Political consultant describes ploy to repay illegal $1 million loan to Fattah campaign

In early 2007, about six weeks before the Democratic primary, U.S. Rep. Chaka Fattah’s campaign for Philadelphia mayor was in trouble.

He was far from the front-runner he was considered to be when he entered the race. What’s more, the campaign didn’t have enough cash to make the kind of final push that might turn things around.

There wasn’t enough money for campaign literature or other basic expenses, let alone a television ad.

But Fattah had a plan.

“He said he had some ideas … that he would get back to me,” political consultant Thomas Lindenfeld told jurors  Wednesday during the third day of testimony in Fattah’s federal corruption trial.

Lindenfeld, Fattah’s campaign strategist during his failed bid for mayor, said Fattah later arranged a meeting with Alfred Lord, a longtime friend and wealthy executive at the Sallie Mae Fund, the widely-known student-loan organization.

The two had never met.

“I had to Google to find out who he was,” said Lindenfeld.

The first meeting, Lindenfeld said, included a “wide-ranging” conversation. The two talked generally about Lindenfeld’s two-partner firm, LSG Strategies, Fattah’s mayoral campaign and Philadelphia politics.

“Inconclusive, but friendly,” said Lindenfeld, who has already pleaded guilty in connection with the case in hopes of being handed a lenient sentence.

The second meeting was different, said Lindenfeld. That’s when Lord offered to loan Fattah’s campaign a $1 million, an illegal sum that prosecutors say “dwarfed” the city’s newly minted campaign finance limits.

The government alleges the loan was specifically made to Lindenfeld’s political consulting firm, then passed on to the campaign and used to cover various expenses.

Lord, who testified Tuesday, confirmed that, but said he never discussed the loan with Fattah.

Lindenfeld did, and said he directly asked the congressman if he could repay the loan.

“No problem,” Fattah told him.

Two weeks before the primary, after a sham promissory note was processed, the campaign started spending. Lindenfeld said Fattah called the shots on how the money was spent because he was ultimately responsible for repaying the loan from Lord, not LSG Strategies.

Dealing with $600,000 debt

After Fattah lost the primary — he placed fourth in a five-man field — Lindenfeld said the $400,000 the campaign didn’t use was wired directly back to Lord with a note.

“As it turns out, the business opportunities we had contemplated weren’t as fruitful as expected,” wrote Lindenfeld.

The campaign didn’t have enough money to repay the remaining $600,000 debt, said Lindenfeld. That was particularly problematic because Lord’s finances were in bad shape at the time and he needed to collect, according to testimony.

When Lindenfeld shared this with Fattah, he said, the congressman replied with five words: “I’ll take care of it.”

Months later, Lindenfeld said he got an out-of-the-blue call from Robert Brand, a longtime friend of Fattah who ran a for-profit education-focused organization called Solutions for Progress.

Lindenfeld said Brand wanted Lindenfeld’s company to do some marketing work for Solutions for Progress. He would pay him up front: $600,000.

Lindenfeld told jurors he figured this was how Fattah planned to repay the outstanding piece of the $1 million loan. Eventually, the $600,000 was wired to LSG Strategies and back to Lord, said Lindenfeld.

Lindenfeld said his firm never did any work for Solutions for Progress, and that Fattah knew that money was wired to the organization.

The government alleges that the $600,000 was sent to Solutions to Progress from the Educational Advancement Alliance, a nonprofit Fattah founded. Fattah allegedly assembled the money by orchestrating the theft of charitable donations and federal grant money, according to the indictment.

Lindenfeld is expected to continue his testimony Thursday morning.

Fattah is charged with racketeering, bribery, wire fraud and other offenses. Four associates are charged alongside him, including Brand.

During opening statements on Monday, defense lawyers said Lindenfeld and Gregory Naylor, another political consultant on Fattah’s mayoral campaign, were “autonomous, ” that they had pulled all the strings without Fattah’s knowledge

“As far as Congressman Fattah knew, all money coming into the campaign was lawful,” said Fattah attorney Mark Lee.