Obama,Slumlords,Rezko,and the Chicago Democratic Machine

Rezkowatch gives an essential primer from Evelyn Pringle's impressive research on the Obama-Rezko-Chicago Machine operation.After you read this you'll know why Hillary Clinton doesn't want to drop out of the race:

Obama says he met Tony Rezko when he got a call right out of the blue from David Brint, after he was elected president of the Harvard Law Review, wanting to know if he would be interested in working for Rezko's real estate development company, Rezmar.

Because they read he was interested in community development work, Obama says, Rezko and his two partners, Daniel Mahru and Brint, met with him to discuss the job. "I said no, but I remained friendly with all three of them," Obama said in the Chicago Tribune on November 1, 2006. "All three of them remained great contributors of mine," he added.

And so they did. According to the latest tally given during interviews with the Tribune and Sun-Times on March 14, 2008, the amount attributed to Rezko went from a claim of $50,000 or $60,000 a year ago, to Rezko raising roughly $250,000.

Rezmar owners, Rezko and Mahru, had plenty of money. By 1998, Rezko had a reported net worth of $34 million and Mahru was worth $14.6 million, according to the "Rezmar who's who list," published in the April 24, 2007 Sun-Times.

After turning down the surprise job offer, Obama just happened to get hired at the small 12-attorney Davis, Miner & Barnhill law firm in 1993, which just happened to represent Rezmar. And then a couple years later, Rezko's companies just happened to appear on the first contributions made to the "Friends of Obama" committee to launch his political career as a state senator.

On March 14, 2008, when asked by the Sun-Times whether politics was mentioned at his first meeting with Rezko, Obama stated: "Quite frankly, I don't recall. I think it was talking about the possibility of me working for him."

The Davis firm served as a hub for the Rezmar slumlord business for a decade before founding attorney, Allison Davis, quit and became partners with Rezko full-time.

Mayor Richard Daley took office in 1989 and Rezmar got its first city loan of $629,000 the same year, even though Rezko and Mahru had no construction experience. Rezmar stopped making the $2,982 payments three years later and missed 16 payments before the city changed the terms so Rezmar would only pay $465 a month, according to the Times.

Governor Jim Edgar appointed Mahru to the Illinois Affordable Housing Advisory Commission in 1993, which helps decide which projects get state funds,

About the same time that Rezko started funding Obama's Illinois senate campaign, Rezmar began developing low-income housing with three non-profit groups, which were also represented by Davis, including the Chicago Urban League, the Woodlawn Preservation and Investment Corp, and the Fund for Community Redevelopment and Revitalization.

Bishop Arthur Brazier, described as "a powerful ally of the mayor" by the Sun-Times, founded the Woodlawn Preservation Corp and the Fund for Community Redevelopment.

Allison Davis was the treasurer for Woodlawn when the group went into business with Rezmar and he also served on the board that ran the Fund for Community Redevelopment.

By the time Rezmar started working with the non-profits, earlier projects were having major problems, including tenants without heat for five weeks in one building between December 1996 and February 1997. The city had to sue to get the heat turned back on and in fact, has sued Rezmar for failing to heat buildings at least a dozen times, the Times says.

The Times reported that Obama got a $1,000 donation from Rezmar on January 14, 1997, while the tenets were without heat. Records show Obama also received a $1,000 contribution from Rezko Concessions, a day earlier on January 13, 1997.

Rezmar and the non-profits rehabbed 15 buildings between 1995 and 1998. Each project involved loans from the city or state, federal low-income-housing tax credits and bank loans. The way it was set up, Rezko and Mahru always made out because Rezmar was paid part of the fees when a deal closed and the remainder when tenants moved in.

The projects were supposed to provide housing for at least 25 years. "But the first deal Rezmar struck with the Woodlawn Preservation ... collapsed in just six and a half years, when the state sued for foreclosure," according the April 23, 2007 Times.

Of the buildings managed by Rezko and Mahru, 17 ended up in foreclosure, six buildings are currently boarded up, hundreds of the apartments are vacant and in need of major repairs, and taxpayers are left stuck with millions in unpaid loans, the Times reports.

On April 26, 2007, the Sun-Times reported that Chicago aldermen were accusing the Daley administration "of being asleep at the switch while low-income housing projects developed by the now-indicted Tony Rezko collapsed into disrepair."

"The spigot of loans, grants and tax credits should have been cut off when the first of 30 taxpayer-supported Rezko buildings in Chicago fell into disrepair," the aldermen said.

Instead, a “Sun-Times investigation showed that the city, state and federal governments kept the gravy train rolling -- to the tune of $100 million between 1989 and 1998."

"They were going after people for being slum landlords in one department and loaning them money in another," said Alderman Freddrenna Lyle.

David Brint now owns Brinshore Development. He told the Times that he quit Rezmar four years after the company got its first deal with city because it did not find money for repairs. Brint and his partners have taken over four failed Rezmar buildings -- "in one case paying the city $1 million to settle a $4 million loan made to Rezmar," the Times says.

In February 2007, David Brint gave Obama $4,600, and his wife, Elizabeth gave contributed $2,300. Brint also hosted a fundraiser for Obama in June 2007. Elizabeth donated a couple thousand in 2002 and $2,000 in 2003 as well.

As a state senator, "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 June 13, 2007 Sun-Times reported

"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 October 28, 1998 letters to both city and state housing officials. "This project will provide much needed housing for Fourth Ward citizens.'' New Kenwood was set up as a "minority owned" company, where Davis owned 51% and Rezko 49%.



The deal included $855,000 in development fees for Rezko and Davis, while Obama was still working at the Davis law firm. Although the firm represented several companies owned by Davis and Rezko when Obama wrote the letters, the firm did not represent New Kenwood. Davis and Rezko instead hired a firm owned by Mayor Daley's brother Michael, "to help them get $3.1 million from bonds issued by the city," according to the Sun-Times

"In addition to the development fees, a separate Davis-owned company stood to make another $900,000 through federal tax credits," the Times noted.



The development opened in 2002 and was supposed to be managed by William Moorehead & Associates. William Moorehead was also a client of the Davis firm and a business partner of Davis. In April 2007, Moorehead told the Times that his company was dropped from the deal before the apartments opened. The apartments are now managed by a company owned by Davis' son, Cullen Davis, according to the Times.

In a 2006, Moorehead pleaded guilty and admitted stealing more than $600,000 from the Island Terrace and other federally subsidized projects. During the period when Moorehead was stealing, the Times reports, he lent Davis $100,000.

Davis sent Moorehead a letter on June 15, 2000, saying the sale and refinancing of one of their projects had been delayed: "I need to borrow $100,000 from the Island Terrace resources." As part of a plea deal, Moorehead is cooperating in a federal investigation.

Gary Poter owned the construction company that rehabbed all of Rezmar's buildings. He was stabbed to death in May 2006, by a disgruntled employee, according to the Sun-Times "Rezmar who's who" list. Back on March 3, 2004, Poter donated $2,000 to Obama's senate campaign and on July 19, 2004, he gave Obama another $1,000.

Mayor Daley made Thomas McNulty, the attorney who acquired buildings for Rezmar, president of the Chicago Low-Income Housing Trust Fund, a charity that doles out tax dollars to subsidize rent payments for the poor. Rezmar received more than $2.7 million from this charity fund, according to the April 24, 2007 Sun-Times.

Obama began serving on the board of a Chicago charity foundation, the Woods Fund, the same year he was hired at the Davis law firm. In 2000, Davis went to Wood to help fund his plans to build low income housing. Obama voted to invest $1 million in Neighborhood Rejuvenation Partners, a $17 million partnership that Davis still operates, according to a report in the November 29, 2007 Sun-Times.

Davis used some of the money to build an apartment building for senior citizens, a $10 million project built with a $5.7 million city loan, which earned Davis nearly $700,000 in development fees. Davis' son Cullen is paid to manage the building, which opened three years ago with a ceremony featuring Mayor Daley, according the Times.

"Davis has gotten deal after deal from the mayor, helping to make Davis one of the city's top developers," Tim Novak noted in the November 7, 2007 Sun-Times.

Another example of a Chicago version of a minority-owned business is DV Urban Realty Partners, where Davis owns 51% and Robert Vanecko, Daley's nephew, owns 49%.

According to the September 23, 2007 Sun-Times, all total, the city-connected pension funds gave DV Urban $68 million. The first investor was the Chicago Teachers Pension Fund, but the board members say they did not learn that DV Urban was owned by the Mayor's nephew until 6 months after they voted to approve the investment.

Davis and Vanecko had received $1 million in management fees and they are "guaranteed at least $3 million in management fees and could make as much as $8.4 million before the pension deal ends on Dec. 31, 2014," the Times reports.

Davis and his partners have received more than $100 million in taxpayer subsidies to build and rehab apartments and homes over the past 10 years and have made at least $4 million in development fees, according to the Times.

A cursory review of campaign records shows Davis and his family members giving close to $16,000 to Obama's presidential campaign. The Sun-Times reports that Davis has donated more than $400,000 to dozens of political campaigns, and the top beneficiaries include Mayor Daley, Governor Rod Blagojevich and Obama.

Daly appointed Davis to the Chicago Plan Commission in 1991, where he stayed until January 2006. The Commission must approve, disapprove or defer any proposal by a public body or agency "to acquire, dispose, or change any real property within the territorial limits of the city," according to its web site.

Davis helped Rezmar win approval for two major developments as a member of the Commission, even though the two were business partners. The first vote involved a housing development along the Chicago River at Irving Park Road. The second was in March 2004, for the approval of Rezmar's proposal for the 62 acre South Loop project, Riverside Park. This deal collapsed shortly before Rezko was indicted in October 2006.

Kelly King Dibble was a vice president at Rezmar and she became the executive director of the Illinois Housing Development Authority. She is now an attorney with the Northern Trust Company, the same company that financed Obama's mansion.

Velma Butler, an investor in Rezko's 62 acre Riverside Park project, also serves on the Illinois Housing Authority. She donated $1,000 to Obama's US Senate campaign in 2003.

On October 1, 2006, Daley appointed Martin Nesbitt chairperson of the Chicago Housing Authority. The CHA was created for "the purposes of engaging in the development, acquisition, leasing, operation, and administration of a Low Rent Housing Program and other federally assisted programs," according to the agency’s 2005 annual financial report.

Nesbitt succeeded Sharon Gist Gilliam, according to the CHA web site. Gilliam is a former board member of Rezmar. Daley appointed Nesbitt to the Housing Authority on July 9, 2003, and he served as vice chairperson of the Board since January 17, 2006.

Nezbitt is also vice president of the Pritzker Realty Group, where he procures new real estate investment opportunities, retail investments and developments for the Group, according to the CHA web site. The Huffington Post site shows tens of thousands of dollars donated to Obama from people with the last name Pritzker around Chicago but many are listed as homemaker or not employed or information requested, so its impossible to sort them out.

Nesbitt is treasurer for Obama's presidential campaign according to the Center for Public Integrity. Over his career, Nesbitt has contributed over $10,000 to Obama campaigns.

Michelle Obama was hired as an assistant in Daley's office by Valerie Jarrett, Daley's deputy chief of staff in 1991. Daley then appointed Jarrett chairman of the Office of Planning and Development and Michelle became her assistant there. Jarrett is now CEO of the real estate development and management firm, called Habitat, which manages the housing program for the Chicago Housing Authority.

Jarrett was appointed chairman of the University of Chicago Medical Center Board in June 2006, and chairman of a newly created Executive Committee of that Board, according to a June 13, 2006 University announcement. In addition, Jarrett was named vice-chair of the University's Board of Trustees, the announcement states.

Michelle landed a job at the University of Chicago Hospital. Two months after Obama became a senator, she was made a vice president. Tax returns show the promotion nearly tripled her pay to $317,000 in 2005, from $122,000 in 2004.

Susan Sher was corporation counsel in the Daley Administration when Michelle was hired. Sher is now Michelle's boss at the University of Chicago, says the April 22, 2007 Tribune.

The Commission on Chicago landmarks "is responsible for recommending to the City Council that individual buildings, sites, objects, or entire districts be designated as Chicago Landmarks, thereby providing legal protection," according to the government web site. Daley appointed Michelle to serve on the Landmark Commission. The current chairman of the Commission is Daley's former chief of staff, David Mosena.

Mosena was a member of Obama's Senate Finance Committee in 2004. Other members included Valerie Jarrett, Tony Rezko, Rita Rezko, and Allison Davis. The committee raised more than $14 million, according to the Sun-Times on April 23, 2007. Jarrett serves on Obama’s presidential finance committee.

Rezko was backing Bush for reelection while he served on Obama's senate campaign. He co-hosted a $3.8 million Chicago fundraiser for Bush in 2003, and on December 9, 2003, he donated $4,000 to Bush, listing himself as a "self-employed businessman," and gave another $2,000 on December 19, 2003, according to the Center for Responsive Politics.

Mayor Daley's brother Bill is currently an Obama advisor. The Mayor's chief image defender, David Axelrod, is a top strategist for Obama and was also the media consultant for Obama's US Senate campaign.

On April 1, 2007, Dick Simpson, a former Chicago alderman and chairman of the political science department at the University of Illinois, told the New York Times: "Axelrod’’s mostly been visible in Chicago in the last decade as Daley’s public relations strategist and the guy who goes on television to defend Daley from charges of corruption”.

Corruption within the Daley administration has no beginning and no end. The Feds arrested 15 more people in Chicago this week, including developers, contractors and city employees. "A mole wore a wire for a year while acting as a bagman carrying bribes from developers and contractors to Chicago building inspectors, exposing systemic corruption in the Zoning and Buildings Departments," according to a May 22, 2008 Tribune report.

This very interesting,we'll have to wait and see if the newest indictments against the building inspectors have anything to do with Rezko and gang? We aren't saying they are but... it's Chicago.