What You Didn’t Know About Obama and Rezko
Rick Moran explains how the "Agent of Change" got involved with a real estate developer indicted for political corruption and fraud.
February 28, 2008 - 1:12 am
Do you feel lost and left out because when someone mentions “Rezko” you think it’s that company that makes frisbees? (Sorry, but you’re confusing “Wham-O” who make that backyard widow-maker “Slip ‘n Slide” with a political fixer who’s just plain slippery.)
Are you confused by the head spinning machinations of Barack Obama that allowed him to purchase a house worth $2.6 million (with a vacant lot next door that can be accessed only through the property where the house sits) for around $1.65 million? (Don’t worry, so is most of the press.)
Do you wonder why this “Agent of Change” and modern day prophet Barack Obama would have gotten himself involved with a man indicted for political corruption and fraud?
Well, allow me to clear things up for you. Following is a little primer on Rezko, Obama, and how Windy City politics can have its way even with new messiahs.
To set the stage, you have to remember that we’re talking about Chicago. This is “The City That Works.” No one disputes that. The question is who it “works” for. If you’re a member of the Democratic Machine, it works wonderfully.
First of all, you have no Republican opposition to speak of. That’s because (little known fact) there is an elixir added to the city water supply that alters the brain chemistry of smart, independent thinking kids and turns them into slavish Machine voters by the time they’re 18 years old.
The enthusiasm for the Democratic Machine is incredible. There are even documented instances where the desire to vote Democratic in Chicago carries on even beyond death. Having voted on Election Day all their adult lives, the dead have been known to rise from their graves in cemeteries all across the city, answering some irresistible urge not understood by science, and pull the lever for whoever the Machine tells them to.
So to be a part of this Machine is to belong to something special. And the Machine doesn’t just embrace politicians. It also nurtures an army of businessmen, contractors, entrepreneurs, shady operators, sleaze balls, and outright criminals who feed off city contracts and depend on politicians to grease the system to funnel the goodies their way. In return, the politicians get campaign contributions, fancy dinners at 5-star restaurants, sweetheart deals on everything from cars to houses, and occasionally cold, hard cash.
This is a city where the politician, the businessman, and the criminal element constantly rub shoulders and have been known to exchange hats on occasion. Every once and a while, an “insurgency” rears its head and runs an independent slate of candidates. Sometimes, they meet with limited success – especially after some mind-blowing example of sleaze has been splashed across the papers for a couple of months prior to the election.
But the Machine goes on. It either absorbs the newcomers or ignores them. Eventually they tire of bucking the tide and either quit or are defeated.
This then is the political world where Prophet Barack began his career. Now for your Rezko-Obama Primer.
WHO IS TONY REZKO
Antoin “Tony” Rezko is a Syrian born businessman who was known in Chicago political circles as “a fixer.” Need to get a waiver of some kind of regulation to close a real estate deal? Call Tony. Want your kid to intern in the office of a United States senator? Call Tony. Are the wheels of government turning too slowly and need to have a legislator or two goose the bureaucracy? Call Tony.
Rezko had a lot of friends and associates because he collected politicians like a kid collects baseball cards. He was a fundraiser with the ability to shake the money tree for his political friends.
Entrepreneur, real estate tycoon, developer, and pal of the powerful, by all accounts Tony Rezko had his fingers in many pies.
He was also, according to Sun Times political reporter Carol Marin, a “staggeringly talented shakedown artist”:
Carol Marin wrote in the January 3, 2007, Chicago Sun-Times that the “feds believe that Rezko was a staggeringly talented shakedown artist who traded plum appointments for large donations” to Illinois Governor Rod Blagojevich, “got massive ‘consulting fees’ for himself and his friends in exchange for state investment business, and, along the way, wiggled his way into all manner of lucrative deals and contracts, some of which came with government tax breaks or subsidies.
“If that was the extent of Rezko’s magic, he would still be just another accomplished but mundane player in the riotous world of Chicago corruption. But that isn’t the end of his story. It seems, today, like it’s only the beginning.
“Rezko, let’s remember, was ‘traveling’ internationally when his indictments were handed down. He has interesting friends the world over. The emir of Qatar is a pal. The former Iraq electricity minister, Aiham Alsammarae, who resides in west suburban Oak Brook when he’s not on the lam from a Baghdad lockup, is a Rezko business colleague who’s been indicted in connection with $2 billion in missing money meant to rebuild Iraq’s infrastructure. The feds are investigating what role Rezko may have had in that deal.
The Feds are also looking at Rezko’s long time business relationship with Patti Blagojevich, the governor’s wife, as well as minority contracts won by Rezko’s various businesses.
In short, Tony Rezko is as shady as they come in Chicago politics.
WHAT ARE THE CHARGES AGAINST REZKO?
Rezko was indicted on October 11, 2006 on 24 fraud related counts:
A 24-count indictment unveiled Wednesday by U.S. Attorney Patrick Fitzgerald charges Mr. Rezko, 51, in an “extensive” fraud scheme in which he allegedly demanded payments from firms wanting work from a huge state pension fund and favorable rulings from a state board that regulates hospital developments.
Mr. Fitzgerald said the illegal activities constituted “a pay-to-play scheme on steroids.
“It was a feeding frenzy. People were feeding at the trough for millions of dollars,” he said.
How extensive was this kickback scheme? After Governor Blagojevich was elected, Rezko handed him a 26 page list of people he was recommending for jobs in the new administration. Contained in that list were people being recommended by Barack Obama. One of those names was the real estate agent who handled the controversial sale of a house to Obama.
How many of the people on that list actually got a job in state government? Jack Lavin, the CFO of Rezko’s company Rezko Enterprises, was named head of the Illinois Department of Economic Opportunity. And Kelly King Dibble, who was in charge of business development for Rezko’s real estate development company, got a real plum; executive director of the Illinois Housing Development Authority.
Gee. No conflict of interest there.
OBAMA AND THE SLUMLORD
Tony Rezko created a real estate development company in 1989 called Rezmar. Their intent was to purchase decrepit housing, renovate it, and turn it into low income rentals for the poor. At the time, there was a city wide effort to rehab older structures instead of building new low income housing. Over the next 9 years, Rezmar purchased 30 buildings and got $43 million in city funds for rehab.
Eventually, Rezmar turned to a small, left wing law firm Davis Miner Barnhill & Galland to assist in the paperwork associated with government contracts and other real estate legalities. DMB & G employed a young lawyer named Barack Obama. By this time, Rezko was aware of Obama – having offered him a job at Rezmar following Obama’s graduation from Harvard.
The only problem was that Rezko didn’t care about maintaining the buildings:
Rezko and Mahru had no construction experience when they created Rezmar in 1989 to rehabilitate apartments for the poor under the Daley administration. Between 1989 and 1998, Rezmar made deals to rehab 30 buildings, a total of 1,025 apartments. The last 15 buildings involved Davis Miner Barnhill & Galland during Obama’s time with the firm.
Rezko and Mahru also managed the buildings, which were supposed to provide homes for poor people for 30 years. Every one of the projects ran into trouble:
- Seventeen buildings — many beset with code violations, including a lack of heat — ended up in foreclosure.
- Six buildings are currently boarded up.
- Hundreds of the apartments are vacant, in need of major repairs.
- Taxpayers have been stuck with millions in unpaid loans.
- At least a dozen times, the city of Chicago sued Rezmar for failure to heat buildings.
This would be a classic definition of a slumlord. And Obama’s involvement with Rezmar during this period? The “Yes we can” man isn’t saying much:
For five weeks, the Sun-Times sought to interview Obama about Rezko and the housing deals. His staff wanted written questions. It responded Sunday but left many questions unanswered. Other answers didn’t directly address the question.
Among these: When did Obama learn of Rezmar’s financial problems? “The senator had no special knowledge of any financial problems,” Gibbs wrote.
Did the senator ever complain to anyone — government officials, Rezmar or Rezko — about the conditions of Rezmar’s buildings? “Senator Obama did follow up on constituency complaints about housing as [a] matter of routine,” Gibbs wrote.
Did the senator ever discuss Rezmar’s financial problems with anyone at his law firm? “The firm advises us that it [is] unaware of any such conversations,” Gibbs wrote.
The campaign claims that Obama was a “junior lawyer” whose jobs included “reviewing documents, collecting corporate organizational documents, and drafting corporate resolutions.” But Obama was with the firm for nine years. Are we to believe he was still doing scut work while Rezko was giving the city the runaround regarding the condition of those properties?
WHY WOULD OBAMA GET INVOLVED WITH THIS SLEAZE?
Obviously, Saint Barack wouldn’t be caught dead with a crook like this.
But Obama the ambitious politician? That’s another story.
If you listened to Obama, you would think that he barely knows Rezko. He has told the press he had lunch with him “a couple of times a year” and that he and his wife socialized with the Rezkos “2 to 4 times a year.”
This may be true. But wouldn’t you love to pull his phone records for the last 17 years and find out how many times he spoke with Rezko?
Rezko saw something in Obama right off the bat, donating $2,000 to Obama in his first race for state senate. In fact, he was one of the first donors to that campaign. Through the years, Obama estimates that Rezko donated around $60,000 to his campaigns. That doesn’t include monies the rainmaker made fall from heaven.
At the end of Obama’s failed attempt to unseat Congressman Bobby Rush, he was in desperate need of cash. A quick call to Tony and thousands of dollars showed up as Rezko tapped his business friends for his pal. This is a man Obama described as a “one time fundraiser” who over the years may have raised as much as $150,000 for Obama. (Note: Rezko also raised money for George Bush and a few other Republicans.)
JUST WHAT DID OBAMA DO IN RETURN FOR REZKO’S SUPPORT?
There were small things, such as hiring the son of one of Rezko’s associates as an intern in his senate office. And there were a little larger favors:
As a state senator, Barack Obama wrote letters to city and state officials supporting his political patron Tony Rezko’s successful bid to get more than $14 million from taxpayers to build apartments for senior citizens.
The deal included $855,000 in development fees for Rezko and his partner, Allison S. Davis, Obama’s former boss, according to records from the project, which was four blocks outside Obama’s state Senate district.
Obama’s letters, written nearly nine years ago, for the first time show the Democratic presidential hopeful did a political favor for Rezko…
The fact that the proposed housing was outside of the district he represented as a state senator is an interesting addendum to the story. With no real political interest of his own or any benefit for his constituents, Obama (playing the oldest and most cherished of political games) rubbed the back of a man who had rubbed his – to the tune of $855,000.
Obama has denied doing any favors for Rezko. He is right. Putting pressure on bureaucrats to give a crony a contract worth $855,000 in personal fees is beyond “favor” and enters the realm of corrupt deal.
Then there was the strange case of Obama intervening with the State Department on behalf of one of Rezko’s business associates who was being denied entry to the US because he was considered an “undesirable alien.”
One of the richest men in the world, Nadhmi Auchi, who Rezko owed more than $27 million in “loans,” was looking to come to Chicago. After receiving another “loan” from Auchi, Rezko told prosecutors that he approached Senator Obama to try and get a visa for the billionaire. Obama denies he was approached and there is no record (yet) of any entreaties he made to the State Department on Auchi’s behalf.
Auchi himself stands convicted in a French court of fraud as part of the most spectacular corporate scandal in Europe since the end of the war; the “Elf Affair” where dozens of executives of the French oil company Elf stole 2 billion francs for houses, yachts, jewelry, and other expensive gewgaws.
It was Auchi who, in the end, probably made it possible for Obama to purchase his current house.
HOW DID REZKO HELP OBAMA PURCHASE HIS HOUSE?
Three weeks prior to Obama’s purchase of a fine, old Georgian mansion in the city’s Kenwood area, Auchi “loaned” Rezko another $3.5 million. The loan came through one of Auchi’s offshore holding companies. All of these loans to Rezko would eventually be “forgiven” when Rezko gave Auchi a bigger stake in a huge 62-acre development near Riverside Park.
The sellers of the house also owned a vacant lot adjacent to the property. But since the lot could only be accessed through the property where the house sat, it would have been pretty worthless to anyone except the owner of the dwelling. Offering price for both: $2.6 million.
This turned out to be a little steep for Obama who had just received a $1.2 million advance on a book. No problem for Mr. Fixit. Obama went in on a deal where Mrs. Rezko plunked down $125,000 for the $625,000 vacant lot. The sellers say that they gave Obama a $300,000 discount because his was the highest bid. The fact that Obama was the only one bidding on the house raises some eyebrows considering the neighborhood and the market at the time. Obama claims the house had been on the market 3 months which is not a long time considering the $2 million asking price and the complication of the vacant lot next door.
By paying full freight for the vacant lot – a lot that could never be developed unless bought by Obama – Rezko got his pal his dream house at a substantial discount.
The sellers have declined to talk directly to the media and have answered questions through Obama campaign headquarters. This might be considered strange in some quarters. But not if you’re considered the new messiah of politics.
The Auchi “loan” could very well have financed the whole deal. Court documents a year later show Mrs. Rezko making a salary of $37,000 with $35,000 in assets. Poor Tony reported that he had “no income, negative cash flow, no liquid assets, no unencumbered assets [and] is significantly in arrears on many of his obligations.”
And that brings us to the final finagle; the sale of part of that vacant lot by Rezko to Obama.
It seems that Tony was in dire straits financially. He offered to sell a 10 X 150 foot parcel of the lot, valued at $40,500 dollars to Obama. His long time pal agreed, paying more twice the appraised value – $104,000. Obama claims it was to increase the size of his garden.
Some garden, huh?
For someone he supposedly barely knew, Obama and Rezko sure did each other a lot of favors.
DID OBAMA DO ANYTHING ILLEGAL?
There is no evidence that in any of his dealings with Rezko that Obama broke any law. The question is one of ethics. And judgment, of course. And truthfulness. Obama’s relationship with Rezko is much more extensive than he has ever admitted. Their 17-year relationship went beyond “one fundraiser” as Obama claims, and a few social dates with the gals.
Rezko was a patron, a valued supporter, and a business partner. And almost certainly a close friend as well.
The significance of this relationship is that it proves that Barack Obama is not who he claims to be – a new kind of politician who will lead us all to the Promised Land. Obama can lie like any normal politician. He can do favors for his supporters who give him money. He can do business with scam artists like Rezko whose illegal activities authorities are still trying to unravel.
Given what we know already, there doesn’t seem to be a “bottom” to this story yet. And what we find when we get there may yet prove to be Barack Obama’s undoing as a candidate for President of the United States.
Rick Moran blogs at Right Wing Nuthouse.