The connection has dogged Sen. Barack Obama (D-IL) ever since it was first reported in November of 2006. With Tony Rezko’s trial finally beginning this week, and with the trial expected to last for months, it will keep dogging him.
You know the general outline. In June of 2005, Obama bought a home in Chicago’s South Side. On the same day, Tony Rezko bought an adjoining lot, the house’s side yard. It was not an isolated association between the two. Rezko was a big-time fundraiser and supporter of Obama, who raised more than $150,000 for Obama’s state and federal campaigns over the span of nine years ($20,000 of that was from Rezko himself). Over the past 16 months, Obama has donated almost $160,000 of those Rezko-linked contributions to charity.
Rezko, a big-time real estate developer and mucky-muck in Illinois politics, was indicted in October of 2006 on fraud and extortion charges.
Although Obama’s longterm relationship with Rezko has gained plenty of scrutiny, the house purchase has understandably gotten the most. Given Rezko’s central role in Illinois’ influence-buying and cronyism scandal, suspicion is natural. Obama himself has called his subsequent purchase of a strip of the adjoining lot from Rezko “bone-headed.” It’s hard not to agree.
There is no sure evidence that the house deal was worse than bone-headed. Not that the question has been put to rest. A number of unanswered questions remain.
For instance, it’s unclear whether Rezko was actually doing a favor for Obama: whether Obama could not have bought the house otherwise or whether Obama derived a financial benefit from Rezko’s involvement in the deal. The main suspicion has been that Rezko’s purchase of the side yard at the seller’s asking price allowed Obama’s purchase of the house to go through since the seller insisted on closing both properties on the same day. But both Obama and Rezko have said that someone else had bid on the side yard, raising the bidding to the asking price. If that’s the case, then Obama could have bought the house without Rezko’s involvement. And Obama has said that his family has stayed off the side yard and never used it for family activities.
Obama has acknowleged, however, that Rezko’s likely motivation for buying the lot was to curry favor with him. Rezko reportedly admitted as much to his business associates. And as The New York Times reports today, Rezko was so heavily in debt at the time he purchased the lot that he did it under his wife’s name in order to protect it from creditors.
And then there’s the other big question, whether Obama ever did anything for Rezko in return for his purchase of the side yard or all those contributions. Obama has said that Rezko “never asked me for anything” and “Iâve never done any favors for him.â No substantial evidence has surfaced to contradict that claim. (The Chicago Sun-Times did dig up letters from Obama in 1998, some seven years before the house sale, urging Illinois and Chicago officials to provide funding for a Rezko company to build apartments for senior citizens, but both Obama and Rezko denied that Rezko had asked Obama to write the letters, and there’s no evidence to the contrary.)
As Rezko’s trial nears, you’re sure to hear the two names raised together again and again. And you’ll be hearing about that house purchase. So we’re laying it all out here. We’ve compiled the main details in our timeline of Rezko and Obama’s relationship here.
Recently, NBC News got a good aerial view of the Obama’s home and side lot, which is now owned by Michael Sreenan, a former business attorney of Rezko’s:
Back in 2004, the home’s owner put both parcels on the market. There was no fence between the two properties, since the undeveloped land served as the house’s side yard, but the properties were listed separately.In January of 2005, the Obamas made three successive bids on the home, which had been listed at $1.95 million. After bids of $1.3 and then $1.5 million, the Obamas, through an agent, finally offered $1.65 million, a bid which the seller ultimately accepted. Obama has said that the house was on the market for a number of months and was overpriced. The seller, a doctor at the University of Chicago named Fredric Wondisford who has refused to speak to the media, has stated in an email released by the Obama campaign to Bloomberg that Obama’s bid was the highest bid on the home. Obama has said that he didn’t purchase the side yard because he could not afford it.
It’s still unclear exactly how Rezko came to buy the side yard. Back in November of 2006, when Obama was first interviewed by The Chicago Tribune about the deal, he was very hazy on the details: “I don’t recall exactly what our conversations were or where I first learned, and I am not clear what the circumstances were where he made a decision that he was interested in the property.”
In answering written questions from The Chicago Sun-Times later that week, he was clearer: “to the best of [his] recollection,” he’d told Rezko about the side yard and that “he developed an interest, knowing both the location and, as I recall, the developer who had previously purchased it.”
Last month, an Obama spokesman divulged more: that at some point before the purchase, which closed in June of 2005, Obama and Rezko had toured the property together “because Rezko was a real-estate developer in the area” and Obama wanted his opinion. The spokesman could not specify when, exactly, this tour had occurred — before Obama had made successive bids on the home in January of 2005, or after.
It’s not clear when Rezko bid on the property, but Obama has said that the seller accepted Rezko’s bid on the yard before accepting Obama’s bid on the house.
Both Obama and Michael Sreenan, Rezko’s former attorney who now owns the adjoining lot, have said that at least one other party bid on the yard, as an explanation for why Rezko ultimately paid the seller’s asking price, $625,000. The burning question, of course, is whether Rezko was doing Obama a favor by buying the side lot at the asking price. Though the seller, via the campaign, has corroborated other details about the purchase, he has not confirmed that there were other bids on the lot.
Though Obama made his final offer in January of 2005, the purchase did not close for another five months. It’s unclear why.
By June of 2005, when the purchases did close, Rezko’s ethical and legal troubles had begun unraveling on the pages of the city’s major newspapers. Just a month before, The Chicago Tribune had run a major profile of Rezko and his many entanglements, including the fact that he’d been subpoenaed as part of a sprawling corruption probe of the state government.
As you can see from the picture of the property above, the two properties are now divided by a fence. But there was no fence when the purchases were made. The Obamas have provided documents to The Chicago Tribune to show that, immediately following the purchase, they began making preparations for installing a fence — an undertaking that required considerable paperwork since the properties are landmarked. That process lasted several months.
When it finally came time to install the fence, the Obamas also wanted to extend their property by another five to ten feet so that the fence would be at a distance from the house. The Obamas ultimately purchased from Rezko a 10-foot wide strip adjacent to and paralleling their property line.
Obama has said that he approached Rezko personally in January of 2006 about buying some of the adjacent lot. To set the price for the 1,500-square-foot strip, which was one-sixth of the entire lot, Obama hired a firm to appraise its value. When that appraisal came in at $40,500, Obama says he judged it too low for appearance’s sake and instead set the price at $104,500, which was one-sixth of the price Rezko had paid for the entire lot. There’s been no suggestion that Rezko actually negotiated with Obama on the price. In any case, he accepted.
Rezko’s rapidly deteriorating situation might explain Obama’s extra caution. Since its profile of Rezko the previous May, the Tribune had also brought word (as you can see on our timeline) that Rezko had been subpoenaed on a number of other matters, all pertaining to U.S. Attorney Patrick Fitzgerald’s investigation of influence-buying, cronyism, and extortion in Gov. Rod Blagojevich’s (D) government. It was increasingly clear that he was of central interest to prosecutors. He was finally indicted in October of 2006.
Though Obama’s name may come up at the trial, since Rezko allegedly made illegal “straw” contributions (via intermediaries) to Obama in addition to a number of other politicians, he is expected to be only a peripheral player. As The Los Angeles Times puts it this morning, Obama will be in “the background.” But unfortunately for Obama, Rezko is also certain to be in the background of his campaign through November.
Andrew Berger and Peter Sheehy contributed research to this post.