bank documents show.

But he failed to make any payments, according to the suit, and the bank filed its collection case just 12 days after the FBI served search warrants at a law office where Fattah Jr. worked and at his apartment in the Residences at the Ritz Carlton in Center City.

The suit says Fattah Jr. owes a total of $70,597 for the loan, late fees, and attorney costs. His lawyer, Ronald A. Sarachan, declined to comment.

The younger Fattah got the United Bank loan in spite of a rocky credit history, court files show.

Known as "Chip," Fattah Jr., 29, has tried to market himself as a well-heeled and well-connected player. He once ran a company that provided luxury services for clients.

But the reality was different. He has been sued by five other banks for unpaid loans - three for a combined $66,000 that he borrowed in 2005 in the name of 259 Strategies, one of his companies.

In March 2006, Fattah Jr. borrowed $108,000 to finance a 2006 Range Rover Sport. He quit making payments after August, court documents show, and the vehicle was repossessed. The finance company later sued, saying Fattah Jr. still owed $22,000.

Fattah settled those four judgments in 2010, court records show. A case on an unpaid $6,489 debt is scheduled for a summer hearing.

United Bank filed documents in April that said it had lent an unspecified amount to Fattah Jr. secured by a $450,000 consulting contract given to 259 Strategies by Delaware Valley High School, a company that runs alternative-education programs in Philadelphia and other districts in the area.

On Dec. 30, Fattah Jr. signed a refinancing note in a deal that gave him 12 months to pay in full.

United's loans ended up like the others, with the bank hiring a lawyer to chase after its money. The suit also names another Fattah Jr. firm, Legal Marketing Strategies.

United Bank president Evelyn Smalls, citing privacy rules, declined to answer questions about why Fattah Jr. was given the loans.

"We do not talk publicly about any of our relationships," she said.

Rep. Fattah, senior Democrat on the House Appropriations Committee, has been a supporter of United, Philadelphia's only black-owned bank. In 2010, he announced that the U.S. Treasury Department had given United Bank a $394,000 grant from a program that supports lending in distressed communities.

Fattah and a spokesman did not respond to requests for comment.

Lawyer David T. Shulick, Delaware Valley High's owner, said Fattah Jr. was to give political advice, help supervise construction, and, from the $450,000 contract, pay other Delaware Valley employees. The amount represented a 10 percent cut of Delaware Valley's $4.5 million contract with Philadelphia schools and fulfilled a minority-subcontracting requirement.

Shulick said he never heard about the loan until bank representatives called him, saying Fattah Jr. had missed payments. The bank's lawyer, Matthew A. Lipman of the firm McElroy, Deutsch, Mulvaney & Carpenter, declined to comment.

"What can I tell you? He never told us he was applying for this loan," Shulick said, "and it all came as a surprise to us."

Shulick said he told Lipman he had quit paying Fattah Jr.'s firm before the beginning of the school year.

"I said no more funds would go to 259," Shulick said.

Asked whether he had spoken to Fattah Jr. since the federal raid, Shulick declined to comment.

Contact Joseph Tanfani

at 215-854-2684 or jtanfani@phillynews.com.

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