August 18, 2014
By Bob Coleman
Editor, Coleman Report
The son of a powerful member of the House’s Appropriations committee is facing 411 years in prison and $13 million in fines for a series of loan transactions that left a number of banks writing off their loans.
The indictment alleges those conned are Citizens Bank ($26,000), PNC Bank ($30,000), Sun National Bank ($50,000), Bank of America ($10,000), Wells Fargo ($25,000), United Bank ($50,000) and Philadelphia Credit Union ($15,000).
Reads the indictment, “Between 2005 and 2012, defendant CHAKA FATTAH, Jr. engaged in a course of conduct which included obtaining business lines of credit from the financial institutions identified in this indictment, all of which are federally insured, through false statements and fraud, improperly using the loan funds for his personal benefit rather than for business expenses, making false statements to financial institutions and the United States government to settle his unpaid debts, and filing false tax returns on the income he received.
“FATTAH and M.A. submitted a series of false and fraudulent applications for lines of credit from financial institutions in Philadelphia during 2005 to obtain lines of credit for FATTAH’s entities under false pretenses. In order to persuade these banks to provide loans, FATTAH caused the preparation of a false federal income tax return for year 2004, which falsely claimed that 259 Strategies had gross income of $140,000 during 2004. The return also falsely claimed that 259 Strategies had expenses of $132,400, which lowered the taxable income on which taxes had to be paid, and FATTAH paid the $1,125 tax due on the fictitious return. In fact, 259 Strategies had no earnings in 2004, and FATTAH did not even register 259 Strategies with the Commonwealth of Pennsylvania until 2005.
“FATTAH used the funds from the business lines of credit primarily for personal expenses, including car payments, food, restaurant and club expenses, utilities, clothing, electronics, retail purchases, charitable donations, jewelry, entertainment, legal fees, and personal credit card expenses, rather than working capital and other business expenses as required by the loan agreements.
“Having used the loan funds for personal expenses rather than business expenses, defendant FATTAH defaulted on several lines of credit.
“In order to settle those debts and attempt to pay less than what he owed in 2010, FATTAH provided false income and other information to two banks, to the United States Small Business Administration which had insured those two bank loans, and to a Small Business Administration investigator.
“FATTAH claimed that during 2010 he earned approximately $2,500 monthly and that 259 Strategies had ceased operations, when, in fact, in 2009 he had begun earning from $6,250 per month to $450,000 per year, or $37,500 monthly.
“FATTAH failed to file timely federal income tax returns for 2005 through 2008, and when he did file income tax returns for those years in late 2010, he failed to report all of his earned income on the returns. FATTAH generally identified income on his federal tax returns only when the income information had already been reported to the Internal Revenue Service by others, and did not identify on his federal income tax returns income which had not been reported to the Internal Revenue Service.