Rep. Chaka Fattah Indicted On Corruption Charges

WASHINGTON -- Rep. Chaka Fattah (D-Penn.) was indicted on federal corruption charges on Wednesday in connection with fraud around his unsuccessful 2007 campaign for mayor of Philadelphia.

In a 29-count indictment, federal prosecutors charged that Fattah and his associates were part of a racketeering conspiracy that involved "several schemes" intended to further their "political and financial interests."

Prosecutors said Fattah, who was elected to Congress in 1994, and four associates were involved in a scheme to borrow $1 million from a wealthy donor, disguising it as a loan to a consulting company. After losing the election, Fattah reportedly returned $400,000 in unused campaign funds to the donor, then engaged in a series of maneuvers -- including the misuse of federal grant funds -- to repay the outstanding $600,000.

In addition, the indictment alleges a number of improper dealings between Fattah and Herbert Vederman, a lobbyist and a former deputy mayor of Philadelphia who served as the finance director for Fattah's mayoral campaign. Vederman continued to serve in that capacity until at least 2011 as he negotiated the campaign's outstanding debts, according to the indictment.

In a statement, Fattah denied wrongdoing and believed he would be cleared of the charges.

“This has been an eight-year effort by some in the Department of Justice to link my public service career to some form of wrongdoing. With today’s charges, this misguided campaign has now moved from speculation to specific allegations," he said in the statement.“As I have previously stated, I have never participated in any illegal activity or misappropriation of taxpayer dollars as an elected official."

Fattah allegedly accepted payments and other things of value from Vederman while doing him a number of personal and political favors. The congressman offered a job to Vederman's girlfriend, the prosecutors say, and at another point signed and hand-delivered a letter to President Barack Obama urging him to give Vederman an ambassadorship.

Fattah and his wife, Renee Chenault Fattah, also allegedly used bribery proceeds to "close on a vacation home" in the Poconos by falsely disguising an $18,000 payment on the home as a sale of their Porsche to Vederman.

Catherine M. Recker, Vederman's attorney, also denied the allegations.

"Mr. Vederman will plead not guilty and will defend himself at trial.  The government has cherry-picked facts to support its cynical view of friendship and wrongly labeled it bribery," Recker said in a statement.

The indictment also alleges that Fattah used campaign funds to pay for his and his wife's personal expenses, as well as his son's student loans.

“As charged in the indictment, Congressman Fattah and his associates embarked on a wide-ranging conspiracy involving bribery, concealment of unlawful campaign contributions and theft of charitable and federal funds to advance their own personal interests,” Leslie Caldwell, who heads the Justice Department’s Criminal Division, said in a statement. “When elected officials betray the trust and confidence placed in them by the public, the department will do everything we can to ensure that they are held accountable."

"Public corruption takes a particularly heavy toll on our democracy," Caldwell added, "because it undermines people’s basic belief that our elected leaders are committed to serving the public interest, not to lining their own pockets.”

Speaking to reporters on Wednesday, Fattah said he would step down from his position as ranking member on the House Commerce, Justice, Science, and Related Agencies Appropriations Subcommittee while the charges were pending.

In a statement, House Minority Leader Nancy Pelosi (D-Calif.) called the charges "deeply saddening."

"Congressman Fattah has been a tireless and effective advocate for America’s hard-working families across more than 20 years of distinguished service in the House," Pelosi said.

Laura Goldman contributed reporting.