On the defensive in August 2008 over McCain not knowing how many homes he has, the McCain campaign released a television ad saying that one of Obama's "biggest fundraisers," Chicago-area developer and recently convicted felon Tony Rezco, helped Obama buy his house by "purchasing part of the property he couldn't afford." [1]
Similarly, McCain supporter Mitt Romney stated in June 2008 that Rezco "financed" Obama's house [2]; McCain supporter Senator Lindsey Graham (R-SC) made a similar claim the same week:
KERRY: If John McCain is such a reformer, how did all these lobbyists start running his campaign? ...
GRAHAM: ... John McCain didn't borrow money from a guy going to jail to build his house, so if we're going to start talking about associations, that's fine, we'll do that." [3]
Rezco did not help finance Obama's house, however, via purchasing part of the property, loaning money to Obama, or otherwise. The related claim that Rezco saved Obama $300,000 on his house purchase is also false.
What Rezco did was buy a lot adjacent to the house the Obamas purchased when the Obamas purchased their house, part of which the Obamas purchased from the Rezcos at above market value the following year.
Details:
Obama's book "Dreams From My Father" was selling well enough by 2005 that the Obamas decided to move to a house from their condominium and found a house they wanted to purchase. The sellers had divided the property - a century-old house and an adjacent undeveloped lot - into separate parcels and listed them separately. The sellers were asking $1.9 million for the house, which per Obama had been on the market for months; the Obamas bargained them down to $1.65 million, which they financed themselves. [5,6]
Per Obama, Rezco - a local developer and long-time Obama friend and campaign contributor who was later convicted on felony corruption charges - learned about the adjacent lot when Obama asked for Rezco's professional opinion with respect to whether the house was a good buy. [5] The same day in June 2005 when the Obamas purchased their house the Rezcos purchased the adjacent lot for the asking price of $625,000; the two deals were not related aside from the seller's stipulation that the closing date for the two properties be the same. The seller has corroborated Obama's account that the Rezkos were not involved in the Obamas' house negotiations. [5,7,8,9]
In January 2006 the Obamas bought one-sixth of the Rezcos' lot for $104,500. Obama's appraiser estimated the 10-foot-wide strip at $40,500 but Obama instead paid $104,500 because that was a sixth of the Rezcos' original $625,000 purchase price. The Rezcos sold the rest of the lot in December 2006 for $575,000, making a total net gain of $54,500 on the lot not taking into account taxes and related fees. [6,9]
On June 4, 2008 a federal jury convicted Rezco of 16 felony counts, including fraud, money laundering and bribery, in an influence-peddling scheme with longtime Republican insider Stuart Levine. The charges against Rezko were unrelated to his connection to Obama, who was not implicated in any wrongdoing. [10-13]
The Chicago Tribune, June 4, 2008:
Witnesses against Rezko claimed his alleged schemes involved a host of political insiders from both major parties. Among those whose names came up repeatedly during the trial were Chris Kelly, another top fundraiser for [Illinois Governor] Blagojevich; William Cellini, a veteran Republican power broker; and Robert Kjellander, the longtime Republican national committeeman from Illinois.
Rezko befriended many Illinois politicians and was a major fundraiser for some, most prominently Blagojevich and Obama. The criminal charges against Rezko had nothing to do with his connection to Obama. [13]
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How rich is McCain - did he really not know how many homes he has?
Get the facts at McCain Fact Check.
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[1] Political Radar. McCain Ad Rips Obama on Rezko ABC News August 21, 2008
[2] Harrell, Jeff. Feinstein: Clinton won popular vote Media Matters Jun 5, 2008
[3] Grim, Ryan. Feinstein: Clinton won popular vote Chicago Tribune June 6, 2008
[4] Walzer AJ. Stephanopoulos did not challenge Graham's false suggestion that Obama "borrow[ed] money from" Rezko "to build his house" Media Matters Jun 8, 2008
[5] Transcript. Tribune interview with Barack Obama Chicago Tribune March 16, 2008
[6] Jackson, David. Barack Obama: I trusted Rezko Chicago Tribune March 15, 2008
[7] Slevin, Peter. Obama Says He Regrets Land Deal With Fundraiser Washington Post December 17, 2006
[8] Newton-Small, Jay. Interview with Obama: Still Confident TIME March 06, 2008
[9] Burger, Timothy J. Obama Bought Home Without Rezko Discount, Seller Says Bloomberg February 18, 2008
[10] Secter B & Coen J. Rezko convicted of corruption Chicago Tribune June 4, 2008
[11] Einhorn C & Saulny S. Ex-Obama Fund-Raiser Is Convicted of Fraud New York Times June 5, 2008
[12] Chicago Tribune. Tony Rezko
[13] Selvin, Peter. Obama Says He Regrets Land Deal With Fundraiser Washington Post December 17, 2006
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Additional Resources:
FactCheck.org. Does Obama have a real estate problem?
FactCheck.org. Rezko Reality August 22, 2008
Politifact.com. Did Obama know that Tony Rezko was saving him $300,000 on the purchase of his home?
Politifact.com. Obama couldn't have afforded his home without Rezko's help.
Politifact.com. Obama's Rezko connection
