A Chicago-based restaurateur and real estate developer, the Syrian-born Tony Rezko was one of the first major financial contributors to Barack Obama’s political campaigns in the 1990s. Rezko had initially met Obama in 1990, when the former was a low-income housing developer in Chicago and the latter was a Harvard Law School student. Rezko offered Obama a job with his company, Rezmar Corporation, but Obama turned it down.
In 1993 Obama found employment with the Chicago law firm Davis Miner Barnhill, which represented developers who built low-income housing with government funds. In 1995 one of the firm's clients -- the Woodlawn Preservation and Investment Corporation (WPIC) -- partnered with Rezmar Corporation in a project to convert an abandoned nursing home into low-income apartments. Obama was instrumental in helping Rezmar Corporation and WPIC strike their deal. Rezmar Corporation would also partner with WPIC clients in four later deals.
When Obama announced in 1995 that he was running for an Illinois Senate seat (which would be up for grabs in 1996), two of Tony Rezko’s companies donated a total of $2,000 to Obama’s campaign. Over the course of the entire primary season, Rezko raised between $10,000 and $15,000 of the roughly $100,000 Obama collected overall. Obama won the November 1996 election, and the district he represented included 11 of Rezko's 30 low-income housing projects.
Rezko served on the campaign committee for Obama’s failed congressional run against U.S. Rep. Bobby Rush in 2000, raising between $50,000 and $75,000 of the estimated $600,000 Obama collected for that race.
In 2001 Rezko’s Rezmar Corporation stopped making its mortgage payments on the old nursing home it had converted into apartments, and the state of Illinois foreclosed on the building, which was located in Obama's Senate district.
In 2003 Obama announced that he would run for an Illinois seat in the U.S. Senate which would be open the following year. He again named Rezko to his campaign finance committee. It is estimated that Rezko raised some $160,000 for Obama during the Senate primary season.
In November 2004 Obama was elected Senator. A few months later, he and Rezko's wife, Rita, purchased adjacent pieces of property in Chicago's Kenwood neighborhood. Obama’s portion of the deal involved a mansion for which he paid $1.65 million -- $300,000 below the seller’s asking price. Meanwhile, Rezko's wife (who earned only $37,000 per year and owned few assets) paid the full asking price -- $625,000 -- for a vacant lot adjacent to Obama’s mansion. At this time, Mr. Rezko was being pursued by creditors seeking more than $10 million which Rezko owed on defaulted loans and failed business ventures. At least 12 lawsuits had been filed against Rezko and his businesses from November 2002 to January 2005, including one by the G.E. Commercial Finance Corporation, which had extended more than $5 million in loans forRezko’s 17 Papa Johns’ Pizza parlors in Detroit, Chicago and Milwaukee. In November 2004, G.E. obtained a court judgment against Mr. Rezko for the $3.5 million that it said was outstanding on its loans. Obama says he does not know why the Rezkos decided to purchase the vacant lot at that time. But the Rezkos’ involvement was crucial because the owners of the house and the lot had stipulated that neither property could be sold unless a deal for the other also closed on the same day. Both deals indeed closed on the same day in June 2005.
At the time of the purchase, Mr. Rezko was ostensibly destitute; that is why his wife was named officially as the sole purchaser of the vacant lot.
In December 2005 Obama paid Rita Rezko $104,500 for a strip that constituted one-sixth of her newly acquired lot, so that he could increase the width of his yard by ten feet. At the time of this deal, Tony Rezko was under federal investigation on charges that he had solicited kickbacks from companies seeking state pension business under his friend, Illinois Governor Rod Blagojevich, for whom Rezko reportedly had raised as much as $500,000. For more than two years before the property purchases, news articles also had raised questions about Mr. Rezko’s influence over state appointments and contracts. Moreover, reports swirled that the FBI was investigating accusations of a shakedown scheme in which Mr. Rezko had suggested appointments to a state hospital board.
Obama rejects any suggestion that the Rezkos, by paying full price for the vacant lot, had enabled him to save $300,000 on his home’s purchase price and were perhaps seeking political favors in return. “Frankly, I don’t think he [Mr. Rezko] was doing me a favor,” Obama has said.
In October 2006, Mr. Rezko was indicted on extortion charges. According to federal prosecutors, Rezko had funneled $10,000 in kickback fees to Obama's 2004 Senate campaign.
He remained free on bail until January 28, 2008, when a U.S. District Judge jailed Rezko for having disobeyed a court order to keep the Judge apprised of his (Rezko’s) financial status. Most notably, Rezko had failed to tell the judge about a $3.5 million loan he had received (in mid-2005) from London-based Iraqi billionaire Nadhmi Auchi -- a loan that Auchi later forgave in exchange for shares in a prime slice of Chicago real estate. According to the Associated Press, Rezko “gave $700,000 of the [$3.5 million] to his wife [for the purchase of the vacant lot adjacent to Obama’s mansion] and used the rest to pay legal bills and funnel cash to various supporters.”
To view additional resources about Tony Rezko, click the titles below:
Obama: I Trusted Rezko
By David Jackson
March 15, 2008
8 Things You Need to Know about Obama and Rezko
By Tim Novak
January 24, 2008
Obama’s Syrian Connection
By Andrew Walden
March 11, 2008
Iraq Billionaire Threatens Reporters Investigating Rezko Affair
By Andrew Walden
August 24, 2008