Rezko-Obama 4-23-07 "PART TWO"

Sun-Times' questions, and Obama campaign's answers
April 23, 2007
The Sun-Times first sought to interview Sen. Barack Obama on March 14 about indicted businessman and longtime supporter Antoin "Tony" Rezko and a series of troubled low-income housing deals involving Rezko's company, Rezmar Corp. Obama's staff asked for written questions. It responded Sunday but left many questions unanswered and didn't directly address some other questions.
What follows are the Sun-Times' questions, asked in the preliminary stages of the newspaper's investigation, and the answers received in an e-mail from Robert Gibbs, communications director for the senator's presidential campaign:
Sun-Times question: Please explain what legal work the senator performed on each of those Rezmar projects. I have a copy of a legal bill showing Sen. Obama worked on the Central Woodlawn project. Please include the number of hours he spent on each Rezmar deal, the dates he worked on those deals, and to whom he reported at the firm, whether that was Allison Davis and/or William Micelli.
Obama campaign answer: Senator Obama worked on several projects in which the firm's principal client was a not-for-profit corporation. The projects entailed negotiations between the firm's primary not-for-profit client and the Rezmar-related entity that served as co-general partner or co-venturer of the not-for-profit.
Once the negotiations between the not-for-profit and Rezmar-related entity were completed, the firm represented the combined entity, usually an Illinois limited partnership or Illinois limited-liability company.
The Senator, relatively inexperienced in this kind of work, was assigned to tasks appropriate for a junior lawyer. These tasks would have included reviewing documents, collecting corporate organizational documents, and drafting corporate resolutions. The Senator reported primarily to former partner Allison Davis and occasionally to William Miceli.
Q: At the time of those deals, Tony Rezko was a client of the senator's firm, a campaign donor to the senator, a personal friend, and a business partner with the senator's boss, Allison Davis. But Mr. Rezko was also a landlord to many constituents living in the state Senate district that Senator Obama represented at the time. And many of those Rezmar properties had fallen into disrepair, while Rezmar began to fail financially. Did the senator ever talk to Tony Rezko about the deteriorating status of his housing projects?
A: To reiterate: the firm did represent entities in which Tony Rezko had an interest but never Tony Rezko, personally. Senator Obama does not remember having conversations with Tony Rezko about properties that he owned or any specific issues related to those properties.
Q: In this situation, how did the senator decide whose interests took precedence: Mr. Rezko, Mr. Davis, the senator's constituents?
A: The Senator, then a junior lawyer, did not have the authority, the assignment or the opportunity to make such decisions. But it is important to keep in mind that the whole enterprise of affordable housing is geared toward improving housing stock for those unable to afford market-priced housing. The goals of the firm's clients were consistent with the needs of communities benefiting from affordable housing initiatives.
Q: By the time the Fund for Community Revitalization and Redevelopment closed on its final deal with Rezmar in 1998, Rezmar was having financial problems, according to a 1998 lawsuit over Rezmar's failure to pay its mortgage on an earlier housing deal. That lawsuit was filed several months before Rezmar and the Fund closed on that final housing deal, which included an investment from Allison Davis' company, American Housing Partners. [Editor's note: American Housing Partners was to invest $250,000 in Rezmar's last low-income housing deal, state records show. But state officials say that, in the end, American Housing didn't participate in the deal.]
A: The Senator is unaware of Mr. Davis' company making any investments in housing deals involving the Fund for Community Redevelopment and Revitalization. We have checked this point with the Miner firm, which also reports no knowledge of such an investment.
Q: Was the senator aware of Rezmar's financial problems at the time?
A: No.
Q: Did the senator or his law firm alert the Fund for Community Revitalization and Redevelopment about Rezmar's financial problems? If not, why not? Would such notification have been necessary under legal ethics?
A: The Senator, and, upon inquiry the firm, have no knowledge of a lawsuit having been filed prior to consummation of this housing transaction. We understand that such a lawsuit would have in all probability have to have been disclosed as a condition to closing on additional loans, which would in turn have raised red flags with the lenders. The Senator has no additional information.
Q: Many Rezmar government-financed housing deals have ended up in legal battles, including foreclosure. Several Rezmar buildings are now boarded up, and others are in need of major repairs. Taxpayers have lost millions of dollars on these deals. While Senator Obama has called Mr. Rezko a legal client, campaign contributor and a friend, there's ample evidence that Mr. Rezko was a slum landlord. Was the senator aware then that Mr. Rezko's projects were deeply mired in physical and financial problems? Does the senator think it is fair to characterize Mr. Rezko as a slum landlord?
A: Housing partnerships in which low-income-housing tax credits are syndicated frequently struggle financially. The reasons for the problems such partnerships struggle are complex but frequently include urban crime, demographic changes and social factors outside the control of any developer or owner. Senator Obama was not otherwise aware of financial and physical problems attributable to misconduct by Mr. Rezko.
Q: Rezmar's buildings were often cited for code violations, including lack of heat in the winter. One third of Rezmar's government-financed housing projects were in the state Senate district represented by Sen. Obama. Did anyone ever complain to the senator about the physical conditions of Rezmar's buildings? If so, who?
A: Senator Obama did follow up on constituency complaints about housing as matter of routine. Further questions about their condition should be addressed to the CHA [Chicago Housing Authority]. It is our understanding that, according to CHA, the buildings owned by Rezmar were maintained in good condition and good standing.
Q: Did the senator ever complain to anyone -- government officials, Rezmar or Tony Rezko -- about the physical conditions of Rezmar's buildings?
A: Again, Senator Obama did follow up on constituency complaints about housing as matter of routine.
Q: Did the senator and Tony Rezko ever discuss the financial problems facing Rezmar, which eventually abandoned its affordable-housing deals? If so, what was the nature of those conversations?
A: No.
Q: Even before the Illinois Housing Development Authority foreclosed on some Rezmar properties, the authority was pressuring Rezmar to pay its delinquent mortgages or face foreclosure. At the time, Sen. Obama was a state senator -- and a lawyer involved in Rezmar's deals. Did Mr. Rezko or anyone at Rezmar ask Sen. Obama for help? And did the senator's dual roles pose any difficulties?
A: No. As he was not asked for help, there was no conflict in what you describe as a "dual role."
Q: Did the senator ever discuss Rezmar's financial problems with anyone at the law firm of Davis Miner & Barnhill? If so, whom did he discuss it with? And when did those conversations occur?
A: The firm advises us that it unaware of any such conversations.
Q: When did the senator learn of Rezmar's financial problems -- problems that eventually ended up costing taxpayers millions of dollars in unpaid loans, foreclosure costs, etc.?
A: The Senator had no special knowledge of any financial problems.
Q: Given all the problems Rezmar's buildings caused for many South Side neighborhoods, including those the senator represented, does the senator still consider Mr. Rezko a friend? And can you explain. What would the senator say to his constituents who live near Rezmar buildings that are boarded up, subject to numerous vacancies, and in need of repairs?
A: The Senator is troubled by the allegations against Mr. Rezko and expects that the legal system will runs its course and resolve the charges brought. Nothing in the prior political or personal relationship with Mr. Rezko will affect the Senator's independent judgment in this matter.
Q: While Rezmar's buildings were going to seed, the senator continued to take campaign donations from Mr. Rezko. How does the senator explain this?
A: As mentioned above, housing partnerships struggle for a myriad of reasons and the Senator was unaware of any misconduct at the time that he accepted Mr. Rezko's political support.
Q: How many fund-raisers has Tony Rezko had for the senator since 1990? When were those fund-raisers? Where were those fund-raisers? How much was raised?
A: I don't know the exact amount raised, but would refer you to an answer provided to the Sun-Times in November 2006 about fund-raising in the U.S. Senate race.
Q: Sources have said the senator has long used the words "political godfather" to describe how he views Tony Rezko. Is that true? If so, what does that mean, and why does -- or did -- he feel that way?
A: The Senator has never used that phrase in relation to Tony Rezko.
Q: Previously, the senator told the Sun-Times he met Tony Rezko through David Brint. How did the senator meet David Brint? When and where did that occur? What were the circumstances of the meeting? What was the senator's relationship with David Brint when Brint introduced the senator to Tony Rezko?
A: The Senator met David Brint because Mr. Brint was recruiting him for another employment opportunity. There was no preexisting relationship.
Q: Did David Brint and / or Tony Rezko help recruit the senator to join the law firm of Davis Miner Barnhill?
A: No.
Q: When did the senator first meet Allison Davis? What were the circumstances?
A: The Senator met Allison Davis when he interviewed with Miner Barnhill.
Q: Were there any legal conflicts and / or any other problems for the senator in working for the Davis law firm, whose list of clients included companies owned by Davis and not-for-profits that Davis helped create?
A: No. Any conflicts in the situation described would be ones for the lawyer with the separate business interests.
Q: Allison Davis and Tony Rezko have been business partners for years. When did the senator become aware of their business relationship? Was it before he went to work for the law firm? Did the senator work on any legal cases involving companies or entities jointly owned by Tony Rezko and Allison Davis?
A: Mr. Davis is no longer a partner at the firm. Senator Obama did not know about a business relationship between Allison Davis and Tony Rezko while Mr. Davis was at the firm.
Q: In the ethics statements the senator filed while serving in the state Senate, he listed all the clients that his law firm represented. Now, the senator's former colleague, William Miceli, has told me the firm has compiled a list of all cases that the senator, in particular, worked on while he was at the law firm -- and provided that list to the senator. Please provide us with that list of the clients whose cases the senator worked on, including the names of clients, the dates he worked on those cases, any court case numbers.
A: The rules of professional responsibility binding on the firm precludes its public dissemination of client-confidential information, including the fact of representation. If there are specific questions about specific representations, we will attempt to answer them with the assistance of the firm -- as we have done in response to earlier questions above.
Q: Please provide us the date the senator went to work for the Davis Miner Barnhill firm, and the date he left.
A: Approximately Feb. 1993-Oct. 2002.
Q: Ald. Arenda Troutman's father, Benjamin, developed a low-income housing project in 1996 with the help of the Fund for Community Redevelopment and Revitalization, at the same time the Fund was a partner with Rezmar. The senator's law firm represented Benjamin Troutman at that time. Did the senator work on Mr. Troutman's case? If so, what legal services did the senator provide?
A: He did not work on this case.
Q: Does the senator have any financial interest in any business owned by Tony Rezko, Dan Mahru or Allison Davis? Has the senator ever had any interest in businesses owned by those three men, including any of the housing developments involving Rezmar?
A: No.
Q: Please describe the senator's relationship with Tony Rezko's former partner, Daniel S. Mahru. How often did the senator meet with Mr. Mahru regarding the Rezmar real estate deals that involved the senator's former law firm?
A: The Senator knows Mr. Mahru, who is a political contributor. That is the extent of the relationship.
Q: Is there any other information the senator would like to provide regarding his relationship with Mr. Rezko, his involvement with Mr. Rezko's housing deals, his relationship with Allison Davis or anything else relating to these issues.
A: No. The Senator has answered all questions here to the best of his knowledge