Whistleblower Suit Alleges Fraud In Rezko-Obama Land Deal

A whistleblower lawsuit filed in Cook County Circuit Court this past week by a former bank official for Chicago's Mutual Bank alleges that the bank over-valued an adjacent vacant lot to Sen. Barack Obama's home purchased by Rita Rezko, wife of convicted influence peddler Tony Rezko, to assist Obama in the contemporaneous purchase of his South Side mansion for $1.6 million, which was $300,000 less than the asking price. According to a Washington Times report, Kenneth J. Connor reviewed an appraisal prepared by another firm and reappraised it at $500,000, which was $125,000 below the original appraisal. Connor alleges that bank officials removed his lower reappraisal from the file at a time Rita Rezko's loan file with the bank was under subpoena by a federal grand jury looking into criminal wrongdoing by her husband. Connor claims in his whisteblower lawsuit that bank officials fired him after he questioned their actions in removing his reappraisal of the Rezko property from Rezko loan file. The Washington Times writes:

According to the complaint, Mr. Connor reviewed the appraisal of the Rezko property by another firm, Adams Appraisal, which had set the value at $625,000. Mr. Connor's complaint said that he told his bosses in a report that the property had been overvalued by at least $125,000 and that a "reasonable and fair evaluation" should have been no greater than $500,000.

Later, the complaint states, Mr. Connor observed that his lower appraisal was not in the Rezko file and that he notified his supervisors that it had been replaced. He said, according to the complaint, the new file had been reviewed by the FBI and "if the FBI were to ask me about such matters, I would tell them the truth. I never rescinded my original findings."

Critics of Mr. Obama's dealings with Rezko charge that the senator may have gotten a deal on his property purchase, noting that Mrs. Rezko paid the full asking price for her property on an adjacent lot. Both of which were sold by a single seller. Mr. Obama bought his house for $1.65 million - $300,000 below the asking price.

When the property was sold, Mr. Obama knew Rezko was under investigation on fraud charges.

The complaint said the Rezko loan was approved by Mutual Bank President and CEO Amrish Mahajan and others so that Mrs. Rezko could buy a 9,090-square-foot vacant parcel of real estate. It said that in January 2006, Mrs. Rezko and Mr. Obama, along with his wife Michelle, signed an agreement to sell a 10-foot strip of the property to the Obamas. At that point, according to the complaint, Mr. Connor's firm asked him to conduct the reappraisal.

If the allegations in the complaint are true, Mutual Bank officials may be guilty of making false statements, willfully overvaluing property, bank fraud, witness retaliation, willful violation of a lawful subpoena, FDIC violations, and state banking regulations. Rezko's ties to Mutual Bank could spell serious legal problems for Sen. Obama as well. According to a statement released by the RNC, Mutual Bank has loaned Rezko $3.4 million in recent years. Mutual Bank's President, Amrish Mahajan, helped Illinois Gov. Rod Blagoyevich raise nearly a half million dollars for his campaign committee. Mahajan's wife is accused of bilking the State of Illinois out of millions of dollars from a no-bid contract awarded to her drug-screening company. Mahajan may also be tied to questionable real estate commissions earned by Gov. Blagoyevich's wife, Patti, according to the Chicago Tribune. A recent item by Sun-Times columnist Michael Sneed hinted that Rezko has been cooperating with federal prosecutors recently concerning his ties to a politically-connected bank. He is currently awaiting sentencing after being found guilty on multiple felony counts of public corruption.