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Longtime Philadelphia congressman convicted of fraud: prosecutors

By Joseph Ax

NEW YORK (Reuters) - U.S. Representative Chaka Fattah was convicted on Tuesday of orchestrating multiple frauds aimed at enriching himself and preserving his political career, prosecutors said.

The 59-year-old Fattah, who has represented parts of Philadelphia in Congress for more than two decades, was found guilty of more than two dozen counts of racketeering, bribery and fraud following a month-long trial in federal court in Philadelphia.

Fattah lost the Democratic primary in April, months after being charged in a wide-ranging indictment alongside four associates.

Prosecutors said Fattah misappropriated hundreds of thousands of dollars in campaign, charity and taxpayer money in a series of schemes stretching over several years.

Some of the frauds stemmed from Fattah's unsuccessful 2007 mayoral campaign, which left him deeply in debt to several supporters.

During the race, Fattah accepted an illegal secret $1 million loan from a former chief executive officer of student loan servicer SLM Corp, or Sallie Mae, according to authorities.

Fattah convinced Karen Nicholas, who oversaw his nonprofit educational organization, to transfer charitable donations and federal grant money to repay the loan, prosecutors said.

Separately, Fattah encouraged consultant Thomas Lindenfeld to apply for federal funds for a fake nonprofit as a way of repaying more than $100,000 he was owed.

In another scheme, Fattah funneled campaign money through another consultant, Gregory Naylor, to pay off his son's student debt. The son, Chaka Fattah Jr., was convicted in an unrelated fraud case last year and sentenced to five years in prison.

Both Lindenfeld and Naylor pleaded guilty and testified as government witnesses at trial against Fattah.

Fattah's lawyers said he was unaware of the schemes, which they claimed were set in motion by Lindenfeld and Naylor, and argued that the case rested entirely on the word of two convicted felons seeking leniency.

Fattah also accepted bribes from a close friend, retired businessman Herb Vederman, in exchange for supporting Vederman's quest to secure a U.S. ambassadorship, prosecutors said.

The congressman made a personal appeal to President Barack Obama on Vederman's behalf.

Lawyers for Fattah and Vederman said the two men acted out of friendship, not as part of a bribery scheme.

Nicholas, Vederman and two other Fattah associates, consultant Robert Brand and campaign treasurer Bonnie Bowser, were also found guilty of several counts on Tuesday, although the jury acquitted Nicholas and Bowser on some charges.

(Reporting by Joseph Ax; Editing by Dan Grebler)