What You Didn’t Know About Obama and Rezko
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.
As a Chicagoan, I can see a few problems with your background. The machine is excellent at keeping it self in power. Quite literally, Daley is so conservative at the city level he has prevented any GOP challengers from making headway. He also keeps the city running, and avoids a Jesse Jackson as mayor.
This has led to a high tolerance for corruption in Chicago. Rezko blends with a ring of scams and scandals at the state and city level.
It doesn’t help that the ILGOP has suffered critical failure thank to George Ryan.
Shades of the Ferraro debacle for the Democrats?
Excellent article. Also, a perfect picture of upper-echelon totalitarianism at work. Putin would get all warm and fuzzy reading this.
I fully expect the media will run maximum interference for B.O. on this matter.
This outstanding investigative piece, with its harsh criticism of Obama, is likely to bring down the wrath of the blogosphere’s leading poofs, Andrew Sullivan, Gleen Greenwald and John Cole. Nevertheless, keep up the good fight for truth; it’s increasingly clear that those three clowns don’t have any understanding of the term.
Here is Obam’s NAFTA scandal. He is a real disgrace:
http://www.usnewslinks.com/tvstations/oh.html
There is absolutely nothing new in this article that hasen’t been reported over and over again. Sure, Obama made a judgement error by dealing with this slimbag,but unless something much more damaging than what has been reported shows up, this story will fade away by late spring like dirty Chicago snow. If you really dislike Obama so much, go to the voting booth this fall and join the 30% others who agree with you, and vote for this dynamic, powerful,72-year old, inspiring nominee John McCain.You might want to revisit the Keating Five file first, however. It makes the Rezko story look like sunday school. Or you could occupy your time with a revisit of his wife, Cindy, and her stealing money from a charity she ran to supply her pill habit. Or how Johngot her off with no jail time due to his influence. Or the lobbyists on McCain’s staff. Or 20 other stories worse that Rezko.Get over it. Obama will get the other 70% of the vote and change the world. Just watch.
Do you wonder how a “community activist” who becomes a State politician and then a US Senator can afford a $1.6 million house in the first place? His wife does have a good job but not that good. Can you say “sub-prime mortgage”?
Here is Obam’s NAFTA scandal. His campaign told canadians in advance to ignore his comments.
http://www.youtube.com/watch?v=_LtbLEKHsi0
I posted wrong link earlier
See the wonder of a liberal’s hypocrisy at work in the comments by JohnB:
His “community activist” Messiah has made his political career on the backs of a slum lord who has taken advantage of the “poor” to make millions of dollars for himself and to any honest evaluation for Hussein Obama, also.
This liberal doesn’t care in the least.
Those hundreds of thousands of minorities and underprivileged freezing in apartments while Rezko was off “raising” money for the Messiah don’t rate a concern.
Yes, the Messiah stands for “hope and change”. Lots of “hope” for more of his shady friends to make “change” on the backs of the poor and needy.
“Obama can lie like any normal politician.”
Obama is also lying about his economic policies. He tells the “elite” University of Chicago economists that he is pro-capitalism while preaching socialism on the campaign trail to the blue collar bubbas. The MSM will try to run interference for Obama—but it is 2008. The new media will not let them get away with its previous nonsense.
It’s not the coruption, it’s the hypocrisy.
Michelle Obama says her husband passed up a chance to get rich as a corporate lawyer so he could “give back” by a community organizer. Then he turns around and gets chummy with one of the worst slumlords exploiting the community he selflessly dedicated himself to so he can get himself a nice big house. Kinda makes you wonder if his reasons for getting into the “community organizing” game were really that altruistic in the first place….
Obama received a $1.2 million advance on a book prior to June 2005?
He had just been elected to the US senate a few months earlier and was completely unknown outside of Illinois, so his book probably wouldn’t have sold more than a couple thousand copies if he hadn’t become a successful presidential candidate.
What’s going on here?
glad you’re finally up to speed mr. rick moran.
my blog has covered this since 2006.
http://astuteblogger.blogspot.com/2006/12/omabamgate-continued-rezko-land-deal.html
http://astuteblogger.blogspot.com/2007/04/obama-corrupt-crook-in-deep-with.html
Sorry I missed your coverage. I will be sure to check you site for coverage from now on.
What a great article. Really.
Dave -
Obama gave a very popular keynote speech at the 2004 Democratic National Convention. As such, he was already well-known nationally, and his book (“The Audacity Of Hope”) sold very well.
This article is full of factual inaccuracies. First, the “Rezko Lot” is actually a corner lot, accessible from 2 streets.
Secondly, Obama was only an associate attorney at Barnhill from 93-96, when he was elected to the Illinois Senate.
This is simple fact-checking stuff, guys.
There are several errors of fact in the section concerning the Obama house in South Kenwood. I lived in the area for 10 years and work in the real estate industry. I know exactly where the house is and have gone by several times.
1. The side lot is not inaccessible or worthless to anyone other than the owner of the Obama home. It is a corner lot, and under current zoning has the size and frontage to allow construction of a single family house.
2. The price of $1.65M, at 85% of list, was almost exactly at the average ratio of list to sale price for that area over the trailing 24 months, per MLS data. It was not a discount or bargain.
3. The appraised value of $40,000 for 1/6 of the side lot was ridiculously low given land values in that neighborhood. It’s clear that the appraiser valued it as if its highest and best use was as a narrow strip of land, when in fact it was part of a fully developable lot. By analogy, in eminent domain, when the gov’t takes a strip of land, they must pay based on its prorata value of the whole from which it was taken; that’s what Obama paid.
(By the way, the appraiser who valued the land at $40,000 once testified that a proposed Home Depot would deflate home values in the area, even though he’d never analyzed a similar situation; his opinion was based on studies of cell towers. That’s the kind of expertise that produced the $40,000 value for 1/6 of a lot now listed at $995,000.)
It’s usually a good idea to consult a competent real estate professional when reporting on real estate transactions.
I love this line: “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?”
LOL! It all really swings on something you have no proof. Conspiracy theories of the highest order.
Personally, I don’t like the land deal. But it’s really hard to take this article seriously with the level of conspiracy theories thrown in. I guess this is politics now though. Ugly, ugly, ugly.
I really hope Obama and McCain raise above this vitriol and run good campaigns on the issues and leave all the haters behind.
To understand Chicago Machine politics, you have to understand the identity politics. It was always more of a Rainbow Coalition than a melting pot.
Governer Rod Blagojevich is of Serb heritage. They say Tony Rezko is a Syrian immigrant, but Rezko could be more Near Eastern than Middle Eastern among the part of Chicago where I grew up. Is there some kind of Serb or perhaps Orthodox Christian Mafia now ascendent in Illinois politics or are these ethnic identifications accidental?
Does Barack Obama count as part of the Serb Mafia on account of his Kenyan father? Not so far-fetched as many East Africans are Orthodox Christians and the Russians used to have strong connections to that part of the world. Or am I too deep into Near-Eastern conspiracy-think?
It looks to me like Obama is a Rorschach candidtate. You see in him whatever you want to see.
What matters is what he actually does. The answer to that seems to be “nohting” but he does it well.
He has no decernable political accomplishments other than “community organizer.” Whatever that is. I guess that mean that he signs people up for whatever government program is handing out goodie today.
I have lived my entire life without ever needing the services of a “community organizer” or any other such animal. I’m not sure what they do that would qualify them for higher office.
Why spend so much time with your exaggerated propaganda? Obama is obviously the most trustworthy presidential candidate we have had in long time. Don’t be scared.
I’m willing to assume that the transaction was entirely legal, involved no permanent transfer of wealth from Rezko to the Obama’s, and was fairly minor as political favors go.
But granting all that doesn’t help Obama in the least.
There’s still the jarring incongruity that Obama and his wife, who claim that they “passed up the corporate lifestyle” and accepted reduced incomes because they wanted to “serve the public,” had a slumlord help them buy a mansion.
What is it with some people in this country? Any time any one comes up with an idea to help people better their their lives and radicate poverty, some numbskull cries socialism. I think our problem in this country is what I call intellectual ignorance and even bankrupcy. Some people just get carried away by gossips and inuendos, without doing their own home work to find the truth. They rather digest the information that has been alloyed and shaped to fit a certain desired result. I feel sorry for those idiots.
sounds like a scam here, can u say bye bye to obama all this will come out in the rezko trail starting monday obama is doomed he should know when you run for a country your wife hates your background and bad dealings will come back to haunt you,, good luck hillary
Well done. Finding information
on what really happened is not easy to do. Newspapers, Chicago Sun Times and Chicago Tribune have cut off access to many of stories that show the ties between Obama and Rezko.
Do not expect the Republican Party to belabor Obama with this. Why? There’s a man named Bob Kjellander. He’s a Republican National Committeeman for Illinois, and Vice Chair of the committee to organize this year’s convention.
He’s also in bed with Tony Rezko. Governor Blagojevich steered some huge bond deals to firms represented by Kjellander, who received several hundred thousand dollars in fees. Kjellander then loaned this windfall to some of Rezko’s associates.
Rick,
Hurry the heck up!!! Get to the bottom of this “wanna-be masiah” and put him where he needs to be .. behind bars.
In the mean-time… can you bring this up again… and bring up the question of where some of Obamam’s money is coming from. I was extremely disappointed to see how FAST the press squashed your story about Obama’s house money… They dropped it like a hot potatoe. Can you please bring it up again. Obama said he hardly knew Rezko on t.v. This guy (Obama)is a pathetic wacko, a liar, a theif, a con… jumping on all the ignorant single mothes, ignorant blacks, ignorant welfare recipiants..etc.. you get my drift… to get him in office. Please hurry!!!! Help EXPOSE Obama for what he really is….