When Chaka “Chip” Fattah Jr. was charged and ultimately jailed for his role in a tax and fraud scheme involving the School District of Philadelphia, he told me that the trial had never really been about him. When his father, former Congressman Chaka Fattah, was subsequently found guilty, of racketeering, fraud, and money laundering, it felt like the years-long investigation into corruption involving school contracts was finally over (Representative Fattah resigned from Congress on June 23, 2016). The feds, it turns out, weren’t quite finished.
This week, prosecutors filed an indictment charging David T. Shulick, former president of the Bala Cynwyd-based Delaware Valley High School Management Corp., of embezzling funds from the School District of Philadelphia (SDP). Shulick was also charged in a scheme to defraud PNC Bank, and with filing false tax returns with the Internal Revenue Service (IRS).
The indictment charges that between 2010 and 2012, Shulick, together with Fattah, Jr., embezzled funds meant for Philadelphia public schools. The pair did this, alleges the indictment, by hiding the true costs of services provided by Shulick’s company, Unique Educational Experiences, Inc., by submitting false budgets to the SDP. Those budgets, according to prosecutors, contained false entries for benefit costs, inflated staff salaries, and salaries for staff positions that were never filled at the school. Instead of using funds earmarked for those items for the schools, it’s alleged that Shulick pocketed some of the money, using it to pay personal expenses including household staff such as housekeepers and nannies, as well as contractors for improvements and landscaping for Gladwyne, PA, residence, and his Margate, New Jersey, vacation home.
Prosecutors also charge that Shulick and Fattah Jr. schemed to defraud PNC Bank. According to the indictment, when Fattah Jr. defaulted on a loan made by PNC Bank, Shulick, who is a licensed attorney in Pennsylvania, acted as Fattah Jr.’s lawyer, telling PNC Bank that Fattah Jr. might declare bankruptcy if he were unable to resolve his debts. To support the claims, the feds allege that Shulick sent a letter to PNC Bank, offering to settle PNC Bank’s claim for $2,500 while representing that Fattah Jr.’s monthly income was $2,500. According to the indictment, Shulick’s companies alone were paying Fattah, Jr. more than that amount ($75,000 per year) with a promise of an increase in the future.
Finally, the indictment charges that Shulick filed false federal income tax returns for tax years 2009, 2010, and 2011. According to the indictment, Shulick failed to report all of his taxable income in these years and improperly claimed itemized deductions.
Shulick’s criminal defense lawyer, Hope Lefeber, called the indictment a “witch hunt,” saying that it was an outgrowth of the Fattah case. Any fraud, she says, was the fault of Fattah Jr., whose “nature and character” had already been proven at his trial.
But shouldn’t Shulick bear some of the blame for hiring Fattah Jr? Lefeber says no, claiming that Fattah Jr. was “foisted upon Shulick” by his father’s intermediate. Noting that Philadelphia required Shulick, by contract, to hire a minority contractor, Lefeber said the message was clear to Shulick: “hire him [Fattah Jr.], or you wouldn’t get the business.” Lefeber says that after Shulick fired Fattah Jr., he lost the contract, deadpanning, “What a surprise.” Shulick’s company declared bankruptcy last year.
“That is,” Lefeber added, “the culture in Philadelphia.”
Shulick turned himself in to authorities on Thursday to answer not guilty to charges of embezzlement, conspiracy, and bank and tax fraud. Lefeber says, “As far as he is concerned, Shulick is a victim.”
If convicted of all of the charges, Shulick faces a substantial term of imprisonment, restitution to the School District of Philadelphia and PNC Bank, and a fine of up to $3,800,000.
