The Justice Department says Rep. Chaka Fattah (D-Pa.) and four of his associates have been charged with participating in a racketeering conspiracy. (Reuters)

Rep. Chaka Fattah (D-Pa.), a onetime rising star who came to Congress 20 years ago as a next-generation reformer, was charged Wednesday with racketeering related to an off-the-books $1 million loan to his unsuccessful campaign for Philadelphia mayor in 2007.

The Justice Department charged Fattah, a senior member of the powerful Appropriations Committee, and four supporters with 29 counts that included bribery, bank fraud and other corruption charges.

“The public expects their elected officials to act with honesty and integrity,” said U.S. Attorney Zane David Memeger for the Eastern District of Pennsylvania.  “By misusing campaign funds, misappropriating government funds, accepting bribes and committing bank fraud, as alleged in the Indictment, Congressman Fattah and his co-conspirators have betrayed the public trust and undermined faith in government.”

Following the indictment's unveiling, Fattah stepped down as ranking Democrat of the subcommittee that controls the budgets of the Justice Department, FBI and U.S. attorney's office. The congressman told reporters in the Capitol that he rejected the allegations but embraced the chance to formally fight them in federal court.

“It’s been an eight-year matter, and we’ve moved from an investigation to an actual allegation," Fattah said, "and I think I’ll stand by my original position, which was: As an elected official I’ve never been involved in any illegal activity or misappropriation of funds.”

He also maintained that he would run for re-election in 2016 to a very safe seat for Democrats, where the incumbent regularly receives more than 80 percent of the vote. "We’ll have to live with the judgment they make," he said of Philadelphia voters.

The wide-ranging investigation has been going on for several years, leading to charges  against or guilty pleas from a number of Fattah's associates, including his son and a political consultant to his mayoral campaign.

Prosecutors allege that Fattah and associates took out a secret $1 million loan from a wealthy businessman to help fund Fattah's unsuccessful 2007 mayoral campaign, then conspired to use federal grant funds to repay much of it. He also is alleged to have tried to settle a campaign debt by directing a federal grant to his creditor.

Some of the conduct laid out in the indictment was previously aired in November when charges were filed against a D.C.-based political consultant who had worked for Fattah's mayoral campaign. Fattah was not named in those documents, but several sources told The Washington Post that he was the unnamed public official referred to in charging documents.

That consultant, Tom Lindenfeld, who had also worked with several D.C. mayors and numerous other Democratic candidates, pleaded guilty to a felony charge of conspiracy to commit fraud and is now awaiting sentencing.

[Read about D.C.-based consultant's role in Philadelphia corruption case]

Prosecutors also leveled new allegations Wednesday, including accusations of a quid pro quo scheme to reward a lobbyist, Herbert Vederman, with an ambassadorship or an appointment to the U.S. Trade Commission in return for an $18,000 bribe and "other items of value."

Fattah, a native of West Philadelphia, pulled himself up through the ranks of the city's parochial political machine, first serving in the state House and then the state Senate. In 1991, his neighborhood's political icon, William Gray (D), who rose to become U.S. House majority whip, resigned from office under the cloud of a corruption scandal, and Fattah ran for the vacant seat. He lost to Lucien Blackwell, who was 25 years his senior and more connected to the party bosses.

In 1994, Fattah defeated Blackwell in the Democratic primary and entered the House just as Republicans took charge for a 12-year run in the majority. While he climbed up in seniority, his eyes remained fixed on Philadelphia's power centers. He married Renee Chenault, a popular television news anchor for the local CBS and NBC affiliates, and he began plotting a bid for the 2007 mayor's race as the incumbent, John Street, hit his term limit.

In a five-person Democratic primary, Fattah seemed to be a top-tier candidate because his congressional district, anchored in West Philadelphia, gave him a large voting base, and because of his fundraising prowess from Washington. However, amid a crime wave in the city that spring, Fattah found himself battling the police union over his support for a new trial for Mumia Abu-Jamal, the convicted killer of a city police officer in 1981 whose case has become an international cause celebre.

Prosecutors allege that in the waning weeks of that primary race, Fattah's campaign received a $1 million loan from a wealthy supporter, but disguised the money as a loan to a consulting firm.

Michael Nutter, the former city councilman, embraced a tougher stance on crime and came from far behind to blow past the other Democratic candidates. Fattah finished a distant fourth with 15 percent of the vote.

Returning his focus to Washington with a huge campaign debts, Fattah then used his perch overseeing federal purse strings to steer $600,000 to the secret donor through a nonprofit that he controlled, according to the statement issued by the Justice Department and the Philadelphia-based team of federal prosecutors who have led the investigation.

He also tried unsuccessfully to steer a $15 million federal grant to a political consultant who was owed $130,000, prosecutors said, additionally alleging that Fattah had his consultant steer $23,000 from the congressional campaign account to pay down his son’s student loans.

In denying the charges, Fattah told reporters that his legislative work had always been about helping his constituents, setting up the possibility that he will defend the non-profits that he established and poured money into as legitimate entities. He also rejected the assertion that his non-profit received $50,000 in federal funds to run a conference that never happened, which prosecutors said allowed the non-profit's director to use the money to pay off political consultants and her personal attorney.

“They said that I didn’t keynote a conference in October 2012, and the conference never happened. We’ll see what the facts are," Fattah said.

Investigators suggested that they will win at trial.

“These crimes and the subsequent elaborate cover-up constitute an egregious breach of public trust,” said Edward J. Hanko, special FBI agent of the Philadelphia division.