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Ex-Obama Fund-Raiser Is Convicted of Fraud

Alex Constantine - June 5, 2008

June 5, 2008

topics rezko 190 - Ex-Obama Fund-Raiser Is Convicted of FraudCHICAGO — Antoin Rezko, a once-powerful fund-raiser who helped propel the career of Senator Barack Obama, was found guilty on Wednesday by a federal jury of 16 counts, including fraud, money laundering and bribery in an influence-peddling scheme that touched the highest levels of the administration of Gov. Rod R. Blagojevich of Illinois.

Mr. Rezko, 52, was acquitted on eight other charges, including attempted extortion. After the verdict, he surrendered to the authorities. Sentencing is Sept. 3.

While Mr. Obama’s friendship with Mr. Rezko has been debated on the campaign trail, no evidence surfaced in the courtroom to suggest that Mr. Obama was involved in any wrongdoing.

In a statement, Mr. Obama said that he was “saddened” by the verdict.

“This isn’t the Tony Rezko I knew,” he said, adding that the charges against Mr. Rezko “once again shine a spotlight on the need for reform.”

“I encourage the General Assembly to take whatever steps are necessary to prevent these kinds of abuses in the future,” Mr. Obama said.

During the Democratic primary race, Senator Hillary Rodham Clinton repeatedly called attention to Mr. Obama’s relationship with Mr. Rezko in an effort to raise questions about Mr. Obama’s judgment.

Minutes after the verdict was announced, the Republican National Committee began circulating an e-mail message titled “Rezko: Obama’s Longtime Friend and Money Man” that sought to link the two over a 20-year period. The committee also posted a Web site and a video.

In Chicago, the verdict was seen as a serious blow to Mr. Blagojevich, already damaged by descriptions of pay-to-play politics that emerged in testimony, sometimes involving him directly. Mr. Blagojevich, 51, a second-term Democrat who ran as a reformer, has not been charged, but the trial, which began in early March, revolved around the inner workings of his administration. He has denied any wrongdoing.

At a news conference after the verdict, Mr. Blagojevich said that he respected the jury’s decision, then refused to take questions.

“As for me,” he read from a statement, “I will continue to get up every single day to keep working as hard as I possibly can for the people.”

Mr. Rezko, a former adviser to Mr. Blagojevich (pronounced bluh-GOY-uh-vich) and once one of his top fund-raisers, was accused of using his influence to corrupt two state boards in a scheme to collect millions of dollars in kickbacks from companies that wanted to do business with the state. Prosecutors described Mr. Rezko as “the man behind the curtain, pulling the strings.”

A lawyer for Mr. Rezko, Joseph J. Duffy, said he would appeal the verdict. “We strongly believe in Mr. Rezko’s innocence,” he said.

Mr. Blagojevich’s administration is also the target of other federal investigations, and many here asked whether Mr. Rezko’s conviction was the first of more to come.

The trial captured intense attention, not because most Chicagoans knew or cared about Mr. Rezko, but for what light it might shed on two of the state’s best-known politicians, Mr. Obama and Mr. Blagojevich.

Mr. Blagojevich’s name surfaced repeatedly in the trial. Witnesses told of conversations with him in which he spoke of or seemed to condone rewarding campaign contributions with jobs.

Mr. Obama, whose name rarely came up during the trial, has been criticized for his involvement with Mr. Rezko in property transactions related to his house. As Mr. Obama was buying his house in 2005, Mr. Rezko’s wife, Rita, bought an adjacent empty lot. She later sold the Obamas part of the lot that enabled them to expand their yard. Mr. Obama has since called the transactions “boneheaded.”

According to Mr. Obama’s campaign, Mr. Rezko may have raised as much as $250,000 for him over the years. The campaign has donated $159,085 in contributions from Mr. Rezko, his family and associates to charity, the amount the campaign says can be “reasonably credited to Mr. Rezko’s political support.”

Mrs. Clinton brought up Mr. Obama’s ties to Mr. Rezko to try to counter his statements that he offered a change from politics (and fund-raising) as usual. Although Republicans have raised similar questions, the fallout, if any, seems unclear.

To many in Illinois, the Rezko trial has smacked of déjà vu. A few years ago, the state’s Republican Party imploded under another federal investigation that wound its way up to the former governor, George Ryan, who was convicted of racketeering and fraud in 2006 and is in prison.

Democrats now control the governorship, the State House and the State Senate. But academic experts and political commentators say the Rezko case has wounded Mr. Blagojevich and contributed to expectations that he could face prosecution.

Mr. Rezko was one of Mr. Blagojevich’s top fund-raisers, bringing his campaign more than $1.4 million from 2001 to 2004, according to the federal authorities.

Prosecutors said Mr. Rezko used his political power to benefit himself and his friends at the expense of the people of Illinois. He agreed to a plan to steer teachers’ pension investments to firms that would provide kickbacks, and he pushed a health board to approve a new hospital so he could get a cut from a contractor’s bribe, they said. Taken together, prosecutors said, Mr. Rezko stood to gain at least $3.9 million.

Patrick J. Fitzgerald, the United States attorney in Chicago, said he was gratified by the verdict, calling the jury system “the best antidote to the poison of corruption and dishonest government.”

“I hope people step back and say, When you do that stuff, it’s going to come back to bite you in a serious way,” he added.

After delivering their verdict, jurors said in a statement that they had faced a “difficult and challenging” task with “caution and great care.”

“We were here to represent the people who didn’t have a voice in this case,” said one juror, Susan Lopez, a school administrator.

“We didn’t focus on the governor; we didn’t focus on Obama,” Ms. Lopez added. “That was not our duty as jurors in this case. It was about Mr. Rezko and about the teachers of Illinois and the health care system of Illinois,” referring to the state boards in question.

Mr. Duffy, Mr. Rezko’s lawyer, told the jurors that his client was simply a politically oriented businessman who became the victim of the government’s star witness, Stuart Levine, who pleaded guilty. Mr. Duffy attacked Mr. Levine’s credibility, calling him a liar and a thief and pointing to contradictions in his testimony.

Mr. Fitzgerald made a surprise appearance in an unlikely capacity. Two witnesses testified that Mr. Rezko told them not to worry about federal investigators because Mr. Fitzgerald would be ousted. One witness, Ali Ata, former director of the Illinois Finance Authority, said Mr. Rezko had offered two big names who could make that happen, Robert Kjellander, an Illinois Republican Party leader, and Karl Rove, the former White House political aide.

In interviews with The New York Times, Mr. Kjellander and a lawyer for Mr. Rove said neither man had tried to displace Mr. Fitzgerald.

Antoin Rezko
Nam Y. Huh/Associated Press

Antoin Rezko, a Chicago entrepreneur who found riches in fast food and real estate, was convicted on June 4, 2008 of 16 counts of fraud, money laundering and bribery.

His indictment in 2007 on federal charges had shaken the world of Illinois politics, and the administration of Gov. Rod R. Blagojevich. But none of Mr. Rezko's many political connections drew more scrutiny than his ties to Democratic presidential nominee Barack Obama.
Mr. Rezko, who met Barack Obama in 1991, contributed to his campaign for the Illinois Senate in 1995 and his re-election campaigns. He also raised money for Mr. Obama’s Congressional race in 2000, but not his presidential campaign.

Mr. Obama said he had made a mistake by engaging in a real estate deal with Mr. Rezko. The deal involved a new home Mr. Obama and his family bought in Chicago in 2005; Mr. Rezko acquired an adjacent parcel of land to help complete the sale.

During his trial, Mr. Rezko's links to Mr. Obama were barely mentioned. But the verdict was seen as a serious blow to Mr. Blagojevich, already damaged by descriptions of pay-to-play politics that emerged in testimony, sometimes involving him directly.

Mr. Rezko was found guilty of 16 of 24 counts and acquitted on eight other charges, including attempted extortion.

An Obama Patron and Friend Until an Indictment
June 14, 2007

CHICAGO — Antoin Rezko, an entrepreneur of considerable charm who found riches in fast food and real estate, is known around Chicago as a collector of politicians.

Back in the 1990s, Mr. Rezko’s office was adorned with framed photos of candidates he viewed as up-and-comers. Among them was Barack Obama, a state legislator whose first campaign donations included $2,000 from Mr. Rezko’s companies. As Mr. Obama built a career that carried him to the Senate in 2004, Mr. Rezko was there with him, holding fund-raisers and rallying support.

Now, as Mr. Obama runs for president, the once-beneficial relationship with his old friend and patron has become problematic.

Last fall, Mr. Rezko was indicted on federal charges of business fraud and influence peddling involving the administration of Gov. Rod R. Blagojevich of Illinois, whose picture was also on Mr. Rezko’s wall. Since then, Mr. Obama, a Democrat, has had to answer questions about a land deal with Mr. Rezko’s wife, Rita, and about other ties to him.

Since early June, Mr. Obama has given to charity more than $21,000 in donations that his Senate campaign had received from Rezko associates now linked to the federal inquiries. He gave away $11,500 from Mr. Rezko himself last fall.

Mr. Obama says he never did any favors for Mr. Rezko, who raised about $150,000 for his campaigns over the years and was once one of the most powerful men in Illinois. There is no sign that Mr. Obama, who declined to be interviewed for this article, did anything improper.

Mr. Obama has portrayed Mr. Rezko as a one-time fund-raiser whom he had occasionally seen socially. But interviews with more than a dozen political and business associates suggest that the two men were closer than the senator has indicated.

Mr. Obama turned to Mr. Rezko for help at several important junctures. Records show that when Mr. Obama needed cash in the waning days of his losing 2000 Congressional campaign, Mr. Rezko rounded up thousands of dollars from business contacts. In 2003, Mr. Rezko helped Mr. Obama expand his fund-raising for the Senate primary by being host of a dinner at his Mediterranean-style home for 150 people, including some whose names have since come up in the influence scandal.

And when Mr. Obama and his wife, Michelle, bought a house in 2005, Mr. Rezko stepped in again. Even though his finances were deteriorating, Mr. Rezko arranged for his wife to buy an adjacent lot, and she later sold the Obamas a 10-foot-wide strip of land that expanded their yard.

The land sale occurred after it had been reported that Mr. Rezko was under federal investigation. That awkward fact prompted Mr. Obama, who has cast himself as largely free from the normal influences of politics, to express regret over what he called his own bad judgment.

“Senator Obama is a very intelligent man, and everyone by then was very familiar with who Tony Rezko was,” said Cindi Canary, executive director of the Illinois Campaign for Political Reform, a nonpartisan research group. “So it was a little stunning that so late in the game Senator Obama would still have such close involvement with Rezko.”

While it is not clear what Mr. Rezko got from the relationship, he liked to display his alliances with politicians, including Mr. Obama.

In one instance, when he was running for the Senate, Mr. Obama stopped by to shake hands while Mr. Rezko, an immigrant from Syria, was entertaining Middle Eastern bankers considering an investment in one of his projects.

[Years earlier, as a state legislator, Mr. Obama wrote letters to city and state officials supporting efforts by Mr. Rezko and a partner to build apartments for the elderly with $14 million in government money, The Chicago Sun-Times reported in its June 13 editions. The developers received $855,000 in fees.]

Mr. Obama’s spokesman, Bill Burton, said the senator was one of several politicians who intervened because the project was important to local residents.

Mr. Burton also said in a statement that the senator “has held himself to a high standard and has had a career in public service fighting for the toughest possible ethical rules.”

“This is not a record changed by anything that has happened to Tony Rezko,” Mr. Burton said.

Mr. Rezko, 51, declined to comment. He has pleaded not guilty to the federal charges.

People who know Mr. Rezko describe him as warm and personable.

“I am sure that Obama saw in Tony the same thing that many of us saw — someone who was willing to help if asked, and for little in return,” said Michael Rumman, a former top Illinois official and Rezko business partner.

Mr. Rezko, whose politics were more practical than partisan, raised hundreds of thousands of dollars for Democrats, in particular Mr. Blagojevich, who gave Mr. Rezko’s associates state jobs and contracts. He also raised money for Republicans, including President Bush.

Mr. Rezko sometimes got involved in the private lives of the officials he backed. Governor Blagojevich’s wife, Patti, did real estate work for him, and Mr. Rezko sold a town house to Representative Luis V. Gutierrez, a Chicago Democrat.

Mr. Rezko got his start in business and politics after graduating from college in Chicago in the late 1970s, when he met a son of the late Nation of Islam leader, Elijah Muhammad. Through this contact, he joined Muhammad Ali’s entourage and won county food concessions.

By the 1990s, Mr. Rezko was developing low-income housing. One of his partners spotted a news item about Mr. Obama’s being the first black president of the Harvard Law Review and offered him a job. Mr. Obama decided to join a law firm, where he later spent several hours on work involving Mr. Rezko’s housing developments.

Mr. Rezko also owned dozens of pizza and Chinese food franchises, as well as commercial real estate projects. And after he raised $500,000 for Mr. Blagojevich’s election in 2002, Mr. Rezko became the man to see for state appointments.

When Mr. Obama first fielded questions about Mr. Rezko last fall, he said they had had lunch once or twice a year and had socialized with their wives “two to four times.”

n addition to enlisting his huge circle of donors, Mr. Rezko and Mr. Obama talked frequently about campaign developments during the Senate race, Mr. Rezko’s associates said. Many of the donors also contributed to Mr. Blagojevich, and several have been linked to the federal charges against Mr. Rezko. One indictment accuses him of seeking payoffs from companies doing business with state boards, another with fraud in his business dealings.

Mr. Obama recently said he would give away three donations totaling $21,500 from Mr. Rezko’s fund-raising dinner. The senator has said that he was giving away the donations to “make sure there were no questions” about the matter.

Several other Rezko associates who contributed to the Senate campaign were appointed to the state boards that Mr. Rezko is accused of influencing. Mr. Obama has not returned those donations; Mr. Burton, his spokesman, said the senator had nothing to do with the appointments. Mr. Burton also said that Mr. Obama had not known of any questions about Mr. Rezko and his associates at the time he took their donations.

While Mr. Obama was running for the Senate, Mr. Rezko was also raising money for a huge development in the South Loop of Chicago, often playing host to dinners in a private room at the Four Seasons Hotel here.

Former Rezko associates said that Governor Blagojevich attended one of the dinners, and that at Mr. Rezko’s request, Mr. Obama dropped in at one for Middle Eastern bankers in early 2004, just as he was starting to pull ahead in the Senate primary. The visits, Mr. Rezko’s partners said, helped impress foreign guests.

“I remember that he had been on the campaign trail, and he was completely wiped out and exhausted,” said Anthony Licata, a lawyer who represented Mr. Rezko on real estate deals. “My recollection is that he drank ice tea, and he talked about how he was really making progress, and we were all excited to see him.”

Mr. Burton said it was not unusual for Mr. Obama to be “shaking hands late in the Senate primary season.”

“If someone recalls meeting him during this period,” he said, “Senator Obama has no reason to doubt it.”

By 2004, Mr. Rezko’s pizza restaurants were in trouble, and creditors were suing him. Yet after the Obamas bid $1.65 million for their house in January 2005, Mr. Rezko got involved. Mr. Obama has said that he mentioned the deal to Mr. Rezko.

People familiar with the transaction said that the sellers did not want to close until that June 15, and that the sale would go through only if someone bought the adjacent lot from them on the same date. Rita Rezko paid $625,000 to outbid others for the lot and later sold the Obamas one-sixth of that land, for $104,500.

After The Chicago Tribune reported the transactions last November, Mr. Obama said he had acted ethically, though it had been a mistake to let Mr. Rezko do anything that could be seen as a favor.

The disclosure came four days before Michelle Obama was to appear as a special guest at a charity fashion show organized by Mrs. Rezko. Mrs. Obama attended, though others there said it seemed a bit awkward.


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