Opinion: Special Ticket Report: Illinois politics, Rod Blagojevich and Barack Obama

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Because of the federal arrests today of Illinois Democratic Gov. Rod Blagojevich and his chief of staff on charges involving, in effect, selling the nomination to replace Barack Obama in the U.S. Senate, the Ticket is republishing a Special Report backgrounder that first appeared here in April.

It examined the frequently seamy world of Illinois politics in general and specifically the case involving Antoin ‘Tony’ Rezko, onetime political patron of now-President-elect Barack Obama, and his ally, the current governor, who despite his arrest retains the right to appoint the new senator.

Although the run-of-the-mill political/financial back scratching that occurs routinely in Illinois and Chicago and sometimes crosses the line into corruption got scant attention from the national media during this year’s presidential campaign, which focused on change and reform, it is a daily fact of life in the Land of Lincoln.

Illinois’ last governor, George Ryan, a Republican, is now serving time in federal prison for selling favors. Before him there was former Gov. Otto Kerner and numerous others who ran afoul of the law, including one secretary of State whose apartment was found packed with shoe boxes of checks worth millions from applicants for driver’s licenses.

It’s an, uh, interesting state. Here’s the previous Ticket item:

The trial of Antoin “Tony” Rezko, onetime patron to Sen. Barack Obama and Illinois Gov. Rod Blagojevich, has turned lurid.

Under cross-examination by Rezko attorney Joseph Duffy, star prosecution witness Stuart Levine, a Chicago-area lawyer, is admitting to conspiracy, extortion, bribery, fraud and other bad acts while he ‘served’ at the Illinois public school teachers pension fund board.

At Duffy’s urging, Levine is detailing 30 years of drug usage including sordid day-long binges with other men at a Chicago inn called the Purple Hotel. Rezko’s attorney Duffy is wondering whether all that cocaine, crystal meth and other drug use has perhaps fogged Levine’s memory.

That aside, much of the trial’s focus is on money -- much of it given in the form of campaign money in the careers of Obama and Blagojevich.

It’s an unfolding, seemingly local political story that’s fascinating in its revealing details about the subterranean world of business, financial and family connections in Illinois and Chicago politics that helped take a virtually unknown black Chicago attorney, nurtured him politically and financially and turned him into....

...the polished candidate who today thrills crowds of thousands across the country with his eloquence.

Obama currently leads in delegates for the Democratic nomination for president.

This tale is long by Ticket standards. We’ll do this rarely. But for those interested in delving into details, it provides important background about the early political connections of a little-known newcomer to the national political scene.

This story concerns two men, neither of whom face any legal charges today. They are two of Illinois’ top Democratic politicians -- Gov. Blagojevich, who’s been mentioned often in court, and Sen. Obama, who’s received only passing mentions. They’re entwined in the Rezko saga, particularly through the bounteous campaign money he raised for them both.

Get used to that name. Rezko’s currently in a long-running Chicago trial on federal extortion and bribery charges. Few campaign donors were more responsible than Rezko for the rise of Blagojevich (Blah-goy-ah-vitch) and Obama. Both politicians came to rely on him for political and personal advice -- and lots of campaign money.

Their intimate relationship is coming into focus through Rezko, a Syrian-born businessman who made his money in real estate and restaurant franchises and now sits daily in the federal courtroom of U.S. District Judge Amy St. Eve. The trial’s daily events are covered in this Tribune Rezko court blog.

So far, Blagojevich, reelected in 2006, is more deeply enmeshed in the scandal than Obama, who’s not been implicated in any wrongdoing.

But all three operated in the murky world of Illinois Democratic politics, where money, family relationships and long business associations provide the invisible glue of the local political world.

Witnesses in Rezko’s trial have testified that Rezko recommended friends and associates for government jobs and posts on Illinois state boards when Blagojevich took office in 2003, and some of those friends were generous donors to Blagojevich.

An early trial exhibit from prosecutors was a spreadsheet. Prepared by an FBI agent , the spreadsheet identifies Rezko-related donors who supplied $1.43 million between 2001 and 2004 to Blagojevich, who was first elected governor in 2002.

Using Federal Election Commission and Illinois state records, The Times’ Dan Morain compared donors on the FBI spreadsheet to Obama’s contributors. Guess what.

Sen. Obama received $222,000 during the same 2001-2004 period from Rezko-related Blagojevich donors.

And Obama received at least another $32,000 from them for this presidential run -- although Rezko, indicted in 2006, has not been involved in Obama’s current campaign.

Those Obama-Blagojevich donors include Rezko himself, along with his family members, employees and associates of his various business enterprises. There’s also the head of a major Chicago investment firm that received Illinois public teachers’ pension money to invest.

Jay Stewart, of the nonprofit government watchdog Better Government Assn. in Chicago, called the overlapping list of donors a “who’s who of the inner circle” of Democratic politics in the Land of Lincoln.

“Did they come from the same general political environment?” Stewart said of Blagojevich and Obama. “Yes. They’re Chicago pols. They both knew Tony Rezko. Tony Rezko raised money.”

In his presidential race, Obama increasingly has relied on small donations delivered via the Internet from more than a million individuals. But when he started in Illinois politics, Stewart noted, “if you wanted money, you needed to ask the big boys.”

Rezko was a big boy. He was, for instance, a link between Obama and Santa Monica developer Jay Wilton of Wilton Partners. On July 16, 2003, Wilton gave $5,000 to Obama’s first U.S. Senate run. A few days later, Wilton gave $50,000 to Blagojevich, Illinois state records show.
Unlike the federal system, Illinois state campaign finance law permits donors to give as much as they want to state candidates. So, in Illinois they do.

In early 2004, Wilton and Rezko spent $78,000 on a Los Angeles-area fundraising tour for Blagojevich, Illinois campaign records show. Three Southern California companies donated a combined $150,000 to the Illinois governor during the trip.

Shortly before the initial $50,000 donation, Blagojevich announced that Wilton would begin work on an $83-million state contract to refurbish rest stops on Illinois tollways, called ‘oases.’

Some of the restaurant concessions granted the right to operate at those rest stops ‘trace back’ to Blagojevich’s patrons including Rezko, the Chicago Tribune disclosed in 2005. Wilton, who did not return repeated calls, is not implicated in the Rezko case.

Another overlapping donor is John Rogers, head of Ariel Capital, a major Chicago-based investment firm. Rogers gave $12,500 to Blagojevich in 2004, the FBI spreadsheet shows. Rogers has also given Obama $25,000, state and FEC records reveal.

Aides to Obama and Rogers said the pair have a friendship that is separate from Rezko. Ariel Vice President Matt Yale said Rogers’ inclusion on the FBI spreadsheet was a surprise, adding, ‘To the best of our knowledge, we have not made any contributions to Governor Blagojevich or any political candidate on behalf of Tony Rezko.’ Ariel is not implicated in the criminal case.

As an Illinois state senator, Obama appeared before Illinois pension funds in 2000 and 2001 to urge that they provide more business to black-owned investment houses, including, as it happens, Ariel.

Describing his efforts to the Urban League last year, Obama said African American-owned firms were not getting any business from state pensions. Obama singled out Rogers’ Ariel Capital, calling it a well-respected investment house but one that received no business.

‘We didn’t have to implement a formal program,’ Obama told the Urban League, taking no credit. ‘I simply said, ‘Listen to what these folks have to say,’ and in about six months they got about a half billion dollars worth of business simply on their own excellence.’

In 2002, the year after Obama made the pitch, the Illinois Teachers’ Retirement System reported an 18% increase in assets managed by minority-owned firms. Ariel’s share grew to $442 million by 2005.

In 2006, after the federal investigation became public, the teacher pension board severed its relationship with Ariel, concluding that Ariel’s investment returns were insufficient.

As he was for Blagojevich in his initial run for governor in 2002, Rezko in 2003 and 2004 was part of Obama’s finance committee, responsible for raising campaign money.

Obama started out as a long shot. The main candidate was Blair Hull, a wealthy businessman who was financing his own campaign. But less than three weeks before the primary, a court unsealed multimillionaire Hull’s divorce file, which alleged spousal abuse. The divorce case so damaged Hull that he finished third in the race. The four-year anniversary of that primary passed on Palm Sunday.

The eventual winner of that primary: Barack Obama.

-- Andrew Malcolm

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Photo credits: Associated Press / Nam Y. Huh, Democratic Governors Assn.