The Price of Corruption, Part Deux

The far-reaching implications of the Fattah indictment

The Price of Corruption, Part Deux

The far-reaching implications of the Fattah indictment

Last week I wrote a column on Pennsylvania’s corruption tax: the cost of corruption to taxpayers, which one study estimated at about $1,300 per person. I had not planned to write a new column on corruption, but Pennsylvania is a gift that keeps giving.

This week, the US Attorney’s Office for the Eastern District of Pennsylvania announced the indictment of Congressman Chaka Fattah and several associates for their roles in a racketeering conspiracy.

The indictment is long, but it is quite a read. I recommend it as summertime beach reading. Think of it as a detective novel where we are the victims.

Fattah and his associates are innocent until proven guilty, of course, but once the Feds issue an indictment their batting record is in the 90 percent range. Fattah keeps saying it is just an allegation and that he will continue to work to serve his constituents.

Wake up! This is an indictment based on a long-term investigation with plenty of evidence behind it and lots of people giving first hand testimony. It is about the misuse of public money that should have been used for those very constituents.

The part of the indictment about lobbyist Vederman helping to pay for Fattah’s au pair is just too much. I never knew that urban social justice advocates worried about having an au pair. Where have I been?

Among those that are talking are Greg Naylor, a former Fattah aide, and Thomas Lindenfeld, a Fattah political consultant from D.C., both of whom have already pled guilty. They are trying to buy down their sentence.

It is worth noting that Naylor’s sentencing date has been postponed, which is often a sign that they are waiting to see what comes of his information before deciding on his sentence. Lindenfeld was supposed to be sentenced in March, but as far as I know, he has not been sentenced as of yet either.

Here are some of the odder aspects of the indictment.

Fattah’s son appears in the indictment. He was indicted earlier on unrelated charges (23 counts of defrauding the IRS, several banks and the Philadelphia School District) and is on trial now. In his father’s indictment, the Congressman uses campaign funds illicitly funneled through another company to pay off the son’s student loan. They paid down about $23,000 in loans through 34 different payments. Quite a Dad!

To keep the family theme going, let’s not leave out his wife, newscaster Renee Chenault-Fattah, who is mentioned in the indictment as person E. She is accused of being part of a scheme to fraudulently sell her car to one of the co-conspirators, Herb Vederman, to get $18,000 to help with costs for a vacation home in the Poconos.

She has not been charged and is now on leave from her NBC 10 job. She did not actually give up possession of the car and eventually it was re-registered in her name. If the indictment is right, she could face further questions. Her temporary leave of absence from the station may turn into a somewhat longer-term leave. The potential replacements are no doubt already in full battle mode.

Herb Vederman is a recurring bad dream in local politics. He worked for the Rendell administration and is a successful businessman but he likes to make campaign contributions so he can have political juice. He wanted to be appointed as an ambassador, based of course on his skills in foreign policy (just kidding), but to no avail. It appears that Fattah did everything he could, including contact the White House, on Vederman’s behalf.

Vederman helped Fattah financially and Fattah returned the favors. The part of the indictment about Vederman helping to pay for Fattah’s au pair is just too much. I never knew that urban social justice advocates worried about having an au pair. Where have I been?

The most intriguing part of the indictment document is person D, the originator of the campaign loan that Fattah is alleged to have fraudulently paid back. I assume, as reported in other places, that this is Al Lord, the former CEO of Sallie Mae (the student loan company that was privatized in 2004).

In Philadelphia, in addition to individual bad acts, there is a troubling structural issue behind the corruption. Why? Civic expectations in a non-competitive system lead to bottom feeding. There is a sense that nobody is watching the store and that nobody really cares all that much.

Lord is not mentioned in the indictment because he is not charged with anything. While Lord may not have done anything illegal, it is no accident that Sallie Mae’s Foundation was a large contributor to Fattah affiliated nonprofits,. They were buying congressional influence, just as other Government Sponsored Enterprises like Fannie Mae and Freddie Mac always did, through their charitable arm.

But if Lord was being repaid by donations from the corporate foundation associated with his company, routed through a company associated with Fattah, that would not pass the smell test. Did he know the connection between the corporate contributions and his personal repayment? If so, then he has some explaining to do.

There are three other important people in the indictment: Bonnier Bowser, Karen Nicholas and Robert Brand. They are co-conspirators and they have been mentioned in articles related to the Fattah mess for a long time. They are long-term loyalists to Fattah who may have seen the Congressman as their ticket to something else: an appropriation, political standing, D.C. relationships and transferred power.

Bob Brady, the city’s Democratic party leader and long time associate of Fattah, said the expected: Innocent until proven guilty, if the charges are true it is troubling, and he has done lots of great work in support of the city. Brady also noted that Fattah immediately resigned his senior position on the House Appropriations Committee, which indeed is a loss to the city.

Let’s dial forward a bit on the assumption that the Feds did not get it wrong and that Fattah gets convicted. From the early Daily News articles that highlighted his use of appropriations to reward a few nonprofits run by associates, to the conviction of two of those associates, to the indictment on Wednesday, it is safe to say that Fattah is done politically, no matter what happens at a trial. When he goes, several things are set in motion, some obvious and some less obvious.

First, let’s cover the obvious point. His congressional seat goes up for grabs. He has occupied that seat since 1994 and since that time there really has been no competition. He grabbed it in a competitive race with Lucien Blackwell, the incumbent Congressman and late husband of Jannie Blackwell, a powerful city Councilwoman. Political offices are inherited goods in Philadelphia.

The bad blood between those two political families has never been fully assuaged. Look for her to want to influence who jumps into the race, or in local political terms, look for her to want to block someone from entering. In the land of political giants, blocking entry is often just as satisfying as running someone.

Who are the logical competitors for the seat? The most obvious would be Mayor Nutter, who leaves office soon and will need a new job. He loves policy issues and Washington D.C. and he hails from the district. Moreover, Nutter became Mayor in 2007, in part by painting himself as the integrity candidate. In a Fattah special election, he gets to do the same thing once again. He is by far the front-runner. It is a perfect scenario for him.

Nutter will not be Brady’s choice because he is no fan of Nutter, a fact that he has never hidden. He may look for others, including District Attorney Seth Williams or State Senate leader Vincent Hughes. Both are from the Fattah congressional district and both have been mentioned already in publications in D.C. and Philadelphia.

I hope that it is not Seth Williams. I would rather see him run for State Attorney General, which will likely have an opening soon, given the antics of Kathleen Kane’s rule. There is no love between Williams and Kane and if she does not get indicted herself, then an election battle between the two would be something to behold. I’d want to sell tickets to those debates.

A second implication of the Fattah indictment is that his machine is closed down. He has several City Councilmembers that are close associates, including Blondell Reynolds Brown, Cindy Bass, and Curtis Jones, as well as several members of the state legislature.

What does it mean when the hub leaves the spokes? It means that political affiliations are scrambled and voting solidarities change. It could also mean that one or more of those politicians are weakened and eventually challenged, unless they latch on to another machine (Kenney moved from Fumo to Dougherty). Or it could mean that someone emerges as the new hub in that part of the city.

I would not bet on the new hub option, as there are too many persons that view themselves as the inheritor of the kingdom. Fattah did a terrific job of grooming candidates and loyal sycophants. But there is not exactly a corporate succession plan at work here, any more than there was when Vince Fumo’s political empire crumbled.

A third implication of the indictment and potential conviction is that once again, the local Democratic Party loses credibility. I am a card-carrying member of the Democratic Party and come from one of those families where voting Republican meant a likely visit from angry ancestral ghosts.

But this is getting embarrassing.

At the very least there is going to be mounting pressure on party leaders to speak out against wrongdoing within their ranks. Yes, I can also provide the list of recent State Republican crooks, and it is just as depressing from the State House to the State Supreme Court. But let’s stay on the Ds for now.

In Philadelphia, in addition to individual bad acts, there is a troubling structural issue behind the corruption. Why? Civic expectations in a non-competitive system lead to bottom feeding. There is a sense that nobody is watching the store and that nobody really cares all that much. There are too many inherited positions and too few voters riding herd over a nearly $4 billion company that is called the city of Philadelphia.

The party still selects judges the way we shop at Target or Costco: Looking for the best possible deal. Of course all of our legislators support state owned liquor stores: We shop retail as if it were Moscow in the 1970s. And we seem to be proud of it. We can’t imagine another way.

When does Governor Wolf or the presumptive new Mayor (Kenney) start saying something, not only about an individual bad actor (we are saddened by these events, etc.) but also about a culture that leads to bad acts? When do they demand in very vivid terms higher standards from those around them? When do their appointments for various boards and positions start to reflect performance over politics? Corruption is enabled by the lack of quality oversight at every level of government.

Finally, it is time to ask questions about politicians creating their own nonprofits and having them run by legislative aides and political loyalists. This was not why nonprofit law was created in America. But with former State Senator Vince Fumo (recently out of prison) and now Fattah, we see a sad misuse of legal and organizational intent.

The organizations they controlled had no separation from the political networks they controlled and were funded by appropriations they directed. Independent governance within those organizations was non-existent. This is an unhealthy trend, which again exists with legislators on both sides of the aisle.

Enough. It is time to take stock and clean house.

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