In court, Chip Fattah opens his defense

With his embattled congressman father and TV news anchor stepmother sitting in the front row on the first day of his bank and tax fraud trial, Chaka "Chip" Fattah Jr. accused federal authorities Friday of basing their case against him "entirely on speculation" and a "gross lack of investigation."

Acting as his own lawyer, he scoffed at allegations that he lived the life of a high-roller by shirking his tax obligations, obtaining bank loans through fraud, and stealing from the Philadelphia School District.

Instead, Fattah, 33, described himself as a successful young businessman, who spun a small photography company he started in college into ventures as varied as a consulting business and a personal concierge service for well-heeled clients. Ultimately, he said in his opening statement to jurors, he earned every dollar he spent.

"I'm an entrepreneur," he said. "I took a camera and made it into $100,000. The government is criticizing me for trying to figure out how to make money. How to make a living. How to pay my rent."

Prosecutors saw things differently.

In his own opening salvo, Assistant U.S. Attorney Paul Gray painted Fattah as a scam artist, who repeatedly lied to banks, auditors, and the IRS about his showy spending on flashy clothes, expensive bar tabs, a $45,000 BMW, and a $600,000 condo at the Ritz Carlton.

The businesses Fattah cited on loan applications to secure more than $200,000 in six years from community banks? Gray told jurors Friday most were nothing more than Fattah and his college roommate "sitting around their Henry Avenue apartment eating pizza."

"Two men sitting around an apartment obsessing about how much money they can make is not a legitimate business," Gray said. "His priorities were clubs, restaurants, and clothes. Federal taxes - not so much."

Those barbs presaged the contentious legal battle to come in what is expected to be a three-week trial.

Fattah has accused the Justice Department of targeting him in an attempt to strike a blow against his father, U.S. Rep. Chaka Fattah (D., Pa.), who faces his own federal corruption trial in April on charges he misspent public and charitable funds.

U.S. District Judge Harvey Bartle III, however, has barred Fattah Jr. from making that argument in court.

The elder Fattah greeted his son with a handshake before Friday's proceedings. At times - as his son set out to attack the government's investigation - the congressman leaned forward in his seat with the slightest hints of a smile playing over his face.

"I'm very proud of my son," the congressman said, as he and his wife, NBC10 anchor Renee Chenault-Fattah, left the courtroom after the first two hours of the trial.

But it was the younger Fattah - tall and lanky in a three-piece gray suit - facing the more immediate concerns about his future.

In December, he jettisoned the lawyers assigned to his case in a dispute over trial strategy and chose to represent himself, despite warnings from Bartle.

His performance on the first day of trial demonstrated clear preparation, but at times his opening argument appeared to lose jurors in its focus on the minutiae of the case.

"Some of this may seem like nitpicking," he said. "But details are important."

To the extent that his statements sketched out trial strategy, Fattah's defense appears as if it will proceed along two lines: reframing what the government has characterized as lies on loan applications and tax forms as honest mistakes, and arguing that he legitimately earned money prosecutors say he stole.

Answering an accusation that he sought to make his consulting business appear more legitimate on a 2005 loan application by exaggerating the number of its employees, Fattah told jurors: "It could have been a typo - or something."

Facing charges he lied to investigators with the U.S. Small Business Administration about his ability to pay back his debts, he shot back: "The truth is, I was under no obligation to settle those loans. I could have just declared bankruptcy."

And as for allegations he took $100,000 meant to pay for counseling services for inner-city schoolchildren, Fattah stressed he earned that money through hard work.

That last accusation centers on portions of Fattah's indictment that accuses him of falsifying budgets between 2010 and 2012 while working for Delaware Valley High School, a for-profit education firm that held contracts with the Philadelphia School District to run an alternative school.

Prosecutors say he and the company's owner - David Shulick - inflated their expenses to bilk the district, while underpaying teachers.

But Fattah denied that Friday.

"I worked day and night while other employees were on vacation and the owner of the company was 'downashore' in Margate," he said. "I earned my [money] by working every day to get that school open."

It was a theme that continued as the first of the government's witnesses began taking the stand.

Two officials from United Bank of Philadelphia testified that Fattah took out a short-term business loan in 2012, saying he needed money to cover payroll for employees at Delaware Valley.

Prosecutors allege that instead, Fattah used $15,000 to pay down personal credit card debts and cover more than $33,500 in gambling debts at SugarHouse and Harrah's casinos.

In his cross-examination of the bank officials, Fattah appeared to suggest that he viewed those sums as his own salary and that he was entitled to draw on the business loan directly to pay his personal debts.

"Would the bank normally concern itself with what an employee - after being paid - did with their money?" he asked.

Testimony is expected to resume Monday.

jroebuck@phillynews.com

215-854-2608 @jeremyrroebuck