Two years after 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), the jury had an answer: Guilty. In addition, the jury found Shulick guilty of conspiring with Chaka Fattah, Jr. to embezzle funds from the School District of Philadelphia, as well as bank fraud, making a false statement to PNC Bank, and filing false tax returns with the Internal Revenue Service (IRS).
Shulick's guilty verdict may finally put an end to a years-long investigation into corruption tied to contracts with the School District of Philadelphia. In 2015, Chaka "Chip" Fattah Jr., son of former Congressman Chaka Fattah, was found guilty of 22 counts, including bank fraud; making false statements to banks to obtain loans; making false statements to banks and the Small Business Administration (SBA) to settle loans for less than what was owed; filing false federal income tax returns for tax years 2005, 2006 and 2008; failing to pay federal income tax; wire fraud; and theft from a program receiving federal funds. Fattah Jr. was sentenced to five years in prison for his crimes.
Fattah Jr. has suggested that his trial was not really about him, but about his famous father, calling the investigation "politically motivated." The following year, his father, Fattah, was found guilty of racketeering, fraud and money laundering. Fattah resigned from Congress on June 23, 2016, and was sentenced to 10 years in prison for his crimes.
Nearly two years later, Shulick had his day in court. Prosecutors alleged that Shulick embezzled funds meant for Philadelphia public schools by promising to provide at-risk students with guidance counseling, psychological support services, and school security. Instead, the feds argued, he pocketed the money and spent it on personal expenses including household staff such as housekeepers and nannies, as well as contractors for his personal residence and a vacation home.
Shulick was also charged with a scheme to defraud PNC Bank. According to the indictment, when Fattah Jr. defaulted on a loan from PNC Bank, Shulick, who is a licensed attorney in Pennsylvania, acted as Fattah Jr.’s lawyer, advising the bank that he might declare bankruptcy. To support his statement, the feds alleged that Shulick sent a letter to PNC Bank which misrepresented Fattah Jr.'s income. Shulick's attorney, Hope Lefeber, argued in response that the letter that Shulick prepared was truthful and any problems were related to the attachments prepared by Fattah Jr.
Finally, Shulick was accused of filing false federal income tax returns by failing to report all of his taxable income and improperly claiming itemized deductions. According to a statement from United States Attorney William M. McSwain, Shulick "used his business like a personal piggy bank and a pass-through to hide his income and expenses from the IRS." According to McSwain, Shulick "even disguised his housekeepers and nannies as employees of his business in order to cheat on his taxes."
The jury found Shulick guilty on seven counts, including conspiracy, embezzlement, bank fraud, and filing false tax returns. Lefeber was disappointed with the verdict. Among other issues, she says, the jury was not allowed to consider how the money in question was actually spent, including common costs related to running the schools. According to Lefeber, Shulick maintains that he is not guilty and plans to appeal.
McSwain said about the finding, "This verdict serves as a reminder that when it comes to education, my office has zero tolerance for fraud." Shulick's sentencing is scheduled for August 16.