Why Tony Rezko is a problem for Barak Obama

Sen. Hillary Rodham Clinton has been questioning her rival Sen. Barack Obama’s relationship to political donor Tony Rezko, now on trial for fraud — particularly Rezko’s involvement in the purchase of Obama’s Chicago home. Here’s a look at what’s going on and what it means:

Q: Who is Tony Rezko?

A: Antoin “Tony” Rezko is a millionaire Chicago businessman who has long helped young politicians raise money and make connections. Raised in Syria, he moved to Chicago to study engineering but wound up making money in real estate and fast food. He is now on trial in federal court on mail fraud, wire fraud, money laundering and attempted extortion charges.

Q: What is his relationship to Obama?

A: He’s been friendly with Obama for years, even offering him a job after Obama finished law school. Obama turned down the offer, but a political friendship developed. Rezko and his family donated at least $21,457 to Obama — and helped raise tens of thousands more — for his campaigns in Illinois, though not for his presidential bid. He also advised Obama on the purchase of a new Chicago home and, in his wife’s name, purchased a vacant lot next to the new Obama home at the same time.

Q: Why is Rezko on trial?

A: Prosecutors allege he tried to shake down companies seeking contracts from Illinois regulatory boards for campaign contributions and payoffs. They say he used his influence with Gov. Rod Blagojevich to get people appointed to the boards and then threatened to have them block contracts unless the companies paid millions of dollars in kickbacks.

Q: What does that have to do with Obama?

A: Nothing. No one has alleged that Obama has anything to do with the charges against Rezko, nor has Obama been charged with any wrongdoing. Obama has donated to charity the money that Rezko donated to his campaigns, as well as money from other Rezko friends and partners, a total of $150,000.

Q: Did Rezko help Obama buy his Chicago home?

A: Yes and no. Obama says he sought Rezko’s advice as a real estate developer and even toured the property with him but got no financial assistance from Rezko. Instead, Obama paid $1.65 million for the house in June 2005 by using money from a book contract and taking out a mortgage.

But Rezko’s wife did buy the vacant lot next door, which made it easier for Obama to buy the house. Both pieces of property were owned by the same couple and they insisted on selling them at the same time, but Obama couldn’t afford both. Rezko’s purchase of the empty lot allowed the home sale to go through, although Obama says Rezko wasn’t the only person interested in the lot.

Q: Did Obama and Rezko coordinate their purchases?

A: Obama says they didn’t. He says Rezko became interested in the lot while advising him on the house and then bought the land on his own, for $625,000.

Q: Where did Rezko get the money to buy the lot?

A: That’s not clear. Some court documents related to his criminal case show that at the time of the land purchase, creditors were pursuing Rezko for more than $10 million. Rezko argues in the case documents that he is essentially broke now. This raises the question of how he was able to come up with $125,000 and a $500,000 mortgage to buy the property. He later resold the lot at a profit.

Q: Did Obama get a special deal on the price of his home?

A: The sellers originally asked for $1.95 million but agreed to sell for $1.65 million after rejecting two lower offers from the Obamas. The Obama campaign says it has an e-mail from the sellers stating that this was the best offer they got and that the price for the house had nothing to do with Rezko buying the vacant lot.

Q: So Rezko bought the lot next door. Was that the end of his involvement?

A: No. Obama later bought one-sixth of that lot so that he would have a bigger side yard. Its value was appraised at $40,500, Obama says, but he paid one-sixth of what Rezko originally paid, or $104,500.

Q: What does Obama say about all this?

A: Obama says he went out of his way to make sure he violated no laws or ethical guidelines, and that he has never done any favors for Rezko as a result of the arrangement. But he also says he regrets the “boneheaded” move and would not do it again because of the questions it raises about ethics and insiders currying favor with him.

Q: Did Obama know Rezko could be an ethical land mine for him?

A: He should have. When Obama was buying the house, there were plenty of news stories about a federal investigation of the governor and Rezko’s role in the administration, including the fact that Rezko had been subpoenaed. Obama has acknowledged that “things had surfaced” by that time.

Q: Why is this an issue in the presidential campaign?

A: Clinton cites it as an example of Obama not living up to his promises to move away from old-fashioned insider politics. She also argues it suggests there are other ethical problems that could be uncovered by Republicans if Obama becomes the Democratic nominee.

Q: Does Clinton accuse Obama of any specific misconduct?

A: No. Her campaign suggests there must be something improper in Rezko’s involvement but doesn’t say what. “If the relationship was aboveboard, why won’t Sen. Obama address basic inquiries about it? What is it that he is hiding?” said a spokesman.

Q: Has Obama refused to answer “basic inquiries”?

A: No, but he hasn’t been completely open either. For instance, he did not disclose until last month that Rezko actually toured the home with him before the purchase. He also has released the e-mail from the home’s seller to only one news organization.

Obama hasn’t provided details of the fundraisers Rezko held for him, nor has he released documents related to the property, such as the appraisal of the strip of land he bought from Rezko.