The head of a now-defunct for-profit education firm with ties to Chaka "Chip" Fattah Jr. was charged Tuesday with bilking the cash-strapped Philadelphia School District out of hundreds of thousands of dollars meant for educating some of the district's most troubled children.
In an indictment filed in federal court, prosecutors accused David T. Shulick, former president of the Bala Cynwyd-based Delaware Valley High School Management Corp., of skimming funds from a $2.1 million contract his company held between 2010 and 2012 to run an alternative school in Southwest Philadelphia for students at risk of dropping out.
With the help of Fattah - Delaware Valley's former chief operating officer and the son of former U.S. Rep. Chaka Fattah (D., Pa.) - Shulick allegedly drafted false budgets and submitted fake invoices to the School District while skimping on maintenance, failing to hire counselors, and laying off teachers to avoid paying their salaries.
Instead, prosecutors say, he spent district money to pay his housekeepers and nannies, as well as contractors for improvements and landscaping done at his $1.1 million, 13-room home, with a pool, in Gladwyne, and a vacation condo in Margate, N.J.
The charges Tuesday came as a "complete surprise," his lawyer said. For his part, Shulick, 46, balked at the allegations and pinned the blame on Fattah.
"It's incomprehensible after what I have been put through by the Fattahs and others," he said before declining further comment on the case.
Federal authorities have telegraphed for years that Shulick might one day land in a criminal court.
FBI and IRS agents raided his Logan Square law office in 2012 and spent hours interviewing him at his home.
Prosecutors all but called him a criminal during Fattah's trial on bank and tax fraud charges last year. That case sent the congressman's son to prison for five years - in part for his role in fleecing the School District through Delaware Valley's contracts.
In fact, it was Fattah himself who tipped authorities off to the pair's alleged crimes.
Hoping to earn a reward and edge out Shulick to start his own rival company, Fattah in March 2012 attempted to anonymously report the misspending at the Southwest school campus through the district's fraud prevention hotline.
Later, at an in-person meeting, Fattah implicated himself as he walked district representatives through Delaware Valley's budgets line by line, pointing out inflated salaries, exaggerated benefit costs, and money allotted for nonexistent employees. He did not know at the time that an FBI agent was among the people attending the meeting.
Agents also caught Fattah bragging to his former college roommate that he and Shulick were paying teachers upward of $10,000 less a year than they had told the School District.
"Yo, I got teachers making $23," he said in a conversation caught on tape in 2011. "They can work all they want. They're making $23,000 a year."
He continued: "I got security guards making $15,000. ... They could go work at Pathmark. At the end of the day, I don't care."
For some of his time at Delaware Valley, Fattah drew his own salary from a $450,000 subcontract Shulick cemented with Fattah's consulting firm 259 Strategies - a contract granted so that Shulick's company could comply with district rules requiring 10 percent of all contracts to go to firms run by women or minorities.
Shulick later hired him to work directly as Delaware Valley's chief operating officer.
But Shulick's lawyer Hope Lefeber said Tuesday that responsibility for the fraud fell solely on Fattah.
She described her client as dedicated to his work for the students, and said he sunk thousands of dollars of his own money into the schools he ran. His company, which at various times held contracts to run additional campuses in East Falls, Bucks County and Reading, declared bankruptcy last year.
"Mr. Shulick knew nothing about Mr. Fattah's failure to honor his obligations," she said. "He's done absolutely nothing wrong. He was taken advantage of by Chaka Fattah Jr., just like everyone else."
Fattah, who is serving a prison term in Michigan, did not immediately respond to email requests for comment Tuesday. However, in an email last week, he said he had recently deposed Shulick for more than three hours over the phone from the detention center for a separate civil suit he has filed against the government tied to his criminal case.
He questioned in the email why he had been prosecuted when Shulick had not.
The indictment filed Tuesday also charges Shulick with lying on his personal income taxes and for the alleged role he played, while working as Fattah's lawyer, in helping the congressman's son cheat PNC bank out of $18,000 Fattah owed from a business loan in default.
Shulick is set to turn himself in to authorities on Thursday and make an initial appearance on charges of embezzlement, conspiracy, and bank and tax fraud.
School District officials declined to comment on the case.
Staff writer Mark Fazlollah contributed to this article.