Bank whistleblower alleges Rezko property value altered

Rick Moran
This is something of a complex story so bear with me.

When Obama purchased his house, the back and side yards were sold as a separate piece of land - ostensibly at the request of the seller but it may very well have been Rezko's idea to help Obama and allow him to be able to afford the $1.9 million asking price for the house.

That land was valued at $625,000. Rezko's wife put a downpayment of $125,000 (where she got the money when Rezko was pleading poverty to the court at the same time is unknown) on the  yard, paying full asking price, while the sellers lowered the price of the mansion to $1.6 million, thus allowing the newly elected senator to afford the house.

A few months later, Obama agreed to help Rezko by buying a strip of that land for a "garden." A Mr. Kenneth J. Connor reappraised the land and found that it had been overvalued at the time of sale - by a whopping $125,000!

Now Connor is suing because the bank made his lower appraisal disappear.

From Saturday's Washington Times:

A former Illinois bank official, now claiming whistleblower status, says bank officials replaced a loan reappraisal that he prepared for a Chicago property that was purchased by the wife of now-convicted felon Tony Rezko, part of which was later sold to next-door neighbor Barack Obama.

In a complaint filed Thursday in the Circuit Court of Cook County, Kenneth J. Connor said that his reappraisal of Rita Rezko's property was replaced with a higher one and that he was fired when he questioned the document.

Mr. Connor, a real estate and commercial credit analyst at the Mutual Bank Corp. in Chicago, also noted in the complaint that the bank received a grand jury subpoena in October 2006 requiring it to produce information concerning Mrs. Rezko's purchase, including the bank's files on the property.

The complaint also said that the grand jury wanted information on Mrs. Rezko's checking account and loan file and that the Federal Deposit Insurance Corp. (FDIC) had audited the Rezko file - although Mr. Connor's lower reappraisal had been replaced with a higher amount.

"Connor's internal whistle-blowing activity at Mutual Bank implicates Mutual Bank and the potentially guilty officers thereof to prosecution under federal and Illinois statutes," said the complaint, filed by attorney Glenn R. Gaffney.

The complaint said Mutual Bank officials could 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.

This, from what I understand, is highly unusual. First, the size of the lower appraisal is incredible - 20% errors are just not made in that business. If the bank were in on this, that would mean that it is possible that the sellers - a doctor who worked at University of Chicago hospital where Michelle Obama worked - were in collusion. The higher appraisal of the empty yard meant that they could lower their asking price for the house.

The 10 foot parcel of land that Obama paid more than $100,000 for was worth nowhere near that amount (one real estate expert  thought it would be worth about half that).  Now it could be that Obama was just helping out a buddy in a financial bind by  paying twice what the property was worth. But there is also a possibility that it was Obama paying Rezko back for his buying the vacant yard at the inflated price.

The whole transaction stinks of manipulation, cronyism, and collusion to possibly defraud. It should be interesting to see where this investigation leads as well as how Mr. Connor's lawsuit progresses.




This is something of a complex story so bear with me.

When Obama purchased his house, the back and side yards were sold as a separate piece of land - ostensibly at the request of the seller but it may very well have been Rezko's idea to help Obama and allow him to be able to afford the $1.9 million asking price for the house.

That land was valued at $625,000. Rezko's wife put a downpayment of $125,000 (where she got the money when Rezko was pleading poverty to the court at the same time is unknown) on the  yard, paying full asking price, while the sellers lowered the price of the mansion to $1.6 million, thus allowing the newly elected senator to afford the house.

A few months later, Obama agreed to help Rezko by buying a strip of that land for a "garden." A Mr. Kenneth J. Connor reappraised the land and found that it had been overvalued at the time of sale - by a whopping $125,000!

Now Connor is suing because the bank made his lower appraisal disappear.

From Saturday's Washington Times:

A former Illinois bank official, now claiming whistleblower status, says bank officials replaced a loan reappraisal that he prepared for a Chicago property that was purchased by the wife of now-convicted felon Tony Rezko, part of which was later sold to next-door neighbor Barack Obama.

In a complaint filed Thursday in the Circuit Court of Cook County, Kenneth J. Connor said that his reappraisal of Rita Rezko's property was replaced with a higher one and that he was fired when he questioned the document.

Mr. Connor, a real estate and commercial credit analyst at the Mutual Bank Corp. in Chicago, also noted in the complaint that the bank received a grand jury subpoena in October 2006 requiring it to produce information concerning Mrs. Rezko's purchase, including the bank's files on the property.

The complaint also said that the grand jury wanted information on Mrs. Rezko's checking account and loan file and that the Federal Deposit Insurance Corp. (FDIC) had audited the Rezko file - although Mr. Connor's lower reappraisal had been replaced with a higher amount.

"Connor's internal whistle-blowing activity at Mutual Bank implicates Mutual Bank and the potentially guilty officers thereof to prosecution under federal and Illinois statutes," said the complaint, filed by attorney Glenn R. Gaffney.

The complaint said Mutual Bank officials could 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.

This, from what I understand, is highly unusual. First, the size of the lower appraisal is incredible - 20% errors are just not made in that business. If the bank were in on this, that would mean that it is possible that the sellers - a doctor who worked at University of Chicago hospital where Michelle Obama worked - were in collusion. The higher appraisal of the empty yard meant that they could lower their asking price for the house.

The 10 foot parcel of land that Obama paid more than $100,000 for was worth nowhere near that amount (one real estate expert  thought it would be worth about half that).  Now it could be that Obama was just helping out a buddy in a financial bind by  paying twice what the property was worth. But there is also a possibility that it was Obama paying Rezko back for his buying the vacant yard at the inflated price.

The whole transaction stinks of manipulation, cronyism, and collusion to possibly defraud. It should be interesting to see where this investigation leads as well as how Mr. Connor's lawsuit progresses.