One chapter in the Chaka Fattah Jr. saga appears to be ending. According to a source close to an ongoing federal grand jury investigation of “Chip” Fattah Jr., prosecutors have finished gathering evidence, are presenting it in a coordinated fashion to the grand jury, and are preparing to make one or more indictments. The source, who is not authorized to speak about the case, spoke on the condition of anonymity.
Much of the trouble began in February 2012, when the FBI subpoenaed documents from Fattah Jr., infamously carting them out of his residence at the Ritz-Carlton in Center City. The investigation at that point appeared to involve whether Fattah Jr. had used the influence of his congressman father to win millions in lucrative contracts from the School District of Philadelphia (SDP) for Delaware Valley High School (DVHS), a for-profit education firm with four schools serving troubled youth in the Philadelphia area. Fattah Sr. did at one point try to get the school a federal grant for “green” school buses, but was ultimately unsuccessful.
DVHS had paid the younger Fattah $450,000 for contracting work he did for the school in the 2010-2011 school year, more than 10 percent of what the school received from SDP for the year. In August of last year, after news emerged that the firm’s records were also being subpoenaed, the district cut ties with DVHS’s two Philadelphia schools, in East Falls and Southwest Philly.
As the investigation continued, it reportedly began to encompass questions regarding Fattah Jr.’s finances. Fattah, who’s maintained something of a lavish lifestyle, has faced lawsuits for unpaid gambling debts and loans.
According to the source, the U.S. Attorney’s Office, which began calling witnesses earlier this year, is investigating whether Fattah Jr. paid his taxes properly, along with other questions relating to bank loans he’s obtained. But it’s also focused on his relationship with DVHS, and how exactly the schools spent more than a half million dollars they received in federal funds.
A Fox 29 report from February has already raised questions about whether the school’s founder, Bala Cynwyd lawyer David Shulick, was spending DVHS funds for personal items like home renovations and luxury car payments. Fox also reported that Philadelphia’s Inspector General was investigating the propriety of DVHS’s spending of school funds.
Though DVHS did not ultimately win any contracts from Washington, it did receive $2.2 million in federal dollars from the Obama administration’s stimulus bill, funneled through the SDP for the 2011-2012 school year. According to our source, the existence of these funds, a portion of which prosecutors appear to be concerned with, seem to help explain why the feds are interested in the case.
Neither Shulick, the U.S. Attorney’s Office in Philadelphia, nor Fattah Jr. would comment on the matter, though Fattah Jr. did say he was re-launching 259 Strategies, the consultancy that received the DVHS contracts in the first place. “I’m an entrepreneur and I think that my expertise can be valuable to different industries in Philadelphia,” he said, adding that he is starting to put out proposals to various companies. Fattah Jr. is also trying to raise money to pay his legal bills through a legal defense fund.
An indictment or indictments, pending a grand jury rubber-stamp, could come within weeks, the source says.