Fattah will refund contributions

The settlement, a first for the city's Board of Ethics, covers more than $50,000.

As U.S. Rep. Chaka Fattah scrambles to raise money for his mayoral bid, he is also in the unusual position of having to give some back.

In a first-of-its-kind settlement approved yesterday by the Philadelphia Board of Ethics, Fattah agreed to transfer $36,766 from his mayoral committee to his exploratory committee - and then refund that money to donors.

The agreement also requires the exploratory committee to repay $20,000 to a contributor whose money should not have been accepted.

"I see it as a de facto admission of guilt. Otherwise, they would have fought it," said Zack Stalberg, president of the election-watchdog group Committee of Seventy. He urged the ethics board in February to investigate Fattah's exploratory-committee spending. The ethics board, he said, "acted aggressively and properly."

Gregory Harvey, a lawyer for Fattah, responded that the campaign was in no way admitting wrongdoing. "It's a settlement of a number of issues which we resolved," he said.

All the money has been returned to the exploratory committee, but not yet to donors, Harvey said. Some of those transactions were reflected on the campaign-finance report, filed by Fattah two weeks ago, that reported $588,672 cash on hand. It is anticipated that the rest of the returns will be included in his May 4 report.

At issue were expenses picked up by the exploratory committee, which Fattah created in 2005, that the mayoral campaign committee should have paid.

Those expenses included computers and office equipment, Fattah's campaign Web site, and video clips, photos and other items related to a Nov. 18 event he held to formally announce his candidacy.

Fattah used his exploratory committee to collect money - some in single checks of $100,000 each - that exceeded the city's strict campaign-finance rules. At the time, those rules limited individuals to a $2,500 maximum donation and political committees to $10,000.

Fattah argued that his committee did not have to adhere to the limits since he was not yet a declared candidate. He also said money raised would not be spent promoting his candidacy.

In addition, the settlement calls for the exploratory committee to refund a $20,000 check it improperly accepted from Suzanne Peck, chief technology officer for Washington, D.C., and a longtime donor to Gov. Rendell.

Campaign-finance records show the exploratory committee received the check three days after Fattah declared his candidacy, when the exploratory committee was no longer supposed to be raising money.

Although the ethics board has the authority to issue penalties and fees, it pursued a settlement instead. That decision was driven by the fact that the board - created last year, and whose members were sworn in last November - has yet to approve a complaint process and enforcement regulations.

At yesterday's ethics board meeting, where the agreement was announced, members offered no accompanying words condemning the activities of Fattah's committees. The settlement - discussions had been under way for three months before Stalberg's involvement - was left to speak for itself.

Nonetheless, in hammering out the agreement, the board took its most visible step in its policing of campaign-finance reporting - and was transparent in its suggestion that more is to come.

"There are active investigations being pursued at this point," chairman Richard Glazer said.

"The fact that a campaign or PAC has not been mentioned here does not mean anything."

The board's next meeting is scheduled for May 15, the day of the primary.

Contact staff writer Marcia Gelbart at 215-854-2338 or mgelbart@phillynews.com.