It's 'bulls---,' Fattah Jr. says in meeting with investigators

IN A CONVERSATION recorded by an undercover FBI agent, Chaka Fattah Jr. called part of a budget submitted to the Philadelphia School District for an alternative school run by a for-profit company "bulls---."

Fattah had worked for the now-defunct, for-profit alternative-education company Delaware Valley High School, at times serving as its chief operating officer.

The $170,000 for "benefits" in the budget?

"This entire line is bulls---," Fattah told investigators with the Office of the Inspector General for the school district in a March 2, 2012, meeting. One of the investigators was the undercover agent.

That recording and two others made later in 2012 by the agent were played for jurors yesterday on the seventh day of Fattah's federal fraud trial.

Fattah, 32, the son of U.S. Rep. Chaka Fattah Sr., is accused of defrauding banks, the IRS and the school district of hundreds of thousands of dollars.

The feds contend Fattah and David Shulick, who served as DVHS' president, provided budgets to the school district that inflated salary figures for a director, teachers, administrative staff and nonexistent employees at DVHS' newly opened Southwest Philadelphia school in the 2010-11 and 2011-12 school years.

The largest alleged false figure was the "benefits" amount. "The $170,000 budgeted for benefits simply went into the pockets of DVHS' owner and his right-hand man, Fattah," prosecutors wrote in a trial memorandum.

Shulick has not been charged. Assistant U.S. Attorney Paul Gray said in his opening statement at Fattah's trial that Shulick is not "now" charged. His wording suggests Shulick could later be charged by the feds.

On Feb. 29, 2012, IRS and FBI agents raided Fattah's condo at the Residences at the Ritz-Carlton and DVHS' administrative office on Logan Square.

About a week earlier, the school district happened to receive an anonymous email from a person looking for a reward to expose misappropriation of school funds, according to the trial memorandum. After learning the person was Fattah, the feds inserted the undercover agent into the meetings with Fattah and the district's investigators.

The feds contend that Fattah wanted to blow the whistle on Shulick because Fattah wanted to start his own alternative school and compete with Shulick.

In the recorded conversations, Fattah says Shulick misused school-district money for personal expenses. He outlines to the investigators various items in the budget for the Southwest school that were false.

Teachers were not paid $45,000, as the budget says, but were paid $36,000, he said.

Fattah also admits, among other things, in the recordings that there was no counselor at the Southwest school, although one was budgeted for $50,000.

Fattah contends Shulick was the one responsible for the budgets. Fattah, not a lawyer and not a college grad, is acting as his own attorney at his trial.

Mattie Thompson, a former executive at DVHS, testified yesterday under cross-examination by Fattah that the person who had the final word at DVHS board meetings - in which Shulick, Fattah and Thompson participated - was Shulick.

But under questioning by Assistant U.S. Attorney Paul Gray, Thompson also said she had questioned Fattah about specific items in the 2010-11 budget for DVHS' Southwest school. Fattah was involved with the budgets, she testified Friday.

Fattah, Thompson said, explained to her that the difference in the teachers' salaries between the $36,000 they got paid and the $45,000 on the budget was something called a "labor burden," meaning things like health benefits and workers' compensation had to be included, she said.

But according to witnesses in the trial, and Fattah himself in the recordings, teachers got no benefits, and if they wanted health benefits, $5,000 was deducted from their $36,000 salary.

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