United States v. Fattah

• Decision Date: 20 October 2016
• Docket Number: CRIMINAL ACTION NO. 15–346
• Citation: 223 F.Supp.3d 336
• Parties: UNITED STATES of America v. Chaka FATTAH, Sr., et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

223 F.Supp.3d 336

UNITED STATES of America

v.Chaka FATTAH, Sr., et al.

CRIMINAL ACTION NO. 15–346

United States District Court, E.D. Pennsylvania.

Signed October 20, 2016

Eric L. Gibson, Jonathan Ian Kravis, United States Department of Justice, Washington, DC, Paul L. Gray, Andrea Foulkes, Bea Witzleben, U.S. Attorney's Office, Philadelphia, PA, for Plaintiff.

Mark M. Lee, Samuel W. Silver, Bruce P. Merenstein, Schnader Harrison Segal & Lewis LLP, Kevin V. Mincey, Shabrei M. Parker, Thomas O. Fitzpatrick, Mincey & Fitzpatrick LLC, Riley H. Ross, III, Ross Legal Practice LLC, Catherine M. Recker, Amy B. Carver, Robert E. Welsh, Jr., Welsh & Recker, P.C., Barry Gross, Meredith C Slawe, Mira E. Baylson, Drinker Biddle & Reath LLP, Mariana Rossman, The Rossman Firm LLC, Dana Bazelon, Law Offices of Dana Bazelon, Ronald H. Levine, Matthew Todd Newcomer, Post & Shell, P.C., Ann Campbell Flannery, Philadelphia, PA, Henry W. Asbill, Jacob M. Roth, James M. Burnham, Julia Sheketoff, Noel John Francisco, Jones Day, Washington, DC, Peter Goldberger, Ardmore, PA, Steven R. Paisner, Paisner Litvin LLP, Bala Cynwyd, PA, for Defendants.

MEMORANDUM

Bartle, District Judge.

This action is the story of political corruption involving five criminal schemes. Following their convictions by a jury after a lengthy trial, the defendants have filed motions for judgments of acquittal under Rule 29 of the Federal Rules of Criminal Procedure or in the alternative for a new trial under Rule 33.

Congressman Chaka Fattah, Sr., Herbert Vederman, Robert Brand, Karen Nicholas, and Bonnie Bowser were charged in a twenty-nine count indictment with conspiracy to commit racketeering (18 U.S.C. § 1962(d) ) as well as an array of other crimes.¹ The indictment, which was returned on July 29, 2015, also accused the defendants of one or more of the following offenses: conspiracy to commit wire fraud (18 U.S.C. §§ 1343 and 1349 ); conspiracy to commit honest services wire fraud (18 U.S.C. §§ 1343, 1346, and 1349 ); conspiracy to commit mail fraud (18 U.S.C. §§ 1341 and 1349 ); mail fraud (18 U.S.C. § 1341 ); falsification of records (18 U.S.C. §§ 1519 and 2); bribery conspiracy (18 U.S.C. § 371 ); bribery (18 U.S.C. § 201 ); bank fraud (18 U.S.C. §§ 1344 and 2); false statements to financial institutions (18 U.S.C. §§ 1014 and 2); money laundering (18 U.S.C. §§ 1957 and 2); money laundering conspiracy (18 U.S.C. § 1956(h) ); and wire fraud (18 U.S.C. § 1343 ).

Fattah, at all times relevant, represented the Second Congressional District of Pennsylvania which currently encompasses parts of Philadelphia and Montgomery Counties. Prior to taking his seat in the United States House of Representatives in 1995, he served as a Representative and later as a Senator in the Pennsylvania General Assembly. Vederman, a former Deputy Mayor of Philadelphia and lobbyist, was close to Fattah and was a long-time Fattah supporter and contributor. Brand, whose wife was at one point a member of Fattah's congressional staff, was a Philadelphia businessman and also a long-time Fattah supporter. Nicholas was formerly employed as a member of Fattah's congressional staff and at the time of the events in question was the chief executive officer of Educational Advancement Alliance ("EAA"), a non-profit entity established by Fattah. Finally, Bowser held the position of chief of staff of Fattah's congressional office in Philadelphia for many years and served at times as the treasurer of the Fattah for Mayor campaign and the Fattah for Congress campaign. She had a close working relationship with Fattah and held a power of attorney for him personally.

The jury returned a verdict of guilty against Fattah on all twenty-two counts in which he was named. Specifically, it found against him on Count One (conspiracy to commit racketeering), Count Two (conspiracy to commit wire fraud), Count Three (conspiracy to commit honest services wire fraud), Count Four (conspiracy to commit mail fraud), Counts Five through Ten (mail fraud), Counts Eleven through Fifteen (falsification of records), Count Sixteen (bribery conspiracy), Count Seventeen (bribery), Count Nineteen (bank fraud), Count Twenty (false statements to a financial institution), Count Twenty–One (falsification of records), Count Twenty–Two (money laundering), and Count Twenty–Three (money laundering conspiracy).²

Vederman was found guilty on all eight counts against him. They were Count One (conspiracy to commit racketeering), Count Sixteen (bribery conspiracy), Count Eighteen (bribery), Count Nineteen (bank fraud), Count Twenty (false statements to a financial institution), Count Twenty–One (falsification of records), Count Twenty–Two (money laundering), and Count Twenty–Three (money laundering conspiracy).

Brand was named in Count One (conspiracy to commit racketeering) and Count Two (conspiracy to commit wire fraud). The verdict was guilty on both counts.

As to Nicholas, the jury convicted her on Count One (conspiracy to commit racketeering), Count Two (conspiracy to commit wire fraud), Counts Twenty–Five and Twenty–Six (wire fraud), and Counts Twenty–Eight and Twenty–Nine (falsification of records) but acquitted her on Count Twenty–Four (wire fraud).

The jury found Bowser guilty on Count Sixteen (bribery conspiracy), Count Nineteen (bank fraud), Count Twenty (false statements to a financial institution), Count Twenty–One (falsification of records), and Count Twenty–Two (money laundering). She was found not guilty on Count One (conspiracy to commit racketeering), Count Two (conspiracy to commit wire fraud), Count Three (conspiracy to commit honest services wire fraud), Count Four (conspiracy to commit mail fraud), Counts Five through Ten (mail fraud), Counts Eleven through Fifteen (falsification of records), and Count Twenty–Three (money laundering conspiracy).

The defendants, as noted above, have pending motions under Rules 29 and 33. Under Rule 29, the court must "enter judgment of acquittal of any offense for which the evidence is insufficient to sustain a conviction." The court must review the evidence in the light most favorable to the Government to determine whether a rational jury could have found a defendant guilty beyond a reasonable doubt. SeeUnited States v. Wolfe , 245 F.3d 257, 261 (3d Cir. 2001). All reasonable inferences, of course, are drawn in favor of the jury's verdict. A defendant carries a heavy burden when challenging the sufficiency of the evidence. SeeUnited States v. Lore , 430 F.3d 190, 205 (3d. Cir. 2005).

Pursuant to Rule 33, the court may grant a new trial "if the interest of justice so requires." The standard of review under Rule 33 is different than under Rule 29. Here, the evidence is not evaluated in the light most favorable to the Government. Instead, a new trial may be granted if in the view of the court the verdict is against the weight of the evidence. SeeUnited States v. Johnson , 302 F.3d 139, 150 (3d Cir. 2002). The court must consider whether there is "a serious danger that a miscarriage of justice has occurred." SeeUnited States v. Silveus , 542 F.3d 993, 1004–05 (3d Cir. 2008).

I.

The first criminal scheme charged in the indictment centered on a $1,000,000 illegal loan to the unsuccessful campaign of Fattah to become Mayor of Philadelphia in 2007. The evidence, taken in the light most favorable to the Government, established the following facts.

In the spring of 2007, Fattah, a member of Congress, was in need of funds for his faltering primary campaign for Mayor of Philadelphia. To remedy the situation, Fattah arranged for an illegal campaign loan of $1,000,000 from a wealthy donor. This sum far exceeded the amount allowed under the recently enacted City of Philadelphia ordinance which provided for a maximum individual campaign contribution of $2,500 for city-wide races for office. To conceal the loan, Fattah had the donor wire the $1,000,000 to LSG Strategies Services Corporation ("LSG"), the Washington, D.C. political consulting firm of Thomas Lindenfeld. At Fattah's direction, Lindenfeld signed a promissory note with the donor for the $1,000,000.³ Fattah assured Lindenfeld that he, Fattah, would cover the debt.

Lindenfeld distributed some of the $1,000,000 to Gregory Naylor, a Lindenfeld friend and long-time Fattah confidant, who paid various Fattah campaign expenses through his political consulting firm Sidney Lei & Associates ("SLA").⁴ Naylor had known Fattah for more than thirty years and had served for a period of time as the district director of Fattah's congressional office in Philadelphia. Naylor used $200,000 of this sum to pay "walking around money" in cash to a large group of campaign workers on the eve of the primary election on May 15, 2007. To camouflage that this widely known expenditure came from an illegal loan, Naylor submitted a false SLA invoice dated June 1, 2007 to the Fattah mayoral campaign for approximately $193,000. The invoice stated it was for election-day campaign expenses, although SLA itself never incurred any. Naylor sent the invoice at the instruction of Fattah.

After Fattah's defeat, Lindenfeld mailed back to the donor a check for $400,000 which represented the portion of the $1,000,000 loan that was never spent. The donor, however, also pressed for the return of the remaining $600,000. Lindenfeld reported this development to Fattah who told Lindenfeld that he would take care of it. Fattah arranged for the non-profit EAA to provide the money to pay the debt. EAA, which Fattah had established, was headed by Nicholas, his former staffer. She proceeded to misappropriate a $500,000 charitable grant from Sallie Mae and a $100,000 grant from the National Aeronautics and Space Administration ("NASA") for this purpose. Both grants to EAA were intended to support the nonprofit's educational work.

On January 24, 2008, Nicholas, using funds from Sallie Mae, transmitted a check for $500,000 from EAA to Solutions for Progress ("SFP"), a company in Philadelphia led by Brand. Several days...