Obama’s Chicago mentor and Mayor Daley’s nephew squandered millions in pension funds, but made millions for themselves
It is good, every now and then, to reflect upon the nature of the political machine that Barack Obama consciously and deliberately chose as the venue within which to build his political career. He wasn’t born the Chicago Democratic politics; he sought it out as a match for his skills and inclinations.
When he was a fledgling lawyer, Obama’s first boss was Allison S. Davis. As an article on Obama’s coterie in Chicago explained:
…in 1993 Obama launched his law career at a small Chicago firm then known as Davis Miner Barnhill & Galland. (snip)
Allison Davis, a former partner in Miner's firm (and the son of a prominent U. of C. professor), occupied an office next to Obama's at 14 West Erie Street. "He spent a lot of time working on his book [Dreams from My Father]," Davis recalls. "Some of my partners weren't happy with that, Barack sitting there with his keyboard on his lap and his feet up on the desk writing the book."
Davis speculates that Obama never joined a blue-chip Loop firm out of concern that he would then end up representing the sort of wealthy corporate interests that might appear unsavory from the point of view of a Democratic politician. One time, Davis worked with DePaul University to draw up a proposal to redevelop the Cabrini-Green public-housing area. "I asked Barack if he wanted to represent this entity," Davis recalls. "And he said no, because this is going to result in poor people being moved out." (The proposal never went anywhere.)
Still, if Obama's aim was to avoid unsavory clients, he fell short of the goal, considering Antoin "Tony" Rezko's trial this year on charges of influence peddling in state government. Rezko's development firm joined the long line of recruiters while Obama studied at Harvard, and later at Davis Miner Barnhill, Obama did some legal work for nonprofits partnered with Rezko's firm. "If you look at Rezko through a 1994-1995 lens, you're going to get a different picture," says Miner, defending Obama's relationship with Rezko. "He was more like the poster child for low-income housing development. At that point, [Rezko] was well thought of." (However, Rezko was known to be under federal investigation by the time Obama made a tangled deal with him involving the purchase of the senator's new Hyde Park home in 2005—a transaction that still darkens Obama's presidential campaign.)
That same Allison M. Davis was able to parlay his political connections into lucrative – for him and his cronies – investment management work that didn’t work out so well for the clients. Tim Novak of the Chicago Sun-Times’ Watchdog group:
A real estate venture created by President Barack Obama’s onetime boss and a nephew of former Mayor Richard M. Daley squandered $68 million it was given to invest on behalf of pension plans for Chicago teachers, cops, city employees and transit workers, a Chicago Sun-Times investigation has found.
The five public pension funds haven’t made a dime on the investments they made nearly a decade ago with DV Urban Realty Partners, a company created by Obama’s ex-boss Allison S. Davis and Daley nephew Robert G. Vanecko, records show.
In fact, the financially troubled pension plans have lost most of the money they gave DV Urban, which used the money to invest in risky real estate deals, primarily in neglected neighborhoods.
It invested in eight real estate deals that, for the most part, had gone belly up by Dec. 31, 2015, when the investment deals with the Chicago pension plans expired.
Though the pension funds lost out, DV Urban and its affiliated companies got about $9 million of the pension money for management fees. And they were in line for more until pension officials, facing losses, got a court order in 2012 to remove Davis and Vanecko from managing the retirement investments.
Following the sale of two properties last year, the pension funds recovered $6 million of their original investments — but $293,716 of that went to DV Urban, which had also invested some of its own money in the real estate deals.
Wow, making millions off of failed deals that squandered the pension funds of working people.
That pretty much sums up the guy whose office was next door to Obama’s in his first legal job.