The news out of Chicago is not good for Governor Rod Blagojevich. Convicted Chicago political operator Antoin “Tony” Rezko is talking to prosecutors about what he knows as far as corruption in Illinois and Chicago politics.
Believe me, it’s plenty.
Jailed political fundraiser Antoin “Tony” Rezko, the Chicago real estate developer who helped launch Barack Obama on his political career, is whispering secrets to federal prosecutors about corruption in Illinois and the political fallout could be explosive.
Democratic Gov. Rod Blagojevich, whose administration faces multiple federal investigations over how it handed out jobs and money with advice from Rezko, is considered the most vulnerable.
Rezko also was friendly with Obama — offering him a job when he finished law school, funding his earliest political campaigns and purchasing a lot next to his house. But based on the known facts, charges so far and testimony at Rezko’s trial, there’s no indication there’ll be an October surprise that could hurt the Democratic presidential nominee — even though Rezko says prosecutors are pressing him for dirt about Obama.
“I think this strikes fear into the Blagojevich administration and the Statehouse Democrats but not into the Obama campaign,” says state Sen. Kirk Dillard, R-Westmont, a John McCain delegate to the GOP convention but an old friend of Obama.
Should Obama be worried? Not about Rezko. The real estate deal between the two that allowed Obama to purchase his mansion (Rezko bought an adjacent vacant lot saving Obama hundreds of thousands of dollars) and then have Obama do Rezko a favor by purchasing a small strip of that lot for an above market price was borderline legal, certainly unethical, but probably nothing Chicago prosecutor Patrick Fitzgerald would want to drag the next president (or sitting president) into court about.
There are other Rezko-Obama dealings such as Obama’s steering state contracts to Rezko’s businesses in exchange for fundraising assistance and campaign contributions. But that kind of thing is done all the time and you’d probably have to arrest just about every member of the House of Representatives and the Senate if a prosecutor would go after lawmakers who greased the palms of cronies and fundraisers with contracts.
So in order to understand why Obama may be sweating, I will have to give you a quick primer on the nature of Chicago politics.
There is a triad in the city that rules in all matters political and most matters economic. The first leg of the triad is the “legitimate” businessman. In order to start a business or expand one, you obviously need a bunch of licenses, permissions, and approvals from several city departments. You also need a little “juice” (used to be called “clout”). Nothing gets done in Chicago without greasing the palms of the right people either by gifts, promises of future considerations, or outright bribes.
This is where the second triad of the Chicago power structure comes into play. Well connected operators like Tony Rezko will, for a piece of the action or a kickback (“pay for play”) grease the wheels of government and get the job done allowing the legitimate businessman to operate.
The third leg of the triad is the politician. Connected to both the legitimate business world and the shady, half underground world of the Tony Rezkos in the city, the politician steers business his way or to his ward thus enriching himself and bringing home the bacon for his constituents.The politicians also staff the numerous bureaucracies at City Hall through complicated patronage schemes. This ensures a rock solid loyalty to the man who rides herd on all of it from above; Mayor Richard Daley.
But then there is a sub-strata that supports the entire rotten edifice. “The outfit” we call it here. It is the remnant of the original Al Capone gang that never left the city – updated and vastly more organized, disciplined, and improved – and has its fingers in so many legitimate pies that it is impossible sometimes to separate the politician from the businessman from the mobster. The outfit has a lot of cash that both the politician and the businessman can tap into. The Rezko’s of the city move easily in and out of the legitimate and illegitimate world, acting as a bridge when necessary in order to keep both the businessman and the politician’s hands clean.
They all mingle, intertwine, do each other favors, muscle out those who don’t play the game, and steal as much taxpayer money as they believe they can get away with.
I am sorry if that was a little longer than a “short primer” but there really is no easy way to paint a picture of the spider’s web of connections that now may entrap Obama.
One strand of that web holds interest for prosecutor Fitzgerald. It is the Giannoulias family and their ownership of The Broadway Bank. Specifically, the bank’s vice president and chief loan officer Alexi Giannoulias who has, to put it mildly, a rather checkered history:
A man who has long been dogged by charges that the bank his family owns helped finance a Chicago crime figure will host a Windy City fund-raiser tonight for Sen. Barack Obama.
Alexi Giannoulias, who became Illinois state treasurer last year after Obama vouched for him, has pledged to raise $100,000 for the senator’s Oval Office bid.
Before he promised to raise funds for Obama, Giannoulias bankrolled Michael “Jaws” Giorango, a Chicagoan twice convicted of bookmaking and promoting prostitution.
Giannoulias is so tainted by reputed mob links that several top Illinois Dems, including the state’s speaker of the House and party chairman, refused to endorse him even after he won the Democratic nomination with Obama’s help.
Giannoulias was the bank’s vice president and chief loan officer for most of the more than $15 million in loans.
He was not charged with breaking any laws. The Obama campaign disputed any suggestion that Obama is tarnished by the association.
“Barack Obama has a long record of fighting for ethics reform from his days as a state senator,” a campaign rep said.
Alexi also approved millions in loans for Rezko’s various real estate projects. Obama used Broadway Bank for both his personal business and for his Senate campaign fund.
At this point, a reasonable observer would say that I am just touting another “guilt by association” meme. Au contraire, mon ami. Read on, McDuff:
(4) The Giannoulias family was involved with Obama as far back as his first state senate campaign in 1996. It has been long rumored here in Chicago that Obama obtained a sweetheart deal on his first town home here in Chicago — which he could not have afforded otherwise — and guess who the financing came from for that house? We’ve been told it was Broadway Bank, the Giannoulias bank. Now, this sets up a scenario where the Giannoulias family helps Obama with his campaign finances and gets him deeper in their pocket with his sweetheart mortgage deal (for the first home he owned that he could not afford) – all in exchange for quid pro quo to be determined later.
(5) One favor political Chicago claims Obama did for the Giannoulias family was in 2006 when, out of the blue, 29 year old Alexi Giannoulias, with no experience, and without ever having voted before, decides to run for State Treasurer of Illinois. Also out of the blue, Barack Obama endorses Alexi Giannoulias for State Treasurer. This was a SHOCK to everyone in Chicago — and Giannoulias would have never become State Treasurer without Obama’s help. In political circles here, it has always been believed that this endorsement was bought years ago with that sweetheart mortgage deal Broadway Bank arranged for Obama to buy his town house.
(6) So, the Tony Rezko sweetheart deal was not the first magic home loan Obama ever received to buy a house he could not afford.
There’s more to this that looks like it will break soon. We were STUNNED when we read Sneed’s column because we never in a million years believed Fitz would actually be able to take down Obama.
The Sneed column referenced contains this cryptic entry:
Sneed hears rumbles political fund-raiser/fixer Tony Rezko, who is now singing sweetly to the feds from his cell at the Metropolitan Correctional Center, has been talking about his “dealings” with a Chicago bank, which has political connections.
Clearly, Obama’s legal Achilles heel is not directly related to Rezko but rather his dealings with the Giannoulis family and Broadway Bank. And if Fitzy can turn young Alexi – now Illinois State Treasurer – Lord knows what will spill out and complicate an Obama presidency.
For in truth, there is no chance this will come out before the election. Fitzgerald has proven himself to be a very careful prosecutor – especially when aiming high – and will no doubt seek to build his case slowly. He may end up not even indicting Obama, seeing the enormous problems in trying to bring Obama to trial. But you can bet that Obama will be interviewed several times by the prosecutor and will himself, be on tenterhooks as to his fate.
Obama was simply caught up in business as usual Chicago politics – where there are times you can’t tell the difference between the businessman, the politician, and the mobster. It is from this political culture our next president will have sprung.
Kind of makes you wish for the good old days of Al Capone. At least you knew who the crooks were.
Welcome Instapundit readers.
For the record, my inclusion of the Chicago political primer was so that the Obama-Rezko-Giannoulis connection could be seen in context. Why would Obama endorse a mob banker for State Treasurer, going against the expressed wishes of the leader of his party in the statehouse? The same reason Rezko approached the Broadway bank for a $13 million loan for his real estate projects. In Chicago, it’s not who you are but what you can do for me. The payoff for Obama was Giannoulis raising a ton of money for him in his presidential campaign. This was set up by Obama’s endorsement of Giannoulis for treasurer which in turn was set up by almost certainly a generous loan arrangement on Obama’s first townhome run through Broadway.
Interestingly, Rezko was also indicted in a check bouncing matter after having written almost a half million dollars in bad checks in Vegas. While there has been speculation in the Chicago press that Broadway Bank kept Rezko’s head above water with low cost loans for much of the last 3 years when his businesses were bankrupt, the fact that those checks were drawn on an account at Broadway Bank probably means that the Giannoulis family cut Rezko loose, seeing him as a liability.
How badly do you think Tony wants to get back at the Giannoulis family?