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Fattah Jr. not averse to diming out partner, prosecutors allege

Days after FBI agents raided Chaka "Chip" Fattah Jr.'s Ritz-Carlton condo in 2012, investigators with the Philadelphia School District met with an anonymous tipster who offered to expose his employer in exchange for a reward.

An FBI agent testified Monday that over the course of three meetings, Chaka Fattah Jr. not only managed to dime out his boss - a contractor who ran schools for at-risk youth - but also thoroughly implicated himself.
An FBI agent testified Monday that over the course of three meetings, Chaka Fattah Jr. not only managed to dime out his boss - a contractor who ran schools for at-risk youth - but also thoroughly implicated himself.Read moreANDREW THAYER / STAFF PHOTOGRAPHER

Days after FBI agents raided Chaka "Chip" Fattah Jr.'s Ritz-Carlton condo in 2012, investigators with the Philadelphia School District met with an anonymous tipster who offered to expose his employer in exchange for a reward.

That tipster, they later learned, was Fattah himself. Over the course of three meetings between March and May, he not only managed to dime out his boss - a contractor who ran schools for at-risk youth - but also thoroughly implicated himself, an FBI agent testified Monday.

As Fattah's federal bank and tax-fraud trial entered its second full week, jurors heard the 32-year-old son of U.S. Rep. Chaka Fattah (D., Pa.) in his own words as he walked investigators through a fraud that prosecutors allege funneled thousands of taxpayer dollars into his personal bank account. Unknown to Fattah at the time, one of the School District inspectors he met with was actually an undercover FBI agent recording the entire discussion.

"I just think that this is wrong," Fattah said of allegedly falsified budgets he brought with him to a March 2012 meeting. "It's not true and correct. There's not argument about it. When you look through this, you all are going to be flipping."

Prosecutors have accused Fattah of bilking the School District out of tens of thousands of dollars while working as the chief operating officer for Delaware Valley High School, a for-profit education firm that ran alternative schools for at-risk students in East Falls and Southwest Philadelphia.

He and Delaware Valley's owner, David Shulick, allegedly submitted budgets to the district that lied about the number of employees on their staff, inflated the salaries they paid them, and claimed thousands of dollars in expenses for benefits that were never paid.

Shulick has not been charged with a crime.

Fattah has argued in court that budgets are meant to be planning documents and are not intended to reflect every dollar as it was spent. He maintains that every dollar not accounted for was spent to benefit the students.

But his own statements in his 2012 conversations with School District investigators appeared to undermine that case.

"From my perspective, DVHS should have submitted another budget if they weren't going to honor the original," he said at a meeting recorded that April. "They were taking money from the School District."

Many of the recordings centered on budgets Delaware Valley submitted for managing its campus in Southwest Philadelphia between 2010 and 2012. They listed teacher salaries at $45,000 a year and claimed an additional $170,000 was spent on benefits.

Fattah told investigators that teachers actually made $36,000 and were required to pay for their own benefits.

In separate FBI recordings played for jurors last week, Fattah joked to his former college roommate that some school employees made even less than that.

"Yo, I got teachers making $23," he said 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 DVHS, Fattah drew his own salary from a $450,000 subcontract Shulick cemented with Fattah's consulting firm 259 Strategies. Prosecutors have said that he granted the contract to Fattah to comply with district rules requiring 10 percent of all contracts to go to firms run by women or minorities.

Mattie Thompson, a DVHS administrator, testified Monday that she was astounded when she learned how much Fattah was being paid, during a 2011 meeting Shulick had convened at his house with various administrators to discuss a company payroll check that had bounced.

Prosecutors have alleged that Fattah took the money from DVHS to pay off gambling debts.

As Thompson told jurors, she didn't know what to think.

"I was flabbergasted," she said.

Testimony is expected to resume Tuesday.

jroebuck@phillynews.com

215-854-2608 @jeremyrroebuck