Skip to content
Link copied to clipboard

In testimony, former confidant links Fattah to crimes

A former staffer and longtime confidant told a federal jury Wednesday that he helped to falsify U.S. Rep. Chaka Fattah's campaign finance reports and steal thousands of dollars of political donations for just one reason:

U.S. Rep. Chaka Fattah was unaware of his aides’ scheme, his lawyers contend. A witness Wednesday testified he acted at the congressman’s behest.
U.S. Rep. Chaka Fattah was unaware of his aides’ scheme, his lawyers contend. A witness Wednesday testified he acted at the congressman’s behest.Read moreSTEVEN M. FALK / Staff Photographer

A former staffer and longtime confidant told a federal jury Wednesday that he helped to falsify U.S. Rep. Chaka Fattah's campaign finance reports and steal thousands of dollars of political donations for just one reason:

"The congressman asked me," Gregory Naylor said as he testified on the eighth day of Fattah's federal corruption trial.

During three hours on the stand, Naylor - a political strategist whose friendship with Fattah dated back decades - delivered the most damaging testimony so far in the government's case, directly linking Fattah to schemes to cover up and pay back an illegal $1 million campaign loan, and to use cash from the congressman's campaign coffers to repay his son's college debts.

And although Fattah's defense sought to trip him up by questioning discrepancies in statements he gave to the FBI, Naylor remained resolute.

"At the end of the day, the answer to the question remains the same," he said when asked about the illegal loan scheme. "My testimony is that I first learned of it through the congressman."

Naylor's testimony came as part of a plea agreement with prosecutors, nearly two years after he admitted his own role in the crimes of which Fattah now stands accused. Naylor's cooperation in 2014 with the long-running federal investigation marked authorities' first significant breach of the congressman's intensely loyal inner circle.

In his time on the stand Wednesday, the 68-year-old campaign veteran with a hangdog look came across as a loyal soldier, willing to do whatever was asked of him without too many questions.

"I operate on a need-to-know basis," he said at one point. "What I don't need to know, I don't need to know."

During three decades in Philadelphia Democratic politics, Naylor developed a reputation as a wizard with Election Day field operations for mayoral, gubernatorial, and presidential candidates.

He offered jurors a glimpse of that work Wednesday, describing the cash-stuffed envelopes he routinely distributed to campaign workers, who delivered supportive voters to the polls. In one race, he recalled, workers "rioted," blocking trolleys and traffic near 68th Street and Woodland Avenue in Southwest Philadelphia, when their money wasn't forthcoming soon after the polls closed.

"It's impossible to write checks," Naylor said. "You have to give money to people, most of whom don't have bank accounts. So it's a lot easier just to give people cash."

For Fattah's failed bid in 2007 to become mayor of Philadelphia, Naylor said, he distributed $200,000 in cash on Election Day from a fund that now lies at the heart of the Justice Department's racketeering conspiracy case.

Another top strategist on the campaign, Thomas Lindenfeld, already has testified that he took out a $1 million loan from then-Sallie Mae CEO Al Lord at Fattah's encouragement. Because the donation exceeded city campaign-contribution limits, the loan was made to Lindenfeld's Washington political consulting firm and did not appear on the congressman's campaign filings.

Yet, Naylor said Wednesday, all the money he spent on Election Day went to support Fattah's cash-strapped mayoral bid. To cover up the source of the funds, he testified, Fattah had him submit invoices for the $200,000 as if Naylor had fronted it to the campaign.

Naylor said he was happy enough to let the congressman and his campaign treasurer, Bonnie Bowser - who also is charged in the case - write down the fake debt they reported owing him over a period of years, since he already had been paid from the Lord loan stash.

"The campaign was broke before Election Day," he said with a shrug. "We were broke after Election Day, too."

Prosecutors have accused Fattah, Lindenfeld, and others of paying back the loan in late 2007 by raiding charitable donations and federal grant funds from two education nonprofits the congressman founded: the Educational Advancement Alliance and CORE Philly. Investigators allege the money was laundered through contracts the charities forged with Solutions for Progress, a Philadelphia-based technology firm run by a Fattah family friend.

Lindenfeld, testifying last week, said he assumed that when Solutions for Progress contacted him out of the blue in 2008 offering his firm a $600,000 contract for no work, it was Fattah's way of getting the funds to him to repay the debt to Lord.

Naylor's testimony Wednesday linked Fattah directly to the plan.

(Fattah's lawyers have described both Lindenfeld and Naylor as unscrupulous aides who acted without the congressman's knowledge.)

"He was aware there was a loan. He was aware it had to be paid back. We talked about it," Naylor said of Fattah. "He said [the funds] went through EAA to Solutions for Progress and it was done."

But the debt to Lord was only the largest sum Fattah struggled to pay off after losing the mayoral race. Other witnesses Wednesday testified they fought for years to recoup lesser but still significant funds the campaign owed them.

Gregory Harvey, a prominent Philadelphia campaign lawyer, said his firm - Montgomery, McCracken, Walker & Rhoads - eventually forgave more than half of the $80,000 in legal fees Fattah for Mayor owed after the campaign ended.

Communications strategist Robert DiLella threatened to sue Fattah over thousands in debt the congressman had personally guaranteed to pay back in a signed legal document.

But that threat was met by another, DiLella said - from Fattah ally and former City Councilman George Burrell.

"His comment to me was, 'Do you really want to sue a sitting member of Congress?' " DiLella testified, recalling a phone call he received days after raising the specter of a lawsuit.

Enraged, DiLella said, he lost his temper.

" 'I know what a congressman makes. I know what an anchor at a major TV station makes,' " he said he told Burrell, referring to Fattah's wife, former NBC10 newscaster Renee Chenault-Fattah.

When Burrell responded by asking what they could do to settle the debt, DiLella said he offered the only solution he could accept.

" 'Yeah,' " he recalled saying. " 'Pay the f- bill.' "

But even as creditors were clamoring for repayment, Fattah was diverting what little campaign cash he had to help pay college debts owed by his son, Chaka "Chip" Jr., Naylor said.

Between 2007 and 2011, Naylor's political consulting firm sent nearly $25,000 to student lender Sallie Mae and to Drexel University, where Fattah Jr. had been banned from attending class until he paid his bills.

Naylor testified Wednesday that his firm issued the younger Fattah sham tax forms as if he had worked as a consultant to the company.

Fattah Jr. is serving a five-year prison term on bank- and tax-fraud charges, in part for not reporting the income Naylor paid to Drexel on his behalf.

Naylor conceded Wednesday that the money the congressman used to pay him back came from Fattah's campaign funds. But he admitted that he had not always been so forthcoming about the source when confronted by the FBI.

"I thought I was protecting myself and everyone else involved," he said. "The congressman and his son."