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Last update: 10/18/2008 1:42:00 PM

A Complaint Filed in an Illinois Court Sheds Additional Light on the Land Deal Involving Obama and the Rezkos

WASHINGTON, Oct 18, 2008 /PRNewswire-USNewswire via COMTEX/ — The following was released today by the Republican National Committee:

In A Complaint Filed In Cook County Circuit Court, A Bank Official Stated That An Appraisal Of The Property Rita Rezko Purchased Next To The Obamas Had Been Replaced With A Higher One:

Kenneth Conner, A Former Illinois Bank Official, Filed A Complaint Stating That Bank Officials Replaced A Loan Reappraisal Prepared By Conner For Property Purchased By Rita Rezko, Tony Rezko’s Wife, With A Higher One And That Conner Was Fired When He Questioned The Document. “A former Illinois bank official, now claiming whistleblower status, says bank officials replaced a loan reappraisal that he prepared for a Chicago property that was purchased by the wife of now-convicted felon Tony Rezko, part of which was later sold to next-door neighbor Barack Obama. In a complaint filed Thursday in the Circuit Court of Cookme County, Kenneth J. Connor said that his reappraisal of Rita Rezko’s property was replaced with a higher one and that he was fired when he questioned the document.” (Jerry Seper, “Complaint Hits Rezko Land Deal,” The Washington Times, 10/18/08)

— Conner Reviewed The Appraisal Of The Rezko Property, Which Set The Value At $625,000, And Told His Bosses That The Property Had Been Overvalued By At Least $125,000. “According to the complaint, Mr. Connor reviewed the appraisal of the Rezko property by another firm, Adams Appraisal, which had set the value at $625,000. Mr. Connor’s complaint said that he told his bosses in a report that the property had been overvalued by at least $125,000 and that a ‘reasonable and fair evaluation’ should have been no greater than $500,000.” (Jerry Seper, “Complaint Hits Rezko Land Deal,” The Washington Times, 10/18/08)

— Later, Conner Observed That His Lower Appraisal Was Not In The Rezko File, Which Had Been Reviewed By The FBI. “Later, the complaint states, Mr. Connor observed that his lower appraisal was not in the Rezko file and that he notified his supervisors that it had been replaced. He said, according to the complaint, the new file had been reviewed by the FBI and ‘if the FBI were to ask me about such matters, I would tell them the truth. I never rescinded my original findings.’” (Jerry Seper, “Complaint Hits Rezko Land Deal,” The Washington Times, 10/18/08)

The Complaint Also Noted That The Bank Received A Grand Jury Subpoena Requiring It To Produce Files Relating To Mrs. Rezko’s Purchase And Finances. “Mr. Connor, a real estate and commercial credit analyst at the Mutual Bank Corp. in Chicago, also noted in the complaint that the bank received a grand jury subpoena in October 2006 requiring it to produce information concerning Mrs. Rezko’s purchase, including the bank’s files on the property. The complaint also said that the grand jury wanted information on Mrs. Rezko’s checking account and loan file and that the Federal Deposit Insurance Corp. (FDIC) had audited the Rezko file - although Mr. Conner’s lower reappraisal had been replaced with a higher amount.” (Jerry Seper, “Complaint Hits Rezko Land Deal,” The Washington Times, 10/18/08)

WHAT WE KNOW Obama Engaged In A “Boneheaded” Land Deal With Rezko:

Obama Paid $300,000 Less Than The Asking Price For His Chicago Mansion, While Rezko’s Wife Paid Full Price For A Vacant Lot Next Door On The Very Same Day. “Two years ago, Obama bought a mansion on the South Side, in the Kenwood neighborhood, from a doctor. On the same day, Rezko’s wife, Rita Rezko, bought the vacant lot next door from the same seller. The doctor had listed the properties for sale together. He sold the house to Obama for $300,000 below the asking price. The doctor got his asking price on the lot from Rezko’s wife.”(Tim Novak, “Obama And His Rezko Ties,” Chicago Sun-Times, 4/23/07)

— The Seller Of Obama’s Home “Wanted To Sell Both Properties At The Same Time.” “On the same day Obama closed on his house, Rezko’s wife bought the adjacent empty lot, meeting the condition of the seller who wanted to sell both properties at the same time.” (Brian Ross and Rhonda Schwartz, “The Rezko Connection,” ABC News’ “The Blotter” Blog, abcnews.go.com, 1/10/08)

— But Obama Could Not Afford To Purchase The Parcel Of Land Rezko’s Wife Purchased. “The parcel included an adjacent lot which Obama told the Chicago Tribune he could not afford because ‘it was already a stretch to buy the house.’” (Brian Ross and Rhonda Schwartz, “The Rezko Connection,” ABC News’ “The Blotter” Blog, abcnews.go.com, 1/10/08)

Obama Originally Downplayed His Interactions With Rezko Prior To The Purchase, But Later Admitted He Also Walked The Property With Rezko Before Purchasing It. “When the transactions were first reported, Mr. Obama said only that he had asked Mr. Rezko, as a developer, whether he thought the house was worth buying. But last month, Mr. Obama’s campaign staff said the senator also recalled walking around the house and the adjacent lot with Mr. Rezko.” (Mike McIntire and Christopher Drew, “As Developer Heads To Trial, Questions Linger Over A Deal With Obama,” The New York Times, 3/2/08)

“Then - A Few Months Before Rezko Was Indicted - Obama Bought Part Of That Lot From Rezko’s Wife.”(Tim Novak, “Obama And His Rezko Ties,” Chicago Sun- Times, 4/23/07)

— Though The Strip Purchased By Obama Was Valued At $40,500, He Paid $104,500 For It. “Later, the Obamas bought a 10-foot-by-150-foot piece of the lot for $104,500. An appraisal put the value of the strip at $40,500, a spokesman said, but Obama considered it fair to pay one-sixth of the original price for one-sixth of the lot. ‘It wasn’t something we needed to have,’ Obama said. ‘It was something I thought would be nice, if it worked economically for him.’” (Peter Slevin, “Obama Says He Regrets Land Deal With Fundraiser,” The Washington Post, 12/17/06)

At The Time Of Obama’s Purchase, Rezko Was Also Under Investigation For Influence-Peddling In Gov. Blagojevich’s Administration. “At the time Obama bought that strip of land, it had been reported that Rezko was under federal investigation for influence-peddling involving the administration of Blagojevich, whose campaign also received Rezko’s financial support. Rezko has since been indicted for allegedly demanding kickbacks from companies seeking state business under Blagojevich.” (Tim Novak, “Obama And His Rezko Ties,” Chicago Sun-Times, 4/23/07)

— “When The Property Was Sold, Mr. Obama Knew Rezko Was Under Investigation On Fraud Charges.” (Jerry Seper, “Complaint hits Rezko land deal,” The Washington Times, 10/18/08)

Obama Called His Purchase Of The Land “A Boneheaded Move” Because Rezko “Was Already Under A Cloud Of Concern.” “’I am the first one to acknowledge that it was a boneheaded move for me to purchase this 10-foot strip from Rezko, given that he was already under a cloud of concern,’ Obama said. ‘I will also acknowledge that from his perspective, he no doubt believed that by buying the piece of property next to me that he would, if not be doing me a favor, it would help strengthen our relationship.’” (Rick Pearson, “Obama Believes Himself A ‘Viable Candidate’ For Presidency,” Chicago Tribune, 12/14/06)

Obama: “There’s No Doubt I Should Have Seen Some Red Flags In Terms Of Me Purchasing A Piece Of Property From Him.”(Peter Slevin, “Obama Says He Regrets Land Deal With Fundraiser,” The Washington Post, 12/17/06)

Mutual Bank Has Lent More Than $3.4 Million To Tony Rezko:
Since 2002, Mutual Bank Has Lent More Than $3.4 Million To Rezko. “Mahajan and his bank also have had business dealings with Rezko, who pleaded not guilty this month to federal charges he tried to squeeze millions in kickbacks and campaign contributions from firms seeking approval from two state boards. Since 2002, Mutual Bank has lent more than $3.4 million to Rezko and his partners in three deals, according to a review of public records.” (David Kidwell, Ray Long And Rick Pearson, “Governor’s Wife’s Deals Questioned,” Chicago Tribune, 10/27/06)

— In One Deal, Mutual Bank Lent Rezko $1.32 Million. “In one, Mahajan’s bank lent $1.32 million to Rezko on several pieces of property that were deeded back and forth between Rezko partners both before and after the loan was secured. Banking experts said such moves raise questions about who owned the property used as collateral for the loan.” (David Kidwell, Ray Long And Rick Pearson, “Governor’s Wife’s Deals Questioned,” Chicago Tribune, 10/27/06)

— President And CEO Amrish Mahajan Said He Did Not Know The Property Was Transferred In The $1.32 Million Deal. “Mahajan said Thursday he had no idea Rezko and his partners had transferred the property used to secure the loan and said that would be a violation of the mortgage contract.” (David Kidwell, Ray Long And Rick Pearson, “Governor’s Wife’s Deals Questioned,” Chicago Tribune, 10/27/06)

— Amrish Mahajan: “We do not go checking on every loan. ... The mortgage was paid on time, and if I remember correctly it has been satisfied.” (David Kidwell, Ray Long And Rick Pearson, “Governor’s Wife’s Deals Questioned,” Chicago Tribune, 10/27/06)

In 2005 Records Show That Amrish Mahajan Signed Renegotiated Loan Papers Between Rezko And Rezko’s Partner Abdelhamid Chaib. “In 2005, records show, the Rezko partner who took out the loan with Rezko—Abdelhamid Chaib—paid off most of the loan and renegotiated a smaller loan of $156,000. Mahajan signed the renegotiated loan papers.” (David Kidwell, Ray Long and Rick Pearson, “Governor’s Wife’s Deals Questioned,” Chicago Tribune, 10/27/06)

Mutual Bank Also Held The Mortgage On A Lot Next To Obama’s House That Rezko’s Wife, Rita, Bought. “Mutual Bank, records show, has loaned money to Rezko. In 2005, Mutual Bank held the mortgage on a lot that Rezko’s wife, Rita, bought next to U.S. Sen. Barack Obama’s south side house. Rita Rezko later sold Obama a 10-foot-wide strip of her lot, which enabled his family to expand their side yard.”(Chris Fusco, Carol Marin and Eric Herman, “Woman With Ties To Gov’s Wife Charged: Accused Of Bilking Taxpayers Out Of Thousands,” Chicago Sun-Times, 3/8/07)

Amrish Mahajan Was Among Nine Other Individuals Involved With Allegations Of Corruption In The Rezko Trial.

“A month before opening arguments were made in Antoin Rezko’s federal corruption trial, Gov. Rod Blagojevich’s top lawyer issued a memo to the governor’s senior aides. The Feb. 8 directive called on staff members to search their computers, calendars and files for any information relating to Rezko and eight other notable people whose names have found their way into allegations of corruption within state government. ... Others on Quinlan’s list include ... Amrish Mahajan, a Chicago banker who has raised money for Blagojevich...” (Kurt Erickson, “Memo Issued On Rezko Month Before Trial,” The [Illinois] Pantagraph, 5/14/08)

Former CEO Of Fannie Mae And Former Obama Adviser Jim Johnson Resigned Under Criticism:

Jim Johnson Is The Former CEO Of Fannie Mae. (David A. Vise, “Fannie Mae Lobbies Hard To Protect Its Tax Break,” The Washington Post, 1/16/95)

“Jim Johnson, The Former Chairman Of Fannie Mae Who Was One Of Three Advisors Tapped By Democrat Barack Obama To Vet Vice Presidential Candidates, Resigned Today After Questions Were Raised About Favoritism He May Have Received From Countrywide Financial Corp.”(Johanna Neuman, “Barack Obama Advisor Jim Johnson Quits Under Fire,” Los Angeles Times, 6/12/08)

Johnson Remains A Bundler For Obama’s Presidential Campaign And Has Committed To Raising $100,000 To $200,000. (Obama For America Website, , Accessed 5/19/08)

In 1998, Fannie Mae’s Earnings Were Manipulated, Which Resulted In “Maximum Payouts” To Executives Including CEO Jim Johnson. “As CEO of Fannie Mae, Johnson, a former chief of staff to Vice President Walter F. Mondale and chairman of the board of the Kennedy Center, was the beneficiary of accounting in which Fannie Mae’s earnings were manipulated so that executives could earn larger bonuses. The accounting manipulation for 1998 resulted in the maximum payouts to Fannie Mae’s senior executives — $1.9 million in Johnson’s case — when the company’s performance that year would have otherwise resulted in no bonuses at all, according to reports in 2004 and 2006 by the Office of Federal Housing Enterprise Oversight.” (Jonathan Weisman and David S. Hilzenrath, “Obama’s Choice Of Insider Draws Fire,” The Washington Post, 6/11/08)

The Manipulation Resulted In Johnson Receiving A Bonus Of Over $1.9 Million When He Otherwise Would Not Have Earned A Bonus. “An Office of Federal Housing Enterprise Oversight report in September accused the company of improperly deferring $200 million of estimated expenses in 1998, which allowed management to receive full annual bonuses. Had the expenses been recorded that year, no bonuses would have be en paid, the report said. Fannie Mae reported paying bonuses in 1998 to Johnson, who received $1.932 million; Raines, who then was chairman-designate, $1.11 million; Chief Operating Officer Lawrence M. Small, $1.108 million; Vice Chairman Jamie S. Gorelick, a former deputy attorney general, $779,625; Chief Financial Officer J. Timothy Howard, $493,750; and Robert J. Levin, who was executive vice president for housing and community development, $493,750.” (Albert B. Crenshaw, “High Pay At Fannie Mae For The Well-Connected,” The Washington Post, 12/23/04)
Johnson Also Received Fees And Compensation From Fannie Mae Worth $3.3 Million Between 2001 And 2006. “Johnson left the company before it was swept up in an accounting scandal that tarred its reputation, but even during the years of scandal, Johnson was reaping hundreds of thousands of dollars in consulting fees and other compensation, $3.3 million in all between 2001 and 2006.” (Jonathan Weisman and David S. Hilzenrath, “Obama’s Choice Of Insider Draws Fire,” The Washington Post, 6/11/08)

In 1998, Fannie Mae Improperly Deferred $200 Million Dollars In Expenses, Which Allowed Johnson To Receive Nearly $2 Million In Bonuses; Johnson Would Not Have Received A Bonus If The Money Had Been Properly Expensed. “An Office of Federal Housing Enterprise Oversight report in September accused the company of improperly deferring $200 million of estimated expenses in 1998, which allowed management to receive full annual bonuses. Had the expenses been recorded that year, no bonuses would have been paid, the report said. Fannie Mae reported paying bonuses in 1998 to Johnson, who received $1.932 million; Raines, who then was chairman-designate, $1.11 million; Chief Operating Officer Lawrence M. Small, $1.108 million; Vice Chairman Jamie S. Gorelick, a former deputy attorney general, $779,625; Chief Financial Officer J. Timothy Howard, $493,750; and Robert J. Levin, who was executive vice president for housing an d community development, $493,750.” (Albert B. Crenshaw, “High Pay At Fannie Mae For The Well-Connected,” The Washington Post, 12/23/04)

In 1998, Johnson, Then-CEO Of Fannie Mae, Hosted The Opening Ceremony Of A Lobbying Office In Oklahoma. “The concern is whether such efforts were made to bolster Fannie’s business more than to advance philanthropic goals. Critics say the foundation helped to reinforce ties with various congressional groups forged by Fannie’s in-house lobbyists. At times the two seemed indistinguishable: They often sponsored events in tandem. Both were big donors to the CBCF’s annual awards gala in 2003 and a similar black-tie event for the Congressional Hispanic Caucus Institute in 2002. In 1998, then-CEO Jim Johnson hosted the opening ceremony of a lobbying and public relations office in Oklahoma, an event attended by former Oklahoma Governor Frank Keating and then-Senator Don Nickles (R-Okla.). But wearing his other hat as the foundation’s chairman, Johnson also took the opportunity to announce $125,000 worth of grants to local charities.” (Dawn Kopecki, “Philanthropy, Fannie Mae Style,” Business Week, 4/2/07)

Obama Solicits Advice From Former Fannie Mae CEO Franklin Raines, Who Was “Under The Shadow Of A $6.3 Billion Accounting Scandal”:

The Obama Campaign Has Solicited Franklin Raines, Who “Stepped Down As Fannie Mae’s Chief Executive Under The Shadow Of A $6.3 Billion Accounting Scandal,” For Advice On Mortgage And Housing Policy. “In the four years since he stepped down as Fannie Mae’s chief executive under the shadow of a $6.3 billion accounting scandal, Franklin D. Raines has been quietly constructing a new life for himself. He has shaved eight points off his golf handicap, taken a corner office in Steve Case’s D.C. conglomeration of finance, entertainment and health-care companies and more recently, taken calls from Barack Obama’s presidential campaign seeking his advice on mortgage and housing policy matters.” (Anita Huslin, “On The Outside Now, Watching Fannie Falter,” The Washington Post, 7/16/08)

Like Jim Johnson, Raines Received Low-Rate Home Loans From Countrywide, A Major Seller To Fannie Mae. “Fannie Mae’s former CEO, Jim Johnson, resigned Wednesday as the leader of likely Democratic presidential nominee Barack Obama’s search for a running mate after The Wall Street Journal reported that he and another former CEO, Franklin Raines, received low-rate home loans from troubled mortgage lender Countrywide Financial Corp. a major seller of home loans to Fannie Mae.” (Alan Zibel, “Fannie Mae CEO Says Ethics Policy Bans Discounts,” The Associated Press, 6/12/08)
Former Fannie Mae Chairman Frank Raines Was Accused Of Manipulating The Company’s Earnings. “Former Fannie Mae chairman and chief executive Franklin D. Raines, accused of manipulating the housing finance company’s earnings, is challenging regulators to make their case against him beginning Feb. 16 instead of waiting until the end of the year.” (David S. Hilzenrath, “Fannie Mae’s Former Chief Wants Earlier Hearing Date,” The Washington Post, 2/6/07)
Raines Was Forced Out As Fannie Mae’s CEO In December 2004. “Former chief executive Franklin D. Raines and chief financial officer J. Timothy Howard were forced out Tuesday night after accounting mistakes that could cost Fannie $9 billion in reported profit.” (David S. Hilzenrath, “Fannie Mae Exit Packages Face Review,” The Washington Post, 12/23/04)

Under Raines’ Leadership, Fannie Mae Committed “Extensive Financial Fraud” And Was Forced To Pay A $400 Million Civil Penalty. “In a May report, the Securities and Exchange Commission and the Office of Federal Housing Enterprise Oversight found that Fannie Mae under Raines perpetrated ‘extensive financial fraud’ so that executives could collect big bonuses. There have been no criminal charges, but the conduct of Raines and other senior Fannie executives ‘was inconsistent with the values of responsibility, accountability, and integrity,’ the agencies said. Fannie paid a $400 million civil penalty this year to the SEC and OFHEO.” (Jay Hancock, Op-Ed, “Raines Claiming Accountability Isn’t Enough,” The [Baltimore] Sun, 12/10/06)

Penny Pritzker, Obama’s National Finance Chairman And Hyatt Heiress, Co- Owned Superior Bank FSB, A Subprime Mortgage Lender:

Penny Pritzker Is The National Finance Chairman For Barack Obama. “And Penny Pritzker, a Chicago philanthropist, serves as Mr. Obama’s national finance chairman even as her brother, Jay Robert, holds fund-raisers across town for Mrs. Clinton.” (Jodi Kantor, “In Democratic Families, Politics Makes For Estranged Bedfellows,” The New York Times, 2/4/08)

Penny Pritzker Is An Heiress To Hyatt Hotel Fortune. “As billionaire Penny Pritzker stood in the kitchen of her Lincoln Park home in early January, she and her husband debated whether her schedule could take on another massive challenge. The Hyatt hotel heiress was running multiple businesses, trying to spend time with her two teenage children and dealing with numerous civic and philanthropic responsibilities.” (John McCormick, “Pritzker Blazes Campaign Trail,” Chicago Tribune, 9/30/07)

The Pritzker Family Owns Ticketmaster. “Ticketmaster first became a center of controversy in the music world 13 years ago, when alternative rockers Pearl Jam declared war on what they called an unjust monopoly — and it all started in Chicago. Though Ticketmaster was founded in 1978, its rise to prominence in the concert world really began in 1982, when it was purchased for $4 million by Chicago investor Jay Pritzker, head of the billionaire family that owns the Hyatt hotel chain. From that point on, its headquarters were based in Los Angeles, and it quickly became the dominant force in ticket sales nationwide.” (Jim DeRogatis, “Chicago And Ticketmaster: The History,” Chicago Sun-Times, 6/17/07)

The Pritzker Family Co-Owned Superior Bank FSB. “Ms. Pritzker, who declined to be interviewed, has confronted other challenges, including the 2001 collapse of Superior Bank FSB, which the Pritzker family co-owned, resulting in a $460-million payment to federal regulators, and a rift over family assets that settled out of court in 2005. She oversees the Pritzker family’s non-hotel real estate interests and chairs its TransUnion LLC credit bureau.” (Steven R. Strahler, “Penny Pritzker,” Chicago Crain’s Business, 5/7/07)

Superior Bank Was A “Subprime Lender That Made Risky Mortgage And Auto Loans To People With Poor Credit Histories.” “Auditors Ernst & Young...agreed to pay the FDIC $40 million in restitution in connection with the collapse of the bank, a subprime lender that made risky mortgage and auto loans to people with poor credit histories. It had about $2 billion in assets when it was shuttered.” (Kathy Bergen, “Millions For Pritzkers In Settlement,” Chicago Tribune, 12/28/04)

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