Barack Obama - Association with Tony Rezko

Last Updated : Feb 23, 2011

Summary

Tony Rezko is a former engineer, real estate developer, and businessman who is now in prison on for wire fraud, bribery, money laundering, and attempted extortion as a result of a federal investigation known as "Operation Board Games".  Mr. Rezko's businesses were in the district that Barack Obama represented when he was a State Senator for Illinois. Accusations have been made concerning contributions made to the Obama campaign.  There is also evidence that the house Barack Obama purchased after becoming a U.S. Senator was improperly obtained from Mr. Rezko. 

 

Background - Tony Rezko

 

Anthony "Tony" Rezko was born in Syria and moved to Chicago, Illinois after completing college in Syria.  He then got both a Bachelor's Degree and Master's Degree in Civil Engineering from the Illinois Institute of Technology.  In addition to working as an engineer, Mr. Rezko began to develop both single-family residences and fast food restaurants.  

In 1984, Mr. Rezko went to work for Jabir Herbert Muhammad, former manager of heavyweight champion Muhammad Ali and son of the late Nation of Islam leader, Elijah Muhammad, after supporting the future mayor of Chicago during his campaign at the request of Mr. Muhammad.  Eventually, Mr. Rezko opened a number of restaurants with Mr. Muhammad, and Mr. Rezko was made trustee of Mr. Muhammad's affairs when he fell ill.  Mr. Muhammad sued Mr. Rezko in 2008, alleging that he had been swindled out of his home and business assets.

In January 1989, Rezko and Daniel Mahru, CEO of a firm which leased ice makers to bars, hotels and restaurants and a former attorney, founded a real-estate development and restaurant holding corporation called Rezmar Corporation.  Mayor Dailey took office just after the founding of the company.  Between 1989 and 1998, more than $100 million from the city, state and federal governments and bank loans went to Rezmar to rehabilitate 30 buildings in Chicago.  Rezmar was paid at least $6.9 million to develop those buildings as low income apartments for African Americans.  As of April 2007, of the 1,025 apartments Rezmar was supposed to provide:

  • Six of its 30 buildings are boarded up
  • Seventeen went into in foreclosure, most after Rezmar abandoned them
  • An 18th building is being foreclosed on by the state. Rezmar walked away from it, leaving it to the corporate investors, who got a state loan to try to save it but failed. The building is now boarded up
  • Hundreds of apartments are vacant, most in need of major repairs.
     

In October 2006, Rezko was indicted along with businessman Stuart Levine on charges of wire fraud, bribery, money laundering, and attempted extortion. The charges against both men claimed that they attempted to extort millions of dollars from businesses seeking to do business with the Illinois Teachers Retirement System Board and the Illinois Health Facilities Planning Board from 2002 to 2004. Levine pleaded guilty and agreed to testify against Rezko and others. Rezko pleaded not guilty, and was jailed shortly before the trial began when he received a $3.5 million wire transfer from Lebanon. While the defense presented no witnesses, prosecutors contended that they had shown Rezko's "corrupt use of his power and influence" to gain benefits for himself and his friends.  The jury found Rezko guilty of six counts of wire fraud, six counts of mail fraud, two counts of corrupt solicitation, and two counts of money laundering, but found him not guilty on three counts of wire and mail fraud, one count of attempted extortion, and four counts of corrupt solicitation. CBS News reported that the "high-profile federal trial provided an unusually detailed glimpse of the pay-to-play politics that has made Illinois infamous."

While the jury was deliberating on this trial, an arrest warrant was issued for Rezko in Las Vegas for passing bad checks in two casinos and failing to pay $450,000 in gambling debts that were accrued between March and July 2006.  Another casino had also filed a civil complaint for a total of $331,000 in 2006 and was given a judgment of default in 2007.

 

Association with Governor Rod Blagojevich

Tony Rezko was intimately involved with Governor Blagojevich.  

  • Rezko donated $117,652 to Blagojevich's campaigns
  • At his trial, the prosecutor claimed he was responsible for delivering bundled contributions totalling almost $1.44 million
  • Blagojevich's wife made at least $38,000 acting as Rezko's real-estate agent on several of his company's property acquisitions
  • In 2002, Rezko assisted Blagojevich in setting up the state's first Democratic administration in twenty years
  • Many of Rezko's associates were named to state positions, three appointed to the state board that oversees hospital projects. one to the state's development board

 

Association with President Obama

Rezko's political involvement with State Senator, US Senator, and President Obama is far less extensive than his involvement with Governor Blagojevich.  

  • The law firm that Barack Obama interned for did a large amount of work for Rezmar Corp, but Obama himself did almost no work, totaling only 5 billable hours
  • In 1990, Obama turned down a job offer from Rezmar Corp..  Obama did not apply for the job.
  • On July 31, 1995, the first ever political contributions to Obama were $300 from a lawyer, a $5,000 loan from a car dealer, and $2,000 from two food companies owned by Rezko.
  • Rezko was one of the people on Obama's U.S. Senate campaign finance committee, which raised more than $14 million.
  • Rezko threw an early fundraiser for Obama that Chicago Tribune reporter David Mendelland claims was instrumental in providing Obama with seed money for his U.S. Senate race.
  • Obama in 2007-08 identified over $250,000 in campaign contributions to various Obama campaigns as coming from Rezko or close associates, and said that he donated almost two-thirds of that amount to nonprofit groups.
  • In 2005, Obama purchased a new home for $1.65 million (which was $300,000 below the asking price but represented the highest offer on the property) on the same day that Rezko's wife, Rita Rezko, purchased the adjoining empty lot from the same sellers for the full asking price - a condition of the seller
  • in 2006 Obama purchased a 10 foot (3.0 m) wide strip of Ms. Rezko's property for $104,500

Of the interactions between Obama and Rezko, the sale of the house is the most problematic as it appears to be a clear case where Obama profited at Rezko's expense.  Given Rezko's (now) history, the appearance of impropriety is difficult to miss.  This is especially the case when Rezko's political donations are considered.  President Obama has acknowledged that he made the decision to involve Rezko in the house deal and called it a "bone-headed" decision.

 

References

[1] Website: Chicago Sun Times Article: Broken promises, broken homes Author: Tim Novak Accessed on: 04/12/2010

[2] Website: Chicago Sun-Times Article: Las Vegas judge issues arrest warrant for Tony Rezko over alleged gambling debts Author: NATASHA KORECKI Accessed on: 04/12/2010

[3] Website: CBS Chicago Affiliate Article: Jury Finds Tony Rezko Guilty On 16 Of 24 Charges Author: Mike Parker Accessed on: 04/12/2010

[4] Website: Fox News Article: Courtroom Wire: Notes From Tony Rezko's Corruption Trial Author: NA Accessed on: 04/12/2010

[5] Website: ABC News Article: The Rezko Connection: Obama's Achilles Heel? Author: BRIAN ROSS and RHONDA SCHWARTZ Accessed on: 04/12/2010

[6] Website: Salon.com Article: How close were Barack Obama and Tony Rezko? Author: EDWARD MCCLELLAND Accessed on: 04/12/2010

[7] Website: Chicago Sun-Times Article: Obama explains Rezko relationship to Sun-Times Author: CHRIS FUSCO, DAVID MCKINNEY, TIM NOVAK AND ABDON M. PALLASCH Accessed on: 04/12/2010

[8] Website: Chicago Sun-Times Article: Obama and his Rezko ties Author: TIM NOVAK Accessed on: 04/12/2010

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