Dressed in a gray three-piece suit, the tall and lanky Fattah Jr., 31, known as "Chip," told reporters after his initial appearance in the afternoon before a magistrate: "I've said many times, 'I'm innocent.' I believe this entire situation is politically motivated. If my dad weren't the congressman, no one would be going after me with these charges."
According to the 23-count indictment, from 2005 to 2012, Fattah Jr. improperly used bank loans for his personal benefit rather than for business expenses, made false statements to financial institutions and the IRS to settle his unpaid debts, and filed false income-tax returns.
The indictment alleges that Fattah Jr. improperly used the loans for "car payments, food, restaurant and club expenses, utilities, clothing, electronics, retail purchases, charitable donations, jewelry, entertainment, legal fees, and personal credit-card expenses."
Fattah Jr. owned a management-consulting business, 259 Strategies LLC. In 2011, the indictment says, he spent $17,500 of a business loan "to pay gambling debts at SugarHouse Casino." He later withdrew $16,000 in cash from subsequent loan proceeds "to pay down gambling debts at Harrah's casino."
The feds contend that he fraudulently received a total of $206,000 in bank loans. Asked yesterday if he used the bank loans to pay off gambling debts, Fattah Jr. said, "I don't believe so."
As for personal expenses, he said that as the owner and sole employee of his company, money he put into his personal accounts was his income. "I could choose to do anything with it," he said.
He could, for instance, buy "a nice suit" at Boyds, he said.
Rep. Fattah yesterday criticized the U.S. Attorney's Office and the FBI for indicting his son. "I am confident the facts will clear his name," the congressman said in a statement. "I love him and stand by him today and every day."
The father also has faced scrutiny by federal prosecutors, who subpoenaed records from his congressional offices.
The indictment against Fattah Jr. also charges him with stealing federal funds given to the school district. At the time of the raid, he worked as a consultant for Delaware Valley High School, a for-profit alternative-education company that received money from the school district to run two schools, in East Falls and Southwest Philadelphia.
The indictment does not name the high school or its president, David Shulick, instead identifying them as "Company 1" and "Person 1." It says Fattah Jr. and "Person 1" provided budgets to the school district that inflated salary figures for a director, teachers, administrative staff and nonexistent employees.
Based on the false budgets for two school years, the district paid DVHS $957,868 for its services at the "Southwest" school, the indictment says. The feds contend that Fattah Jr. stole some of the funds. Assistant U.S. Attorney Paul Gray said the amount of the alleged theft was "substantial."
Fattah Jr. said: "I did not defraud the school district."
Shulick, who has not been charged in the case, could not be reached by the Daily News.
The school district released a statement saying it has cooperated with authorities. "If these allegations prove to be true, we are very troubled that vendors would take advantage of the School District and its students particularly in such difficult financial times."
Fattah Jr. has been unemployed since the Feb. 29, 2012, raid on his Center City apartment by IRS and FBI agents. He now lives with his mother, Michelle Wingfield, the congressman's ex-wife, at her Overbrook home. She and Fattah Jr.'s sister, Fran, were in court yesterday to support him.
An assistant federal defender is representing Fattah Jr., who is scheduled to be arraigned Aug. 14.
Earlier this year, Fattah Jr. filed a federal lawsuit against the IRS, the FBI and the Justice Department, saying that details of the 2012 raid were leaked to the media, resulting in "a virtual storm of negative publicity."
- Staff writer Dylan Segelbaum contributed to this report.
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