Behind the facade, troubles rose for Fattah son

The son of U.S. Rep. Chaka Fattah tried hard to keep up the image of a rising young entrepreneur, talking about his work for high-living clients and moving in to the luxurious Residences at the Ritz-Carlton in Center City.

But behind the facade, Chaka Fattah Jr.'s troubles were rising. Taxes went unpaid, checks started bouncing, and loan officers began calling about missed payments on a $50,000 loan, according to records and interviews.

And the FBI was secretly digging into his finances - even recording his conversations as he talked about his work as a budding political consultant.

Fattah Jr.'s image crumbled for good on Wednesday, when agents raided the Ritz-Carlton apartment and Fattah Jr.'s space at a law office, seizing a computer and records.

Agents are now asking about Fattah Jr.'s ties with politicians - including his father, Chaka Sr., the ranking Democrat on the House Appropriations Committee.

And they want to know what he did for David T. Shulick, a lawyer and owner of a for-profit education company that receives millions in contracts from the Philadelphia School District and other area schools to educate students with disciplinary problems or those at risk of dropping out.

The FBI also wants to know what happened to American Express gift cards that Fattah Jr. discussed on one of the tapes, according to interviews of two people who heard them. The cards were apparently purchased with at least $7,000 drawn on a school company check that Fattah Jr. cashed, Shulick said.

Shulick said he never even knew about the gift cards until he was told by the FBI. He said he thought Fattah Jr. might have used some to pay vendors, but the feds want to know whether he gave any to city politicians.

"The question is, what happened to those gift cards?" Shulick said.

Fattah Jr.'s attorney, Ronald A. Sarachan, declined to comment. The FBI has not responded to calls about the investigation.

In two long interviews with The Inquirer, Shulick talked about his business dealings with Fattah Jr., his fund-raising for Fattah Sr. and others, and the congressman's unsuccessful attempt to win $375,000 in federal money for his school firm to purchase energy-efficient school buses.

In the investigation, he said agents were trying to establish whether he hired Fattah Jr. at the behest of the congressman, a notion he calls "absurd."

"Nothing could be further from the truth," he said.

He said agents went to his home early Wednesday morning, the day of the raids.

They played him four recorded conversations, all of Fattah Jr. talking to someone he apparently knew well. The agents didn't identify the person wearing the wire.

"It seems like he was set up," Shulick said. "It sounded like he was sitting next to someone and he was at some social event and he was talking."

Shulick said he was offended when he heard Fattah Jr. refer to him on one of the recordings as "a Jewish businessman."

In other excerpts, Fattah Jr. talked about the gift cards and about his efforts to overcome community opposition to Shulick's plan to open a branch of his company's for-profit Delaware Valley High School.

Shulick said he met Fattah Jr. a few years ago through his sister, Fran Fattah, an attorney.

He said Fran Fattah told him about her brother's former firm, American Royalty, a concierge service that handled member clients' needs, including arranging private jets.

Although Shulick said he thought the idea was "the stupidest thing in the world," he referred two Main Line friends to American Royalty.

In the summer of 2009, Shulick said, Fattah Jr. reached out to him. Delaware Valley wanted to open a new site for 400 students on Kelly Drive, but the surrounding neighborhood was in an uproar, fearful the school would kill any chance of a redevelopment proposal.

"He reached out to me and said, 'Can I be helpful here?' " Shulick said.

"He just seemed to be a smart, bright kid who understood community politics. We need anyone we can get, and I'm taking him."

"I felt he brought tremendous value to us in understanding the political world," Shulick said.

Shulick hired Fattah Jr. and assigned him to work with two other consultants who were meeting with residents and business owners. He was paid approximately $75,000, according to sources.

A key leader in that community opposition was Councilman Curtis Jones, a Fattah ally for decades. Jones said the FBI also talked to him and played an excerpt of one recording, which he declined to describe.

"They did ask me if he ever gave me anything," Jones said. Aside from buying tickets at campaign fund-raisers, Jones said, the answer is no.

He said he never wavered in his opposition to the school, despite the involvement of Fattah Jr., known as "Chip."

"No disrespect to Chip, but that and a dime weren't going to change it," Jones said. "They could have brought the pope in here, and I would still have been against that project."

Although opponents urged the School Reform Commission in August 2009 to cancel its $3.5 million contract with Delaware Valley, the commission gave the school a green light.

Shulick said Fattah Jr. also worked all that summer to help oversee a $1.1 million renovation of the building, meeting with contractors and overseeing technology installations. He also helped arrange the massive community grand opening of the Kelly Drive site.

Shulick eventually signed a deal with Fattah Jr.'s firm - 259 Strategies L.L.C. - which also allowed him to meet a requirement to give 10 percent of his contract to a minority firm.

Fattah Jr., 29, is not a college graduate, but the deal gave his firm responsibility for paying the school's support staff and psychologist, and helping to oversee graduate students who worked with the students.

To meet the school district's requirements, 259's subcontract paid it 10 percent of the total that Delaware Valley received from the district. The amount in 2010-11 was $450,000, and $410,000 this year.

Last year, Shulick said, he also helped Fattah Jr. set up another firm, Legal Marketing Strategies L.L.C.

Both firms were named on the FBI search warrants served Wednesday.

But Shulick also said Fattah Jr. at times seemed to be trying to coast on his family name.

"I would yell at him occasionally about it," he said. "I want work done by the due date, period."

And he says Fattah Jr.'s financial troubles eventually began to surface at the office.

Shulick said last year officers started calling him from United Bank, trying to collect on a $50,000 loan to 259 Strategies. "A lot of money," Shulick said. "We had no idea."

Last August, the state filed a lien against 259 for $1,070 in unpaid taxes. Court records show several judgments against 259 and Fattah Jr.

Shulick said that Fattah Jr. was supposed to use part of the money he received from Delaware Valley to pay other companies and consultants. But last year, some of those checks started bouncing.

"You're in over your head," he says he told Fattah Jr.

In July, he fired Fattah Jr., he said, but rehired him in December. He said he hasn't heard from Fattah Jr. since the raid - but would keep him on the payroll if he returns and does his job.

Shulick said he learned he had to step up his political giving when he got his first contract in Philadelphia schools a decade ago.

His competitors had clout, he said, and they were getting huge contracts, although his company's performance was better and it was charging far less per student.

"If you live in Philadelphia, you've got to support the politicians. Period," he said. "If you don't, bad things will happen."

Rep. Fattah was one of the beneficiaries. Shulick said he hosted one fund-raiser at Green Valley Country Club that raised about $30,000, with help from lobbyist Herb Vederman of the law firm Stradley Ronon Stevens & Young.

Another early fund-raiser was held at Vederman's home.

"I remember the congressman being there, and I remember there must have been, like, 12 people, and I will never forget being so impressed by the people I was around that I had just read about.

"I worked my butt off and that's how I ended up raising, just by sheer hard work, more money than anybody else for Fattah's campaign."

None of that compared to his charity giving, which topped $1 million, he said.

Fattah Jr. also held a fund-raiser at his law office for the City Council campaign of Cindy Bass, a former Fattah staffer.

Shulick said he also began paying Vederman's firm to help win government grants. Shulick would not say how much he paid the firm, which began working "as early as 2005."

"I just know we wanted to have buses, and to see if there was any green grant money available," he said. "All I know is, we wanted to go and get whatever was available to make us a better school."

Vederman did not respond to requests for comment.

In 2009, Rep. Fattah submitted a request for $375,000 in transportation funds for Delaware Valley High School, to "replace the fleet with green clean fuel burning vehicles."

Shulick said he didn't know how the earmark request came about.

At first, he said, Fattah Sr. simply volunteered his help - before Shulick ever met Fattah Jr.

"The federal government is trying to do green transportation initiatives," Shulick quoted Fattah as saying. "It's for schools, and is this something that would be of interest to you?"

John Saler, a lobbyist with Stradley Ronon, said he only tried to win the school grants in Harrisburg; he declined to provide further details. "We never did any federal lobbying for him [the congressman], ever," he said. The government relations arm of the firm hasn't done any lobbying for Shulick in several years, he said.

Shulick said he never learned that Fattah had tried to win the money until he Googled the name of Delaware Valley High School and was steered to the mention of the earmark request on Fattah's website.

Fattah's office declined to say who asked for the earmark request. Instead, his office issued a statement saying that the request was submitted to a committee, according to protocol, but that the bill died.

"Not one federal dollar sent to any entity, not one request treated specially, not a process done in secret," said the statement issued by spokesman Ron Goldwyn.

When the funding did not come through, Shulick went out and bought his own large yellow school buses, with plain old diesel engines.

"I don't recall getting a damn penny," he said. "As of today, we got nothing."