Rezko beginning to intrude on Presidential Campaign

After months of mainly being a local story with occasional forays by the national media into the swampy mess of corruption in Illinois politics, the story of Barack Obama's friend of 17 years and major fund raiser Antoin "Tony" Rezko appears to have finally penetrated the screen of good press around the candidate and may start to take a toll on his popularity.

The New York Times, the Wall Street Journal, and nationally-syndicated columnist Robert Novak have all written major pieces over the weekend on Rezko and have finally begun to focus on more than just the famous real estate deal where Obama got a $300,000 discount on the price of his house due to Rezko purchasing a lot next door from the same seller on the same day.

This is certainly a transaction that still needs to be explained. But Rezko's relationship with Obama and other shady characters in the Chicago political world and how some bribery money made it into Obama's campaign coffers will be the subject of Rezko's trial that begins today in Chicago. And it is a dead certainty that Obama's name will come up at some point.

The Times did a good job summarizing some of Obama's major ethics problems:

Some critics say that given Mr. Obama’s longtime emphasis on ethics, it is puzzling that he would have been so involved with the Rezkos on the house and lot deals after questions had begun to crop up about Mr. Rezko’s political and business activities.

For at least two years before the property purchases, news articles had raised questions about Mr. Rezko’s influence over state appointments and contracts. There had also been reports that the F.B.I. was investigating accusations of a shakedown scheme involving a state hospital board to which Mr. Rezko had suggested appointments.

Also, Chicago officials had announced that they were investigating whether a company partly owned by Mr. Rezko had won public contracts by posing as a minority business. As a result, said Jay Stewart, executive director of the Better Government Association in Chicago, Mr. Obama “should have been on high alert.”

John Fund gives some background on Rezko and the mysterious Nadhmi Auchi whose loan to Rezko just days before Obama closed on the house probably helped Rezko buy the next door lot and seal the deal for his friend:

Mr. Auchi was also a top official in the Iraqi oil ministry in the 1970s. He has for years vigorously denied charges he had dealings with Saddam Hussein after the first Gulf War.

However, an official report to the Pentagon inspector general in 2004 obtained by the Washington Times cited "significant and credible evidence" of involvement by Mr. Auchi's companies in the Oil for Food scandal and illicit smuggling of weapons to the Hussein regime. In 2003,

Mr. Auchi began investing in Chicago real estate with Mr. Rezko. In April 2007, after his indictment, Mr. Auchi loaned another $3.5 million to Mr. Rezko, a loan that Mr. Rezko hid from U.S. Attorney Patrick Fitzgerald's office. When Mr. Fitzgerald learned that the money was being parceled out to Mr. Rezko's lawyers, family and friends, he got Mr. Rezko's bond revoked in January and had him put in jail as a potential flight risk.

In court papers, the prosecutor noted that Mr. Rezko had traveled 26 times to the Middle East between 2002 and 2006, mostly to his native Syria and other countries that lack extradition treaties with the U.S. Curiously, Mr. Auchi has also lent an unknown sum of money to Chris Kelly, who, like Mr. Rezko, was a significant fund-raiser for Illinois Gov. Rod Blagojevich (himself under investigation by a federal grand jury as an alleged beneficiary of the Rezko shakedowns). Mr. Kelly is himself under indictment for obstructing an IRS probe into his activities.

Novak also points to Auchi as a possible Obama Achilles heel:

But the case against Rezko prepared by the always determined U.S. Attorney Patrick Fitzgerald poses possible new pitfalls for the Democratic front-runner by introducing into the proceedings Auchi, who has been convicted on corruption charges in France and given a suspended sentence. While his friends describe Auchi and his family as victims of Saddam Hussein's tyranny, Pentagon sources call him a "bagman" who laundered money in London for the Iraqi dictator.

Chicago Sun-Times reporters Chris Fusco and Tim Novak asked last week how it was possible for Auchi to get government permission to visit Chicago in 2004 despite his French criminal conviction. Obama aides were quoted as saying Auchi never reached out to the senator, and representatives of both men say neither has any recollection of meeting the other. But the Times of London reported last week that "the two may have had a brief encounter" at the Four Seasons Hotel in Chicago. It is an indistinct part of an indistinct story Hillary Clinton's handlers wish had attracted attention before now.

What is not understood by the national media -- yet -- is that this 17 year relationship between Rezko and Obama features a good half dozen tantalizing stories that if fleshed out would probably virtually end the senator's candidacy. There's a series of letters Obama wrote to Illinois housing authorities on Rezko's behalf that garned the developer a huge service fee for the construction of senior housing -- housing not located in Obama's senate district.

Novak raises a question as to how Auchi managed to get into the United States in 2003 despite his conviction for bribery in connection with the notorious Elf scandal in France. The answer, according to Rezko, is that he asked Obama to intercede with the State Department and get Auchi -- listed as an "undesirable alien" -- a visa.

There's the work performed for Rezko by Obama's law firm in connection with a real estate scam that may have bilked millions of dollars from the city. The rehab projects the city payed Rezko for are falling apart with no heat -- most have been boarded up.

Obama has barely scratched the surface in answering these and other questions. As with all scandals, the questions will simply multiply and in the end, the candidate, who has already changed his story several times about the real estate transaction involving his house, will get caught in inconsistencies and falsehoods. And as Ed Lasky points out, the press may finally have roused themselves and thrown off the blinders on Obama and may be ready to act like newspaper people instead of lap dogs:

Still, after a year in which Obama was hailed as the second coming of JFK, will his Teflon coating now be scratched?

Tapper says he asked Obama about his patriotism "because obviously Democratic voters think the nominee should be someone who is able to withstand Republican conservative attacks." He says he noticed such criticism spreading on talk radio, cable shows and blogs, and "to act as if we can ignore other parts of the media because we're snobby about it . . . then we're irrelevant, because we're missing part of the story.

"It's very difficult to argue that the level of scrutiny of Barack Obama has been the same as the level of scrutiny of other candidates." But, Tapper says, holding Obama accountable is difficult because he speaks to reporters infrequently.

That will almost certainly change if the Rezko story breaks the way I believe it will.

Ed Lasky and Rich Baehr also contributed links for this post.