>> i'm monica malpass. on "inside story," chaka fattah, an 11-term congressman from our area, is in uncle sam's cross hairs, accused of corruption and fraud. let's get the inside story. good morning, and welcome to "inside story." i'm monica malpass. thanks for joining us. let's meet our insiders this week. they are ajay raju, attorney and businessman. good morning. welcome to you. renee amore, g.o.p. state official. >> good morning. >> good morning, renee. larry platt, journalist. good morning, sir. and sam katz, documentarian. welcome to all of you. thanks for being here. tough week for one of our senior politicians in this area. the i.r.s., the fbi, the justice department had been investigation chaka fattah for two years since he ran for the mayor's position several years ago, in 2004. and just last week, they did issue a 29-count indictment, saying he had illegally, in essence, gotten a million-dollar loan to fund that mayoral race and then he illegally tried to pay it back.

we'll go through some of the details. what's your initial blush on this? is your reaction that it's politically motivated? he is a democrat. the president's a democrat. much of the administration is democratic appointees, and others. why would they be doing it, and if so, what is the point? >> well, my initial take is that it's not politically motivated it's that when you read the indictment, there's a real case here. now, obviously, the congressman is presumed innocent, but it's gonna be a tough climb for him because they've got a lot of goods. there's a lot there. >> he did say he's gonna stay in office. he will not resign. he stepped down from a subcommittee -- appropriations -- level appointment in the house so that he wouldn't have to be dealing with money issues. but nonetheless, he's staying in office. and we'll read a statement from him, saying that he has "as i previously stated, i've never participated in any illegal activity or misappropriation of taxpayer dollars as an elected

official." he says there's just no way, sam. and the government says, "oh there is a way, that you took $1 million illegally and then tried to repay $400,000 and then a few hundred-thousand here and there from not only grant money, but, also, from federal dollars and then charities." >> well, as you started, this was a criminally motivated, not a politically motivated, investigation. and the idea, if you recall back in 2007, the campaign-finance rules as they related to philadelphia elections changed and very severe caps were imposed on the individual and pac contributions that could be made. i suspect at some point the fattah campaign for mayor realized that it was gonna be dollars short, so a very clever, but criminal scheme was conceived, if in fact proven true, to make loans to consulting groups, which would then spend the money on behalf of the fattah campaign. and when those loans were called for repayment, the public part

of it was to appropriate funds to nonprofit organizations which would then hire those consulting groups, who would be paid for no service, but would repay the loan. and that's a criminal enterprise. and if, in fact, that proves to be true, it not only stains the congressman, but all of these nonprofits that local-government officials have been creating around philadelphia for years, whether to fight poverty or to promote education or charter schools, has created a trap into which many of them have fallen and have been prosecuted and sent to jail. and i would be very surprised if this was not one of those. >> now, he has not been booked yet. he has not made an appearance at u.s. district court. we don't know when that's going to come. but we do know that he has a serious legal interest here. he's got to hire a team of lawyers to try to rebut this. his son also had some legal issues a year ago almost to the day, has been charged with federal tax evasion and lying

about a student loan that apparently is embroiled in a repayment by his dad, allegedly. so is it a father/son issue here, renee? what is the backstory here? >> the backstory, first, is very sad. let me be very clear about that. fattah has done something for his community. and they have some mixed messages and feelings, also, about this whole thing. but that's gonna override, you know, because of this whole piece. and the father and son have done some negative things, and people are not happy about it, and it's very damaging to who they are and what they're about. and so this is gonna be an ongoing thing. and to me, it's an uphill battle. and you're absolutely right, larry. i hate to agree with you, but, you know, you're innocent until proven guilty, you know, and so we have to wait and see. but he's gonna have a real difficult time, 'cause these things are very serious. >> four other people were also named in that indictment -- bonnie bowser, a chief of staff of his. karen nicholas ran the nonprofit for him. herb vederman, a lobbyist, was his campaign-finance director when he ran for mayor and had

worked under rendell, as well, during his mayoral term. and robert brand, a fattah friend. and the allegation is not just the money, but, also, that allegedly, fattah would use his power to try to get positions or at least access to the obama administration appointments to ambassadorships and that kind of thing. some people would say that's politics as usual, that it's pay to play and that people use their power to offer access and to get money, that it's sort of a quid pro quo that might not be legal, but it happens a lot, people say. >> well, it's not legal, and when it does happen, it's not unusual for those with wealth, for them to use the wealth to influence, benefit for themselves. but usually, it's a bit more subtle, and it's not in your face. but it is illegal, and it should not be usual, and especially in a system where we have a history of institutionalized corruption. but, having said that, i think these are sweeping allegations

against congressman fattah, and we have to, also, as renee pointed out, you have to look at the context of one's career, not just the allegations of misdoings. if they turn out to be true, it would be stunning, especially for those who have placed so much confidence in and like the fattah family and others involved in this. >> the bigger issue for me is how many of these figurative and literal perp walks do we need to go through to have a discussion about the culture of corruption in this town? renee said this is sad, and that's sort of what bob brady's quote said and other politicians. and i'm not sure it's sad. i think it's outrageous. and i'm waiting for the local politician to say this culture of corruption that defines the way we do business in this town is utterly outrageous and not acceptable. >> i think the allegations are outrageous, but until we know them to be true, we have to sort

of reserve judgment. one thing that i think we ought to be focused on, the second congressional district has 280,000 households, of which 20% live below $10,000 per year annual household income. >> absolutely. >> 33% of kids under age 18 live below the poverty line. >> that's right. >> that's higher than the national poverty line. 65,000 individuals in the second congressional district don't have a high-school diploma, of which 16,000 do not even get to ninth grade. >> and the allegations are -- >> and, by the way, that second district has been poor nationally for years, for decades, and it will be so whether congressman fattah gets a chance to finish the work that he started or whether somebody else comes in and does it. that constituency needs help today. >> right. well, there has been other reaction, as well. you mentioned bob brady there, u.s. representative. also, mayor nutter had called fattah a longtime champion for philadelphia. he did direct a lot of money here for science and education.

but some people would look at the irony and say, if it turns out to be true -- and, again, he is innocent until proven guilty -- if the allegations are true that he steered money towards some and robbed peter to pay paul, took it from others allegedly, from charities that felt they were giving to members of the second district or young people who were deserving in the second district. >> i think you're seeing the circling of the wagons. this is what happens in philadelphia when legislators get gifts, when congressmen use federal funds to abet and aid their own political interests. what happens? no one calls for anything other than "let's wait and see." if a member of the nutter administration had lunch with somebody inappropriately because the ethics rules of city government prohibit them from having lunch, they'd be fired. and everybody in philadelphia today who has power and has influence is saying, "oh, he's a good man. let's wait and see." no one has stood up and said anything to condemn the actions for which he has been accused.

and, in fact, it seems to me that other than the inquirer, no one has called for his resignation. fattah should resign. >> and does that speak to his power, that people are afraid to accuse him? >> fattah should resign. he should resign. he knows that the trail of money that goes from a federal appropriation to a nonprofit organization to a consultant back to the person who lent his campaign money -- he already knows that they have that evidence, because that's the basis for this case. >> i think you're absolutely right. you should think about running for mayor. >> [ laughs ] >> no. and look, there is this culture of corruption in philadelphia. jeremy nowak on the philadelphia citizen last week found this study that shows that the average citizen pays $1,300 a year as a corruption tax. that is unacceptable. as a de facto corruption tax. and yet, when a story like this comes along, it does feel, as sam pointed out, like business as usual, instead of like, "whoa, we got to change some things." >> but they're not gonna do it.

the politicians aren't gonna do it. it's gonna have to take other folks to do it. they're not gonna step out and do it. they're doing what they need to do, they think. and so we shouldn't even think that. you really shouldn't run for mayor. you should run for congress... >> [ laughs ] >> ...in that district. >> i'm running for my life. >> [ laughs ] me too. but the bottom line, they're not gonna do it. we have to get the community to really make a big difference out of this thing and the business folks until something really happens. but it's going full circle. it's not gonna happen right now. >> allegedly, he did try to block part of the investigation when there was an interest in his congressional record and votes that he had made and interest that he had shown in certain areas, perhaps about the ambassadorship on herb vederman's part. were you surprised that he would try to block part of it and then deny the allegations? >> no. i'm not surprised at all about the whole thing. you know, we've been talking about this kind of stuff for years. it's not just two years he's been investigated. at least seven years. >> right. >> you know, let's be clear about this. this has been going on with the charities and all these things. and of course you're gonna block it, 'cause you're gonna say, "i didn't do it." but i'm with you, sam. let's resign, and let's move on

so we can start fresh and help those constituents that you talked about, ajay. they really need a lot of help. >> and what about the racketeering charge as an attorney? tell me, he -- at least chaka fattah's initial comment when he was interviewed moments after this indictment came down, he not only denied doing it -- he said he was innocent, as i just quoted -- but he also said he didn't get this rico charge. where is that coming from? that's often a tool used by the federal government to try to get members of the mafia historically, and other people as well. so explain why, you know, maybe they would have chosen racketeering. >> well, i think the allegations are sweeping, and i think the tactics that the feds are using are -- if you look at a level of specificity in the detail, and also, the people, how far-reaching it is. i think they're throwing everything that they can find on this, and it has been two years in the making. and if those allegations prove to be true, sam, you're right. we would be stunned. but i think until we have the justice process worked through some of us are patient about it not because we are patient about

corruption as much as we believe that, you know, they have to at least have justice play its course. >> my point on that is not that he should be found guilty before the trial. it's that his ability to represent the second congressional district and the people of pennsylvania has been so severely compromised that between now and the end of that period of trial, fattah will have no capacity and no credibility to do anything on behalf of his people. >> so you agree he should resign? >> i think there is so much distraction right now. i know he just recently won the election, even with the cloud hanging over him, with 88% support. but now, with all of the distraction, i think for congressman fattah to do the good work that he has to do in order to lift those -- remember, one of the poorest congressional districts in the country, with such dire needs. i mean, for him, even with all of the status and with even all of the influence that he has and knowledge he has to how to navigate the inner workings of capitol hill, i think it's time

that he stepped aside so that good work could continue. >> and you had said not much gets done, and that's disappointing, in your opinion with politicians reacting to it, but in fact, there was something that was proposed, mayor nutter as well as council president darrell clarke, among others are looking to possibly -- and the ethics board leader -- looking to possibly change or tighten up the city's campaign-finance disclosure when it comes to nonprofits and corporations so that -- perhaps as a reaction to this. perhaps it was in the works -- but it wouldn't happen again so easily. >> that's a reaction to the so-called "dark money" in the recent mayoral election -- which, by the way, i'm not so sure was that hidden. like, we all know that the money came from the susquehanna guys for tony williams, and the money came from john docherty for jim kenney. i think that -- and maybe i'm the cynical journalist at the table -- i think this was really about payback against the philadelphia businessmen who started philly 3.0 to try and influence the makeup of the city

council. and they didn't release who their donors were, 'cause the city council also just hiked the parking tax as a way to stick it to rob zuritsky and his father joe zuritsky, who started that group. i think that's what this is really about, but, then again, i'm a cynical journalist. >> [ laughs ] >> i think you would be right. >> i think that's true. >> all right. before we go to break, let's talk quickly about one other issue, and then we have many others to cover -- the budget that has been proposed at the state level by the new governor. tom wolf has not gotten much traction, and in fact, the house on both sides have said, "no way, no how." really, after a month of both sides appearing to dig in, there doesn't appear to be a compromise in the offing. where are we gonna be sitting september 1, october 1 november 1? is this gonna become such an impasse, renee, that state government has to partially shut down? are we looking at dire situation? >> well, speaking to some of my friends in harrisburg, it's a serious issue. it's gonna be i think sam said just a while back a long, hot summer in harrisburg. they're still digging in. they're gonna continue to do

that. you know, they're talking about veto, no veto, you know, of this whole budget and stuff. they're gonna have to compromise, because the more these folks, the agencies can't pay their staff -- and they're funded by the state -- it's gonna get worse. the pressure's gonna get worse. so something will be done. >> so, do you think a veto can be overriden? i mean, is this, you know, a chess match that somebody's gonna win, or is it gonna be checkmate? >> they'll need 12 democrats in the house and 3 in the senate to override that. >> so who wins? >> they're not gonna get that. >> i don't think that the legislature and the governor are gonna talk again until the middle of september. >> right? >> the legislature is out. a lot of things are gonna sort of shut down as we head into the period when pope francis is visiting philadelphia and pennsylvania. but the fundamental problem here isn't about votes. it's about ideology. you have a democratic governor who has committed himself to the most obvious parts of the coalition -- teachers, unions, keeping the liquor stores in the state's hands, letting the

pension system basically not be dramatically changed. >> and republicans diametrically opposed on all that. >> and republicans, who were elected not to raise taxes. and as i said before, 60% of the members of the general assembly, both houses, were elected not to raise taxes, and this governor wants to raise them not a little bit. where do they find compromise? the ideological gap is so wide. >> right. >> and the governor doesn't have the votes, and i would say he doesn't have the votes from the democrats. >> all right. we'll have to leave it at that. >> western pennsylvania democrats are not going for this. >> i said that earlier. who wins? >> we're going to be watching. i'll take a break, and "inside story" continues right after this. >> "inside story" is presented by temple university. temple fuels students with academics and opportunities to take charge. plugged into the city, powered by the world. temple.edu/takecharge.

>> welcome back to "inside story." the pope, of course, is coming to the philadelphia area in less than 60 days. some people are beginning to get concerned about the logistics, not only the safety aspect protecting him, protecting these massive crowds of millions of people -- it will double the size of the city for a couple of days at least -- but just trying to get people who might need emergency medical care through what appears to be a huge swath of the city that's going to be obviously shut down by fencing and other reasons to keep the pope safe and give him access. city planners have been working on it for a while. septa's issued some attempts at making passes available to people. but the first time, ajay, it shut down their website, so many

people wanted those $10 passes so then they had to rethink it and there was a lottery system. some people are wondering, is this gonna be a mess? >> it's gonna be a mess. i'm gonna be out of town. >> [ laughs ] >> i've secured an airbnb at the vatican. i hear there's a vacancy. >> yes. [ laughter ] >> no. i think -- >> is the city up for this? >> no, i think the city is up for it. we have done big events before. you know, we're up for it. i think it's gonna generate a half a billion dollars worth of impact, and we have to do these security logistics. i know that the citizens are clamming for more information -- clamoring for more information. they want more. but, you know, think about the logistics involved. and what they cannot do is reveal all of their logistic plans, because that would really undermine their planning process. and, two, they're not the only ones involved. you have the feds involved, the homeland security involved. >> sure. >> so they're not the only ones with a heavy thumb on the scale here. i think we have to let the process go through. i found it very impressive how septa and others are, quite frankly, at least getting a peek from the inside from some of the insiders, how organized they really are and how prepared that they are.

i think we'll be just fine. >> we haven't had big events but this one takes it to a completely different level. however, the city's emergency management director, samantha phillips, was in charge during the derailment of the recent train crash, so she has had her, you know, finger on the pulse, if you will, of a number of big events that didn't necessarily go as people expected, and certainly in an emergency like that. and she was able to talk to secret service in allowing water bottles, even though that would be at an airport considered a possible bomb threat, sam. so do you think that we're making forward motion here we're getting somewhere? >> well, people are using the number 1.5 million. it could be 2.5 million. no community could possibly prepare for every eventuality. i think the most important thing is that there are so many people who want to have a renewal of their faith and are looking for some kind of an uplifting experience, and the presence of pope francis, for all religions, and particularly for a troubled archdiocese, is just going to be such a positive thing that yeah, people are gonna faint

and they're gonna need healthcare, and people are gonna have a hard time getting through security, but the whole idea that the world meeting of families and the focus on family and the focus on faith and this amazing global figure is coming to philadelphia, i think it supercedes all of the down stuff that all of us are gonna stop talking about once he's here. >> the inconvenience pales to the magnanimous effort. >> and it's needed, it's needed. >> yes. >> it's faith-based. people are excited about it. basically, everything you said sam. you're a good politician. >> [ laughs ] >> and to add one thing to what sam said -- and i agree. this is a great thing. and especially this pope and with his laser-like focus on the least among us. i think that is a great message coming from philadelphia. >> it's needed. >> well, especially a city that leads the country in child poverty among the major cities. and we have so many -- 28% -- that live below the poverty line. >> we're producing a documentary on his presence. so for people like you, who will be in the vatican at an airbnb

you'll be able to go on the world meeting of families website and buy a dvd set that you can give as a gift for christmas and watch for yourself. >> there you go. >> i want to be on your documentary. but i will be with you. >> quickly, before we wrap it up, another, 17th candidate has entered the g.o.p. race for president of the united states jim gilmore, former virginia governor. that's a lot of folks to try to manage -- to a dozen and a half. but chris christie in our area new jersey governor, falling in the ratings. you're a republican. tell me what you think is up with that. he was at 6% approximately in february, now dropping into 4% 3%, that range. >> he won't be in the white house. >> [ laughs ] >> just so you're clear, he won't be in the white house. he's dropping. he's really done. i got to be honest, he's done. he's doing his best he can, but he's done. you can't tell people to sit down, shut up, and all these other -- you can't bully people. you can't come across like this. so people are getting mixed messages. it may happen in jersey, new york. they might like it. but it doesn't play well in iowa. >> and somebody on the other side of the aisle, democratic u.s. senator cory booker, says "don't underestimate this guy. i've been working with and against him for a lot of years

and he's got, you know, the gravitas, as well as the powerhouse behind him." >> well, the problem is now he's not the most bombastic offensive guy on the republican side. >> you got donald. >> he's been out-trumped. >> [ laughs ] >> you have donald, so that's what i'm saying. let's move on. >> all right. inside stories of the week coming up next. stick around.

>> "inside story" is presented by temple university. temple fuels students with academics and opportunities to take charge. plugged into the city, powered by the world temple.edu/takecharge. >> time for inside stories of the week. and let's start with ajay. >> monica, our arts and cultural institutions generate $3.3 billion of economic impact, supporting 450,000 jobs, generating $180 million in tax revenues. don't go to paris. go to the museum. spend money locally. >> all right. renee? >> i'm talking about healthcare, which is real important. this is the 50th year -- it was

in july -- that president johnson signed the medicaid bill into law. we have to look at really making sure that we continue to do this. paul tufano -- have to give him a shout-out -- from amerihealth caritas had thought leaders in washington, d.c., to really talk about where we are where we want to go. toomey was there -- senator toomey, senator casey, governors, historians. it was phenomenal. so good job, paul tufano. >> now that elder statesman sam katz has decided not to run as an independent for city council, along with bill green there's a young guy in the nutter administration, andrew stober, who is running as an independent for city council. he's the guy who brought the bike share program to philly. and it's a long shot, but if nutter pushes him, he's got a chance to unseat one of the republicans. >> could be a new name and a new face. all right. sam? >> a lot of names being mentioned as potential replacement for congressmen fattah. i would keep my eyes on president of city council darrell clarke. i think a lot of people may be missing a possible transition for him, and he would be a very

formidable candidate, and a lot of turnover in leadership in philadelphia is about to take place -- attorney general kane chaka fattah. i think we're gonna see some new blood in philadelphia politics. >> mm! all right. it's an interesting time. we'll keep our eyes on it. thank you so much for being here to our insiders, and thanks to all of you for watching. hope you have a great weekend ahead. we'll see you right back here next sunday morning. is >> i'm nydia han along would nerve nerve. >> i'm nydia han along with eva pilgrim. >> hopes dashed when debris is identified in the indian ocean. stows theories and the exclusive accuweather seven-day forecast more next on "action news."

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get out of the past. get fios. now $79.99 a month. go online or call now. call the verizon center for customers with disabilities at 800.974.6006 tty/v >> good afternoon, it is sunday august 2, i'm nydia han along with eva pilgrim. >> here's some of the stories we're following on "action news." the talk of the town, cole hamels and heidi hamles gia guidice to -- goodbye to the city of brotherly love. >> pope