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With friends like these…

By
June 13, 2007

Sixteen years ago, Chicago businessman Antoin “Tony” Rezko tried to hire bright young Harvard law student Barack Obama to work in his real estate development company.

Obama said no, but it was the start of a political friendship.

Rezko contributed thousands of dollars and raised thousands more as Obama ran for the Illinois legislature, the U.S. House and the U.S. Senate. He was even involved in Obama’s purchase of a family home.

But now Rezko faces federal charges as the central figure in an Illinois corruption scandal, and Obama — whose Democratic presidential campaign emphasizes a squeaky-clean image — is scrambling to distance himself from his old supporter.

“The senator and Rezko have not spoken for quite some time,” Obama campaign spokesman Bill Burton said Monday.

Last week, Obama’s campaign said it was donating $23,000 to charity — the total of three contributions from Rezko business associates. Last year, it donated $11,500 to purge itself of money Rezko donated.

Obama has not been touched by the federal investigation that has resulted in extortion and fraud charges against Rezko. The allegations, which include shakedowns involving an Illinois pension fund, have nothing to do with the Illinois senator.

But the situation is awkward for a candidate eager to avoid any trace of scandal. And while it may not have been noticed much among grass-roots voters, he and his staff have been peppered with questions from reporters.

“I think he’s responded to all of them and at the end of the day I don’t think there’s any indication of anything other than perhaps bad judgment,” said fellow Illinois Sen. Dick Durbin. He said the facts don’t appear serious enough “to derail what I consider a very positive presidential campaign.”

Veteran Democratic strategists vary in their appraisal.

Democratic strategist Stephanie Cutter, who is not affiliated with any presidential candidate, said the situation “may leave voters with the impression Senator Barack Obama is and was indeed a politician, but I’m not sure that’s earth-shattering.”

Campaign consultant Chris Lehane, who worked in the Clinton White House and for Al Gore in 2000, said it shows voters that Obama “puts his pants on the same way as any other politician” — something that “undermines the core Obama brand, that he is a different kind of leader.”

Rezko, a Syrian-born U.S. citizen who owned a real estate development business and a group of fast-food franchises, has spent his career showering Illinois officials with campaign money. He was a top fundraiser for Democratic Illinois Gov. Rod Blagojevich.

His connection to Obama began when the future senator got national attention as the first black president of the Harvard Law Review. Rezko was impressed by what he read and offered Obama a job.

The two men kept in contact and he became one of the earliest donors to Obama’s campaign when he ran for a state Senate seat in 1996.

Their relationship came into the spotlight last October, the same month Rezko was indicted on federal charges, with the disclosure that Rezko had played a role in the senator’s purchase of a home.

Obama bought a house and lot. Rezko’s wife bought an undeveloped property next door. The two parcels had once been a single tract of land.

Obama paid $1.65 million for the house and lot while Rezko paid $625,000 for the undeveloped lot. Six months later, Rezko sold a strip of his property to Obama, who wanted to increase the size of his side yard. Obama paid Rezko $104,500, which he says was the market rate.

While Obama has said that the transaction was handled ethically, he has conceded the perception of favor-trading it created was a “boneheaded” mistake.

Rezko is charged with plotting to shake down money management firms hoping to do business with the Illinois Teachers Retirement System, a $39 billion state pension fund, for kickbacks.

He also is charged with swindling the General Electric Capitol Corp. out of $10 million in a deal involving the purchase of pizza restaurants.

Rezko attorney Joseph J. Duffy declined to comment on the case.

While Obama turned down Rezko’s offer of a job back in 1991, he ended up in a group of real estate deals involving the developer anyway. He accepted a position at the law firm then known as Davis Miner & Barnhill.

At the firm, he represented community groups that partnered with a developer in getting city and state housing rehabilitation loans. The developer was Rezko. Obama estimates he did only about five hours of work.

Burton said Obama has fought “for the toughest possible ethics rules” and that is not “changed by anything that has happened to Tony Rezko.”