Identifying players in federal probe of Fattah campaign

When Fattah found his 2007 mayoral campaign race undone by a new anti-corruption law that limited loans and donations, prosecutors say, he schemed to evade the limit.
When Fattah found his 2007 mayoral campaign race undone by a new anti-corruption law that limited loans and donations, prosecutors say, he schemed to evade the limit. (MICHAEL S. WIRTZ / File Photograph)
Posted: September 01, 2014

One was a kid from the hardscrabble Abbottsford Homes in East Falls who rose to become a millionaire member of America's financial elite.

Another is a foul-mouthed, sneaker-wearing, high school dropout who built a political consulting business with clients who included a long-shot Illinois U.S. Senate candidate named Barack Obama.

A third is a hard-driving genius at Philadelphia ward politics steeped in the arcane arts of street money, ballot-cutting, and get-out-the-vote drives.

The fourth is a high-tech entrepreneur who says computers can help lift people out of poverty.

Disparate in backgrounds and paths, the four have prospered for years as they shared a common priority: boosting the career of U.S. Rep. Chaka Fattah, the longtime Democratic powerhouse in West Philadelphia.

Federal prosecutors now say the four were players - witting or not - in a complex scheme involving a $1 million loan that appears to pose a grave threat to Fattah's personal and political future.

In an unusually detailed criminal filing last week, prosecutors revealed they had struck a deal with Fattah's former chief of staff, Gregory Naylor, turning an expert on street politics into a cooperating witness in an ongoing federal probe.

Though Naylor was identified by name in the documents - filed as he pleaded guilty to corruption charges Wednesday - prosecutors were coy about the other figures, identifying them only by initials and linking them to an unnamed "Elected Official A."

People familiar with the investigation, though, have attached names to the initials, leaving no doubt that "Elected Official A" is Fattah, 57, the liberal Democrat, 20-year veteran of the U.S. House, and member of the chamber's powerful Appropriations Committee.

The soft-spoken but dynamic Naylor, 66, is the only person charged with a crime as a result of the investigation.

Fattah, his former boss, has made no public statement since Naylor admitted his guilt.

His plea memo says the illegal scheme began in 2007, when Fattah found his campaign strategy in the Philadelphia mayor's race undone by a new anticorruption law that limited loans and donations to $5,000 per giver. That posed a problem for Fattah, who had been counting on out-raising and outspending his rivals.

After unsuccessfully challenging the law in court, Fattah, prosecutors say, cooked up a plan to evade the limit by taking in $1 million secretly - all as part of a campaign in which he ended up coming in fourth.

According to numerous sources, the loan was provided by Alfred Lord, 68, former chief executive of Sallie Mae, the gigantic quasi-governmental corporation that holds debt on loans taken out by more than 10 million students across America.

Lord lent the money not to Fattah, but to the consulting business of a veteran campaign operative in Washington. The operative, in turn, poured most of the money into Fattah's primary election bid.

According to people familiar with the matter, Lord viewed the transaction not as a disguised campaign contribution, but as "a loan to a business."

However, one person added, "It was done because Fattah needed help and it was thought that helping this consulting business would help Fattah."

Lord, a board trustee of Pennsylvania State University, has long been a generous donor to candidates of both parties.

This year, he gave $500,000 to the campaign of unsuccessful Pennsylvania gubernatorial candidate Rob McCord, a Democrat; there are no limits on donations in statewide races.

Lord declined to comment Friday.

In an interview with The Inquirer last year, Lord spoke fondly of his relationship with Fattah and said he had taken him to visit the East Falls project where he grew up.

"He learned I wasn't born with a silver spoon," Lord said. "It endeared me to him."

In the interview, Lord said he was surprised Fattah lost the 2007 mayoral primary.

"I thought Chaka would be a shoo-in," he said.

'Consummate operator'

According to sources, the recipient of Lord's largesse was Thomas Lindenfeld, 59, an intense and brainy political consultant who at one time was a partner of famed political adviser David Axelrod.

Though he grew up in New Jersey, Lindenfeld might have leapt from the pages of Edwin O'Connor's The Last Hurrah, the classic novel of Boston politics. A high school dropout, he later graduated from Princeton University.

Rumpled, built like a longshoreman, and given to cursing like one, he is considered a master at devising election-day field organizations to find caches of new voters for his candidates and bring them to the polls.

He helped get John Street elected mayor of Philadelphia and helped propel Obama into the U.S. Senate and, later, the presidency.

Lindenfeld has grossed more than $5 million working on campaigns for Democrats in at least 16 states in the last decade, according to Federal Election Commission records.

"Tom is the consummate operator - very gregarious and aggressive," said a Philadelphia Democratic strategist. "He wants to make deals, be known as the guy who gets stuff done when no one else can."

In the 2007 mayoral primary, prosecutors said last week, Lindenfeld tapped deeply into Lord's loan to help Fattah, buying media ads.

Neither he nor Naylor have responded to calls seeking comment since the arrangement was detailed in court documents last week.

The two men worked together on primary day, May 15, 2007, running the effort to get voters to the polls. According to prosecutors, Naylor distributed $200,000 from the loan in street money, paying committeepeople for their election-day labor in a time-honored Philadelphia tradition.

The $1 million loan was not reported on any of Fattah's campaign-finance forms, prosecutors said.

Repayment demand

After Fattah lost in a multi-candidate primary whose winner was Michael Nutter, a new problem emerged.

Hit hard by the last decade's financial turmoil, Lord wanted his big loan paid back.

So Fattah, prosecutors say, orchestrated a series of financial shuffles to tap into the funds of a nonprofit and route the money through two intermediaries and back to Lord.

The nonprofit, Educational Advancement Alliance, was run by a former Fattah staffer. The congressman helped found the alliance and was responsible for most of its funding, channeling money earmarked for it from agencies ranging from the Justice Department to NASA. A charitable arm of Sallie Mae also provided funding.

The Educational Advancement Alliance was just one in an array of Philadelphia nonprofits founded and funded by Fattah - and staffed by his former aides and political operatives.

Government auditors have questioned the spending of the nonprofits, including a trip to the Virgin Islands for students from Overbrook High School, Fattah's alma mater. The students were put up in a resort hotel as part of a program that featured an "eco-kayak" tour.

(Fattah's wife, television anchor Renee Chenault-Fattah, traveled to the islands to help plan that trip and others, along with several Fattah associates. Fattah's office said his wife paid her own way.)

At one time, Fattah had even identified political operative Lindenfeld as a possible leader of a nonprofit funded with taxpayer money.

In a 2010 speech on the floor of Congress, Fattah singled out "my friend Tom Lindenfeld, with the Blue Guardians."

At that time, Lindenfeld had just incorporated the Blue Guardians, a nonprofit with a stated of mission of using "door-to-door canvassing" to wake up environmental awareness in poorer communities along the Atlantic coast and in U.S. islands in the Caribbean.

Fattah cleared the path for the Blue Guardians to get a $500,000 congressional earmark, according to government records. His office said the plan was for it to have a $15 million budget. But after The Inquirer requested information about the funding in 2010, the idea was dropped.

'Fake contract'

Under the 2007 plan to repay Lord, prosecutors say, the Educational Advancement Alliance nonprofit drew up a phony contract to ship money to another Fattah ally, identified in court documents as the operator of a for-profit "public policy technology company.

According to people familiar with the case, the technology company was Solutions for Progress on South Broad Street and its operator was Robert Brand.

On its website, the firm says its 20-year mission has been to "combine technology and public policy expertise" to address "the complex problems of poverty."

Brand, 69, has been active in Philadelphia civic agencies and in politics for decades, working on and off with city mayors dating back 35 years.

His wife also worked for Solution for Progress. She was a staffer for Fattah from the mid-1990s until at least 2002, according to federal records.

Brand's lawyer, Barry Gross of the Drinker Biddle law firm, declined to comment Friday.

According to prosecutors, Brand and Lindenfeld then drew up a "fake contract" as a way to steer money to Lindenfeld so he, in turn, could pay back Lord.

The Lindenfeld payment, prosecutors say, made Lord whole on his $1 million loan.

215-854-4821 @CraigRMcCoy

Inquirer staff writer Joseph N. DiStefano contributed to this article.

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