Former political operative Greg Naylor testified Thursday in federal court that U.S. Rep. Chaka Fattah directed him to pay $22,600 of his son's college-tuition debt.
Testifying for the prosecution in Chaka "Chip" Fattah Jr.'s trial on multiple counts of tax and bank fraud, Naylor said he did not question the Philadelphia Democrat's request in 2007 that he pay Fattah Jr.'s debt to Drexel University.
Naylor, 67, who is also expected to testify in the congressman's corruption trial next year, appeared relaxed as he told jurors he was repaid in full.
Naylor, who pleaded guilty to felony charges in U.S. District Court in August 2014 and is awaiting sentencing, testified Thursday that he made the payments, mostly in monthly installments, directly to the university and to Sallie Mae, the student loan corporation.
In his plea last year, Naylor admitted channeling money from Fattah's campaign funds to finance Fattah Jr.'s education.
Responding to questions from Assistant U.S. Attorney Paul Gray on Thursday, however, Naylor only testified that he was eventually repaid, but not in detail about the source of the reimbursement.
Naylor, who is retired, testified that after making monthly payments on Fattah Jr.'s college loans, the congressman's son told him in 2011 that he was able to take over the debt.
Naylor testified that the tuition payments were made in the name of his political consulting firm, Sydney Lei & Associates Inc.
He said Fattah Jr., 32, did no real work for Sydney Lei. The company covered up the payments with fraudulent 1099s for Fattah Jr., federal tax forms used to report income from self-employment, Naylor said.
The younger Fattah is acting as his own lawyer. In his cross-examination, Fattah Jr. was able to get Naylor to acknowledge that he had made recommendations about how Sydney Lei could improve its website. Naylor also conceded that other companies might pay Fattah Jr. for that type of recommendation.
After the hearing, Fattah Jr. said in an interview that the government's allegation about his father's involvement in the school-loan repayment was incorrect. Fattah Jr. said that he did real work for Sydney Lei and that Naylor's payments to Drexel and Sallie Mae were a way to compensate him.
"I'm saying I made the arrangements," Fattah Jr. said.
Fattah Jr. said Naylor paid Sallie Mae and Drexel because he was concerned that the congressman's son would spend the money improperly and wanted it to go directly toward tuition.
Naylor's testimony was aimed at supporting the government tax charges against the younger Fattah. Prosecutors say Fattah Jr. did not pay taxes on the payment to the school, although it represented income.
Rep. Fattah's trial has been scheduled for May 2.
In a 29-count racketeering conspiracy indictment, he is accused of using his campaign funds, money from charities he created, and federal grant funds to bankroll his unsuccessful 2007 Philadelphia mayoral bid.
The charges allege he took the money to pay off an illegal $1 million campaign loan as well as his son's college debts.
Fattah Jr. studied business and did not graduate. He has said he left the university because his total debt was $120,000.