The Corruptin’ist Guns In the Midwest

8:41 pm, 5/5/07

The Corruptin'ist Guns In the Midwest
The Chicago Sun-Times takes a rather mortifying look at Rezmar, the company of hot dog salesman and top Blagojevich henchman Tony Rezko, and the amazingly convenient coincidences that tie it to Barack Obama, a potential source of even greater mortification.

Two decades ago, Antoin "Tony'' Rezko was running a food company that peddled hot dogs on Chicago's beaches. Daniel S. Mahru supplied the ice.

These businessmen had a brainstorm for a new venture -- rehabbing rundown buildings for poor black families. Rezko and Mahru had no construction experience. Yet City Hall gave their new company, Rezmar Corp., a $629,000 loan to help fix up an abandoned apartment building at 46th and Drexel. They had applied for the loan just six days after Richard M. Daley won his first term as mayor in 1989, having campaigned on a promise to build more housing for the poor.

Taxpayers have lost $5.7 million in grants and loans written off by the Daley administration, a Chicago Sun-Times investigation has found. Millions more could be written off, based on court records and interviews. And the IRS has so far demanded that corporations repay $7.8 million in tax breaks they got for investing in Rezmar apartments that failed to provide low-income housing for at least 15 years.

"Every one of these properties has failed,'' said Phillip Kupritz, the architect on every Rezmar low-income rehab.

Rezko did not respond to interview requests regarding the low-income housing deals. Rezko is under federal indictment on unrelated charges, accused of demanding kickbacks from companies seeking state business under the Blagojevich administration. He's also charged with fraudulently obtaining a $10 million loan for pizza restaurants he began while fixing up low-income buildings with tax dollars.

As Rezmar's loan application was pending, Daley reformed the Housing Department. Daley said he found that housing officials were giving loans to their cronies. So the mayor's staff would now decide who got the money.

Danger! Danger!

And his staff liked Rezmar, which got more than $24 million in loans and $8.5 million in federal tax credits from the city to rehab 14 buildings during Daley's first six years as mayor....All 14 of those buildings ended up in financial straits. Today, three are boarded up.

In fact, they were horrific tenement-like slums, with hundreds of the 1,000+ units Rezmar was given money to fix up today in desperate need of major repairs:

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....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.

Obama has been friends with Rezko for 17 years....Obama, who has worked as a lawyer and a legislator to improve living conditions for the poor, took campaign donations from Rezko even as Rezko's low-income housing empire was collapsing, leaving many African-American families in buildings riddled with problems -- including squalid living conditions, vacant apartments, lack of heat, squatters and drug dealers.

In fact, 11 of Rezko's buildings were in Obama's district, and Obama happened to work for the same law firm - Davis Miner Barnhill & Galland - that helped Rezko and Mahru get the money. Obama's campaign staff claims that Obama put in only five billable hours of work on Rezmar projects.

In fact, Gibbs wrote, "Senator Obama does not remember having conversations with Tony Rezko about properties that he owned or any specific issues related to those properties.''

The depth of coincidental Obama-Rezko ties certainly seems odd: prior to joining the firm, Obama had been offered a job at Rezmar by David Brint, a Vice-President at Rezmar. There also seem to be contradictions between Obama's claims and those of the Davis law firm:

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.

So what's the truth? What we know for sure is that the relationship between Obama and Rezko, which had previously been portrayed as a mere acquaintence, ultimately culminated in Rezko selling Senator Obama part of the yard to his new mansion:

Over the years, Rezko, Mahru, their wives and businesses have given more than $50,000 to Obama's campaign funds, records show. And Rezko has helped raise millions more.

Rezko was among the people Obama appointed to serve on his U.S. Senate campaign finance committee, the Sun-Times reported in 2003. The committee raised more than $14 million, according to Federal Election Commission records, helping send Obama to Washington in 2004.

Two years ago, Obama bought a mansion on the South Side, in the Kenwood neighborhood, from a doctor. On the same day, Rezko's wife, Rita Rezko, bought the vacant lot next door from the same seller. The doctor had listed the properties for sale together. He sold the house to Obama for $300,000 below the asking price. The doctor got his asking price on the lot from Rezko's wife.

Last year, Rita Rezko sold a strip of that vacant lot to Obama for $104,500 -- a deal Obama later apologized for, acknowledging that people might think he got a favor from Rezko. Obama called the episode "boneheaded'' and a "mistake.''

Rezko's trial has been postponed while the Feds try to understand his almost surreal finances, a feat that I'd imagine would challenge even some very fine accountants. The Chicago Sun-Times question and answer session with Obama's campaign is here.