A $1 Million Loan At The Center Of The Fattah Investigation

By George Anastasia
For BigTrial.net

Chaka Fattah's campaign for mayor was not going well.

Once considered the favorite, he was falling far beyond in the polls to Michael Nutter in the 2007 Democratic Party primary, a race that for all intents and purposes decided who the next mayor of Philadelphia would be.

So Fattah asked Albert Lord for help.

Lord, a well-heeled business executive based in Washington, DC., told the federal jury in Fattah's corruption trial on Tuesday that they met at the Four Seasons Hotel in Philadelphia in the spring of 2007.

"The congressman said that in order to win he would need more money for media buys," Lord recalled.

That, federal authorities allege, was the genesis for an illegal $1 million loan to the Fattah campaign, a loan repaid in part -- $600,000 -- with funds siphoned from federal grants to Fattah-sponsored educational programs.

No Tom, I wasn't puking out there

The loan repayment is one of five "schemes" outlined in a 29-count indictment charging Fattah and four co-defendants with racketeering conspiracy, fraud, bribery and money-laundering.

Lord, the retired CEO of Sallie Mae, the for-profit student loan corporation, was testifying under an  immunity agreement. Silver-haired and sporting a tan, the former Montgomery County resident said he earlier had contributed $100,000 to Fattah's mayoral campaign, adding, "I thought Chaka Fattah was going to win."

He described his relationship with Fattah as "professional," but said they had played golf together a half dozen times and that Fattah and his wife were his guests at Super Bowl XXXIX in Jacksonville, FL, in 2005. The Fattahs flew down to Florida with Lord on a private jet.

(The Patriots beat the Eagles 24-21.)

Lord's testimony appears to pave the way for the appearance of Thomas Lindenfeld, a key government witness in the trial which will resume on Wednesday.  Lord said that Fattah referred him to Lindenfeld, a Washington political consultant who was working on the mayoral campaign for the congressman.

Mayor Nutter [right]

At a subsequent meeting in McLean, VA, Lord said he and Lindenfeld discussed the financial situation and that Lord agreed to lend Lindenfeld $1 million to cover the cost of media in the waning days of the race.

The government alleges that $200,000 of that loan was used as "street money" on election day.
Fattah and fellow Philadelphia congressman Bob Brady finished well behind Nutter and businessman Tom Knox in the Democractic primary on May 15 that year. Nutter, who captured 35 percent of the vote, went on as expected to win the general election in November.

Fattah remained a popular congressman, but one with financial problems, including the $1 million loan that had to be repaid. Authorities say that Lindenfeld made a $400,000 payment in June of 2007 and that within the year Fattah had come up with the additional $600,000 by taking federal grand money from non-profit educational programs he controlled.

Among the dozens of documents introduced as evidence today was a letter from Lindenfeld to Lord that accompanied the $400,000 repayment. In the letter, Lindenfeld wrote that "the business opportunities were not as fruitful" as they had expected.

Lord said he had not other business dealings with Lindenfeld and that the money was lent to aid the Fattah campaign. He said he and Fattah never discussed the loan.

The government contends and Fattah, Lindenfeld and others tried to hide the nature of the loan which was never reported as required by campaign finance laws.

In cross-examination by Fattah's attorney, Lord said he considered the $1 million a loan to "a vendor" and not a campaign contribution.

Lindenfeld's testimony, which could come this week, is expected to provide more details about what was discussed and what Fattah knew about the transaction.

Asked if he was concerned about being repaid, Lord said "I'm always concerned when someone else has my money." The comment drew laughter from the crowded courtroom at the end of a day of often boring and arcane testimony about federal grants, loan transactions and paper money trails.

George Anastasia can be contacted at George@bigtrial.net.