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Ties to a developer still cling to Obama

When Barack Obama bought a home in 2005, the developer bought an empty lot next door.

When Barack Obama bought a home in 2005, the developer bought an empty lot next door.

Tony Rezko was obviously in trouble. He was a defendant in at least a dozen lawsuits, federal investigators in Chicago were poking around, and his name was in newspaper stories about corruption and fraud.

None of that stopped Rezko, a politically connected developer, and Sen. Barack Obama, D-Ill., from completing real estate deals in June 2005 that resulted in the Obamas obtaining their dream house and the Rezkos buying an empty lot next door.

Nearly three years later, fallout from Obama's relationship with Rezko, who raised more than $150,000 for Obama's campaigns, continue to dog Obama on the presidential campaign trail. That distraction promises to linger as Rezko goes on trial on corruption charges starting Monday.

Rezko, a longtime confidante and fundraiser for Illinois Gov. Rod Blagojevich, a Democrat, has pleaded not guilty to charges of extorting campaign contributions and payoffs from companies looking to do business with the Blagojevich administration.

Obama is not part of the case against Rezko. Obama has conceded it was a mistake to bring Rezko into his personal real estate dealings, although he has insisted there was nothing unusual about the developer deciding to buy a sought-after building lot in an upscale neighborhood. But a review of court records, including new details of Rezko's finances that have emerged, show that the lot purchase occurred as he was being pursued by creditors seeking more than $10-million, deepening the mystery of why he would plunge into a real estate investment whose biggest beneficiary appears to have been Obama.

Obama's campaign emphasized on Saturday that the criminal proceeding against Rezko "is not a case about Sen. Obama."

Obama's name is likely to surface during the trial, if only because $10,000 of the money Rezko is accused of extorting wound up in Obama's 2004 Senate campaign. There is nothing to indicate that Obama did any favors for Rezko, but there is ample evidence that Rezko did favors for Obama.

Obama has said he did not know why Rezko decided to buy the lot. Business associates of Rezko said he wanted to help the Obamas expand their back yard and that he thought it would be a good investment to own a lot next to a prominent politician.

Rezko's involvement was important because the owners of the house and the lot had stipulated that neither could be sold unless a deal for the other closed on the same day.

As Obama and Rezko were completing the property purchases in June 2005, Rezko was fighting to keep lenders and investors at bay over defaulted loans and failing business ventures. But he sidestepped that financial dragnet by arranging for the land to be purchased in his wife's name, according to land records.

As a result, when the Obamas bought a 10-foot wide strip of the Rezko property seven months later to widen their yard, the $104,500 they paid was beyond the reach of Rezko's creditors.

For at least two years before the property purchases, news articles had raised questions about Rezko's influence over state appointments and contracts. There also had been reports that the FBI was investigating allegations of a shakedown scheme involving a state hospital board to which Rezko had suggested appointments.

As a result, said Jay Stewart, executive director of the Better Government Association in Chicago, Obama "should have been on high alert."

Ties to a developer still cling to Obama 03/01/08 [Last modified: Thursday, October 28, 2010 9:23am]

    

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