Longtime Chaka Fattah aide folds to feds

THE FEDERAL investigation into U.S. Rep. Chaka Fattah's finances, eight years in the running now, just struck very close to home.

Greg Naylor, Fattah's longtime political adviser and congressional staffer, admitted in federal court yesterday that he lied to investigators to conceal an illegal $1 million campaign loan received by someone identified as "Elected Official A" during the 2007 primary election for mayor.

Naylor, 66, also admitted that he conspired with that elected official to use campaign funds to pay down $22,663 in college debt for the official's son.

Fattah's son, Chaka "Chip" Fattah Jr., has his own legal woes.

He pleaded not guilty two weeks ago to 23 federal counts from an indictment accusing him of defrauding banks, the IRS and the School District of Philadelphia in another investigation.

Chip Fattah, after court, said "there's no doubt" the charges were brought because he is the son of a 10-term congressman.

The congressman did not respond yesterday to messages left with his Washington, D.C., staff.

Naylor was charged with a federal information, rather than an indictment, meaning he waived his right to have his case heard by a grand jury. That could signal his willingness to cooperate with federal investigators in the future.

Naylor's attorney, Robert Levant, declined to comment.

A few factors in Naylor's guilty-plea memorandum make clear "Elected Official A" is Fattah.

The memo says Naylor worked on that official's 2007 campaign for mayor, as Naylor did for Fattah. It notes he was a "former long-time employee" of the official, as Naylor was for Fattah.

It also notes the official lost a legal bid in 2007 to undo Philadelphia's campaign-contribution limits, as Fattah did that year.

The memo goes on to say:

* After that court loss, the official "engaged in a scheme to violate the applicable Philadelphia campaign finance laws and contribution limits by secretly arranging for and receiving a $1 million campaign contribution in the form of a personal loan from long-time friend and political person," identified only as "Person D."

* The official's Washington, D.C.-based political consultant signed a promissory note for the loan.

That appears to be a reference to Tom Lindenfeld, Fattah's consultant, who worked on the campaigns of former Gov. Ed Rendell and former Mayor John Street.

Lindenfeld did not respond yesterday to requests for comment.

* Naylor and the consultant spent $600,000 of the $1 million, with $400,000 for advertising and $200,000 for "walking around money" on election day.

The unspent $400,000 was returned to the lender after Fattah finished fourth with 15 percent of the vote in the 2007 primary.

* The lender "experienced acute financial difficulty" later in 2007 and had his son call in the debt.

* The elected official, using funds received by nonprofits he founded and fake contracts to companies run by his allies, repaid the money. That included $500,000 from the Sallie Mae Fund, the charitable arm of the massive student-loan corporation Sallie Mae.

The memo makes clear the investigators followed a long paper trail of emails, wire transfers and bank-account checks.

It also included $100,000 from a NASA grant for a "Math Science & Technology Enrichment Program for members of underrepresented groups" in the city.

Luther Weaver III, Fattah's attorney, yesterday said he knew nothing about Naylor's case and could not comment on the status of the federal investigation into the congressman's finances.

The memo also details the elected official's use of Naylor to pay down his son's college debt, which was more than $100,000 at one point. Naylor received money from the official's campaign accounts, made payments on the student loans and concealed it all by filing false tax returns listing the son as an "independent contractor" for his political firm.

Chip Fattah, who attended Drexel University but did not graduate, declined to comment about that yesterday.

Naylor pleaded guilty to three counts for concealing the crimes with false documents and then lying to investigators about them.

He faces up to 13 years in prison and a fine of $500,000.

The case is being prosecuted by Assistant U.S. Attorney Paul Gray in Philadelphia and Eric Gibson, a trial attorney from the Justice Department's Public Integrity Section in Washington, D.C.