Ties to entrepreneur might test Obama’s image

CHICAGO – Hillary Rodham Clinton dropped the name of Barack Obama’s Chicago patron into the South Carolina debate Monday night, putting front and center a tangled relationship that has the potential to undermine Obama’s image as a candidate whose ethical standards are distinctly higher than those of his main opponent.

Antoin Rezko – an entrepreneur who made a fortune in pizza parlors, Chinese restaurants and real estate – faces trial next month on federal extortion, influence peddling and conspiracy charges. There is no suggestion that Obama is involved in any of the alleged criminal activity. But the upcoming trial – and details of Obama’s relationship with its central figure – could cast a shadow over his carefully cultivated image at a critical time.

In recent weeks, including during the debate, Obama sought to minimize the nature of that relationship. Among other things, he has returned $85,000 in Rezko-related campaign contributions in what a staffer calls “an abundance of caution.”

A review by the Los Angeles Times shows that Rezko, a Syrian-born businessman long active in Chicago politics, played a deeper role in Obama’s political and financial biography than the candidate has so far acknowledged.

For example, Rezko, his employees and business associates – such as his consultants, lawyers and their families – provided Obama in excess of $200,000 in campaign donations since 1995, helping fuel his rapid ascent in Illinois and U.S. politics. Although Rezko is not Obama’s largest bundler, he was there at the start and at critical moments along the way, helping to support the candidate when few others would do so.

In addition to being a campaign benefactor, Rezko also surfaced when Obama and his wife purchased their house on Chicago’s South Side in 2005. On the day the Obamas bought their house, Rezko’s wife, Rita, bought an adjacent lot from the same sellers, part of which Obama later bought back.

Rita Rezko’s purchase, at the $625,000 asking price, came just as the Obamas successfully bid in a slow market to purchase the house for $300,000 below the asking price, according to the Chicago Tribune.The Obamas secured their brick Georgian revival style home on June 15, 2005 for $1,650,000. Later, the Chicago Tribune reported, Rezko paid $14,000 to build a fence, required by city ordinance, along the new property line.

Obama denies there was anything improper in these transactions. The housing deal came after it was known that Rezko was under scrutiny by federal authorities. Obama has said that, in retrospect, the property deal was a “mistake” because of the appearance it created.

Today, Obama campaigns for president as a new kind of politician, less beholden to special interests than his opponents. He and his staff regularly contrast his policy of refusing to accept donations from lobbyists with that of Clinton. His relationship with Rezko may undermine the power of that claim.

Obama’s spokesman Bill Burton waves away such concerns and in response compares Rezko against jailed Clinton fundraiser Norman Hsu.

“This has nothing on the nearly $1 million that Hillary Clinton has had to give back as a result of the Norman Hsu scandal,” he said. “I would put Senator Obama’s record of fighting for lobbying and ethics reform up against anyone in this race,” Burton said.

But a government watchdog group that once lauded Obama for leadership on ethics says the Illinois senator should have known better.

“Everybody in this town knew that Tony Rezko was headed for trouble,” said Jay Stewart of the Better Government Association. “When he got indicted, there wasn’t a single insider who was surprised. It was viewed as a long time coming. … Why would you be having anything to do with Tony Rezko, particularly if you’re planning to run for president.”

Obama’s connection to the businessman dates to his return to Chicago after graduating from Harvard Law School.

Obama worked then for the Chicago firm of Davis, Miner, Barnhill & Galland. At the time, Rezko was developing and investing in low-income housing. In that role, he became one of the firm’s clients, a point that Clinton made during the South Carolina debate.

During the debate, Obama acknowledged doing up to five hours work for a church group that was joining with Rezko to develop low-income housing. Clinton accused Obama of helping Rezko and his “slum landlord business.”

Judson Miner, head of the firm, said in an interview that Obama billed no more than 5.7 hours of time working on a Rezko-related matter.

Back in the mid-1990s, Miner said, Rezko was viewed as an innovative developer intent on improving housing conditions, often working for church groups on the South Side of Chicago.

“He became more interested in greener pastures,” Miner said. “He got indicted. He became a bum. But in the 1990s, it was a very different picture.”

The criminal case against Rezko appears to center in part on his efforts to provide contributions to Illinois Democratic Gov. Rod Blagojevich in exchange for appointments to state boards and commissions. The federal investigation, dubbed “Operation Board Game,” produced allegations that Rezko and others sought to squeeze kickbacks from firms doing business before state boards. One oversees public school teacher pension investments. Another authorizes permits for hospitals.