January 2008

Rezko Primer VII. Land Strip Purchase from Rezko

ArchPundit January 24, 2008 1 Comment

UPDATED 3/17/08 to include Sun-Times and Tribune interviews and documents released by the campaign.

Strip of Land Documents 

 Fence Documents

Part of the requirement in the neighborhood was that an empty lot would have to be fenced from the housed lot due to Landmarks rules in Chicago. To make the lot aesthetically pleasing, Obama asked Rezko to sell a portion of the vacant lot to him to create a reasonable buffer:

To preserve the aesthetic balance, Obama also wanted to put some space between his house and the proposed fence, so he personally asked Tony Rezko if they would sell a portion of their lot without restricting their ability to build in the future.

“I told them if you can spare another 5 or 10 feet, I’d be happy to purchase it from you,” Obama said. “They came back and said they could sell us up to 10 feet.”

Using a standard formula, Obama’s appraiser estimated the 1,500-square-foot portion at a market value of $40,500.

But Obama felt it would be fair to pay the Rezkos $104,500, or a sixth of their original $625,000 purchase price, because he was acquiring a sixth of their land. The sale closed in January 2006.

Obama’s answer to the Sun-Times:

Q: Did Rezko have an appraisal performed for the 10-foot strip?

A: I had an appraisal conducted by Howard B. Richter & Associates on November 21, 2005.

Q: Was there a negotiation? Did he have an asking price, or did he just say, whatever you think is fair?

A: I proposed to pay on the basis of proportionality. Since the strip composed one-sixth of the entire lot, I would pay one-sixth of the purchase price of the lot. I offered this to Mr. Rezko and he accepted it.

Again, no one has brought forth any information to contradict Obama’s version including reporters who looked into the deal.

Tribune Discussion of Strip and Fence:

The next phase then is the strip of land that we bought from Tony Rezko that was adjacent to our part of the property. The way this came up, I wanted a fence to be erected between the two properties. Tony agreed to build that fence. The reason he agreed was that it was under, under municipal code, it was his obligation to build that fence and create a separation.

And during the discussions about building that fence, I suggested to him, you know, I would be interested potentially in purchasing either 5 or 10 feet, a 5- or 10-foot strip alongside that property to widen my side yard. And, but I said that “if it turned out that you had, if that was of interest to you and the rest of the lot was perfectly developable, then that’s something that I would be interested in.”

So I threw that out in a relatively casual way. This was not a big deal to us. It was not something that was critical to our property values, but it was something that I thought would be nice because I’ve got a 9-year-old daughter and a 6-year-old daughter. And in fact, the way this came up was there was a, originally a play, big swing-set thing that went across both properties that we had to tear down, and constructing a new one, there wasn’t going be enough room. And so that’s what triggered my thinking that it would be nice to widen the lot.

He said that he would have his developer or surveyor, whatever the term is, come out and take a look and see how big the property would be and how much space they would need in terms to develop it to see if it would be something that would be buyable.

I, in turn, asked my attorney to do an appraisal of what it would, what a fair price for that 10-foot strip would be or a 5-foot strip would be to make sure that I paid fair market value for such a transaction. The appraisal actually came back relatively low, something like $40,000.

And that was attributable to the fact that there just aren’t comps for a 10-foot strip of land and that was noted by the appraiser. The appraisal—which is, by the way, all these documents are in there—the appraisal did note that the other parcel, Rezko’s remaining parcel, would be fully developable if he sold this to me. And so rather than pay the appraised price, I paid one-sixth of the cost of his property. He agreed to sell that 10-foot strip.

And, you know, I made sure that all the paperwork was done, and since we’re in a landmark’s district, we contacted the [Chicago] Landmarks Commission; in fact Michelle had once served on the Landmarks Commission board. She called somebody she knew down there to find out what regulations or requirements existed in terms of both erecting a fence and any other T’s that had to be crossed or I’s that had to be dotted. And so then the transaction went forward.

Now, last point I’ll make—I know I’ve been long-winded, but I figured I’d try to disgorge as much as this as possible and then you guys can ask questions.

The obvious question is, and this has been posed to me by the Tribune and by other news outlets: If you knew this guy was already under a cloud of suspicion or was having problems, why would you go through with a transaction with him?

The answer is that, at least with respect to the purchase of the house: He wasn’t involved in the purchase of my house, and at that time, the news around Rezko’s problems had not elevated to the levels that they did later.

This was somebody that I had known for a very long time. He had never asked me for favors and had not done me any favors. And so, although in looking backward, I can see how it could have raised issues, it didn’t at the time for me. And that can be considered a smaller lapse of judgment.

A larger lapse of judgment existed when it came to the strip of property. Because at that time, it became clear that Rezko was getting into bigger problems, and this was now a business transaction with him. And this is what I’ve referred to as a “bone-headed” move.

But it is in the context of somebody, again, that I had known for a long time, who I was now a neighbor with, who, frankly, I did not think was doing me a favor because I was paying a substantial amount of money, and he continued to have a developable piece of property. In retrospect, this was an error, and I’ve said so publicly and repeatedly.

This was a mistake on my part. The mistake, by the way, was not just engaging in a transaction with Tony because he was having legal problems, the mistake was because he was a contributor and somebody who was involved in politics, and I should not have engaged in a business dealing with him in general. And I’ve acknowledged that, because it’s raised the appearance of impropriety.

Having said that, the transaction was aboveboard. I paid the full market price for it, and I don’t think there have been any suggestions that I did not. So with that, let me stop.

Sun-Times transcript:

Let me just wrap up by talking about the strip of land. I wanted to build a fence between the properties so it wouldn’t be perceived I was using this lot. Tony agreed to pay for the erection of a fence. I agreed to make sure that all the legal issues were resolved because it’s a landmark district, so there were questions about what the fencing could look like and so forth. During discussions about the fence, I mentioned to Tony that I might be interested in a 5- to 10 feet of that strip if it was still developable because, even breaking this in half, it was still a larger lot than most Chicago lots. It was a 60-foot lot. So, he said, “I might be interested in that,” and “Let me talk to my folks about if they relinquished a strip, will it impede any development capacity on the lot,” and it was determined that it wasn’t.

I, in the meantime, asked for an appraisal about because I didn’t want to be perceived as paying below an appraisal price. The appraisal came back, actually, at $40,000, partly because the appraiser said it’s hard to figure out a piece of property that can’t be developed on. And my view was I either paid the appraisal price or one-sixth of what Tony paid for land, whichever was higher, because I wanted to make sure it was fair and he was getting fair market value. So I paid one-sixth of the price, which was approximately $104,000, and then the fence was erected.

Let me close by saying this. During the time that I was purchasing the house, there were some noises about Tony having potential problems. But they . . . hadn’t risen to the attention that they ultimately would. And I viewed him as . . . purchasing the lot as a friend purchasing a lot, somebody who was interested in real estate development and who was experienced in real estate development.

It is possible that he purchased that lot partly out of business interests and the belief it would appreciate, partly out of a desire to have a lot next to me. I can’t speak fully in terms of his motives.

But it’s fair to say at that time a red light might have gone off in my mind in terms of him purchasing his property next to mine, and the potential conflicts of interest. And I think that’s the first stage of where I wasn’t sufficiently focused on how this would look.

I think that a larger problem is me having bought the strip of land. At that point, it was clear that he was going to have some significant legal problems. But more to the point, even if he hadn’t‚ he was a contributor and somebody who was doing business with the state. For me to enter into a business transaction with him was a bad idea. I’ve said repeatedly it was a boneheaded move, and a mistake that I regret.

Rezko Primer VI. House Purchase

ArchPundit January 24, 2008 14 Comments

Updated 3/17/2008 with Chicago Tribune and Sun-Times interviews

The 94 page pdf of documents related to the sale of the house. Includes Listing Ad, Trust Agreement, Mortgage and other goodies.

Obama bought a house on the same day as Rezko’s wife bought a vacant lot which had been subdivided from the main lot. Obama answered a series of questions from the Sun-Times on the deal:

Q: The seller of your house appears to be a doctor at the University of Chicago . Do you or your wife know him? If so, did either of you ever talk to him about subdividing the property? If you ever did discuss the property with him, when were those conversations?

A: We did not know him personally, though my wife worked in the same University hospital. The property was subdivided and two lots were separately listed when we first learned of it. We did not discuss the property with the owners; the sale was negotiated for us by our agent.

Q: Did you approach Rezko or his wife about the property, or did they approach you?

A: To the best of my recollection, I told him about the property, and he developed an interest, knowing both the location and, as I recall, the developer who had previously purchased it.

Q: Who was your Realtor? Did this Realtor also represent Rita Rezko?

A: Miriam Zeltzerman, who had also represented me in the purchase of my prior property, a condominium, in Hyde Park. She did not represent Rita Rezko.

Q: How do you explain the fact your family purchased your home the same day as Rita Rezko bought the property adjacent to yours? Was this a coordinated purchase?

A: The sellers required the closing of both properties at the same time. As they were moving out of town, they wished to conclude the sale of both properties simultaneously. The lot was purchased first; with the purchase of the house on the adjacent lot, the closings could proceed and did, on the same day, pursuant to the condition set by the sellers.

Q: Why is it that you were able to buy your parcel for $300,000 less than the asking price, and Rita Rezko paid full price? Who negotiated this end of the deal? Did whoever negotiated it have any contact with Rita and Tony Rezko or their Realtor or lawyer?

A: Our agent negotiated only with the seller’s agent. As we understood it, the house had been listed for some time, for months, and our offer was one of two and, as we understood it, it was the best offer. The original listed price was too high for the market at the time, and we understood that the sellers, who were anxious to move, were prepared to sell the house for what they paid for it, which is what they did.

We were not involved in the Rezko negotiation of the price for the adjacent lot. It was our understanding that the owners had received, from another buyer, an offer for $625,000 and that therefore the Rezkos could not have offered or purchased that lot for less.

Q: Why did you put the property in a trust?

A: I was advised that a trust holding would afford me some privacy, which was important to me as I would be commuting from Washington to Chicago and my family would spend some part of most weeks without me.

Q: A Nov. 21, 1999, Chicago Tribune story indicates the house you bought “sits on a quarter-acre lot and will share a driveway and entrance gate with a home next door that has not yet been built.” Is this shared driveway still in the mix? Will this require further negotiations with the Rezkos?

A: The driveway is not shared with the adjacent owner. But the resident in the carriage house in the back does have an easement over it.

While news sources have never explicitly said there were any discrepancies in Obama’s version, there have been no stories based on actual investigations that have disputed the story. Given the number of Chicago reporters who have spent time on the story it’s safe to say at this point that Obama’s version is accurate.

Hence, there are four key points to what happened:

1. The land was subdivided before listing
2. The winning bids were the highest bids for both properties
3. Different Realtors handled the purchases for both plots
4. The owners wanted to sell quickly

One thing that is clear is that Rezko wanted to get in Obama’s good graces, but there is no evidence Obama received a favor.

Frederic Wondisford confirmed several points of this in an e-mail provided to the campaign:

Burton said a campaign adviser discussed the sale with Wondisford by phone and followed up with an e-mail to Wondisford repeating his points. Wondisford responded: “I confirm that the three points below are accurate,” according to the e-mail, provided to Bloomberg News and authenticated through records shown by the adviser.

The e-mail says that the sellers “did not offer or give the Obamas a `discount’ on the house price on the basis of or in relation to the price offered and accepted on the lot.” It also says that “in the course of the negotiation over the sales price,” Obama and his wife, Michelle, “made several offers until the one accepted at $1.65 million, and that this was the best offer you received on the house.”

Wondisford has declined to talk directly about the matter.

Three Bids

The Obamas submitted three bids: $1.3 million on Jan. 15, 2005; $1.5 million on Jan. 21; and $1.65 million on Jan. 23, according to a copy of the sale contract shown to Bloomberg News. Obama received more than $1.2 million in book royalties and a book advance in 2005, the year he was sworn in to the U.S. Senate, his financial disclosure statement shows.

The e-mail between Wondisford and the campaign adviser also says that the sellers had “stipulated that the closing dates for the two properties were to be the same.” In January 2006, Rita Rezko sold the Obamas one-sixth of the lot, for $104,500, to expand their yard. She later sold the rest of the land to Michael Sreenan, who said by e-mail yesterday that he bought it in late December 2006 for $575,000.

The e-mail is contained in the 94 page pdf document linked above.

Tribune Interview statement:

So just fast-forward, I win the Senate’s race, I, we go to Washington because of the good fortune of publicity, my book starts selling. I had more money, our kids are growing and we become interested in moving out of our condo and buying a house.

So at that point, I contact our broker, who had helped us buy our condo, a woman named Miriam Zeltzerman and who was with a real estate agency called Urban Search, which is very prominent in the Hyde Park area. And told her that we’d like to list our condominium for sale and that we were interested in buying a new house.

I was in Washington much of this time so this is the beginning of 2005, or somewhere in 2005. So Michelle started taking some tours with Miriam. And at some point ends up being shown the house which we now live in, on [street name redacted]. Michelle calls me and says, “I’m in, I love this house, but it’s more than we were talking about paying for, but I really think it’s a great house, you should go take a look at it.”

I did, and I also thought it was a terrific house. And what the seller, the seller’s broker described to me was that the way that the house was configured, it had this huge yard on the side, on the south side of the lot, that the lot had already been divided in half, that the lot was being sold separately, that somebody already had an option on the lot, so that that was not part in any way of the transaction. And that the house, was selling, was listed at $1.9 [million], but in conversations with my broker afterward, she said that although the lot had an option on it, the house had been on the market for over, for quite some time.

I think originally the sellers had tried to sell it as just in, in one big chunk, both the lot and the house, and it had been on the market for at least six months, maybe close to a year. They hadn’t been successful. That’s part of the reason why, I think, they divided it. The lot was apparently fairly attractive, and they had gotten offers on that. The house was the thing that was difficult for them to sell, and it was owned by a doctor, a pair of doctors named the Wondisfords who were at the University of Chicago. They had to join Johns Hopkins because they had gotten a new job, so they were moving and so they were anxious to sell.

So, I then discuss it with Michelle as well as our broker and said, “Well, maybe it’s worthwhile us putting down an offer, but we should get a better sense of what it’s valued.” And our broker said, “You certainly shouldn’t be paying the list price on this because it might be a little bit overpriced.” And so at that point, Michelle and I talked about who did we know that knew Kenwood who might have a sense of these properties.

And that’s how Tony Rezko’s name came up, because he was an active developer in that area and owned lots in that area and had done development in that area.

So I don’t know, I don’t remember exactly how this transpired, whether it was in a face-to-face meeting or I called Tony or what have you, but I said, “I’d like your opinion on this property.”

He asked where it was, I told him, he said, “Well I’m going to be in the neighborhood. I might go by and take a look at it. I think he may have done so prior to me being with him, but I don’t recall exactly how that conversation transpired.

The bottom line was that he said, well, he called me back or we spoke and he said, “If you want me to take a look at it, I’d be willing to go into the house and take a look at it.”

I said, “Great.” I arranged with my broker, he and I looked at the house, he said, “This looks like a very sturdy house.”

And at that point, I think, he had found out, perhaps because he knew the seller’s broker, that the person who was, who had the option on the lot was also the person who had renovated this house six years ago. It had gone through a gut renovation six years ago. That that individual was a former employee of Tony’s who was also a fellow developer.

Tony asked me during the course of one of these conversations why I might not be interested in buying the lot and keep the property intact. And I said that, you know, it wasn’t worth it to us to spend an extra $600,000 or so on a lot next door when Michelle and I were really interested in the house. So he said, “Well, I might be interested in purchasing the lot,” and my response was, “That would be fine.”

And my thinking at the time—and this is just to sort of flag this, this is an area where I can see sort of a lapse in judgment where I could have said, “You know, I’m not sure that’s a great idea”—but my view at the time, when he expressed an interest, was that he was a developer in this area that owned lots, that he thought it was going to be a good investment.

And my interest, or my motivation was, here’s somebody that I knew who, if this lot was being developed, it’d be better to have somebody who knew, who I knew, who, you know, would give me schedules, keep me apprised of what was taking place and so forth. So I didn’t object.

He then said, “Well, let me look into it since I know the guy who has the option on the lot.” And in the meantime we simply proceeded to then get an inspector to come in, take a look at the house; it passed inspection. And so we decided to put down a sales contract.

We put down a sales contract, or we put down an offer of $1.3 [million]. The sellers came back, they lowered their offer. I think it was to $1.8 [million] or $1.75 [million].

We raised our offer to five, uh $1.5 [million], and all this was done through our respective brokers. The issue of the lot and the lot price never came up.

It was never an issue in our purchase. Tony Rezko was not involved in those negotiations. Those were negotiations between our brokers, and we ended up agreeing to a sale price of $1.65 [million].

I have in the documents a statement by the sellers indicating that at no time did they ever consider the lot in relation to the price of the house, that they did not offer a discount on the house, that there was no contingency with respect to our house purchase relative to the lot. There was simply no connection between our purchase of the house and our price of the house and the sale of the lot.

As I indicated before, the lot was already for sale. I wasn’t involved in that transaction. I’m not aware of how Tony ended up getting the option from the previous individual. That was not something that I was concerned with. I didn’t know exactly what the price was that he paid. I knew that there had been an option there for 600 and something dollars because the broker had told me when I had first gone to visit.

But the notion, now, this is the area where I want to be absolutely clear, because, frankly, this has appeared in various, in various reports, or the intimation, and John [Kass, Tribune columnist], you’ve been very specific about this, this notion that somehow I got a discount and Rezko overpaid or was somehow involved in that is simply not true. And the sellers have confirmed that it is simply not true.

Rezko bought this, and I don’t know his motives, and I think it is perfectly legitimate to say that he perhaps thought that it would be nice to have a lot next to me, he perhaps thought that this would strengthen our relationship, he could have even thought he was doing me a favor.

But I also think that he thought that he was engaging in a sound business practice and that he was going to develop the property. And the, the fact that there wasn’t some steep discount, is in part born out by the fact that he has now, he transferred the lot to his attorney, his attorney put it on the market and it appears that a sale is about to be consummated on the property for a price that I think reflects the legitimate value of that lot. So that’s the house purchase.

And so the intimation that somehow the purchase of my house was somehow aided by Tony Rezko is simply factually incorrect, and it has been confirmed by the sellers that that is factually incorrect.

Sun-Times:

Fast-forward to shortly after I’m inaugurated. Or sworn in. I’m getting ahead of myself. Because of the attention I received during Senate campaign and the convention, my book sold well, I came into a sizeable amount of money that allowed us to move. We’d outgrown our condominium. We contacted our real estate broker, Miriam Zeltzerman. She was the person who sold us our condo in East View Park. Told her we were interested in putting our condo on the market, interested in having her show us houses in the area. She and Michelle went off and probably looked at 10 houses. One of the last ones they looked at was the house on Greenwood, which Michelle fell in love with and was actually slightly above, well it was above, what we’d originally intended to pay.

Michelle called me. She says, “I saw this house, I really like it, it’s more than we originally budgeted for. I’d like you to take a look at it.”

So I went with Miriam to take a look at the house. It was a wonderful house. The asking price was $1.9 [million].

The sellers, the Wondisfords, had originally sought a higher price because it was not just the house, but because there was a lot that was basically the side yard. They had put that on the market in quite some fashion for a very long time. It had not sold. So they decided to break it up, separate the lot, which was fully developable from the house. So they were listing house separately at 1.9. The lot already had option on it when we went to look at it. The reason the lots were separated was because of seller, and the two transactions were entirely separate.

We come back. I talk to the broker and she says you should probably give a lower offer. You never know. They’ve had this on the market. I think the house had been on the market for six months. And the sellers, the Wondisfords, wanted to make sure they sold both, not just one.

The lot was not their difficulty. Their difficulty was selling the house. This is what my broker told me. . . . Michelle and I talk about it, and we decide is there somebody that we should – there are some people we should talk to who know more about the real estate market in Kenwood – because we had never purchased a house before. Tony was a developer in that area, was active in that area, owned lots in that area and had developed in that area. So, I don’t recall whether I called him, whether we saw each other, whether it was something that was already scheduled, I don’t remember the exact circumstances. But I did bring to his attention, we are looking at this house. We are interested in it. I’d love for us to give your opinion on it.

He got the address, and I think he may have looked at it separate and apart from me when he was in the neighborhood. . . . The upshot is that we found out the person who had renovated the house six years earlier was also the person who had an option on the lot, and that person had worked for Rezko, and so he knew him and was an active developer. So Tony then arranged with me and Miriam Zeltzerman to take a look at the house because I wanted to get a basic assessment. He took a look at it with me. Miriam Zeltzerman was there. And he asked me about the lot, and I said, there’s already an option on it. It’s not something we want to purchase. It’s not worth it to us to spend an extra $600,000 on a lot. We’re just gonna buy the house.

He, at that point, expressed some interest potentially in purchasing the lot.

So my response was, and I’ll be honest with you, my basic view at that time was having somebody who I knew, a friend of mine, who would be developing the lot if he could, would be great. It would be somebody who we know. If we had problems or there were complaints, etc . . .

We then put in a bid for $1.3 [million]. The sellers came back. We went up to $1.5 [million]. Ultimately, we settled on a price of $1.65 [million].

This was conducted entirely between my broker and the seller’s broker. [Discussion of the documents brought by Obama about the house.] Tony Rezko had nothing to do with negotiating the price of the house. The lot was an entirely separate transaction. There’s confirmation from the seller that this idea that I somehow got a discount on the property is simply not true. It is not factually correct. We negotiated it in the same way that housing transactions are negotiated all across the country. And I should add, by the way, in terms of the Wondisfords, just to give a little context, the reason this appears in an email that first comes from our lawyer and we had not put this out earlier, is that they did not want to be caught up in a media circus. They’re very private people. They were the ones who originally contacted us when the story first broke. . .

Rezko Primer V. Intern-son of Rezko ally/Obama donor

ArchPundit January 23, 2008 2 Comments

One of the hundreds of interns Obama hired was tied to a Rezko partner and that man was identified as having been directed to donate money to Obama’s US Senate campaign:

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.”

The internship revelation comes after Obama acknowledged he erred in buying property from Rezko in January. The transaction took place when it was widely known Rezko was under investigation by the U.S. attorney’s office.

From the Trib the other day:

Thus far, there is little in the public record to suggest otherwise, and the few exceptions that have come to light appear minor. On Capitol Hill, Obama once gave a summer internship to the son of a Rezko business associate on Rezko’s recommendation. Earlier, as a state senator, Obama was one of several South Side political and community leaders who wrote state and city officials urging approval of public funding for a senior housing project involving Rezko.

But when Rezko pushed for passage in Springfield of a major gambling measure, Obama vocally opposed it.

Obama publicly apologized for his 2005 property deal with Rezko, calling it “boneheaded” because Rezko was widely reported to be under grand jury investigation at the time. And Obama has given to charities $85,000 in Rezko-linked campaign contributions, including $40,035 last weekend following a published report suggesting that Rezko funneled a $10,000 donation to Obama through a business associate. Aides to Obama say the senator had no knowledge of any such scheme.

Unnamed Political Candidate

The Illinois senator isn’t accused of any wrongdoing. And there’s no evidence Obama knew contributions to his 2004 U.S. Senate campaign came from schemes Rezko is accused of orchestrating.

The allegations against Rezko that involve Obama are contained in one paragraph of a 78-page document filed last month in which prosecutors outline their corruption and fraud case against Rezko, who was also a key money man for Gov. Blagojevich and other politicians.

Rezko is set to go to trial Feb. 25. The revelation that Obama’s name could come up in court is a political headache he doesn’t need as he heads into a round of primaries that are likely to determine his party’s nomination for president.

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.

Rezko Primer IV. Letters of Support for projects Rezko was involved

ArchPundit January 23, 2008 2 Comments

In relation to a partnership between Rezmar Properties and some non-profits:

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 — a longtime friend, campaign fund-raiser and client of the law firm where Obama worked — who was indicted last fall on federal charges that accuse him of demanding kickbacks from companies seeking state business under Gov. Blagojevich.

The letters appear to contradict a statement last December from Obama, who told the Chicago Tribune that, in all the years he’s known Rezko, “I’ve never done any favors for him.”

On Tuesday, Bill Burton, press secretary for Obama’s presidential campaign, said the letters Obama wrote in support of the development weren’t intended as a favor to Rezko or Davis.

“This wasn’t done as a favor for anyone,” Burton said in a written statement. “It was done in the interests of the people in the community who have benefited from the project.

“I don’t know that anyone specifically asked him to write this letter nine years ago,” the statement said. “There was a consensus in the community about the positive impact the project would make and Obama supported it because it was going to help people in his district. . . . They had a wellness clinic and adult day-care services, as well as a series of social services for residents. It’s a successful project. It’s meant a lot to the community, and he’s proud to have supported it.”

The development, called the Cottage View Terrace apartments, opened five years ago at 4801 S. Cottage Grove, providing 97 apartments for low-income senior citizens.

Asked about the Obama letters, Rezko’s attorney, Joseph Duffy, said Tuesday, “Mr. Rezko never spoke with, nor sought a letter from, Senator Obama in connection with that project.”

Davis couldn’t be reached for comment Tuesday.

Further down the article:

While Obama served in the Illinois Senate, he continued to work for the law firm, which Davis left in 1997 to become a developer.

Davis soon went into business with Rezko, creating a company called New Kenwood LLC to build the seven-story apartment building for senior citizens on a vacant stretch of land once occupied by a gas station at 48th and Cottage Grove. The city of Chicago owned the land — nearly two acres tainted by lead, benzene and other toxic chemicals.

Davis is a member of the Chicago Plan Commission. He was originally appointed to the commission in 1991 by his friend, Mayor Daley. Davis, like Rezko, has been a prolific campaign fund-raiser for politicians including Daley and Obama.

Soon after they incorporated New Kenwood in 1998, Davis and Rezko got letters of support from elected officials — Ald. Toni Preckwinkle (4th) and state Rep. Lou Jones (D-Chicago), whose districts included the proposed project.

Firm paid city $1 for land

New Kenwood LLC also got letters of support from Obama, who represented a nearby Senate district.”I am writing in support of the New Kenwood LLC’s proposal to build a ninety-seven unit apartment building at 48th and Cottage Grove for senior citizens,” Obama wrote in separate letters, each dated Oct. 28, 1998, to city and state housing officials. “This project will provide much needed housing for Fourth Ward citizens.”

At the time he wrote the letters, Obama was also a lawyer with Miner Barnhill & Galland, the law firm Davis formerly headed. Among the firm’s clients were several companies owned by Davis and Rezko. The firm did not represent New Kenwood.

Davis and Rezko hired Daley & George, the law firm of the mayor’s brother Michael, to help them get $3.1 million from bonds issued by the city of Chicago.

Rezko and Davis paid the city $1 for the land and spent more than $100,000 to clean it up, including the removal of an underground storage tank. Some tainted land was left behind, but state environmental officials approved construction after Rezko and Davis agreed to cover the polluted areas with parking lots, sidewalks or three feet of dirt, records show.

The $14.6 million Cottage View Terrace was funded entirely by city, state and federal taxpayers.

The project included $855,000 in development fees for New Kenwood. Records don’t show how Davis and Rezko split the money. Davis owned 51 percent of New Kenwood, Rezko 49 percent, according to the records.

Letters of support are hardly uncommon and wouldn’t be considered so much a favor, as a part of the job–it’s common for any grant to seek out letters of support from stakeholders in the community.

More interesting is a Chicago Tribune article on the pork Obama did secure for his Senate District in Illinois:

But some of the larger grants Obama sponsored were tied to political allies and show how difficult it is even for politicians advocating reform to avoid the appearance of favoritism as they dole out taxpayer funds. Several non-profit directors, for instance, gave money to Obama’s campaigns soon after their allotments were awarded.

“My philosophy was that, if money was being distributed, then it would be inappropriate for me to not get my share for my district,” Obama, now one of the U.S. Senate Democrats’ leaders on ethics reform, said in an interview. “Did I think it was the best way to prioritize government spending? No.”

The Tribune analyzed 119 grants in which Obama steered more than $6 million for Chicago projects between late 1999 and late 2002, the heart of his Statehouse career and the center of a state government frenzy in which Obama said the pork-barrel process was “wide open.”

Typical of his grants was the $5,000 Obama delivered to the South Shore Public Library for chess equipment, books and knitting supplies, or the $5,000 to help the Sir Miles Davis Academy plaster and paint walls and repair windows.

But other grants reflected politics. In 2001, for example, Obama steered $75,000 to a South Side charity called FORUM Inc., which promised to help churches and community groups get wired to the Internet. Records show five FORUM employees, including one who had declared bankruptcy, had donated $1,000 apiece to Obama’s state Senate campaign.

As the grant dollars were being disbursed to FORUM, the Illinois attorney general filed a civil lawsuit accusing the charity’s founder of engaging in an unrelated kickback scheme. Just days after the suit was filed, Obama quietly returned the $5,000 in donations. “I didn’t want to be associated with money that potentially might have been tainted,” he said.

FORUM founder Yesse Yehudah, who unsuccessfully ran for state Senate against Obama in 1998, denied wrongdoing and, without admitting guilt, settled the attorney general’s lawsuit by paying $10,000 to a charity. He declined to comment.

Obama was not accused of wrongdoing, and he said none of his state grants came about as a quid pro quo.

“It happens that there were major supporters in my district who had been supporters before they got member initiatives,” Obama said, noting that some of his contributors had been his allies for years.

One of those long-time supporters was Rev. Michael Pfleger, the politically active leader of St. Sabina Church. He gave Obama’s campaign $1,500 between 1995 and 2001, including $200 in April 2001, about three months after Obama announced $225,000 in grants to St. Sabina programs.

By Illinois standards, that’s a pretty clean bill of health for Member Inititiatives.

Rezko Primer III. Legal work on projects Rezko was involved

ArchPundit January 23, 2008 8 Comments

Updated 3/17/2008 after Chicago Tribune and Sun-Times interviewed him at length.

Central to Hillary Clinton’s charge that Obama was representing and taking donations from a slumlords in Rezko and Allison Davis.

Davis was a name partner in the law firm Obama worked for and eventually left the firm to work with Rezko on development deals. The reason Rezko was involved in the deals at all is that he partnered with three non-profits in Chicago to build affordable housing:

Obama said he joined the firm now known as Miner, Barnhill & Galland, which specializes in affordable housing partnerships, in January 1993. He said he was a full-time associate until he entered the state legislature in January 1997, when he went on “of counsel” status, occasionally working on matters for the law firm.

During his time with the law firm, he said his five hours of Rezko-related work consisted of “basically filing incorporation papers” and similar tasks for not-for-profit groups that partnered with Rezmar.

Asked if he had intervened on behalf of Rezko or Rezmar with any government entity, Obama replied, “Never. No.”

In a statement released Monday, the law firm said there were four instances in which it represented the interests of not-for-profit groups in ventures where Rezmar had a partial interest: Central Woodlawn Limited Partnership II, Woodlawn Partners Limited Partnership, KRMB Limited Partnership and Woodlawn Drexel Limited Partnership.

The law firm said Obama’s role was limited to “conducting due diligence under the supervision of more senior attorneys, assisting in documentation of loans, grants and tax credit investments in which the ventures had an interest and providing general legal assistance in land acquisition.

“The firm also assisted the Rezmar Corp. in its acquisition of a general partner interest in an Illinois limited partnership, but Obama had no involvement in the transaction,” the law firm said.

The firm’s senior partner, Judson Miner, said thenon-profits had been clients of the firm before Obama came aboard. “In these transactions, Barack was a young associate doing the kind of work young associates are assigned to do,” Miner said. He said Obama “was always as ethical and reliable as anyone.”

Sun Times April 24, 2007

More from the previous day:

Rezko became Obama’s political patron. Obama got his first campaign contributions on July 31, 1995: $300 from a Loop lawyer, a $5,000 loan from a car dealer, and $2,000 from two food companies owned by Rezko.

Around that time, Rezmar began developing low-income apartments in partnerships with the Chicago Urban League and two other not-for-profit community groups, both founded and run by Bishop Arthur Brazier, pastor of the Apostolic Church of God and a powerful ally of the mayor — the Woodlawn Preservation and Investment Corp., known as WPIC, and the Fund for Community Redevelopment and Revitalization.

All three community groups were clients of the Davis law firm. Davis himself was treasurer of WPIC when it went into business with Rezmar.

Why go into business with Rezmar? “We thought they were successful,” Davis said, noting that little development was taking place in Woodlawn.

At the time, Rezmar had been in business for six years and had become one of City Hall’s favored developers of low-income housing, managing 600 apartments in 15 buildings it rehabbed with government funding. Teaming now with community development groups, Rezmar rehabbed another 15 buildings, with 400 apartments, between 1995 and 1998. Each deal involved a mix of public and private financing — loans from the city or state, federal low-income-housing tax credits and bank loans.

By the time Rezmar started working with those community groups, at least two of its earlier buildings were falling into disrepair — including the Englewood apartment building at 7000 S. Sangamon where the tenants were without heat for five weeks.

The tenants there had no heat from Dec. 27, 1996, until at least Feb. 3, 1997, when the city of Chicago sued to turn the heat on. The case was settled later that month with a $100 fine.

It was during that time that the area’s new state senator, Barack Obama, got a $1,000 campaign donation from Rezmar. The date: Jan. 14, 1997.

Obama works on Rezmar deals

Obama spent the next eight years serving in the Illinois Senate and continued to work for the Davis law firm.Through its partnerships, Rezmar remained a client of the firm, according to ethics statements Obama filed while a state senator.

Davis said he didn’t remember Obama working on the Rezmar projects.

“I don’t recall Barack having any involvement in real estate transactions,” Davis said. “Barack was a litigator. His area of focus was litigation, class-action suits.”

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 he did legal work on Rezko’s deals, according to an e-mail his presidential campaign staff sent the Sun-Times on Feb. 16, in response to earlier inquiries. The staff didn’t specify which Rezmar projects Obama worked on, or his role. But it drew a distinction between working for Rezko and working on projects involving his company.

“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.

The Tribune searched multiple records to determine where Obama had done work on behalf of the entities involved:

Law firm partner Judson Miner said that, over several years, Obama did a total of five to seven hours of billable work on Rezmar-linked projects. He mainly filed incorporation papers for the non-profit groups under the supervision of more senior attorneys, Miner said.

At the Tribune’s request, Cook County Circuit Court Chief Judge Timothy Evans produced a list of all 260 civil and criminal cases in which the firm filed appearances, and the Tribune separately examined 1990s lawsuits that Rezmar Corp. listed in applications for government grants. The paper also examined files from the Illinois Housing Development Authority and the city housing department, as well as the hundreds of clients Obama listed in the unusually frank ethics disclosure reports he filed as a state senator from December 1995 through April 2004.

Those and other records disclosed five instances in which Obama did legal work for ventures that included Rezmar Corp. The case of City of Chicago vs. Central Woodlawn Limited Partnership is one example.

In 1992, that community group partnered with Rezmar Corp. to rehab the former slum apartment building at 6107-6115 S. Ellis Ave. As work was ongoing, city officials sued the developers, alleging 16 serious code violations at the property, including a dangerously dilapidated porch.

Obama and a co-counsel filed appearances in February 1994, but the court records show they appeared on behalf of Central Woodlawn, Rezko’s non-profit partner, not Rezko or his company.

A separate attorney, Wayne Muldrow, represented Rezmar in the case. Muldrow, who had no connection to Obama’s firm, could not be immediately reached for comment Tuesday.

In September 1994, Central Woodlawn was ordered to arrange for an inspection. Two months later a city inspection found “full compliance” with the building code and the case was dismissed.

By the point that the degree of the problems had begun to be realized in 1997, Obama had gone to ‘of counsel status’ after winning a seat in the Illinois State Senate:

The Sun-Times reported that Rezko donated to Obama at the same time residents were without heat at one of the troubled properties operated by Rezko’s firm, Rezmar Corp. The firm received taxpayer help to rehab 30 buildings, including 11 in Obama’s state legislative district on the South Side.

Obama said in the interview Monday that he was unaware of the scope of properties owned by Rezmar or the problems surrounding them. He said none of the affected residents personally sought his help and that aides at his state Senate district office did not recall any inquiries. Still, he said it was “possible” that during his tenure in the legislature that a constituent may have written or called his office “saying, ‘We’re in a building, and we’re unhappy with the service here.'”

Such problems, he said, would normally be brought to the attention of an alderman or the city’s Housing Department. “Had I known that there were buildings that were in deteriorating or poor condition, that certainly would have given me pause. But I didn’t” know, Obama said.

Obama said he joined the firm now known as Miner, Barnhill & Galland, which specializes in affordable housing partnerships, in January 1993. He said he was a full-time associate until he entered the state legislature in January 1997, when he went on “of counsel” status, occasionally working on matters for the law firm.

Sun Times April 24, 2007

Sun Times list of projects worked on by Obama’s law firm which included Rezmar

Sun-Times interview:

I was practicing law for the next four years and . . . our paths would cross at times because they were doing development work. And my firm, which was mostly a litigation firm, had a small transactional practice that represented not for profits that were doing affordable housing work. And that’s where I wound up doing five hours worth or six hours worth of legal work on a partnership, a joint venture between the – I forget what the name of it was – but it was a community development group based in Woodlawn that Arthur Brazier had started and Rezmar. So we were representing the not for profit.

But at that time, I wasn’t particularly close with Tony, although I was familiar with him and I would see him on occasion.

 Tribune:

Fast-forward a little bit, I did not have a lot of interactions with Tony at that point. I was working as an associate at a law firm. There may have been interactions with my law firm and some of the development partners of Rezmar because they would often partner with not-for-profits and we had a small transactional practice in the law firm that specialized in representing not-for-profits—you know, church-based organizations that were doing community development.

I don’t recall exactly how many times at that point I had met Tony Rezko, but I don’t think at that point I would have considered him a friend. He was an acquaintance.

The Weird Experience Argument

ArchPundit January 16, 2008 0 Comment

Let’s stipulate that experience already lost in the Presidential race with the three with the most experience out of the race in Dodd, Biden, and Richardson.

Slate and AP make important points about the idea that Hillary has the experience:

Edwards served a single term in the Senate. Obama served eight years in the Illinois state Senate and is halfway through his first term in the U.S. Senate. Clinton is about to begin her eighth year in the U.S. Senate. Going by years spent as an elective official, Obama’s 11 years exceeds Clinton’s seven, which in turn exceeds Edwards’ six. But it’s a silly calculus. They all come out about the same, even when you factor in Clinton’s youthful work on the House judiciary committee’s impeachment inquiry, her membership on the board of the Legal Services Corp., her chairmanship of the Arkansas Educational Standards committee, her crafting of an unsuccessful national health-care bill, and her sharing Bill Clinton’s bed most nights while he was Arkansas governor and president of the United States.

============

But a Dec. 26 New York Times story revealed that during her husband’s two terms in office, Hillary Clinton did not hold a security clearance, did not attend meetings of the National Security Council, and was not given a copy of the president’s daily intelligence briefing. During trips to Bosnia and Kosovo, she “acted as a spokeswoman for American interests rather than as a negotiator.” On military affairs, most of her experience derives not from her White House years but from serving on the Senate armed services committee.

If you notice, Obama actually has more experience running organizations–one of the reasons the COO quote was incredibly stupid.  He’s making the right argument in the sense that the Power of the President is to persuade, but in an incredibly dumb and awkward way.

From the AP 

Obama’s accomplishments are more substantial and varied than Clinton suggests. And he has a longer record in elected office than she does, as a second-term New York senator.

Obama was a community organizer and led a voter-registration effort in Chicago that added tens of thousands of people to the rolls. He was a civil rights attorney and taught at one of the nation’s premier universities. He helped pass complicated measures in the Illinois legislature on the death penalty, racial profiling, health care and more. In Washington, he has worked with Republicans on nuclear proliferation, government waste and global warming, amassing a record that speaks to a fast start while lacking the heft of years of service.

The Illinois Democrat likes to quote something Bill Clinton once said: “The truth is, you can have the right kind of experience and the wrong kind of experience. Mine is rooted in the real lives of real people, and it will bring real results if we have the courage to change.”

After college, Obama moved to Chicago for a low-paying job as a community organizer. He worked with poor families on the South Side to get improvements in public housing, particularly the removal of asbestos.

“Nobody else running for president has jumped off the career track for three or four years to help people,” said Jerry Kellman, who first hired Obama as a community organizer.

Obama also fought for student summer jobs and a program to keep at-risk children from dropping out of school. More importantly, say those who worked with Obama, he showed people how to organize and confront powerful interests.

Working with the kinds of coalitions to put together community organization and voter registration drives is at least as good as running a panel on education reform.