U.S. says it could offer payout to Fattah Jr.

Chaka “Chip” Fattah Jr. was sent to prison last month on bank and tax fraud charges.

The U.S. Justice Department said Tuesday that it was willing to consider a financial settlement to Chaka "Chip" Fattah Jr. for leaks to reporters that occurred in the investigation that sent him to prison last month.

But any potential offer is likely to be far less than the nearly $10 million that the 33-year-old son of U.S. Rep. Chaka Fattah (D., Pa.) sought in a lawsuit he filed two years ago, government lawyer Ari D. Kunofsky said.

"It seems that his claims have some legs," he said. "But if we look at damages, I don't think we're looking at a significant amount."

Kunofsky's comments came during a brief status hearing in the case, which also marked Fattah's first public appearance since he was escorted from another federal courtroom in handcuffs Feb. 2 to begin a five-year sentence on bank and tax fraud charges.

Dressed in a drab prison jumpsuit, Fattah continued to represent himself in court, as he did in his criminal trial, and told U.S. District Judge Timothy Savage he would be open to considering any deal the government might offer.

"I'm always willing to talk to the government," he said. "But in the last couple of years, I haven't heard one word."

Fattah, whom federal prosecutors have described as a con artist who bilked banks, taxpayers, and clients of his businesses out of more than $1 million, sued the government in 2014, six months before he was indicted. He claimed that federal agents must have given reporters advance notice of a February 2012 raid on his Ritz-Carlton condo and that publicity surrounding the investigation diminished his ability to make a living.

Justice Department officials denied his allegations. But weeks into his trial, Richard Haag, the lead FBI agent on his case, made a surprise admission from the witness stand that he had tipped off an Inquirer reporter to the search.

Since then, Fattah Jr. and his father, who faces a separate corruption trial in May, have seized on Haag's statements in their efforts to paint the government's investigations into their activities as unethical, unprofessional, and biased.

U.S. District Judge Harvey Bartle III, who is presiding over the criminal cases of both father and son, found that Haag's contact with reporters had no bearing on Fattah Jr.'s criminal case. He has yet to rule on the issue with regard to the congressman.

In his civil case, Fattah Jr. has said the publicity surrounding the search of his home cost him his $12,000-a-month contract with Delaware Valley High School, a for-profit education firm for which he worked at the time and that also played a significant role in his criminal trial.

Jurors concluded in November that Fattah Jr., along with others at the firm, had fleeced the Philadelphia School District out of hundreds of thousands of dollars between 2010 and 2012 by submitting inflated budgets for the two alternative schools the company ran for the district.

In court Tuesday, Kunofsky said any settlement the Justice Department might offer would require Fattah Jr. to first devote the money to paying the $1.1 million he owes in court-ordered restitution to his victims, including the School District.

Savage urged both sides to work quickly to determine whether they could strike a deal. Fattah Jr. is being held in the Federal Detention Center in Center City, but he should find out soon which federal prison has been selected for him to serve the rest of the sentence.

"We ought to do it soon," Savage said. "Before he gets designated and potentially moved across the country. That will make things a lot more difficult."

jroebuck@phillynews.com

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