FDIC Sues Directors Of Failed Bank With Ties To Obama And Rezko

The Mutual Bank of Harvey swept in to help Barack and Michelle Obama purchase their mansion on Chicago's south side in 2006 by loaning money to Rita Rezko, wife of convicted political fixer and close Obama political associate Tony Rezko, to purchase an adjacent lot being sold by the owner of the home, part of which was later sold to the Obamas at a reduced price. Federal regulators say that a lot of bad loan decisions made by the bank's board of directors led to its failure and losses totaling $775 million the FDIC had to pick up following its closure. Federal regulators have filed suit against the former bank's directors, charging that they wasted the banks assets through extravagant spending. The bank's executives also had sweetheart arrangements with former Illinois Gov. Rod Blagojevich and his wife, Patti. The Sun-Times reports:

Federal regulators have alleged that directors of the once politically-connected Mutual Bank of Harvey “wasted corporate assets” and “drained bank capital” with extravagant and improper spending — including one director with ties to the Blagojevich family improperly using nearly half a million dollars to bankroll his wife’s criminal defense.

The Federal Deposit Insurance Corporation said in a lawsuit that the alleged improprieties — including spending $250,000 on a wedding and $300,000 on a Monte Carlo board meeting — helped plunge the bank into its 2009 failure.

Amrish Mahajan was the bank’s president, chief executive officer and on the board of directors. Allegations in the lawsuit claim that Mahajan authorized $495,000 in a series of “advances” and “bonuses” to himself. The money was used to cover criminal defense costs of his wife, Anita Mahajan, who was indicted on Medicaid fraud charges in Cook County in 2007 after allegedly bilking taxpayers out of $2.1 million by overbilling on state contracts, the complaint says. When federal regulators learned of the Amrish Mahajan bank arrangement, according to the complaint, he returned $202,560 that came out of the bank’s holding company, leaving $292,440 unpaid.

“Directors and officers are not permitted to use their positions to profit personally at the bank’s expense,” the complaint said.

Anita Mahajan eventually pleaded guilty to a narrow charge and was given probation. Her husband had contributed $10,000 to Rod Blagojevich’s campaign fund, and the couple was involved in property deals in which the former governor’s wife, Patti Blagojevich, got $113,000 in real estate commissions.

Mutual was the same bank that financed the loan involving a piece of land abutting Barack Obama’s Kenwood home that was purchased by Rita Rezko, the wife of convicted businessman Tony Rezko.

You may recall that a former Mutual Bank official, Kenneth Connor, brought a whistleblower lawsuit against the bank claiming that he was fired after complaining that an appraisal for the Rezko/Obama lot had been overvalued by at least $125,000 at the time the loan was extended to Rezko to assist the Obamas with the purchase of their new home. The inflated purchase price for the lot allowed the Obamas to acquire the home at a discounted price from the original owner of the house and adjacent lot. Connor was questioned by FBI agents in 2008 about the land deal, but U.S. Attorney Patrick Fitzgerald's office refused to pursue a criminal investigation, instead focusing entirely on Rezko's corrupt relationship with Gov. Blagojevich, which resulted in his impeachment and removal from office and later conviction on public corruption charges. Fitzgerald's office has kept Rezko hidden away, refusing to allow him to testify at the trials of Blagojevich and another big-time Illinois political fixer, William Cellini. Blagojevich has always maintained that Obama was much closer and more involved with Rezko than he was. A federal jury in Chicago is currently deliberating the fate of Cellini after Fitzgerald's office wrapped up its case against him last week.

Meanwhile, the Omedia is focused on destroying the upstart presidential campaign of successful businessman Herman Cain over a decades-old sexual harassment charge dating back to his days as the CEO of the National Restaurant Association. The mainstream media dealt contemptuously towards all of the female accusers who lined up to accuse former President Bill Clinton of serial sexual harassment and inappropriate behavior towards women, but it's front-page, all-important news when the same type of issues are raised about a Republican African-American presidential candidate. As for the vetting of Barack Obama, the mainstream media has still not gotten around to doing that as he approaches his fourth year in office.