June 21, 2016

Corrupt Congressman Uses Non-Profits and Charities to Launder Money

Filed under: Probable Cause — Tags: — Bill @ 4:36 pm

Chaka_Fattah_official_House_photo2Corrupt Pennsylvania Congressman Chaka Fattah, Sr. is likely going to be headed to a federal prison after being convicted of participating in a racketeering conspiracy, conspiracy to commit bribery, bribery, conspiracy to commit wire fraud, conspiracy to commit honest services fraud, mail fraud, money laundering conspiracy, money laundering, bank fraud, false statements to a financial institution, six counts of mail fraud, and five counts of falsification of records.

The scheme Fattah and his co-conspirators cooked up is well-described in the June 21, 2016, press release issued by Zane David Memeger, the US Attorney for the Eastern District of Pennsylvania.

To make it easier to follow, OpenCdA is going to reduce the essence of the press release to several easily-digestible bullet points. 

  • In connection with his failed 2007 campaign to serve as mayor of Philadelphia, Fattah and certain associates borrowed $1 million from a wealthy supporter, and disguised the funds as a loan to a consulting company.
  • After he lost the election, Fattah returned to the donor $400,000 that the campaign had not used, and arranged for Educational Advancement Alliance (EAA), a non-profit entity that he founded and controlled, to repay the remaining $600,000 using charitable and federal grant funds that passed through two other companies, including one run by Brand.   [Translation:  Fattah used EAA as a front to falsely apply for and get charitable and federal grants, then laundered the money through two companies to make it hard to trace.  EAA then used the laundered charitable and federal grant funds to repay the wealthy supporter.]
  • To conceal the contribution and repayment scheme, the defendants and others created sham contracts and made false entries in accounting records, tax returns and campaign finance disclosure statements.
  • Following his defeat in the mayoral election, Fattah sought to extinguish approximately $130,000 in campaign debt owed to a political consultant by agreeing to arrange for the award of federal grant funds to the consultant.
  • Fattah directed the consultant to apply for a $15 million grant (which ultimately he did not receive) on behalf of a then non-existent non-profit entity.  In exchange for Fattah’s efforts to arrange the award of the funds to the non-profit, the consultant agreed to forgive the debt owed by the campaign.

The takeaway from these bullet points is that a corrupt US Congressman (through his front organization EAA) falsely applied for and received charitable and federal grant money to fund his political campaign.

The rest of the crimes Fattah and his fellow RICO-lytes committed were pretty much straightforward bribery and influence peddling.

It’s also interesting to see that in addition to the usual federal agencies (FBI and IRS-Criminal Investigations), this investigation also involved the Department of Justice Office of the Inspector General, the NASA Office of Inspector General and the Department of Commerce Office of Inspector General.

Why involve the IGs?  Fattah fraudulently filched federal funds.  Fraud, waste, abuse, and mismangement of federal grants administered by their respective agencies brings the IGs into the picture.

Apparently Chaka Fattah, Sr., believes corruption is a family business.  On November 5, 2015, a federal jury found his son, Chaka Fattah, Jr., guilty of bank fraud; making false statements to banks to obtain loans; making false statements to banks and the Small Business Administration to settle loans for less than what was owed; filing false federal income tax returns for tax years 2005, 2006, and 2008; failing to pay federal income tax; wire fraud; and theft from a program receiving federal funds.  On February 2, 2016, Chaka Fattah, Jr., was sentenced to five years in federal prison for 22 counts which included fraud and tax charges.

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