is published by Capital ResearchCenter, a non-partisan education andresearch organization, classi
ed bythe IRS as a 501(c)(3) public charity.
1513 16th Street, N.W.Washington, DC 20036-1480
welcomes let-ters to the editor.
are available for $2.50 pre-paid to Capital Research Center.
According to the Chicago Tribune (March16, 2005), in the late 1990s Jabir Moham-med was the front man who allowed Rezkoto secure city contracts using Chicago’sminority set-aside program.Harold Washington died in 1987 and in1989, the year Richard M. Daley was electedto the
rst of six (so far) terms as mayor of Chicago, Rezko and Mahru formed RezmarCorp., promising to build more low-incomehousing in Chicago. Rezmar became theDaley administration’s
favored low-incomehousing developer. Rezko’s timing was good:During these years many neighborhoods onthe South Side were undergoing gentri
ca-tion, and the prospect of rising real estatevalues attracted a
ock of developers withwallets open to make whatever campaigncontributions might be necessary in orderto get business done.The South Sangamon building was one of 30 low-income projects—containing a totalof 1,025 apartments—that Rezko took onbetween 1989 and 1998. In all, Rezmar Corp.collected more than $100 million by arrang-ing “public-private partnerships” with thecity, the state and federal governments, andin bank loans to rehab South Side buildingsintended as low-income housing. NeitherRezko nor his partner had any constructionexperience when they created Rezmar, butthey became experts at working Chicago’spolitical system to acquire taxpayer subsidiesfor their redevelopment schemes.Rezko and Mahru also managed thebuildings. Not surprisingly, every one of theprojects ran into
culties withinsix years, according to a Chicago Sun-Timesinvestigation, and more than half went intoforeclosure. Chicago sued Rezmar on at leasta dozen occasions. “Their buildings werefalling apart,” a former city of
cial told theSun-Times. “They just didn’t pay attentionto the condition of these buildings.”To arrange project
nancing Rezko fre-quently relied on a small Chicago law
rm,Davis Miner Branhill & Galland, whose toppartner, Allison S. Davis, was a Rezko associ-ate and Daley administration insider.Davis’s name recently surfaced inRezko’s trial for money-laundering, fraud,bribery, and extortion. Witnesses say he wasthe go-between in one of the alleged crimes:an attempted pay-to-play shakedown of Chicago businessman Tom Rosenberg whose
rm managed $1 billion for the Illinois Teach-ers Retirement Association, a $40 billionpension fund. In early 2004 Davis allegedlyapproached Rezko about how to secure anadditional $220 million pension allocationfor Rosenberg’s asset management
rm andwas told that Rosenberg needed to
a $2 million kick-back or raise $1.5 millionfor the re-election campaign of Illinois Gov-ernor Rod Blagojevich, a Democrat. At presstime, the trial, which ended on May 5, hadgone to the jury for deliberation. Rezko didnot testify and made no defense, his lawyersarguing that the prosecution failed to meetits burden of proof.
Ensnared in Chicago Politics
The sleazy tale of Tony Rezko —corruptbusinessman and political fundraiser— ishardly unique in Chicago. What makes thestory noteworthy is that it touches Demo-cratic presidential candidate Barack Obamawho has promised to move America awayfrom politics as usual. Obama now admitsthat becoming involved with Rezko whenhe purchased a new home in January 2005following his election to the U.S. Senate theprevious November was a “bone-headedmistake.” The terms of that involvementhave received widespread publicity: Senator-elect Obama and Rezko toured the propertytogether when it was already known thatRezko was under criminal investigation.Obama and his wife Michelle subsequentlypaid the seller $1.65 million for their newhome, $300,000 below the asking price. Onthe same day Mrs. Rita Rezko paid the sameseller the asking price of $625,000 for the
Barack Obama endorsed Chicago Mayor Richard M. Daley (right) for a sixth term inJanuary 2007. Daley later returned the favor, endorsing Obama for president.