The Man Behind the Image by OPUBCO Communications Group

special REPORT

SUPPLEMENT TO

September , 201 2

THURSday, September 20, 2012

The Man Behind the Image CHAPTER i

A childhood of privilege, not hardship. P. 3

u Myth of the ‘rock-star’ professor. P. 4

CHAPTER 3

The 1997 speech that launched Obama. P. 5

u CHAPTER 4

Defense attorney for Chicago slumlord. P. 6

CHAPTER 5

Obama’s toughest critics on the Left. P. 7

CHAPTER 6

The poor people Obama left behind. P. 8

u CHAPTER 7

Myth of Obama as state Senate reformer. P. 9

CHAPTER 8

Using state pensions to help friends. P. 10

CHAPTER 9

Obama’s Arab-American network. P. 11

u conclusion

Obama brings Chicago to Washington. P. 12

T H E Wa sh i n g t o n E X AMINER

CHAPTER 2

September , 201 2

T H E Wa sh i n g t o n E X AMINER

Special Report Introduction

Obama’s real-life story in 10 acts Few if any of his predecessors took the oath of office with higher public hopes for his success than President Obama on Jan. 20, 2009. Millions of Americans hailed his election as an end to partisanship, a renewal of the spirit of compromise and a reinvigoration of the nation’s highest ideals at home and abroad. Above all, as America’s first black chief executive, Obama symbolized the healing of long-festering wounds that were the terrible national legacy of slavery, the Reconstruction Era and Jim Crow. We would be, finally, one nation. But after nearly four years in office, Obama has become a sharply polarizing figure. His admirers believe he deserves a special place alongside Wilson, the Roosevelts and LBJ as one of the architects of benevolent government. His critics believe he is trying to remake America in the image of Europe’s social democracies, replacing America’s ethos of independence and individual enterprise with a welfare state inflamed by class divisions. In an effort to get a clearer picture of Obama — his shaping influences, his core beliefs, his political ambitions and his accomplishments — The Washington Examiner conducted a four-month inquiry, interviewing dozens of his supporters and detractors in Chicago and elsewhere, and studying countless court transcripts, government reports and other official documents. Over the years and in two autobiographies, Obama has presented himself to the world as many things, including radical community organizer, idealistic civil rights lawyer, dynamic reformer in the Illinois and U.S. senates, and, finally, the cool presidential voice of postpartisan hope and change. With his air of reasonableness and moderation, he has projected a remarkably likable persona. Even in the midst of a historically dirty campaign for re-election, his likability numbers remain impressive, as seen in a recent AP-GFK Poll that found 53 percent of adults have a favorable view of him.

via associated press

ABOVE: Obama’s father, also named Barack Obama, and mother, Stanley Ann Dunham (her father always wanted a son). Obama’s father left the family for Harvard when Barack was just one. This visit, when Obama was 10, was the last time he saw his father; by then Ann had remarried. LEFT: Obama as a child with his baseball bat in Hawaii. PICTURES ON THE COVER LEFT: Barack “Barry” Obama, second row right, in a 1978 senior yearbook photo at the Punahou School in Honolulu. CENTER: Obama in 1995 in his office at the University of Chicago Law School, where he was a lecturer. RIGHT: Obama campaigning for state Senate in Chicago.

But beyond the spin and the polls, a starkly different picture emerges. It is a portrait of a man quite unlike his image, not a visionary reformer but rather a classic Chicago machine pol who thrives on rewarding himself and his friends with the spoils of public office, and who uses his position to punish his enemies. Peter Schweizer captures this other Obama with a bracing statistic in his book “Throw Them All Out,” published last year. In the Obama eco-

nomic stimulus program’s Department of Energy loans, companies owned and run by Obama contributors and friends, like Solyndra’s George Kaiser, received $16.4 billion. Those not linked to the president got only $4.1 billion. The Energy Department is far from the only federal program in which favoritism has heavily influenced federal grants. To paraphrase Tammany Hall’s George Washington Plunkitt, Obama has seen his opportunities and taken them, over and over. – Mark Tapscott / Executive Editor

Special Report

Chapter I A childhood of privilege, not hardship he fathered the young Obama. He abandoned Obama Jr.’s mother when the boy was 1. In 1964, Dunham filed for a divorce that was not contested. Her parents helped to raise the young Obama. Obama’s mother met her second husband, an Indonesian named Lolo Soetoro, while working at the East-West Center in Hawaii. They married, and in 1967, the young Obama, then known as Barry Soetoro, traveled to Indonesia with his mother when the Indonesian government recalled his stepfather. In Indonesia, the family’s circumstances improved dramatically. According to Obama in his autobiography “Dreams from My Father,” Lolo’s brother-in-law was “making millions as a high official in the national oil company.” It was through this brother-in-law that Obama’s stepfather got a coveted job as a government relations officer with the Union Oil Co. The family then moved to Menteng, then and now the most exclusive neighborhood of Jakarta, where bureaucrats, diplomats and economic elites reside. A popular Indonesia travel site describes Menteng: “Designed by the Dutch Colonial Government in 1920s, Menteng still retains its graceful existence with its beautiful parks, cozy street cafes and luxurious housing complexes.” In 1971, his mother sent young Obama back to Hawaii, where his grandmother, Madelyn, known as Toots, would become one of the first female vice presidents of a Honolulu bank. His grandfather was in sales.

Obama’s grandparents moved the same year into Punahou Circle Apartments, a sleek new 10-story apartment building just five blocks from the private Punahou School, which Obama would attend from 1971 to 1979. Obama explains in “Dreams from My Father” that his admission to Punahou began “the start of something grand, an elevation in the family status that they took great pains to let everyone know.” To his credit, Obama did not downplay Punahou’s upscale status, noting in his autobiography that it “had grown into a prestigious prep school, an incubator for island elites. Its reputation had helped sway my mother in her decision to send me back to the States.” Obama also admitted in the book that his grandfather pulled strings to get him into the school. “There was a long waiting list, and I was considered only because of the intervention of Gramps’s boss, who was an alumnus.” The school still features a lush hillside campus overlooking the Waikiki skyline and the Pacific Ocean. It was one of the most expensive schools on the island, and both Obama and his half sister Maya Soetoro-Ng received scholarships. While the Dunhams were not among the wealthiest families on the island, he nevertheless studied and socialized with the children of the social and financial elite. Obama has said he didn’t fit in at the school. But that’s not how other Hawaiians remember it. Associated Press writer Sudhin Thanawala reported from Hono-

lulu in 2008 that “classmates and teachers say Obama blended in well. He served on the editorial board of the school’s literary magazine, played varsity basketball and sang in the choir. He went on the occasional date.” In his recent book “Barack Obama: The Story,” Washington Post reporter David Maraniss said the future chief executive often smoked marijuana with prep school friends, rolling up the car windows to seek “total absorption,” or “TA.” They called themselves the “Choom Gang.” Edward Shanahan, a retired newspaper journalist who now edits downstreet.net and makes no effort to conceal his admiration for Obama, retraced his Hawaii years shortly after the president was elected. Shanahan wrote that Obama lived in a “well-off neighborhood near the University of Hawaii where Barry, as he was known, resided in a comfortable home with his mother and her parents before she took him to Indonesia.” Sanahan said “our tour ended up on the lush, exquisitely maintained and altogether inviting campus of Punahou School, which we can

T H E Wa sh i n g t o n E X AMINER

First lady Michelle Obama told the Democratic National Convention that “Barack and I were both raised by families who didn’t have much in the way of money or material possessions.” It is a claim the president has repeated in his books, on the speechmaking circuit and in countless media interviews. By his account, he grew up in a broken home with a single mom, struggled for years as a child in an impoverished Third World country and then was raised by his grandparents in difficult circumstances. The facts aren’t nearly so clearcut. Ann Dunham was just 18 years old when she gave birth to Obama. She was a freshman at the University of Hawaii. His Kenyan father, Barack Hussein Obama Sr., was a few years older than Ann. They were married against family wishes. Obama Sr. does not appear to have been welcoming or compassionate toward his new wife or son. It later turned out that he was secretly married to a Kenyan woman back home at the same time

September , 201 2

via associated press

TOP LEFT: Obama with his grandparents, Stanley and Madelyn Dunham, on a park bench in New York City, when Obama was a student at Columbia University. TOP RIGHT: Obama with his mother, Stanley Ann Dunham. His Kansasborn mother and Kenyan-born father, Barack Obama Sr., met at the University of Hawaii. They married, and Barack (“Blessed” in Arabic) was born on Aug. 4, 1961. BELOW: Obama and his bride Michelle Robinson, a fellow Harvard Law School graduate, on their wedding day, Oct. 3, 1992, in Chicago.

imagine was a place of great comfort for Obama.” Tellingly, Obama has never lived in a black neighborhood. Maraniss reported in his book that when leftist activist Jerry Kellman interviewed Obama for a community organizing job in Chicago, he asked Obama how he felt about living and working in the black community for the first time in his life. Obama accepted the job but chose not to live among those he would be organizing. Instead, he commuted 90 minutes each way daily from his apartment in Chicago’s famous Hyde Park to the Altgeld Gardens housing project where he worked. It was an early instance of Obama presenting himself one way while acting in quite a different way.

Special Report

TOP LEFT: Obama teaching at the University of Chicago Law School. TOP RIGHT: The University of Chicago Law School building. BELOW: Obama arrived in Chicago in 1985 with a college degree, a map of the city and a new job as a community organizer, only to leave a few years later for Harvard Law School.

September , 201 2

“No one remembers him. He was not a participant in luncheons or workshops. He was here and gone.”

Chapter 2

Myth of the ‘rock-star

T H E Wa sh i n g t o n E X AMINER

Time magazine gushed in 2008 about Barack Obama’s 12-year tenure as a law lecturer at the University of Chicago Law School, saying, “Within a few years, he had become a rock-star professor with hordes of devoted students.” That may have been true during his first two years, when he ranked first among the law school’s 40 instructors, with students giving him a rating of 9.7 out of a possible 10. But law student evaluations made available to The Washington Examiner by the university showed that his popularity then fell steadily. In 1999, only 23 percent of the students said they would repeat Obama’s racism class. He was the third-lowest-ranked lecturer at the law school that year. And in 2003, only a third of the student evaluators recommended his classes. His classes were small. A spring 1994 class attracted 14 out of a student body of 600; a spring 1996 class drew 13. In 1997, he had the largest class of his tenure with 49 students. But by then, his student rating had fallen to 7.75. Twentytwo of 40 faculty members ranked higher than Obama.

Some former faculty colleagues today describe Obama as disengaged, doing only what was minimally required and almost never participating in faculty activities. And, unlike others on the Chicago Law School faculty who published numerous articles in legal journals, Obama’s byline did not appear in a single legal journal while he taught there. By comparison, more prominent legal scholars on the Chicago faculty wrote frequently. Federal Judge Richard Posner published 132 legal articles from 1993 to 2004, and federal Judge Frank Easterbrook published 32 legal articles from 1992 to 2004. Obama has often cited his days at the law school as an important part of his preparation for the presidency. At a March 30, 2007, fundraiser, for example, he said, “I was a constitutional law professor, which means, unlike the current president, I actually respect the Constitution.” From 1992 until 2004, Obama taught three courses: “Current Issues in Racism and the Law,” “Voting Rights and the Democratic Process,” and “Equal Protection and Substantive Due Process.” Obama wasn’t a professor; he was a lecturer, a position that the Chicago Law School said in 2008 “signifies adjunct status.” He was elevated to a “senior lecturer” in 1996, the year he was first elected to the Illinois Senate in Springfield.

The new faculty status put him on par with Posner, Easterbrook and a third federal judge, Diane Wood. As the Chicago Law School explained, senior lecturers “have high-demand careers in politics or public service which prevent full time teaching.” Senior lecturers were, however, still expected to participate in university activities. University of Chicago Law School Senior Lecturer Richard Epstein told The Washington Examiner that Obama did not do so. Obama, Epstein said, “did the minimal amount of work to get through. No one remembers him. He was not a participant in luncheons or workshops. He was here and gone.” Robert Alt, a former Obama student, echoes Epstein, telling the Examiner that “I think it’s fair to say he wasn’t engaged in the intellectual life of Chicago outside of the classroom.” Alt is director of the conservative Heritage Foundation’s Rule of Law Programs and a senior legal fellow. Alt said, “When you have faculty giving faculty lectures, you’d literally have packed rooms in which it’s not unusual to have just all the big names of the university. It wasn’t unusual to see Easterbrook and Posner, and it wasn’t unusual to see the Nobel laureates attending as well.” Even so, Alt said, “I never remember ever seeing Obama in

the audience.” Obama was also a no-show for the faculty workshops, nonclassroom lectures and moot court cases judged by sitting members of the Seventh Circuit Court of Appeals of the U.S. Current Chicago Law School professor Lisa Bernstein said faculty lecturers are still encouraged to participate in as many such events as possible. The pattern of minimal performance at the Chicago campus was not an exception to the rule for Obama. In the state Senate during the same years he was lecturing, Obama voted “present” nearly 130 times, the most of any

via associated press

legislator in the chamber. When then-Sen. Hillary Clinton made Obama’s state Senate voting record an issue in their Democratic presidential primary contest in 2007, the New York Times said it found at least 36 instances when Obama was the lone “present” vote or was one of six or fewer lawmakers casting that vote. And during his lone term as a U.S. senator, according to Gov Track.us: “From Jan 2005 to Oct 2008, Obama missed 314 of 1300 recorded or roll call votes, which is 24.0%. This is worse than the median of 2.4%.”

Special Report

Chapter 3

wire photos

Like so many in the liberal powerbase that served as a springboard for Obama, Marilyn Katz’s activist roots stretch back to her days as a Students for a Democratic Society operative. Today, Katz is an influential political operative in Chicago who has visited the White House 26 times since 2009.

The LIHTC encouraged the partnerships needed to unite government officials and progressive nonprofit activists behind the cause of building thousands of new affordable-housing units, first on Chicago’s poor South Side and then, as the movement spread, to similar neighborhoods across the nation. Obama spoke at a time of great ferment on the Left in which federal housing policies became a central focus for political activism. He was drawing from the same well that had produced the Community Reinvestment Act, relaxed federal standards for mortgage qualifications, and creative financial packaging of subprime loans, but doing so in a manner uniquely matched to conditions on the political ground of Chicago. Public-private partnerships for affordable-housing projects were not a new idea to some of Obama’s listeners, since philanthropic groups like the Ford Foundation and the MacArthur Foundation had been promoting the concept for several years. Not coincidentally, it was a MacArthur vice president, Rebecca Riley, who arranged for Obama to speak at the Valentine’s Day gathering.

Obama’s innovation was to expand the concept beyond simply building affordable apartments and high-rises. It encompassed a cradleto-grave vision of providing for the material needs of the low-income families residing in the new housing, including their schools, child care, job training, medical coverage, clothing and food. In turn, the residents would campaign and vote for the officials advocating the partnerships, adding significantly to their political power. Left unstated was the underlying reality that politically connected developers who built the housing would profit handsomely and could be expected to gratefully give millions of dollars in campaign contributions to politicians like Obama who made it all possible. Chicago thus became the proving ground for Obama’s vision, which, according to LISC spokesman Joel Bookman, “really changed the direction of community development in Chicago and ultimately nationally.” It was an irresistible combination of money, politics and idealism that also offered endless opportunities for greed and tragic abuse of the poor. That made it an ideal tool for

uniting the Daley machine with the reform coalition that had elected Harold Washington as the city’s first African-American mayor in 1983. (Richard M. Daley, who reinvigorated the machine and became mayor in 1989, was the son of the machine’s founder, Richard J. Daley, who died in 1976.) The key to Obama’s vision in Chicago, according to Marilyn Katz, was the city’s most famous radical: “Remember, this is the community of Saul Alinsky. And most of the first housing groups were the Alinsky groups who were still banging at the door.” Katz, an influential Chicago public relations executive and longtime Obama friend and political operative, has visited the White House more than two dozen times since 2009. Like so many in the liberal power base that served as a springboard for Obama, Katz had activist roots stretching back to her days as a Students for a Democratic Society operative in Chicago. A Futures Committee handout for the Valentine’s Day meeting titled, “Barack Obama’s principles of community development,” said the proposed program had “to organize around production, not just consumption.” Such words were a clarion call to activists raised on a thousand vari-

ations of the Marxist labor theory of value and capitalist alienation. “He really questioned the kind of surrogate capitalist strategy that most of the nonprofit communitybased organizations had been pursuing,” Katz told the Examiner. “And he suggested that a real estate strategy for redevelopment of communities was not enough and that you had to really go into the quality-of-life issues, education, wealth building, amenities that were the hallmarks of any community needs,” she said. Obama’s vision “changed the direction and the nature of the 123 groups that were working in the various communities in the city. It was a very influential speech,” she said. The LISC vision speech was a critical turning point for Obama because his position with the Chicago law firm of Davis, Miner, Barnhill & Galland put him at ground zero with what Katz called “the tangential and interlocking circles between the Left-liberal political community, the urban redevelopment community, the legal community and politicos” who controlled Chicago, then and to this day. It was from that point that Obama cultivated the personal, professional and political relationships that would serve him well all the way to the White House.

T H E Wa sh i n g t o n E X AMINER

F e w doubt that B a ra c k O b a m a ’s stirring oration b e f o r e the 2004 Democratic National Convention vaulted him into the national limelight. But another, less-heralded Obama address — delivered on Valentine’s Day 1997 at First Chicago Bank — was equally essential to his later successes. Without it, it is doubtful that he would have ever been in position to assume so prominent a role in 2004. Obama was a newly elected Illinois state senator in 1997 when he addressed an audience that included many of Chicago’s most powerful political insiders and activists, nonprofit executives, business movers and shakers, and philanthropic funders. The occasion was a meeting of the Futures Committee, an elite Chicago civic leadership group created by the Local Initiatives Support Corp., or LISC, a liberal, nonprofit, low-income-housing activist group. No authenticated text of Obama’s speech — which was billed beforehand by LISC in a promotional flier obtained by The Washington Examiner as “a local perspective on effective communities” — is now known to exist. But people interviewed by the Examiner who heard him speak say Obama laid out a powerful vision for a political strategy that ultimately reshaped housing activism on the Left, first in Chicago and then nationwide, even as it paved the way for an accommodation between the corrupt political machine of Mayor Richard M. Daley and its long-standing nemesis, the city’s coalition of white liberal reformers and black community organizers. Obama described a practical strategy for building on the federal Low Income Housing Tax Credit, or LIHTC, contained in the 1986 Tax Reform Act, plus federal, state and local funds and programs, to create new public-private development partnerships.

September , 201 2

The 1997 speech that launched Obama

September , 201 2

T H E Wa sh i n g t o n E X AMINER

Special Report

Chapter 4

For the slumlord’s defense, Barack Obama, Esq. Writing in his 1995 autob i o g ra p h y, “Dreams from My Father,” Obama said he became “a civil rights lawyer” because “to lend meaning to a community’s suffering and take part in its healing — that required something more.” There was indeed “something more” to Obama’s legal career, but it wasn’t civil rights litigation at the Chicago law firm of Davis, Miner, Barnhill & Galland, where he was employed for a decade. “He spent about half his time working with Bill Miceli and my former partner, Allison Davis, and that team,” senior partner Judson Miner told The Washington Examiner. Most of the entries on Obama’s client list for the firm from that period were in real estate, construction and finance. Miceli and Davis were the partners in charge of the firm’s housing and real estate practices. Davis would later leave the firm to join Obama mentor Tony Rezko in the real estate development business. In March 1994, a year before “Dreams” was published, Obama was the lead defense attorney on an obscure case in Cook County Court that has heretofore escaped examination by the national media. In this case, Obama defended a Chicago slumlord and powerful political ally who was charged with a long list of offenses against poor residents. The defendant was the Woodlawn Preservation & Investment Corp., controlled by Bishop Arthur Brazier, a South Side Chicago preacher and political operator. Brazier’s burgeoning real estate empire included a low-income housing project at 6223 South University. Today, MapQuest describes the Woodlawn neighborhood as “quaint and sedate.” But in the winter of 1994, it was a frigid hell. Brazier was closely allied with Obama and his firm, not least because Davis was on WPIC’s Board

via Getty Images and ap

the bitter cold. An experienced Chicago housing attorney who reviewed the case at the Examiner’s request said $50 fines against politically powerful slumlords were not uncommon at that time. The lawyer, who currently works for the city, asked to remain anonymous for fear of reprisal. The attorney termed the forcible removal of the residents in the frigid Chicago winter “outrageous,” and said it looked like “a way to avoid a lengthy eviction process by law. And if the tenants had leases, they should have been bought out with a cash payment in return for leaving the premises early.” The South University apartments eventually became part of a real estate syndication deal that Obama helped negotiate. Brazier remained as the controlling general partner, while the syndicated investors became limited partners. The merging of Brazier’s insider contacts and influence with the limited partners’ financial resources enabled them to benefit collectively from bigger, more profitable deals than they would have each been able to do individually. A Chicago housing expert with direct knowledge of WPIC’s real estate dealings told the Examiner that the syndication deal involving the apartments likely was being negotiated when the building lost heat. “The property was one of five or six that was bundled together into a partnership and syndicated with tax credits,” he said. It was a “prelude to being put into the partnership, which it ultimately was for purposes of the refinancing and syndication.” The WPIC case illustrates how

LEFT: Obama shakes hands with Bishop Arthur M. Brazier after giving a 2008 speech at the Apostolic Church of God in Chicago. TOP RIGHT: A security company owned by nowjailed political fundraiser Tony Rezko sought help from Obama and then-Gov. Rod Blagojevich in an effort to gain a lucrative contract in Iraq, according to a report published in 2007. BELOW: First lady Michelle Obama and Valerie Jarrett, second from right, an adviser to President Obama, attend the funeral of Bishop Brazier at the Apostolic Church of God in 2010.

of Directors. Davis was also the corporation’s registered agent, and he received the court summons when the city filed suit on the South University apartments. Brazier’s WPIC had failed for nearly a month to supply heat and running water for the complex’s 15 crumbling apartments. On Jan. 18, 1994, the day the heat went off, Chicago’s official high temperature was 11 below zero, the day after it was 19 below. Even worse, the residents were then ordered to leave the WPIC complex in the winter chill without the due process they would have been afforded by an eviction procedure. In court documents reviewed by The Washington Examiner,

Daniel W. Weil, commissioner of Chicago’s Buildings Department, slammed WPIC for multiple municipal code violations, including “failure to maintain adequate heat,” failure “to provide every family unit with approved heating facilities,” and “failure to provide adequate” supplies of either hot or cold running water. Things were so bad that the city’s outraged corporation counsel declared that “the levying of a fine is not an adequate remedy” and asked the court for a permanent injunction against WPIC, appointment of a receiver and imposition of a lien on WPIC to pay for repairs, attorneys’ fees and court costs. But Obama did his work so well that in the end, on March 3, 1994, the court simply fined WPIC $50. Only then did Obama tell the court of the forcible removal of tenants in

Obama functioned at the center of a historic accommodation then developing between the Daley machine and its traditional opponents among the city’s liberal reformers. Lubricating the deal was a flood of public and nonprofit federal and state tax credits and funding for low-income-housing projects that would enrich developers and empower ambitious politicians like Obama, at the expense of taxpayers and, especially, the poor. Brazier was not merely an Obama legal client. A disciple of Chicago’s famous radical activist Saul Alinsky, Brazier was also a close political ally of Daley’s and one of the key movers and shakers among the city’s progressive political elite who in the years ahead would advance Obama at every turn. Obama also did legal work involved in the establishment of four Brazier-Rezko limited partnerships: Woodlawn Partners Ltd., Central Woodlawn Partnership, KRMB Limited Partnership and Woodlawn Drexel Ltd. Partnership. Rezko is now serving a 10-year federal prison sentence for fraud and attempted bribery on state government contracts. The former Obama firm still represents WPIC, as well as Brazier’s church, the Apostolic Church of God, and his Fund for Community Redevelopment and Revitalization. Brazier’s son now oversees the properties. As Brazier clung to life in 2010 in a Chicago hospital, Obama called him from the White House for what relatives described as an extremely tearful farewell. Shortly after Brazier died, Obama issued a statement saying of the man he had once helped put 15 poor families on the street in the dead of winter: “There is no way that we can replace the gentle heart and boundless determination that Bishop Brazier brought to some of the most pressing challenges facing Chicago and our nation.”

Special Report

AP photos

Obama’s toughest critic on the Left, the late Robert Fitch, charged that Obama’s most trusted aide, Valerie Jarrett, made a fortune as a real estate developer.

the Left, however, was the late Robert Fitch. Fitch, a radical leftist and freelance journalist who specialized in urban politics and economics, said Obama surrounded himself with people who got rich on Chicago’s $1.6 billion neighborhood demolition program known officially as the Plan for Transformation. At least 25,000 low-income apartments in Chicago were destroyed under the program, which forced thousands of black families — many of whom lived in Obama’s state Senate district — to move out of the city. Obama’s political allies directed the effort. “What we see is that the Chicago core of the Obama coalition is made up of blacks who’ve moved up by moving poor blacks out of the community,” Fitch charged in a 2008 speech before the Harlem Tenants Association. Fitch died in 2011. Fitch claimed in that speech that Obama sold out to a corrupt Chicago establishment. “Obama’s political base comes primarily from Chicago FIRE — the finance, insurance and real estate industry,” he said. “It’s also true that key black members of the Obama inner circle are Daley administration alumni, but they’ve moved up — now they’re part of Chicago FIRE,” he said. Fitch singled out Obama’s most trusted aide, Valerie Jarrett, as one who stood out among those who

made fortunes as real estate operators. Jarrett once worked for Mayor Daley, then later became CEO of the Habitat Co., one of the city’s largest real estate development firms. Fitch also criticized Martin Nesbitt, Daley’s former head of the Chicago Housing Authority and vice president of Pritzker Realty. Like Jarrett, Nesbitt is among Obama’s closest personal friends. Also in Fitch’s cross hairs was Allison Davis, Obama’s law firm boss who built a real estate empire by dealing in low-income housing with business partner Tony Rezko, Obama’s mentor who is now serving a federal prison sentence. In that 2008 speech in Harlem, N.Y., Fitch also blasted Chicago church Michael Hudson leaders who he Fitch: ‘Con game’ said profited on the poor. Chief among these “real estate reverends,” as Fitch called them, was Bishop Arthur Brazier. Brazier, a close Obama confidant and law client, ran the crumbling Grove Parc project alongside his Apostolic Church of God. Jarrett, Davis and Rezko were all involved with Grove Parc. Grove Parc is still owned by WPIC but has more recently been managed by the

Jarrett worked for then-Mayor Richard M. Daley, shown above right with Obama and former Gov. Rod Blagojevich, then later became CEO of the Habitat Co., one of the city’s largest real estate development firms. Cynthia Canary, former head of the Illinois Campaign for Political Reform, recalled that Obama endorsed corrupt officials like the now-imprisoned Blagojevich and certain Chicago City Council members.

Project on Affordable Housing, a Boston-based nonprofit organization that obtains large, multifamily properties and refinances them for long-term affordability. Three weeks after Obama won the 2008 election, Fitch warned his Harlem audience about “hope and change,” saying, “we have to make some distinctions between the change they believe in and the change we believe in; between our interests and theirs.” Michael Hudson, a real estate economist at the University of Missouri-Kansas City, was Fitch’s editor at the Village Voice. He said Fitch despised Chicago political insiders like Obama, who, he argued, became wealthy while cloaking themselves as reformers. “Bob Fitch’s basic premise,” Hudson told the Examiner, “was to show that the reform Democrats always have been the pro-financial real estate interests to do insider dealings. They are people who wear halos when in fact they are predators.” Hudson said Fitch thought the Plan for Transformation was a con game. “The essence of a con game is to pose as you’re doing a public service. That’s the cover story for getting the public money both to redevelop buildings or to get rid of all the tenants.” Obama’s political endorse-

ments also worried liberal reformers concerned about good government. Cynthia Canary, former head of the Illinois Campaign for Political Reform, recalled Obama’s endorsement of corrupt officials like the imprisoned Gov. Rod Blagojevich and Chicago City Council members. “The thing that startled me,” she said, “was when Obama made endorsements of certain City Council members and people who we already knew were in trouble,” she told the Examiner.

Fitch, a radical leftist and freelance journalist who specialized in urban politics and economics, said Obama surrounded himself with people who got rich on Chicago’s $1.6 billion neighborhood demolition program known officially as the Plan for Transformation.

T H E Wa sh i n g t o n E X AMINER

Barack O b a m a ’s carefully constructed image as a civil rights lawyer who wanted to heal the black community was greeted with skepticism by some Chicago activists. “I never drank the Kool-Aid about Barack Obama,” veteran Chicago black activist Eddie Read told The Washington Examiner. Read is president of the Black Independent Political Organization, one of Chicago’s largest black community groups. Read — who describes himself as a “black nationalist” — said Chicago streets are filled with genuine “street gangsters” and phonies known as “studio gangsters.” The latter are impersonators who make money acting in studio-produced rap videos. The same dichotomy is found among Chicago’s street activists, Read said. “So what you get from me is I’m still up in the air on whether or not my brother Obama was a real activist or a studio activist.” Robert Stark, director of the liberal Harold Washington Institute for Research and Policy Studies, told the Examiner that the demolition effort required to clear the way for the new affordable-housing projects advocated by Obama was disastrous for low-income blacks on Chicago’s South Side. “Obviously, when you’re talking about the demolition of housing, there has been a great deal of controversy because poor people were not given an opportunity to come back to the housing that replaced the demolished housing,” said Stark, whose institute is based at Northeastern Illinois University. Wardell Lavender is a tenant activist who has lived in the Woodlawn section of Chicago since 1951. “We don’t know what happened to those people,” Lavender told the Examiner. “What we didn’t do was keep track of them because a lot of them ended up homeless.” Obama’s toughest critic on

September , 201 2

Chapter 5 Obama’s toughest critics on the Left

Special Report

September , 201 2

associated press

LEFT: Cheryl Johnson and her mother, Hazel, lived in the economically deprived Altgeld Gardens housing project when young Obama was a community organizer there. Hazel Johnson was an organizer at the complex and often welcomed Obama into her kitchen. RIGHT: Protesters are arrested outside the Art Institute of Chicago in 2011 during a march protesting high unemployment, foreclosures and lagging school funding. In 2011, Chicago suffered the third-highest black jobless rate among the nation’s major metropolitan areas, at 19 percent, according to the liberal Economic Policy Institute.

Chapter 6 The poor people Obama left behind

T H E Wa sh i n g t o n E X AMINER

Four years after Barack Obama’s historic election as president, little seems to have changed for the African-American communities on Chicago’s South Side. The lack of change — or the sense that these neighborhoods are getting worse — is eroding the president’s standing among African-Americans in his hometown. In 2011, Chicago suffered the third-highest black jobless rate among the nation’s major metropolitan areas, at 19 percent, according to the liberal Economic Policy Institute. Chicago still lacks enough affordable housing. Not only did the city demolish 25,000 public housing units in the previous decade, it also experienced more than 80,000 foreclosures, mainly in low-income neighborhoods.

Chicago “black nationalist” Eddie Read contends Obama has never fought for the black community. “I would not honestly tag Obama as a fighter for black people, black agenda or black issues,” Read told The Washington Examiner. After Obama’s election, Read said, “I hoped that it would change.” But four years later, as he looks around Chicago’s neighborhoods, he said things haven’t improved under Obama. “I don’t see where the quality of life or the quality has changed,” he said, “except that it’s worse.” Dr. Conrad Worrill is an African-American educator, activist and former radio talk show host on Chicago’s African-Americanoriented station WVON. He told the Examiner that Obama was an inspirational speaker who moved people. But in the end, he became just another Chicago politician. “His rise in politics, his trajectory in politics has led him to make adjustments in his political decision-making. And that’s the case with many politicians. So he’s no

different from many others in that regard. He’s a politician,” Worrill said. Cheryl Johnson and her mother, Hazel, lived in the economically deprived Altgeld Gardens housing project when young Obama was a community organizer there. Her late mother also was an organizer at the housing complex and often welcomed Obama into her kitchen. “He’s everybody’s president,” Cheryl Johnson told the Examiner, saying she is proud she knows him. But has he made a difference? “We, as poor people, don’t feel it and don’t see it,” she said. Read believes Obama’s problem is that he does not understand the unique needs of Chicago blacks. “Obama came through Chicago through Saul Alinsky organizing,” he said. “The Alinsky piece seemed to have had an agenda about what it thought was in the best interest of black folks, from the white liberal perspective.” Obama instead allied himself with Chicago’s MacArthur Foundation, local housing nonprofits and real

Dr. Conrad Worrill

Eddie Read

Saul Alinsky

estate developers. Valerie Jarrett and Allison Davis, Martin Nesbitt and Tony Rezko — all Obama friends — were at the epicenter of that powerful coalition. Obama’s low-income-housing campaign still resonates among Chicago’s poor today. Deborah Taylor, a public housing tenant in the Kenwood section of Chicago, also told the Examiner things are as bad as ever for poor tenants. “The residents at the end of the day still suffer here,” she said. “A lot of times a lot of people start out idealistically thinking they are helping,” Taylor said. “I don’t think any of them are in favor of the tenants,” she said. “Everybody’s in it for the money. It’s all about profit now. So the residents lose, lose, lose.” D’Anna Carter, a neighborhood activist in Chicago’s Woodlawn section, singled out the Habitat Co., which was run by Jarrett, now Obama’s closest White House adviser. “They were never interested in poor people,” she told the Examiner.

President Obama with Martin Nesbitt

“They would sell poor people a bill of goods,” she said bitterly in an interview. Wardell Lavender has been a Woodlawn resident since 1951. His was the first black family to move into the neighborhood. He also blames Habitat. “Habitat was bad landlords at the time. They didn’t care too much about the blacks,” he told the Examiner. According to the U.S. Department of Housing and Urban Development, the enticement to the poor to buy condos they could not afford caused widespread losses in Chicago. Foreclosures fell hard on Chicago’s poor residents. The Urban Institute reported in May 2009 that most were displaced or homeless, credit ratings were damaged and violence increased as empty units remained vacant. Worrill said he still supports Obama but adds that the lack of progress in Chicago’s black community is palpable. “He has been supported, but the position he’s in now, he’s in a heck of a predicament.”

Cheryl Johnson

Special Report

9 September , 201 2

Chapter 7 The myth of Obama as state Senate reformer

LEFT: Former Illinois state Sen. Peter Fitzgerald, a maverick Republican and reformer, said Obama never fought corruption, by Republicans or by Democrats: “He never wanted to upset the apple cart with the Chicago machine.” associated press

Republicans who had been elected in 1992. They fought the establishments in both major parties while seeking to increase openness and transparency in government. Fab Fiver Steve Rauschenberger told the Examiner that he and his reformist colleagues were taken aback when Obama rejected the group’s informal invitations to join them. “When Barack first arrived, there was a lot of hope that maybe he was the intellectual bridge, the pragmatic Democrat from Chicago who was not part of the machine that we could perhaps talk to about broad-based consensus policies to change public policy that wasn’t working,” he said. “He appeared to be interested for a good 90 days,” Rauschenberger said. “In March or April of that year, though, he had made it pretty clear he wasn’t interested in risk-taking or challenging institutions or challenging the Chicago machine’s lock on a lot of the mechanics of government in Cook County in Chicago.” An Examiner review of Fab Five initiatives from 1995 to 2000 identified 22 proposals, including sweeping government procurement reforms like requiring open, competitive bidding for state contracts. Obama missed votes on several of the proposals, and those he supported were approved unanimously. “He was nowhere to be found on reform,” Fab Fiver Chris Lauzen told the Examiner. “I reached out to Barack. My wife and I took Barack and Michelle to dinner.” Lauzen said Obama “was not on the playing field. In my opinion, Barack Obama was a product and beneficiary of how politics are practiced in Illinois. It would be impossible to call him a reformer.” State Sen. Dave Syverson, another Fab Fiver, said, “I don’t recall any cases when he was overtly standing up to the machine at all.” Some of Obama’s reluctance about the Fab Five may have stemmed from his occasional golf outings and lunches with the state’s top gambling lobbyist, Alfred G. Ronan.

RIGHT: Paul Green, director of the Institute of Politics and a popular WGN radio host, noted that David Axelrod, right, Obama’s campaign strategist, came from former Mayor Richard M. Daley’s camp. Said state Sen. Dave Syverson: “I don’t recall any cases when [Obama] was overtly standing up to the machine at all.”

Ronan was well-known in Illinois political circles for passing out cash contributions to supporters off the floor of the legislative chambers. Obama himself took $10,500 from Ronan and changed his position on a gambling bill afterward, according to the Los Angeles Times. Ronan told the Times that Obama always paid his own way on the outings. There was also the regular Wednesday night poker game organized by Democratic state Sen. Terry Link. Obama and three other state Senate Democrats in Springfield were regular attendees, along with several lobbyists, Link said. “It started out with five of us, then it escalated where there were a couple of lobbyists that were friends of us that we brought in,” Link told the Examiner. “Barack was not of the machine, but he was adjacent to it,” said Cynthia Canary, former director of the Illinois Campaign for Political Fitzgerald said Obama never confronted Daley. “He never took on Reform, the largest statewide reform Mayor Daley, even when clearly city hall was out of bounds. He never fought corruption in Cook County government.” organization. Paul Green, director of the Institute for Politics at Chicago’s that to satisfy constituent needs, endorsements, not just the BlagoRoosevelt University and a popular politicians are often forced to “use jevich one — he gave a number for WGN radio host, noted David Axel- the influence they have to meet the Chicago City Council that were rod, Obama’s campaign strategist, those needs, including sometimes complete whack jobs. I have never originated from Mayor Richard M. the exchange of favors — consid- understood it or why he felt he eration for jobs being just one.” needed to it,” she said. Daley’s camp. Fitzgerald said Obama never Some have noted that Obama “You see his main adviser, David Axelrod, who also was Daley’s chief confronted Daley. “He never took helped write a 1997 legislative gift adviser and ran his campaigns. So it on Mayor Daley, even when clearly ban. The bipartisan effort included was very much that Obama’s people city hall was out of bounds. He never 23 exemptions. fought corruption in Cook County Green pointed out that the gift were in the Daley camp.” ban didn’t stop corruption. “In 1998, A month after Daley’s patron- government.” Canary said Obama’s endorse- George Ryan was governor; now he’s age chief was indicted for rigging city jobs and promotions, Axel- ment of Rod Blagojevich and other in prison. After him, Rod Blagojevich went to prison, so clearly it didn’t rod defended patronage in a 2005 Daley allies worried her. “Obama has made a number of have any impact.” Chicago Tribune op-ed. He argued

T H E Wa sh i n g t o n E X AMINER

Shortly after Barack Obama won the 2008 presidential election, Prairie State Blue, a liberal blog, a t t r i b u te d his victory to the fact that Illinois’ deeply entrenched government corruption had forced “political reformers” in the state legislature like Obama “to network outside the traditional political circles.” The claim illustrated Obama’s success throughout his career at presenting himself as an outsider and reformer even as he became a skillful operator inside one of the nation’s most corrupt political systems. Earlier this year, a study by the Illinois Institute of Government and Public Affairs pointed to the convictions in recent years of four governors, two congressmen, a state treasurer, an attorney general and 11 state legislators. “The two worst crime zones in Illinois are the governor’s mansion in Springfield and the City Council Chambers in Chicago,” said study author Dick Simpson. It was into such an environment that Obama stepped when he was first elected in 1996 as an Illinois state senator. Former Illinois Sen. Peter Fitzgerald, a maverick Republican and reformer, told The Washington Examiner that Obama never fought corruption, even when it was being done by Republicans. “I’ve never seen him fight corruption. He never wanted to upset the apple cart with the Chicago machine,” Fitzgerald said. After serving with Obama for two years in the Illinois Senate, Fitzgerald defeated Sen. Carol Moseley Braun in 1998 and served one term in the U.S. Senate. His family has been in Illinois banking for several generations. In Springfield, Fitzgerald was a leader of a reform-minded state legislative caucus known as the “Fab Five.” The group’s members were

Special Report

September , 201 2

John Rogers, left, CEO of Ariel Capital Management, and James Reynolds, right, founder of Loop Capital, were members of the Alliance of Business Leaders & Entrepreneurs and longtime Obama backers. Rogers was especially close, having played basketball with Michelle’s brother at Princeton and shot hoops with Obama.

Chapter 8

T H E Wa sh i n g t o n E X AMINER

Senate President Emil Jones, Obama’s legislative mentor, gave him additional leverage by assigning him to a committee that oversaw public pension funds.

William Atwood, executive director of the giant Illinois State Board of Investment, told The Washington Examiner that Obama was relentless in applying pressure. “Anytime I saw him, he brought the issue up. I would see him in Springfield or I would see him at a function and invariably he raised the issue.”

Obama’s state pension scheme

State Sen. Barack Obama and members of an Illinois lobbying group representing politically connected minority-owned businesses launched a campaign in 2000 to pressure state pension funds to help their friends and donors. Obama and his cohorts targeted state officials in charge of pension funds for teachers, police and firemen, and regular government employees. Much as the Rev. Jesse Jackson had been doing for years to Fortune 500 corporations, Obama and the Alliance of Business Leaders & Entrepreneurs, or ABLE, demanded that the officials set aside at least 15 percent of pension assets for management by minority-owned investment companies. If their plan succeeded, the favored investment companies would add lucrative assets to their portfolios, which in turn would help push even more business their way. John Rogers, Ariel Capital Management’s CEO, and James Reynolds, founder of Loop Capital, were ABLE leaders and longtime Obama supporters. Louis A. Holland, chairman of Holland Capital Management, was also an ABLE leader and Obama donor. Rogers was especially close, having played basketball with Michelle Obama’s brother at Princeton and shot hoops with Barack Obama. Reynolds and Obama played basketball at Chicago’s chic East Bank Club and golfed at the South Shore course. Rogers recalled the state pension scheme in a 2007 interview in which he prudently cast it as an effort “to force other industries to have their ‘Jackie Robinson’ moment,” just as Jackson had done with many Fortune

500 companies. Obama not only met regularly with the ABLE leaders to plot strategy, he enlisted powerful Illinois House Speaker Michael Madigan to accompany him in meetings with officials of the targeted pension funds. Just as important, Senate President Emil Jones, the cagey Springfield veteran who was Obama’s legislative mentor, gave him additional leverage by assigning him to a committee that oversaw public pension funds, according to the New York Times. William Atwood, executive director of the giant Illinois State Board of Investment, or ISBI, told The Washington Examiner that Obama was relentless in applying pressure. “Anytime I saw him, he brought the issue up. I would see him in Springfield or I would see him at a function and invariably he raised the issue,” Atwood said. The campaign succeeded in early 2001 when more than $500 million from the pension funds was transferred to Ariel and Holland, and Loop was retained as a brokerage firm, according to pension fund documents obtained by the Examiner. The State Universities Retirement System of Illinois, or SURS, awarded Ariel $49 million, while Holland got $26 million. Loop handled the trading of 2.3 million shares, according to SURS documents obtained by the Examiner. The ISBI awarded $178 million to Ariel. The Teachers’ Retirement System of the State of Illinois, or TRS, handed over $210 million to Ariel and $75 million to Holland Capital Management. Ariel’s assets increased dramatically following the infusion from the pension funds, rising from $2.8 billion to $15 billion between 1999 and 2002, according to the firm’s Securities and Exchange Commission filings. Even so, things did not go well a few years

later. Ariel and Holland were terminated by ISBI and SURS for what pension board officials described as “underperformance.” Rogers also wasn’t helped when U.S. Attorney Patrick Fitzgerald revealed in federal court proceedings that Rogers had given $22,500 to bundler Tony Rezko, who was later convicted of influence peddling. Rogers’ money was destined for the campaign of Gov. Rod Blagojevich, who, like Rezko, is now serving a federal prison sentence for public corruption. No charges were ever filed against Rogers in connection with the $22,500. Rogers remains an Obama confidant. He has visited the White House at least 37 times since Obama’s 2009 inauguration for both business and social meetings with the president, senior aides in the White House and the first lady. Ariel’s president, Mellody Hobson, received a presidential appointment in 2009 to serve on an SEC investment advisory committee. During the 2008 presidential campaign, ABC News reported that employees of the three firms had donated $765,000 to Obama, who was also said to have used private jets owned by two of the firms. Rogers now ranks as the third-biggest bundler for Obama, raking in $1.5 million for the president’s re-election effort. He also is a $50,000 donor to pro-Obama super-PAC Priorities USA. Holland and CEO Monica L. Walker have given $57,000 to Obama and the Democratic National Committee since 2000, according to federal campaign finance records. Obama boasted about his success in the pension campaign during a 2007 address before the National Urban League conference. Referring to ABLE, he declared, “some of the financial service leaders there, they came

to me and said, ‘You know, we are not getting any business from our own state pensions.’ ” Obama was proud of his accomplishment. “In about six months, they got about a halfbillion dollars’ worth of business,” Obama declared. The campaign was aggressive. A toughly worded statement by the minority firms was distributed to a Jan. 19, 2001 board meeting of the ISBI, according to minutes of the event obtained by the Examiner. The firms demanded that the fund “immediately require that all current ISBI money managers do 15 percent of their brokerage business with African-American owned broker/dealers.” They also insisted that 15 percent of the fund assets be allocated to “African-American owned investment management firms.” What was left unstated was that Rogers’ Ariel fund already had a small presence at ISBI, but that it was underperforming. In 1999, for example, the ISBI said Ariel was in the lowest 87th percentile among midcap companies on the Russell Index, according to minutes of a special Nov. 17, 2006, ISBI meeting obtained by the Examiner. Still, the ISBI awarded $178 million to Ariel. Ariel’s underperformance continued until its termination in 2006 after Marquette Associates and Iron Capital Advisors reported to ISBI that Ariel had “failed to meet ISBI expectations regarding performance going back a number of years.” It fell to the 96th percentile in 2006. In criticizing Ariel, the ISBI reported that in 2006 the firm grew only 8.35 percent, compared with an average of 17.41 percent for its peer group. In May 2006, the TRS also cancelled Ariel’s $210 million account and terminated Holland’s $75 million in funds.

Special Report

associated press

Ray Hanania, a Chicago-based Arab-American journalist and activist, described the network in a 2007 interview with Chicago magazine as “a small cluster of activists.” Chief among them was Obama mentor Tony Rezko, above. Levine, right, Rezko’s former partner and the government’s star witness in the Rezko trial, testified that Obama met Nadhmi Auchi at a private Rezko reception held at Chicago’s Four Seasons hotel.

business associates have contributed hundreds of thousands of dollars to Obama’s political campaigns. Following Rezko’s conviction, though, Obama donated to charity at least $85,000 in Rezko contributions to his 2008 presidential campaign. The Chicago Sun-Times estimated Obama received at least “$168,308 from Rezko and his circle,” while ABC News put the total to be as much as $100,000 higher than the amount claimed by Obama. While he was in the Illinois Senate, Obama helped key Rezko associates gain appointments to the state board that controlled health facility contracting for building expansions. Once his associates were appointed, Rezko sought kickbacks from contractors favored by his friends in a process that became the heart of the federal case against him. When Obama became chairman of the state Senate health committee that oversaw appointments to the medical board, among his first acts was to gain fast-track passage of a bill to reduce the board from 15 to nine members, thus making it somewhat easier to gain the panel’s approval for contracts. Rezko then used his connections with Blagojevich to stack the restructured board with his political cronies. Their appoint-

Obama’s controversial relationships with radical figures like Columbia University professor Rashid Khalidi, above, have been well-publicized in recent years. Prior to his academic career in the United States, Khalidi worked for Yasser Arafat’s Palestine Liberation Front when it was classified by the State ments were confirmed by Obama’s Department as a terrorist group.

committee, then sent to the Senate floor. Soon thereafter, contributions from Rezko and his health board allies began pouring into Obama’s campaign coffers, according to federal and state campaign finance data. Rezko associate Dr. Michel Malek, for example, donated $15,000 to Obama after gaining appointment to the health board. Dr. Imad Almanaseer, another Rezko ally appointed to the health board, initially gave Obama $3,000. Over the next three years, he and members of his family donated nearly $10,000 more to Obama. Fortunee Massuda, another Rezko associate, donated $2,000 in January 2004 shortly after winning her assignment to the key panel. Other Rezko allies who were not on the health board also contributed to Obama. Elie Maloof was granted immunity by federal prosecutors after he told U.S. Elie Maloof a t t o r n e y s A pass in Rezko he funneled trial two $10,000 contributions to Obama through Rezko. Prosecutors noted Maloof’s assertion in their opening argu-

ments at Rezko’s trial, but no additional charges were filed. Rezko business partner Abdelhamid Chaib donated $10,000 to Obama, then was convicted on federal corruption charges in 2010 after trying to pressure a Chicago hospital executive to steer contracts to Rezko companies. Another Rezko partner, Ali Ata, was a key witness during Rezko’s 2008 federal corruption trial. He donated $5,000 to Obama’s campaign and claimed to have given an additional $10,000 in “straw donations.” Ata was a former president of the Chicago Chapter of the ArabAmerican Anti-Discrimination Committee. Ata also was an investor with Rezko and Nadhmi Auchi, an Iraqi-British businessman and former Iraqi Baathist who was on a terror watch list and thus barred from entering the United States. Rezko asked federal authorities in 2004 to permit Auchi to join him in Chicago for a business deal, according to the New York Times. Stuart Levine, Rezko’s former partner and the government’s star witness in the Rezko trial, testified that Obama met Auchi at a private Rezko reception held at Chicago’s Four Seasons hotel. Auchi wired $3.5 million to Rezko during the 2008 trial. Fed-

eral prosecutors asked for Rezko’s bail to be revoked when they discovered the Auchi wire transfer. Another Rezko supporter was Mustafa Abdalla, who donated $1,000 to Obama. Abdalla put up property as collateral for Rezko’s bail. Rezko was a generous financial supporter of Chicago-based Arab-American activist groups, including the Arab American Democratic Club, or AADC, and the Arab American Action Network, or AAAN. Rezko was involved in the AADC with Khalil Shalabi. Shalabi was fired from a state government job in 2007 after the Illinois inspector general reported he had been fundraising at work for Rezko and Blagojevich. The Obamas attended several AAAN dinners, including one honoring Khalidi. More recently, Hatem Abudayyeh, AAAN’s executive director, attended an April 22, 2010, Obama policy briefing, according to White House visitor logs. In September 2010, FBI investigators raided Abudayyeh’s Chicago home reportedly seeking evidence of AAAN being used as a conduit for funding to the Popular Front for the Liberation of Palestine and other Middle Eastern terrorist groups.

T H E Wa sh i n g t o n E X AMINER

President O b a m a ’s controversial relationships with radical figures like Columbia Un ive rs i ty professor Rashid Khalidi have been wellpublicized in recent years. Prior to his academic career in the United States, Khalidi worked for Yasser Arafat’s Palestine Liberation Organization when it was classified by the State Department as a terrorist group. Less well-known is a cluster of Chicago businessmen who formed an Arab-American network at the heart of Obama’s political apparatus. Ray Hanania, a Chicago-based Arab-American journalist and activist, described the network in a 2007 interview with Chicago magazine as “a small cluster of activists” in the business community who were politically involved. Chief among them was Obama mentor Tony Rezko. Born in Aleppo, Syria, home of strongman Bashar al-Assad, Rezko migrated to the U.S. in the late 1970s and built a political and financial empire in Chicago and Springfield, the Illinois capital. Rezko is now serving a 10-year federal prison sentence following his convictions on federal fraud and bribery charges related to disgraced Gov. Rod Blagojevich and state contracting. Rezko offered Obama a job at his Rezmar Corp. after he finished at Harvard Law School, but the new lawyer instead accepted a position at a Chicago firm with close personal and professional ties to Rezko. Their relationship steadily deepened in the years thereafter. For example, Obama asked Rezko to assess the $1.6 million Hyde Park/Kenwood home that he and Michelle were considering buying in 2005, a controversial transaction that Rezko’s wife assisted by purchasing an adjoining lot for $625,000. (The owner of the home and adjoining lot insisted that they be sold together.) Rezko and his Arab-American

11 September , 201 2

Chapter 9 The Arab-American network behind Obama

September , 201 2

T H E Wa sh i n g t o n E X AMINER

Special Report

Chapter 10 Obama brings Chicago politics to Washington Chicago has been called the home of “gangster government.” How bad is it? Consider the following facts about the city from which President Obama rose through the ranks of American public life, from community organizer and local lawyer to the Illinois state legislature to the U.S. Senate and finally the Oval Office: » Chicago’s 2.7 million residents make up only about 21 percent of the state of Illinois’ population of nearly 13 million. Yet the city and its suburbs have accounted for 84 percent of the st a te ’s public corruption convictions in federal courts since 1976, according to a study released earlier this year by the University of Illinois at Chicago. » Four of the state’s previous seven governors went to jail on public corruption charges, as did a third of Chicago aldermen who served during the period. » New York and California have higher totals for public corruption convictions, but Illinois leads the nation on a per capita basis. Michael Barone, a Washington Examiner columnist and longtime co-editor of “The Almanac of American Politics,” coined the term “gangster government” in May 2009 in reporting how Obama used the General Motors and Chrysler bankruptcies to aid the struggling United Auto Workers union. Barone defined gangster government as using the powers of public office “to transfer the property of one group of people to another group that is politically favored.” Obama was a little more direct during the 2010 congressional campaign, saying, according to the New York Times, “we’re gonna punish our enemies and we’re gonna reward our friends who

stand with us on issues that are important to us.” The GM and Chrysler bailouts favored the UAW, an unsecured creditor, over secured creditors in the financial community by putting the union ahead of the financiers in the bankruptcy line for reimbursement of losses under the Obama-sanctioned March 2009 bailout. And, as Barone predicted in 2009, taking care of his friends was Obama’s characteristic approach when dealing with domestic issues. Obama’s $787 billion economic stimulus program, for example, included $499 billion in federal spending, most of which was channeled through state and local governments. Eight of the 10 states getting the most contracts are heavily Democratic, with highly unionized state and local government workforces, according to the latest available stimulus award data at recovery.gov. California with $35 billion and New York with $17 billion topped the list of award recipients. Illinois was fourth with $12 billion, Pennsylvania sixth with $9.3 billion, Ohio seventh with $8.9 billion, Michigan eighth with $8.6 billion, Washington ninth with $8.2 billion and Massachusetts 10th with $7.7 billion. Thus, more than a fifth of Obama’s direct economic stimulus funds went to eight states to save the jobs of state and local employees, many of whom were members of three public employee unions, the National Education Association, the American Federation of State, County and Municipal Employees and the American Federation of Teachers. Between them, the trio’s political action committees and individuals associated with the unions gave $116,965 directly to Obama’s 2008 campaign, according to OpenSecrets.org. They also did independent expenditures on Obama’s behalf totaling nearly $4.8 million, plus $3.9 million against his opponent, Sen. John McCain. But it has been in Obama’s

“clean energy” loan program that Chicago-style politics has been repeatedly on display, most famously in the $573 million Solyndra bankruptcy debacle. Solyndra’s main investor was Oklahoma billionaire and Obama campaign donor George Kaiser. Solyndra was the first but no means the most egregious energy loan deal that benefited Obama’s friends. While researching his blockbuster 2011 book “Throw Them All Out,” Hoover Institution fellow and Stanford University professor Peter Schweizer and his researchers found 31 Obama bundlers and big donors whose firms received more than $16 billion in clean energy loans and grants. The list of recipients unearthed by Schweizer includes such luminaries as former Vice President Gore, Silicon Valley venture capital king John Doerr, Sergey Brin, Dan Reicher and Larry Page of Google, Jim Rogers of Duke Energy, Tesla Motors’ Elon Musk and CNN founder Ted Turner. But one of the lesser-known names in the Solyndra scandal perhaps tells the story better than the celebrities. Cathy Zoi was a senior White House environmental adviser during the Clinton administration, then CEO of Gore’s Alliance for Climate Protection. Under Obama, she was appointed assistant secretary of energy for energy efficiency and renewable energy, a position that put her at the center of the approval process for green energy loans and grants. Following the Solyndra debacle, Zoi left the government to work for George Soros as head of a new clean energy investment fund he started. Soros had gotten on board with Obama in 2004 by contributing more than $60,000 to his U.S. Senate race. Soros was then one of Obama’s earliest and most generous financial backers in 2008. After Obama won the White House, Schweizer notes, Soros “had regular private consultations and meetings with White House senior advisers while he was making investment deci-

associated press sions related to the stimulus The $573 million Solyndra program.” bankruptcy debacle has been at the It’s imposforefront of Obama’s “clean-energy” sible to loan program. Solyndra’s main determine investor was Oklahoma billionaire from compulGeorge Kaiser. sory financial disclosure documents how George Kaiser On the Web much profit, if any, resulted For the Special Report online for Soros, but, as Schweizer points out, “Soros seemed to have a keen ability to anticipate what Wa s h i n g t o n was going to WASHINGTONEXAMINER.COM/OBAMA George Soros do and position himself to potentially profit handsomely visits to its factories and was “the from it.” first window company to pocket It certainly didn’t hurt that Soros a stimulus tax credit — worth had political operatives like Zoi in $584,000 — for investing in new his pocket. As The Washington equipment.” Examiner’s Tim Carney wrote in Soros was born in Hungary and February 2011, Zoi’s tenure at the made his first fortune in Europe’s Energy Department “was rife with money markets, but it appears that conflicts of interest.” he understands the way gangster Her husband’s firm, environ- government works in Washington mental windowmaker Serious in the age of Obama. Materials, benefited from presidential and vice presidential