What if you woke up one morning to find that you had been publicly accused of doing some pretty terrible things?
And what if all of those allegations were just that, allegations? And what if they ruined your life?
That’s exactly what Chaka Fattah Jr. says happened to him.
According to Fattah Jr., on February 29, 2012, in the early morning hours, two special agents from the Internal Revenue Service (IRS) together with representatives from the Federal Bureau of Investigation visited his home at the Ritz Carlton and demanded an interview. When they left, according to Fattah Jr., they served him with subpoenas and took documentation about his business and personal finances.
The entire interview took less than half an hour (the search warrant took a bit longer). Despite the short time frame – and the time of day – press photographers from the Philadelphia Inquirer were on hand and snapped a number of pictures. Those pictures were posted online together with a story confirming to the public that Fattah Jr. was being investigated on tax and other business allegations within hours of the raid.
The time of the raid? According to Fattah Jr., the special agents arrived at 6:20 a.m. It’s hardly a peak time for roaming reporters and press photographers. That lead Fattah to one conclusion:
[t]he only way the media company would have sent a photographer to these locations early in the morning on the above date is with advance notice, which only could have been given [by] the Defendants.
It’s one of many accusations that Fattah made against the IRS in a lawsuit he filed last week in federal court. The lawsuit alleges that the IRS didn’t follow their own procedures, tipped off the media, and otherwise engaged in harmful behavior. The damages to his personal finances and business reputation, says Fattah Jr., total nearly $1 million.
Prior to the feds showing up on his doorstep, Fattah Jr. had already attracted his share of attention in Philadelphia. He had flexed his entrepreneurial muscle early, drawing mentions in Black Enterprise, Philadelphia Style, and the Philadelphia Business Journal. He used that momentum – together with his last name – to launch and grow his own consulting firm, 259 Strategies LLC.
It was his role as a consultant that likely contributed to increased scrutiny of his finances and business practices. As part of his consulting services, Fattah Jr. secured a contract with Delaware Valley High School (DVHS). DVHS offers alternative education for at-risk students and had become a destination for the School District of Philadelphia to send students with discipline problems who were at risk of dropping out of school – a growing problem in the troubled school district. It’s not a charter school, nor is it directly affiliated with the public school system. Rather, it’s a private, for-profit company that counts on, as part of its funding, government contracts, and other government money.
Fattah took on the role of the Chief Operating Officer of the company, growing it to twice its annual revenues, doubling the number of schools and employees. For his efforts in 2010-2011, DVHS paid Fattah Jr. the sum of $450,000. He was scheduled to receive similar compensation in the second year of his contract – but that never happened. Federal agents launched an investigation into the school’s finances and the shake-up resulted in a mixed bag of financial consequences.
The results of the investigation have never been made public. Depending on who you talk to, that’s either because the feds didn’t find anything or because they’re still looking. Among the allegations that investigators were reportedly pursuing included whether Bala Cynwyd lawyer and DVHS founder David Shulick had been spending DVHS funds for personal items, a charge Shulick denies. Shulick previously claimed that FBI agents told him that the real focus of the investigation was whether he had been pressured to hire Fattah Jr.; Shulick has denied those allegations, calling them absurd.
When the investigation turned to Fattah Jr., the scrutiny appeared to switch focus from the source of funds and the use of federal dollars to whether Fattah Jr. paid his taxes. He had owed, he admitted, some money in taxes as a result of his increased income but claims that balance has since been paid off. Today, he says, “I don’t believe there is a balance.”
That didn’t stop investigators from plowing through his records, he says. That, of course, raises the question of exactly what the feds were looking for. Fattah Jr. can’t answer that for certain. For his part, he insisted to me, he’s done nothing wrong.
It does not, however, escape notice that Fattah Jr. has a famous father: Rep. Chaka Fattah (D-PA) who has been in Congress for nearly twenty years and currently sits on the powerful House Appropriations Committee. This week, Fattah announced that he had received a summons for a number of documents and has informed House Speaker John Boehner (R-OH) that he will fight certain disclosures on the basis of congressional privilege. Fattah indicated that “the subpoena seeks some information that is not material and relevant, and that it is not ‘consistent with the privileges and rights of the House.'” He otherwise expects to comply with the subpoena which is part of an ongoing investigation that has been going on for seven years.
Fattah Jr. stresses that the investigation into his own finances isn’t about his father. But it’s clear from our conversation that he doesn’t think he’d be treated the same if he didn’t share his name. He’s careful when choosing his words but doesn’t hide the fact that he thinks there might be a different standard. He feels that the IRS has taken this approach because “they don’t believe they have to follow the rules, regulations and laws” when dealing with him. They haven’t, he claims, followed their own procedures, saying, “It seems to me that the IRS is more interested in embarrassing me and damaging my reputation than pursuing truth and justice.”
It’s not just the alleged tip to the press that worries Fattah Jr. He cites a number of alleged procedural errors by the IRS and other law enforcement officials in his lawsuit. Even though he was represented by counsel and had a valid Power of Attorney on file with the IRS, he claims that the IRS failed to notify his representatives of the investigation and contacted him without notifying his attorneys. He says that special agents arrived at his home outside of an appropriate window – before 7:00 a.m. – which he says was meant to catch him off guard.
The raid – and the subsequent publicity – may have produced a lot of negative results. What it did not result in, however, were criminal charges. More than a year after that early morning visit, sources close to law enforcement officials advised the media, on the condition of anonymity, that charges would be announced “within weeks.” Fattah Jr. was told the same thing. That was ten months ago. As of today, Fattah Jr. has never been charged.
Fattah Jr. has, however, lost a great deal of business. Within the space of a few months, he says that he went from a successful entrepreneur making six figures per year and living at the Ritz Carlton to struggling to obtain new contracts. As the result of his staggering legal bills (he says they have reached a half-million dollars) and related costs, he was forced to move back home.
It’s not just about the money, Fattah Jr. emphasized. His reputation, he said, has been destroyed. In addition to compensation, he wants an apology.
“They damaged me,” he says. That’s what, he told me, this lawsuit is about. Claiming that the IRS took an “extraordinarily heavy-handed approach” during the course of the investigation, Fattah Jr. believes that his story could be a cautionary tale for other small business owners. “If they can do it to me,” he says, “they can do it to another taxpayer.”
