FACT CHECK: Obama, His Contributor Rezko, the Slum Landlord Business
by truthteller2007, Mon Jan 21, 2008 at 08:10:49 PM EST
Barack Obama and Hillary Clinton engaged in a heated exchange over Obama's work for a certain Rezko during tonight's CNN-Congressional Black Caucus debate. An assessment of their statements reveals that Barack Obama misrepresented the work he performed for Rezko, who Hillary Clinton correctly characterized as a "slum landlord" who is also one of Barack Obama's "contributors." Clinton, however, neglected to mention that Rezko is presently under federal indictment for fraudulent schemes involving government officials and government funds. Because this fact check is limited to statements uttered during the debate, it will not explore Rezko's involvement in the questionable transaction whereby Obama purchased his Chicago mansion.
Statement: Hillary Clinton referred to Antoin "Tony" Rezko, a man under federal indictment, as Obama's contributor.
Fact: Rezko is indeed one of Obama's major contributors. I quote the Chicago Sun-Times:
During his 12 years in politics, Sen. Barack Obama has received nearly three times more campaign cash from indicted businessman Tony Rezko and his associates than he has publicly acknowledged, the Chicago Sun-Times has found.
Obama has collected at least $168,308 from Rezko and his circle. Obama also has taken in an unknown amount of money from people who attended fund-raising events hosted by Rezko since the mid-1990s....
Sources close to both Rezko and Obama, however, said Rezko raised money often for Obama....
The cocktail party Rezko hosted in 2003 came at a critical time for Obama. He and Rezko timed it to help Obama show he had enough money to compete in the Democratic primary for U.S. Senate against millionaire Blair Hull and state Comptroller Dan Hynes.
"This was discussed a lot. They wanted to have a good showing," said a source familiar with the fund-raiser, speaking on condition of anonymity.
"Tony was one of the biggest fund-raisers."
At the time of the party, the state was in the process of foreclosing on a low-income apartment building Rezko's company rehabbed in Obama's state Senate district -- a rehab project on which Obama's law firm worked. Rezko had also abandoned many other low-income apartments, leaving numerous vacant units in need of major repairs....
Between 75 and 80 people attended Rezko's cocktail party, according to Burton, but he said the campaign has no list of the guests.
More than half a dozen people who were there said between 100 and 150 guests were treated to an open bar and food served by Jewell Events Catering, run by renowned Chicago caterer George Jewell. Valets parked cars for the guests, who each were asked to donate at least $1,000.
Rezko picked up the tab. The exact cost of the party has never been disclosed to the Federal Election Commission, which allows hosts to pay up to $2,000 for fund-raisers held in their homes and not report the expense. If a party costs more than $2,000, the candidate must tell the FEC about it.
Burton said, based on a conversation a former Obama staff member had with Rezko, that the party didn't cost more than $2,000.
Three days after the cocktail party, Obama got donations from several Rezko associates....
The Chicago Sun-Times also provides a list of all donations Obama received through Rezko's bundling network.
According to the Chicago Tribune, Obama has returned only $80,350 of the $168,308 he received from Rezko and those tied to Rezko's bundling network.
Also of note is the "unmentioned politician" in a 78 page document federal prosecutors filed in their case against Rezko. The "unnamed politician" is Barack Obama, who received $10,000 from $250,000 of sham finder's fees Rezko's network filched from a firm that handled the Illinois state teacher's pension fund. I quote the Chicago Sun-Times:
Obama is not named in the Dec. 21 court document. But a source familiar with the case confirmed that Obama is the unnamed "political candidate" referred to in a section of the document that accuses Rezko of orchestrating a scheme in which a firm hired to handle state teacher pension investments first had to pay $250,000 in "sham" finder's fees. From that money, $10,000 was donated to Obama's successful run for the Senate in the name of a Rezko business associate, according to the court filing and the source.
Rezko, who was part of Obama's senatorial finance committee, also is accused of directing "at least one other individual" to donate money to Obama and then reimbursing that individual -- in possible violation of federal election law....
The $10,000 contribution to Obama was given in Aramanda's name on March 5, 2004, records show. While Obama's camp has said the senator did not know Aramanda, Obama's office hired Aramanda's son as an intern in 2005, at Rezko's urging.
So intimate was Obama with Rezko's bundling network, he found his way into a document federal prosecutors filed against the indicted slumlord.
Statement: Hillary Clinton referred to Obama's major contributor Antoin "Tony" Rezko as a man who owned and operated a "slum landlord business."
Fact: Antoin "Tony" Rezko is indeed a slumlord who ran multiple businesses. I quote the Chicago Sun-Times:
For more than five weeks during the brutal winter of 1997, tenants shivered without heat in a government-subsidized apartment building on Chicago's South Side.
It was just four years after the landlords -- Antoin "Tony'' Rezko and his partner Daniel Mahru -- had rehabbed the 31-unit building in Englewood with a loan from Chicago taxpayers.
Rezko and Mahru couldn't find money to get the heat back on.
But their company, Rezmar Corp., did come up with $1,000 to give to the political campaign fund of Barack Obama, the newly elected state senator whose district included the unheated building....
The building in Englewood was one of 30 Rezmar rehabbed in a series of troubled deals largely financed by taxpayers. Every project ran into financial difficulty. More than half went into foreclosure, a Chicago Sun-Times investigation has found.
"Their buildings were falling apart,'' said a former city official. "They just didn't pay attention to the condition of these buildings.''
Eleven of Rezko's buildings were in Obama's state Senate district....
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.
Statement: Obama claims he only performed five hours of work for a church engaged in one real estate deal with Rezko while working as an attorney at Davis Miner Barnhill & Galland, which I henceforth refer to as the Davis law firm in Chicago.
Fact: Obama completed many tasks on behalf of his slum landlord patron. According to the incomplete answer Obama's Senate Presidential campaign staff submitted to the Chicago Sun-Times, Obama engaged in several projects involving an unnamed nonprofit organization affiliated with one of Rezko's tenements, the Central Woodlawn project. I quote the Chicago Sun-Times:
Sun-Times question: Please explain what legal work the senator performed on each of those Rezmar projects. I have a copy of a legal bill showing Sen. Obama worked on the Central Woodlawn project. Please include the number of hours he spent on each Rezmar deal, the dates he worked on those deals, and to whom he reported at the firm, whether that was Allison Davis and/or William Micelli.
Obama campaign answer: Senator Obama worked on several projects in which the firm's principal client was a not-for-profit corporation. The projects entailed negotiations between the firm's primary not-for-profit client and the Rezmar-related entity that served as co-general partner or co-venturer of the not-for-profit.
Once the negotiations between the not-for-profit and Rezmar-related entity were completed, the firm represented the combined entity, usually an Illinois limited partnership or Illinois limited-liability company.
The Senator, relatively inexperienced in this kind of work, was assigned to tasks appropriate for a junior lawyer. These tasks would have included reviewing documents, collecting corporate organizational documents, and drafting corporate resolutions. The Senator reported primarily to former partner Allison Davis and occasionally to William Miceli.
Notice Obama's Senate office did not mention the number of hours Obama worked on projects related to Rezko's business, Rezmar, and notice they did not provide specific dates for all legal work undertaken. But pay particular attention to the claim that Obama was "relatively inexperienced in this kind of work." How does Obama's Senate office reconcile that claim with the follow biographical sketch Obama submitted to the Chicago Sun-Times in 1998?
But Obama did legal work on real estate deals while at Davis' firm, according to biographical information he submitted to the Sun-Times in 1998. Obama specialized "in civil rights litigation, real estate financing, acquisition, construction and/or redevelopment of low-and moderate income housing,'' according to his "biographical sketch."
And how does Obama square his claim during the debate that he only engaged in one transaction involving Rezko's company Rezmar with the incomplete answer his Presidential campaign staff submitted to the Chicago Sun-Times? His Presidential campaign staff cites multiple projects. They also used the plural in the following sentence they sent to the Chicago Sun-Times in an electronic message:
Senator Obama did not directly represent Mr. Rezko or his firms. He did represent on a very limited basis ventures in which Mr. Rezko's entities participated along with others,'' according to the e-mail from Obama's staff.
But Obama's work for Rezko does not end with his job at the Davis law firm in Chicago; it also includes advocacy he performed on Rezko's behalf in his state Senate office. Let us return the Chicago Sun-Times's questionnaire:
Q: At the time of those deals, Tony Rezko was a client of the senator's firm, a campaign donor to the senator, a personal friend, and a business partner with the senator's boss, Allison Davis. But Mr. Rezko was also a landlord to many constituents living in the state Senate district that Senator Obama represented at the time. And many of those Rezmar properties had fallen into disrepair, while Rezmar began to fail financially. Did the senator ever talk to Tony Rezko about the deteriorating status of his housing projects?
A: To reiterate: the firm did represent entities in which Tony Rezko had an interest but never Tony Rezko, personally. Senator Obama does not remember having conversations with Tony Rezko about properties that he owned or any specific issues related to those properties.
Q: In this situation, how did the senator decide whose interests took precedence: Mr. Rezko, Mr. Davis, the senator's constituents?
A: The Senator, then a junior lawyer, did not have the authority, the assignment or the opportunity to make such decisions. But it is important to keep in mind that the whole enterprise of affordable housing is geared toward improving housing stock for those unable to afford market-priced housing. The goals of the firm's clients were consistent with the needs of communities benefiting from affordable housing initiatives.
But the Illinois state Senator must have had conversations with Rezko and others about one Rezmar real estate enterprise, New Kenwood LLC, a project for which he advocated twice on his state Senate office's letterhead. According to the Chicago Sun-Times, Obama's letters helped Rezko secure $855,000 of taxpayer money for the development fees of New Kenwood LLC, a project in which Rezko and Obama's former boss Allison Davis, who resigned from the Davis law firm in 1997, were partners . I reproduce the two letters state Senator Obama wrote on behalf of his former boss and Rezko on 28 OCT 1998, the same year in which the part-time legislator was engaged in legal work for a Rezko related enterprise at the Davis law firm. The letter addressed to Sondra Ford also begins with the greeting "Dear Commissioner Stasch," an administrative error one occasionally finds on form letters sent to multiple parties.
Glaring is the potential conflict of interest between Obama's state Senate office and his office at the Davis law firm. Should a state Senator perform political favors for his boss and for one of his boss's business partners and clients? Even more glaring is Obama's willingness to advocate on behalf of a Rezko enterprise at the very same time when Rezko's other slum housing enterprises in his Senate district were the subject of complaints for the unsafe and unhealthy conditions they afforded inhabitants.
Also egregious is an additional favor Obama performed on Rezko's behalf. You recall the $10,000 donation from Rezko's friend and business partner Aramanda that landed Obama in the 78 page document federal prosecutors filed against Antoin "Tony" Rezko. At the behest of Rezko, Obama's Senate office hired Aramanda's son as an intern. I quote the Chicago Sun-Times:
In addition to a land deal, Sen. Barack Obama's ties to indicted dealmaker Antoin "Tony" Rezko include an internship the senator provided the son of a contributor at the request of Rezko, an Obama spokesman confirmed Saturday.
John Aramanda served as an intern for Obama for about a month in 2005, said Obama spokesman Robert Gibbs. His father is Joseph Aramanda, a Rezko business associate who was named as an unindicted co-conspirator in a federal corruption case against Rezko. Aramanda has contributed $11,500 to Obama since 2000, Gibbs said.
"Mr. Rezko did provide a recommendation for John Aramanda," Gibbs said. "I think that it's fairly obvious that a few-week internship is not anything of benefit to Mr. Rezko or any of his businesses."
I consider the internship another favor Obama performed on behalf of Rezko and Rezko's slum landlord business.
Summary:Obama completed more than just five hours of legal work for Antoin "Tony" Rezko, his main contributor who also ran slum landord operations both inside and outside of Obama's Illinois state Senate district. And according to answers Obama's Presidential campaign submitted in response to a question posed by the Chicago Sun-Times, this legal work involved multiple entities tied to Rezko's tenement empire, not the one "church" Obama disingenuously cited during the debate.That legal work occurred after Obama received $1,000 from Rezko during the winter of 1997, when residents of one of Rezko's slums located within Obama's state Senate district shivered without heat for five weeks during a cold Chicago winter. Obama also wrote letters on Rezko's behalf on his state Senate stationary after he received that donation. Although this is just a scratch on the surface of Obama's long and checkered history with Antoin "Tony" Rezko, it provides some insight into the 2005 real estate transaction involving Obama, Rezko and a mansion in the Kenwood neighborhood of Chicago.