Skip to main content
Press Release

Philadelphia Congressman And Associates Charged With Participating In Racketeering Conspiracy

For Immediate Release
U.S. Attorney's Office, Eastern District of Pennsylvania

PHILADELPHIA – A Member of Congress and four of his associates were indicted today for their roles in a racketeering conspiracy involving several schemes that were intended to further the political and financial interests of the defendants and others by, among other tactics, misappropriating hundreds of thousands of dollars of federal, charitable and campaign funds.


Charged in a 29-count indictment are: Congressman Chaka Fattah Sr., 58, of Philadelphia, Bonnie Bowser, 59, of Philadelphia, Karen Nicholas, 57, of Williamstown, NJ, Herbert Vederman, 69, of Palm Beach, Florida, and Robert Brand, 69, of Philadelphia.  The indictment charges participation in a racketeering conspiracy, bribery, conspiracy to commit wire, honest services and mail fraud, money laundering conspiracy, money laundering, bank fraud, false statements to a financial institution, and multiple counts of mail fraud, wire fraud, and falsification of records.


The charges were announced today by United States Attorney Zane David Memeger, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, FBI Special Agent-in-Charge Edward J. Hanko and IRS-Criminal Investigation Special Agent-in-Charge Akeia Conner.


Specifically, the indictment alleges that, in connection with his failed 2007 campaign to serve as mayor of Philadelphia, Fattah and certain associates borrowed $1 million from a wealthy supporter, and disguised the funds as a loan to a consulting company.  After he lost the election, Fattah allegedly returned to the donor $400,000 that the campaign had not used, and arranged for Educational Advancement Alliance (EAA), a non-profit entity that he founded and controlled, to repay the remaining $600,000 using charitable and federal grant funds that passed through two other companies, including one run by Brand.  To conceal the contribution and repayment scheme, the defendants and others allegedly created sham contracts, and made false entries in accounting records, tax returns and campaign finance disclosure statements.


In addition, the indictment alleges that, after his defeat in the mayoral election, Fattah sought to extinguish approximately $130,000 in campaign debt owed to a political consultant by agreeing to arrange for the award of federal grant funds to the consultant.  According to the allegations in the indictment, Fattah directed the consultant to apply for a $15 million grant (which ultimately he did not receive) on behalf of a then non-existent non-profit entity.  In exchange for Fattah’s efforts to arrange the award of the funds to the non-profit, the consultant allegedly agreed to forgive the debt owed by the campaign.


The indictment further alleges that Fattah misappropriated funds from his mayoral and congressional campaigns to repay his son’s student loan debt.  To execute the scheme, Fattah and Bowser allegedly arranged for his campaigns to make payments to a political consulting company, which funds the company then used to lessen Fattah’s son’s student loan debt.  According to the allegations in the indictment, between 2007 and 2011, the consultant made 34 successful loan payments on behalf of Fattah’s son, totaling approximately $23,000.


In another alleged scheme, beginning in 2008, Fattah communicated with individuals in the legislative and executive branches in an effort to secure for Vederman an ambassadorship or an appointment to the United States Trade Commission.  In exchange, Vederman provided money and other items of value to Fattah.  As part of this scheme, the indictment alleges that the defendants sought to conceal an $18,000 bribe payment from Vederman to Fattah by disguising it as a payment for a sham car sale that never actually took place.


Finally, the indictment alleges that Nicholas obtained $50,000 in federal grant funds that she claimed would be used by EAA to support a conference on higher education.  The conference never took place.  Instead, Nicholas used the grant funds to pay $20,000 to a political consultant, $10,000 to her attorney, and also wrote several checks to herself from EAA's operating account.


“The public expects their elected officials to act with honesty and integrity,” said Memeger.  “By misusing campaign funds, misappropriating government funds, accepting bribes, and committing bank fraud, as alleged in the Indictment, Congressman Fattah and his co-conspirators have betrayed the public trust and undermined faith in government.”


“As charged in the indictment, Congressman Fattah and his associates embarked on a wide-ranging conspiracy involving bribery, concealment of unlawful campaign contributions and theft of charitable and federal funds to advance their own personal interests,” said Assistant Attorney General Caldwell.  “When elected officials betray the trust and confidence placed in them by the public, the department will do everything we can to ensure that they are held accountable.  Public corruption takes a particularly heavy toll on our democracy because it undermines people’s basic belief that our elected leaders are committed to serving the public interest, not to lining their own pockets.”


“These crimes and their cover up constitute a breach of the public trust,” said Hanko. “A founding principle of our democracy is that citizens place their faith and trust in the public servants they elect to represent them.  It is the duty of the FBI, IRS, and Department of Justice to investigate and prosecute those who violate this trust and put personal gain above public service.”


“Public corruption by our elected officials and their associates undermines the American public’s confidence in our government,” said Conner. “When our elected officials and their associates violate the law and create sophisticated financial schemes to enrich themselves, the Internal Revenue Service Criminal Investigation will work diligently with our fellow law enforcement partners to restore the public’s trust.”


The case is being investigated by the FBI and IRS-Criminal Investigation. Assistance was provided by the Department of Justice Office of the Inspector General, the NASA Office of Inspector General and the Department of Commerce Office of Inspector General. It is being prosecuted by Assistant U.S. Attorney Paul L. Gray, Trial Attorneys Eric L. Gibson, T. Patrick Martin and Jonathan Kravis of the Criminal Division’s Public Integrity Section. Trial Attorney Bob Dalton of the Criminal Division’s Organized Crime and Gang Section also has provided assistance.


An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.

Updated September 4, 2015

Public Corruption