Outsider Turned $413,000 Profit on Chicago Real Estate Deal:Obama's Former Employer Tied to Deal

The Chicago Sun-Times reports on a real estate deal that involves Obama's old employer Allison Davis:

Jeffrey Duerwachter isn't a player in Chicago real estate. He doesn't even own a home. Duerwachter, 39, lives with his parents in Wilmette.

He did OK last year at work, making $1,756 a week working on the set of the new Batman movie filmed in Chicago.


But he did even better investing, making a $413,000 profit by buying and immediately reselling a historic South Loop building that once housed the Chicago Defender, the city's biggest African-American newspaper. And he did it all in one day -- June 8.

First, Duerwachter paid $3.72 million for the building and a nearby vacant lot, both owned by the estate of Lev Stratievsky, a Russian immigrant who died in federal custody while he and his son, Boris, were awaiting trial on charges that they tried to launder money for Ukrainian drug dealers.

Then, Duerwachter resold the building and lot for $4.1 million to a company owned by Matthew A. O'Malley, a politically connected Chicago restaurant owner who had been negotiating to buy the property from Stratievsky.

O'Malley bought the property with three loans -- including $1 million in city pension funds managed by DV Urban Realty Partners, a company co-owned by Mayor Daley's nephew, Robert Vanecko, and one of Daley's key African-American allies, Allison S. Davis. This was one of the investments Davis and Vanecko made after their newly created company was hired to manage $68 million for five pension funds for city workers, police officers, Chicago teachers and CTA workers.

How did Duerwachter become part of this real estate deal? He's not saying. He didn't return calls seeking comment. Nor did his attorney, Courtney Mayster.

O'Malley's attorney, Thomas C. Kaufmann Jr., said he couldn't explain it. Kaufmann said O'Malley began trying to buy the property from Stratievsky in February 2006, about nine months after Stratievsky and his son were indicted on money-laundering charges. The Stratievskys were in federal custody at the time, and Lev Stratievsky "was starting to have financial issues,'' Kaufmann said.

Stratievsky died in July 2006. His estate continued negotiating with O'Malley, who wanted to open a restaurant or nightclub in the Defender building, Kaufmann said.

He said he doesn't know if O'Malley has changed his plans for the boarded-up building, whose clock tower has been a familiar site at 24th and Michigan since the early 1900s, when it was built as an automobile showroom. The building is part of Chicago's landmark Motor Row District, so City Hall would need to approve any plans O'Malley has for the property. And the city says O'Malley has yet to reveal his plans.

O'Malley didn't return calls. He operates Millennium Park's Park Grill restaurant, which became a source of controversy after the Chicago Sun-Times disclosed in 2005 that O'Malley and his partners won the 20-year deal with the Chicago Park District to run the restaurant while he and a top park district official, Laura Foxgrover, were romantically involved and having a child. Foxgrover now works for O'Malley's company, which owns three popular restaurants and bars in the South Loop -- the Chicago Firehouse, Grace O'Malley's and the Wabash Tap.

Stratievsky and his son planned to build apartments on top of the Defender building, which they bought along with two vacant lots from the financially troubled newspaper in January 2003 for $1.4 million.

"They offered the best price,'' said Thomas Picou, who ran the Defender after the death of his uncle, John Sengstacke, the newspaper's longtime publisher. "The son is the one I dealt with. He had a lot of money. I met with Boris several times'' at his Highland Park mansion.

"I sold it as part of the deal to raise money for the company,'' Picou said. "It was an albatross. The air conditioning was bad. The heat was bad. It would have cost us about $3 million to bring the building up to code. It was cheaper to the building. It's a beautiful building with marble floors. The woodwork is magnificent.''

Broadway Bank gave the Stratievskys a $3 million loan to buy the building, one of several loans the Stratievskys got from the bank, which is owned by the family of Illinois state Treasurer Alexi Giannoulias.

Two years later, the Stratievskys were arrested in an FBI sting after they agreed to launder thousands of dollars on behalf of a man they believed was working for Ukrainian drug dealers. Charges were dropped against Lev Stratievsky following his death in July 2006. His son pleaded guilty in May, admitting he tried to launder $100,000 for the undercover agent.

This story has a lot.You've got Obama's former employer Allison Davis,Obama's good friend Chicago Mob linked banker Alexi Giannoulias,and Mayor Daley's nephew who gets great pension deals.This is the network of people Obama is associated with.