May 16, 2008 Evelyn Pringle
Three days after the Chicago Sun-Times reported that Aiham Alsammarae, the former electricity minister convicted of corruption in Iraq, put up $2.7 million in property to help raise $8.5 million to free Tony Rezko from jail in Chicago, the Times reported that Alsammarae had contributed six times to Obama's presidential campaign.
The April 29, 2008 report also noted that before he escaped from jail in Bagdad in December 2006, and returned to Chicago, Obama's US Senate office had sought information about Alsammarae from the State Department on October 16, 2006 on behalf of Alsammarae's family while he was being held in jail in Iraq.
As usual, when busted on the contributions given in January, February and March, the Obama camp said it would donate Alsammarae's money to charity and his spokesman, Ben LaBolt, put out the standard line that Obama does not ever "recall" meeting Alsammarae.
The money missing due to Alsammarae's corruption in Iraq during the two years he served as electricity minister between August 2003 and May 2005 is estimated to be $2 billion.
The Operation Board Games investigation revealed that Alsammarae signed contracts worth $200 million that benefited both Rezko and the Iraqi-born billionaire, Nadhmi Auchi, who ended up with Riverside Park, a 62-acre lot in the Chicago Loop estimated to now be worth $2.5 billion.
As noted previously in this series, understanding the connections between Auchi and Riverside Park and all the players is the key to understanding Operation Board Games. Financing deals in the Chicago real estate industry were the focus of the investigation from the start and the financing deals involving Riverside Park specifically.
On September 29, 2005, Crain’s Chicago Business news reported that General Mediterranean Holding, “a Luxembourg-based conglomerate headed by Nadhmi Auchi, is buying Riverside Park, a yet-to-be-built development on a prime 62-acre parcel on Roosevelt Road,” quoting Michael Rumman, the director of the Illinois Department of Central Management Services, as a consultant on the project.
The sale price was estimated to be about $130 million. Joseph Ryan, a local attorney representing GHM, told Crain's that Rezko would no longer be an investor in the project, but “there’s a possibility he may have a consultant’s role in the project."
Crain’s noted that Rezko and Auchi were introduced by a mutual acquaintance in London, and said: "They teamed up recently on a $150 million contract to build a power plant in Iraq."
"Auchi," Crain's also pointed out, "received a 15-month suspended sentence in France after being convicted in 2003 for taking kickbacks from French oil giant Elf."
"And U.S. officials are investigating allegations of bribery involving a mobile phone contract in Iraq that recently was awarded to Orascom, an Egyptian firm in which Mr. Auchi is a shareholder," the report stated.
On May 30, 2006 Crain’s reported that before the GMH deal, Rezko and Daniel Mahru, former co-owners of the real estate firm Rezmar, had piled up more than $100 million in debt on the property. “A liquidity crisis in early 2005 resulted in a technical loan default, property documents show, forcing the eventual sale to Mr. Auchi,” the report said.
The plan was to build 4,600 residential units and about 670,000-square-feet of retail space on the site. However, the development has now been stalled for years being the new owner Auchi is not allowed in this country and several of his surrogates who were supposed to be developing the project appear to be headed to prison.
Future plans are likely not good either being it’s doubtful that many real estate developers in Chicago are eager to hook up with Auchi and Riverside Park at this stage of the game.
Nobody knows Auchi anymore
When the news surfaced that Auchi had made a loan to Rezko a month before Obama and Rezko entered into a real estate deal to buy a mansion and lot for over $2 million in June 2005, rumors started flying about a dinner held in Chicago at the exclusive Four Season’s Hotel in April 2004, for Auchi and other investors from the Middle East, attended by many top Illinois officials and Alsammarae.
Before long, the media was rehashing the fact that shortly after his visit to Illinois, Auchi did invest $10 million with Rezko in Riverside Park. On June 14, 2007, former Rezko associates told the New York Times that Obama dropped in at the Four Season's event at Rezko's request and his visit helped impress foreign guests.
“I remember that he had been on the campaign trail, and he was completely wiped out and exhausted,” said Anthony Licata, identified as an attorney who represented Rezko on real estate deals.
“My recollection is that he drank ice tea, and he talked about how he was really making progress, and we were all excited to see him,” Licata said.
Obama spokesman, Bill Burton told the Times it was not unusual for Obama to be “shaking hands late in the Senate primary season.”
“If someone recalls meeting him during this period,” Burton said, “Senator Obama has no reason to doubt it.”
Licata was an attorney for Riverside Park and an investor. He donated $1,000 to Obama's senate campaign six months after the Four Season's party and also gave $5,000 to the fund for Blagojevich's future presidential bid.
On February 26, 2008, an aide to Obama told the Times of London that Obama did attend an event at the Four Seasons but did not remember meeting Auchi. "He shook a lot of hands and met a lot of people," the aide said. "We do not remember individual people."
Two days later, Bill Burton told the Times: "The bottom line is Obama does not recall ever meeting him [Mr Auchi]."
All members of the “Combine,” have tried to distance themselves from Auchi's visit because as previously explained, he is not allowed in the US. However, the question that remains is how did he enter this country in April 2004, after his 2003 conviction in France. According to the February 28, 2008 Sun-Times: “Auchi's London-based lawyer, Alasdair Pepper, wouldn't answer that."
"State Department and Homeland Security officials said they couldn't comment,” according to the Times.
During a March 14, 2008 interview, the Times asked Obama: "Did you ever help Auchi enter the country?"
He said, "No." But when asked the follow-up question of whether “his office” helped Auchi enter the country, he replied, "Not that I know of."
On January 28, 2008, Raw Story's Michael Roston reported that after rumors began spreading that Auchi may have met with Obama, "In what appears to be a clumsy "cleanup" operation evidence of Auchi's visit to Illinois has now been deleted from two websites linked to his company, General Mediterranean Holding."
The reports in the media always say Rezko hosted the Four Season's event, when in fact Governor Rod Blagojevich directed the show.
ABC News first posted a link to photos showing Auchi meeting with Blagojevich on the site, “Middle East Online.” The description under a picture of Auchi and Blagojevich, still accessible on the internet a month ago, stated: “Governor of the State of Illinois, Mr Rod Blagojevich hosted an official reception in honour of Mr Auchi.”
Another picture, taken in the Chicago office of the President of the Illinois state senate bears the title: “Illinois State Senate President Mr Emile Johns Jr. meets Mr Auchi.”
Jones is often described as Obama’s “mentor.” On February 26, 2007, the Washington Post noted that once he got to the state Senate, Obama “became a political protege of current Senate President Emil Jones, a 35-year veteran of the legislature and one of the state's most influential black lawmakers.”
Obama avoided directly answering questions about Auchi and Alsammarae until March 14, 2008, when he was asked whether he ever met them, during an interview with the Sun-Times. In response, he said, "Tony called and asked if I could stop by because he had a number of friends that he had invited to dinner and he wanted me to meet them."
"I told him that I would be happy to come by if my schedule allowed it," he said. "And it did."
But he said could not recall any names and apparently expects the public to believe that he made a special trip to a private dinner at an exclusive club and never thought to ask why Rezko was throwing a shindig for “friends” from the Middle East, or why they would want to meet an state senator from Illinois to begin with
However, this is exactly what the public is being led to believe due to the fact that every time the subject comes up, the mainstream media repeats this ridiculous fabrication.
To begin with, Obama has continuously claimed that Rezko never asked him for favors. On November 5, 2006, the Sun-Times published his answers to questions that were submitted to him after the news of the real estate deal with Rezko surfaced, and Obama stated: “I have never been asked to do anything to advance his business interests.”
A day later, on November 6, 2006, he told reporters in Waukegan Illinois, “He had never asked me for anything. I'd never done anything for him.”
In December 2006, he told the Washington Post: "I've known him for 15 years."
“He had never asked me to do anything.”
In a March 14, 2008 interview with the Tribune, Obama was asked whether he ever thought Rezko would expect something from their relationship, and he stated: "No. Precisely because I had known him for years and he hadn't asked me for something."
When asked why politicians were drawn to Rezko, he said: "In my interactions with him, he was very gracious. He did not ask me for favors."
Five days later, on March 19, Stuart Levine testified in the Rezko trial and told the jury he had flown Rezko’s wife and children back to Chicago on a private jet from a vacation in Mexico because Rezko had to leave early to prepare for the dinner he was hosting for Auchi in Chicago. Rezko was hoping to convince Auchi to invest in Riverside Park, he told the jury.
Levine said he attended the dinner with other guests that included Illinois Lt Governor Pat Quinn, Christopher Kelly, Jack Lavin, the head of Blagojevich’s economic development agency, and Michael Rumman, director of the Department of Central Management Services.
Levine’s testimony and reports in the media always sounded like they were referring to one event at the Four Season‘s. But on April 14, 2008, Levine dropped a bombshell, when in response to questions for Rezko’s attorney, he testified that the dinner he attended in Auchi’s honor was held at Rezko’s home and Obama and his wife Michelle were there.
The Tribune's Gavel-to-Gavel noted that, “Rezko was trolling for investment capital for a South Loop development, and the party was part of his campaign to get Auchi to invest.”
The Associated Press ran a follow-up story on April 14, 2008, calling Auchi a "mysterious billionaire with his hands on a major chunk of Chicago real estate," and described his arrival in Illinois in April 2004, as a major event in which Lt Governor Quinn “headed a welcoming delegation that greeted Auchi when his private plane touched down at Chicago's Midway Airport.”
The article noted that Quinn personally rode downtown with Auchi and his family and that Quinn said he later attended the party for Auchi held at Rezko's home. The article also mentioned that Auchi was the guest of honor at another lavish dinner party at the Four Seasons, and said, “Blagojevich was on hand for the festivities and posed for photos with the visiting tycoon.”
However, Blagojevich spokeswoman Abby Ottenhoff was quick to tell the Press: "He has not met with or talked to Mr. Auchi since then."
When Senate President Jones was asked if he remembered meeting Auchi, he asked: "Who?"
"I don't know who he is," Jones told the Associated Press.
Regarding the photo of him and Auchi, Jones' press secretary said: "It was strictly a grip and grin."
"He doesn't even remember it."
The line from Obama spokesman, Ben LaBolt, was again: "As he has said previously, Senator Obama does not recall meeting Nadhmi Auchi at any time or on any occasion, and this includes any event that may have been held for Mr. Auchi."
"Senator and Mrs. Obama have no recollection of attending any such event," he stated.
But on April 16, 2008, Sun-Times columnist, Michael Sneed, reported that Obama had even made toasts at Rezko's party, and wrote:
“Dem presidential contender Barack Obama's handlers may be telling the press Obama has NO "recollection" of a 2004 party at influence peddler Tony Rezko's Wilmette house, but a top Sneed source claims Obama not only gave Rezko's guest of honor, Iraqi billionaire Nadhmi Auchi, a big welcome . . . but he made a few toasts!”
In an April 26, 2008, interview with Tribune reporter, John McCormick, Obama did not deny that he and Michelle were at the party but said he did not recall being there, stating:
"I have to say that I just don't recall it. I mean this has been, I guess, four years ago. My understanding, through his lawyer, Mr. Auchi doesn't recall meeting me and you know, I can't speak for other people's recollections.
“But I've said publicly, on many occasions, that I had a social relationship with Mr. Rezko."
The last comment is ridiculous because what Obama has said on “many occasions,” is he only had lunch or breakfast with Rezko once or twice a year and he and Michelle had dinner with Rezko only three or four times in the 15 years they knew each other. When asked whether Rezko may have been using him to impress potential investors, Obama replied:
"I just don't have a recollection of the event. As I said, I was in the middle of running a U.S. Senate race. So, you know, I was speaking all the time, probably six, seven, eight times a day."
“Right,” McCormick said, “but why go to this event that was specifically designed for Rezko investors?”
"As I said, I have no recollection of the event. Alright?" Obama replied. When asked whether he would remember making a toast to Auchi, Obama stated:
"I'm fairly certain I would remember giving a specific toast to somebody. Keep in mind, though, that this was right in the midst of my U.S. Senate campaign, so I was doing three or four events a day.
“So, I mean, there were very few events where I wasn't speaking on anything. But I have no recollection of this particular event."
However, the Tribune has obtained a copy of an Obama "upcoming events" schedule on his old Senate campaign web site which shows Obama had no personal campaign activities on April 3, 2004, the day of the party.
Riverside Park funds legal defense for Board Games defendants
Although revelations about the $3.5 million loan immediately prior to the Rezko-Obama real estate deal led to a few stories in the press, it was Auchi’s second $3.5 million loan in April 2007, that drew the most headlines after Rezko was thrown in jail in January 2008.
After he was indicted, Rezko claimed he was flat broke and was living off $7,500 a month from friends and family. In a November 17, 2006 letter to the court, his attorney reported there were no assets being held in his name or for his benefit abroad, and that, other than an inactive contract in Iraq, he “has no foreign assets, or holdings, or business interests.”
Rezko even told the court he had no money for his legal defense. In a hearing on January 16, 2007, the judge asked Rezko: “How are you paying Mr. Duffy?”
“I have been very fortunate to have the family I have and to have some friends that I have. I've been very fortunate,” he said.
“So, family members and friends of paying your legal bill?” she asked. “Yes, your Honor,” Rezko replied.
“I can confirm that, your Honor,” Duffy told the judge. He went on to tell the court that he had met with members of Rezko’s church, and they “have been extremely supportive and have come forward.”
“Mr. Rezko has not provided us any money since his indictment,” Duffy told the court.
Rezko also told the judge Rita Rezko had sold the lot next door to Obama but had not received a dime. “Your Honor,” he said, “my wife sold the land, too, in Hyde Park the last few weeks.”
“Did she personally own it or did an L.L.C. own it?” the judge asked. “She owned it in a trust, I believe,” Rezko said.
“How much did she get for the land?” the judge asked.
“A hundred-twenty-thousand was in excess of the mortgage on the land, and that hundred-twenty-thousand went all in full to the buyer for a previous debt,” Rezko said.
“So, she didn't walk away with any cash?” the judge asked. “Not one dollar,” he stated.
"Other than the 62 acres, your Honor, I do not have any other assets," Rezko told her.
“If the property is sold today for $200 million," he said, "I will not receive one dollar from the proceeds."
The judge specifically asked whether he could get Auchi to wire him say $100,000 if he wanted it and Rezko basically said he did not know because he never asked.
However, Duffy told the judge, “although he has a personal relationship with the Chairman -- or he believes he does -- I want you to understand I don't think Mr. Rezko could call up on the phone and ask for favors or money from them.”
At a February 27, 2007 hearing, regarding Riverside Park, the judge told Rezko: "If something changes–and I believe I have advised you of this or ordered this before, but if not I want to make clear. If something changes with respect to the status of the 62 acres that we talked about and that I asked you multiple questions on, you must notify the Court immediately."
Rezko was allowed to remain free after posting $2 million bond secured by properties of family and friends. But in January 2008, the judge was informed that Auchi was funneling money from foreign banks via the Chicago law firm of Freeborn & Peters, to fund Rezko’s legal defense and she threw him in jail.
In the motion to revoke bail, prosecutors said Rezko "has had a long-standing relationship" with the Freeborn. Freeborn has represented Rezko “in litigation with franchisor Papa John’s Pizza,” and “appears to represent Rezko in currently pending civil litigation,” they wrote.
The government alleged the wire transfers showed Rezko had access to overseas funds that could enable him to flee and hide out in countries without extradition treaties with the US. In the motion, prosecutors said Rezko's obtaining money originating in Lebanon was consistent with his continuing ties to the Middle East and overseas travel, and noted that:
“Between approximately November 2005 and October 2006, Rezko took multiple trips to Saudi Arabia, United Arab Emirates, Jordan, and Qatar.
“Several of Rezko's overseas trips included Rezko traveling through, and spending time in, Syria and Lebanon. The United States does not have extradition treaties with Saudi Arabia, United Arab Emirates, Qatar, Syria, or Lebanon.”
"Through records from Northern Trust Bank,” prosecutors wrote, “the government has learned there was an approximately $3.5 million wire transfer in April 2007 of which a substantial portion immediately was directed to Rezko’s relatives."
Northern Trust being the same entity holding the confidential Land Trust for Obama‘s mansion and 10-foot lot. Prosecutors said within a week, the $3.5 million was moved to another account at Northern Trust, the “client fund account,” held by the Freeborn firm.
A brief filed by Rezko on January 29, 2008, said, "his business partner had agreed to loan him $3.5 million for legal expenses and to support his family pending trial."
In fact, $1.9 million went to law firms. In addition, on July 25, 2007, GMH wired an additional $200,000. “This transfer was also apparently for Rezko’s legal fees,” prosecutors wrote in their motion. Another $200,000 went to reimburse people who had advanced money for legal fees or living expenses and at least $89,000 was paid to other attorneys and accountants, according to the filings.
In the motion, prosecutors also told the court: "Contrary to Rezko's November 2006 representation to the court that he had no business interests abroad," a confidential informant, "informed the government that Rezko has been interested in working on real estate deals in Syria on property owned by Auchi."
According the informant, “Auchi owned 3 or 4 properties, including one commercial retail shopping center, and Rezko was interested in assisting in the development of the property."
The motion further stated, “Rezko has repeatedly informed the Court that his interest in the 62-acre Property is illiquid, speculative, and only subject to his getting value from it after satisfaction of large prior existing debts.”
Specifically, that it remains to be determined whether this asset is of significant value, and “how that value can be liquidated given the project’s value is tied to the development of what is currently a 62 acre vacant lot,” prosecutors noted.
The motion goes on to state that in contrast to Rezko’s representations, the government learned that “in September 2006, just a few months” before Rezko represented that his interest was illiquid and speculative, “Rezko attempted to post as collateral for a loan part of his interest in the 62 Acre Property.”
“Further,” prosecutors wrote, “on December 12, 2007, the government obtained documents that indicate that Rezko has transferred, restructured, and/or sold significant portions of his interest in the 62 Acre Property.”
Specifically, they noted that an August 10, 2007, Settlement Agreement, signed by Rezko and Christopher Kelly showed Rezko transferred "a portion of his interest" in Riverside Park to Kelly in exchange for the forgiveness of approximately $1.7 million in loans that Kelly made through his business to Rezko between late 2002 and 2006.
Even more troubling, prosecutors said, between January 2007 and August 2007, "unbeknownst to at least the government," Rezko liquidated an additional 60% share of the company that held Rezko ownership in Riverside Park to General Mediterranean Holdings affiliate, Orifarm.
Although many creditors are waiting to be paid from Rezko's sale of Riverside Park, prosecutors said, it appears "Rezko is handpicking the creditors that will be repaid while other creditors," some who are owed considerably more than Kelly, "are unaware that Rezko's one remaining significant asset is being distributed in a manner that will impede their ability to be made whole."
A few days later, prosecutors were no doubt outraged to learn that Auchi had apparently become legal defense fund for Board Game defendants who keep the secrets. On February 7, 2008, Mike Robinson reported another: “Indicted Blagojevich fundraiser got loan from Iraqi billionaire,” in the Associated Press.
Christopher Kelly “has arranged to get a loan from the same Iraqi billionaire whose $3.5 million payment got another member of the governor's inner circle thrown in jail," he wrote. Kelly received the loan five days before Rezko‘s bail was revoked, and he pledged all of his shares in a Nevada land partnership as collateral, Robinson found.
On April 14, 2008, the Associated Press noted that in 2005, reports in Chicago said Auchi had purchased the entire property, but “it seems Rezko was able to hang onto at least some shares in the land through the Riverside Development Corp.”
“Court papers say that the $3.5 million wired to Rezko's lawyers by Auchi was a loan that was erased in exchange for shares in the 62-acre property,” the report wrote. “And they say Auchi had planned at the time to pay $4 million more for the rest of the tract.”
"All the loans and interest have now been paid by Mr. Rezko by means of the transfer of shares" to my client, Auchi’s attorney told the Associated Press. "Mr. Rezko has no remaining shareholding in the development," he said.
However, Joe Cacciatore told the Associated Press that he was a partner with Rezko in Riverside Park before Auchi showed up, and has not seen any money as a result of the sale. Cacciatore has filed a lawsuit against his former partners, according to the article.
Carriatore says he met Auchi at an "Obama fundraising party" Rezko gave at his home several years ago. "He was well dressed," he told the Press. "He seemed distinguished."
According to Obama, Rezko only hosted one fundraising party at his home in July 2003. So exactly how times did Obama party with Auchi?