By Ralph Cipriano
Mark M. Lee, a lawyer for Congressman Chaka Fattah, asked Greg Naylor about his negotiations with the government. And what the feds told Naylor he could expect to gain from his guilty plea, cooperation with the government, and his testimony in court today against the congressman.
"I don't believe they [the feds] had any interest in what I had to gain," Naylor bluntly replied. His discussions with the government prior to his guilty plea, he said, were "not a negotiation." Not after he got caught lying to the FBI.
Naylor, a retired political operative who was once close to Fattah, testified in federal court today about how he handed out about $200,000 in cash on Election Day, known as "walking around money," when the congressman was running for mayor of Philadelphia back in 2007. And how he wrote more than $20,000 in checks to cover the college tuition bills of Chaka "Chip" Fattah Jr.
The payments, which originally derived from campaign cash, came from Naylor's political consulting firm, Sydney Lei & Associates Inc., and were usually made on a monthly basis to Drexel University and Sallie Mae, the student loan corporation, Naylor testified.
Why did he steal campaign money to write checks to cover Chip Fattah's college loans, and then try to cover it up afterwards with a phony paper trail?
"The congressman asked if I would help out," Naylor explained in direct testimony under the questioning of Assistant U.S. Attorney Paul Gray. Naylor said he kept writing checks for four years until the congressman told him, "We're done, we're good."
"Anybody ever tell you Chip had a gambling problem," the prosecutor asked.
"No," Naylor replied. As part of the scam, Naylor testified, "I made false 1099 forms" and sent them to "Chip." Even though Naylor testified that Chip Fattah had done no work for Sydney Lei & Associates. Naylor added that he after he made the payments on the college loans, he told Chip Fattah, "He should pay the taxes on it."
After the prosecutor got throughout questioning Naylor, his story held up under cross-examination from four defense lawyers. That was more bad news for the congressman formerly known as Arthur Davenport.
On cross-examination, Mark M. Lee, on behalf of Congressman Fattah, tried to get Naylor to talk about the central fraud in the case. The plot to have Albert Lord, former Sallie Mae CEO, make a phony loan of $1 million to Thomas Lindenfeld, another political consultant close to Fattah. So that the Lord money could be used to pay the campaign expenses of Fattah's unsuccessful 2007 run for mayor. It's a plot that Lindenfeld has already testified was directed by Fattah.
Specifically, Lee asked if Naylor had once told the feds that it was Lindenfeld who originally told him about the $1 million loan.
There were "so many versions" of interviews with the feds about that loan, Naylor conceded. Asked about how many times he met with the feds, Naylor replied, "I'd say too many. But a lot."
"We've had this discussion many times," Naylor agreed with Lee.
But then Naylor definitively put the controversy to rest. About the phony $1 million loan, Naylor said his final testimony was: "I first learned of that through the congressman."
Over at the defense table, Chaka had taken another direct hit.
Naylor pleaded guilty in 2014 to three felony charges that included lying to the FBI, falsifying invoices to cover up the theft of $193,000 in federal funds [for use as campaign cash], and putting Chip Fattah on Naylor's payroll to cover up the use of more campaign cash to pay off the younger Fattah's student loans.
Chip Fattah, convicted in February of 22 counts of bank and tax fraud, was sentenced to five years in jail and ordered to pay $1 million in restitution.
The other defense lawyers didn't seem to be getting any further with Naylor on cross as the trial came to a close today.
Mira E. Baylson, a lawyer for Robert Brand, a Fattah confidante, got Naylor to agree that when he spoke to Lindenfeld about the loan, Lindenfeld had a "sense of urgency."
Probably about who was going to have to repay the loan. But that was it.
Ann Flannery, a lawyer for Karen Nicholas, a former Fattah aide, got Naylor to say that he never discussed that phony $1 million loan with her client.
Ronald H. Levine, a lawyer for Bonnie Bowser, Fattah's former chief of staff, asked Naylor if it was true that Bowser was "somewhat of a nag" about making sure that campaign finance records were accurate.
"I would say that is accurate," Naylor responded.
The Fattah trial resumes at 9:30 a.m. today in Courtroom 16A.