Q: Does Obama have a real estate problem?
A: A political patron from whom he bought a strip of land is under federal indictment, but there’s no evidence Obama did anything improper.
Was Obama’s real estate deal in Illinois really an issue?
Here’s what happened: In 2005, Barack Obama and his wife, Michelle, bid $1.65 million for a house on the south side of Chicago. According to newspaper reports, the owner was also trying to sell an undeveloped parcel of land adjacent to the property Obama was buying, and he wanted the sales of the two to close on the same day. Obama has said that he mentioned he was buying the house to a longtime political patron, Antoin (Tony) Rezko, a developer. Rezko’s wife wound up buying the lot adjacent to Obama’s. At the request of the Obamas, who were seeking a bit more space for their yard, she later sold them a 10-foot wide strip, or about one-sixth, of her land. The Obamas paid $104,500 for it, or about one-sixth of what Mrs. Rezko had paid for the entire property.
Obama doesn’t appear to have reaped any financial advantages from the transactions. The reason the deal has received a good bit of attention is that Tony Rezko – whose political contributions to Illinois’ former governor, Obama and others totaled in the hundreds of thousands of dollars – was known to be under federal investigation at the time the Obamas were purchasing their home. In 2006, Rezko was indicted in three federal cases: Two involved fraud schemes in which he allegedly demanded payments from firms wanting work from the enormous Illinois teachers’ pension fund and from those wanting favorable rulings from a state board that regulates the building of new hospital facilities. In the third, he was charged with fraudulently obtaining more than $10 million in loans for a pizza restaurant business; in December 2007, prosecutors added more fraud counts to that indictment.
Obama has a relationship with Rezko that dates back many years, but there’s no indication Obama did anything improper. Shortly after finishing law school, Obama, who had turned down a job offer from the developer, went to work at a law firm where he represented some community groups that partnered with Rezko to apply for housing rehabilitation loans. As a state legislator, he wrote letters to city and state officials in support of Rezko’s efforts to build apartments for the elderly with government money; the senator asserts that this was a project the community wanted. Obama got together with Rezko a couple of times a year, he has said.
Obama has donated campaign contributions from Rezko and his associates to charity, and he said in 2006, when the real estate transaction was reported by the press, that he made a “boneheaded” mistake by participating in the deal when it was known that Rezko was being investigated. “I regret it,” Obama said. “I’m going to make sure from this point on I don’t even come close to the line.”
Jackson, David and Ray Gibson. “Obama intern had ties to Rezko: Senator’s spokesman denies any favoritism.” Chicago Tribune, 24 December 2006.
Robinson, Mike. “Obama tries to distance himself from real estate developer facing federal charges.” The Associated Press, 11 June 2007.
Fitzgerald, Patrick J. “Businessman and political fundraiser Antoin Rezko indicted in two fraud cases, including scheme to extort millions fo dollars from firms seeking teachers’ pension fund investments.” Press Release, U.S. Department of Justice, United States Attorney, Northern District of Illinois, 11 October 2006.
Fitzgerald, Patrick J. “Former Illinois Finance Authority director charged in pending loan fraud indictment against businessman Antoin Rezko.” Press Release, U.S. Department of Justice, United States Attorney, Northern District of Illinois, 31 May 2007.
Drew, Christopher, and Mike McIntire. “An Obama patron and friend until an indictment,” The New York Times, 14 June 2007.