ED CENTRAL: Former Sallie Mae CEO at Center of Federal Corruption Probe

Career College Central Summary:

  • For years, Sallie Mae was known on Capitol Hill as a financial heavyweight willing to throw thousands of dollars at legislators in order to protect its lucrative subsidies. Five years after the end of Sallie’s lender gravy train, we’re being reminded again of just how unseemly the financial relationships encouraged by the old bank-based loan system were.
  • It has been reported that Albert Lord, the former chief executive officer of the student loan giant Sallie Mae, is at the center of a federal corruption probe against Chaka Fattah, a longtime Democratic Congressman from Pennsylvania.
  • At issue is an illegal $1 million loan that Lord allegedly made to help Fattah’s failed 2007 bid to become the mayor of Philadelphia. The loan came at a time when Sallie Mae was scrambling to win over Democratic lawmakers to oppose efforts to cut or eliminate government subsidies to student loan providers before Congress successfully ended the bank-based program in 2010.
  • Since August, two political consultants (see here and here) who worked on Fattah’s mayoral campaign have pled guilty to charges that they participated in a $1 million campaign laundering scheme on behalf of the Congressman.
  • According to documents that the U.S. Department of Justice filed in November in the federal district court in Eastern Pennsylvania, Fattah approached Lord (identified in the documents as Person D) in April 2007, at a time when his campaign was struggling financially. The lawmaker had unsuccessfully challenged Philadelphia’s campaign contribution limits in the Pennsylvania Superior Court.
  • Lord, who had already contributed $100,000 to an “exploratory committee” Fattah had set up in advance of his mayoral bid, agreed to make a $1 million personal loan to help the campaign, the court documents state. But because of the city’s contribution limits, Lord could not write out the check directly to the campaign. So instead, he made the loan to a consulting firm that was working with Fattah.
  • Thomas Lindenfeld, the political consultant in charge of the firm, then steered the money to the campaign – using $600,000 of it to buy media ads and to provide “walking around money” to local party officials who were helping bring people to the polls. The rest of the money was returned to Lord.
  • Fattah never disclosed the contribution in his campaign finance filings.

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