Political consultant Thomas Lindenfeld, 59, of Washington D.C., pleaded guilty to one
count of conspiring to commit honest services wire fraud during U.S. Congressman Chaka Fattah's 2007 failed bid to run for mayor of Philadelphia. Lindenfeld faces a maximum possible statutory sentence of 20 years in prison, a fine of up to $250,000, and up to five years of supervised release.
The charges stem from Lindenfeld’s participation in a wire fraud scheme initiated by Fattah, identified in court as “Elected Official A.”
According to the information, Lindenfeld, Fattah, and their associates, violated local campaign finance laws during his 2007 race for Mayor of the City of Philadelphia by arranging for an illegal campaign contribution in the form of a $1 million loan from Alfred Lord, a former executive with Sallie Mae.
Lindenfeld routed the money from Lord through Lindenfeld’s political consulting firm, LSG Strategies Services Corporation (“LSG”), which was working on Fattah's campaign. LSG executed a promissory note with Lord and used the money—received via wire transfer—to pay various expenses of Fattah’s campaign. Of those funds, $400,000 went unspent and was returned to Lord by LSG.
In late 2007, Lord experienced acute financial difficulty and contacted Lindenfeld at LSG to call in the $600,000 remaining debt. That debt was subsequently repaid with stolen charitable funds and federal grant money routed through several entities, including LSG, under the guise of sham contracts for services that were never rendered.
Prosecutors say that to repay the debt, Fattah arranged for a non-profit entity he founded to route a total of $600,000 received from Sallie Mae’s charitable arm, as well as federal grant money, to another company, under the guise of a false contract for services.
The receiving company was run by an ally of Fattah, according to documents, and allegedly executed a fake contract to disguise the movement of money. Another fake contract was executed to disguise the movement of money from the company to LSG, after which Lindenfeld used the funds to repay Lord.
To resolve Fattah’s 2007 mayoral campaign debt to Lindenfeld and LSG, and to compensate them for participating in hiding the $1 million campaign contribution, the federal prosecutors say Lindenfeld and Fattah and others agreed to use his congressional position to steer federal funding to Lindenfeld’s proposed environmental advocacy group, “Blue Guardians,” which was created by Lindenfeld for the purpose of receiving federal funds.
In 2009, during the appropriations process, Fattah asked for $15 million in federal funding for “Blue Guardians.” In December of 2009, his office notified Lindenfeld that “Blue Guardians” had received $500,000 (not the entire $15 million that had been requested) in federal funding as an earmark through the National Oceanic and Atmospheric Administration (“NOAA”).
Approximately one month later, Fattah’s campaign began writing down the debt the campaign owed to LSG on its disclosure forms. Specifically, Fattah reduced the amount his campaign owed to LSG in the amount of $20,000, a transaction falsely labeled as a “contribution in kind.”
NOAA received no information regarding “Blue Guardians” until the earmark showed up in the final bill. NOAA learned that “Blue Guardians” did not have a website, and only identified a point of contact for “Blue Guardians” by calling Fattah’s office, which advised NOAA to contact Lindenfeld.
NOAA learned that Lindenfeld was a political operative who had worked for Fattah. NOAA was suspicious that the earmark was a “political payoff,” and documented all of its interactions with Lindenfeld and informed its legal counsel of what it had learned.
When NOAA reached Lindenfeld in approximately March 2010, it requested, among other things, the articles of incorporation for “Blue Guardians,” its physical address, its lists of Board of Directors or officers, and its tax status. Lindenfeld told NOAA that he would “speak with [Elected Official A] and get everything straightened out.”
In fact, prior to April of 2010, “Blue Guardians” did not exist. Lindenfeld only obtained an e-mail address, articles of incorporation, and a tax identification number for “Blue Guardians” in April 2010. Even after receiving those documents, Lindenfeld never forwarded them to NOAA.
Eventually, Lindenfeld told NOAA that he “had spoken with [Elected Official A]” and that they decided the money could be better spent on the oil spill in the Gulf of Mexico. After Lindenfeld declined to accept the funding, NOAA never disbursed the $500,000 to Lindenfeld or his “Blue Guardians."
No charges have been brought against Fattah, but Lindenfeld is the second of his political consultants to get caught in the Department of Justice's investigation into the lawmaker's campaign practices. In August, Greg Naylor pleaded guilty to helping hide the illegal contributions made by Lord and helping Fattah use campaign funds to pay off Chaka Fatth, Jr.'s college tuition debt.