By MIKE ROBINSON
The Associated Press
Tuesday, January 29, 2008; 2:52 AM
CHICAGO -- An indicted businessman who poured thousands of dollars into the campaigns of Barack Obama and other politicians was jailed Monday after prosecutors disclosed he received $3.5 million from an Iraqi billionaire while claiming to be broke.
Real estate developer and fast-food entrepreneur Antoin "Tony" Rezko was arrested Monday at his home in Wilmette and held after his attorneys failed to dissuade Judge Amy J. St. Eve from revoking his $2 million bond.
"This defendant has played a shell game and I think misled the court about what his assets are," federal prosecutor Reid J. Schar said.
Rezko is charged with scheming to pressure companies seeking state business for kickbacks and campaign contributions.
His name has surfaced in the Democratic presidential race because of his ties to Obama, who ended up donating to charity thousands of dollars in campaign contributions connected to Rezko. During a South Carolina debate, Hillary Rodham Clinton accused Obama of representing Rezko "in his slum landlord business" when Obama was a young Chicago lawyer.
Obama actually represented partners of Rezko's company in government-subsidized apartment rehabilitation projects, not Rezko himself. Obama says he did no more than five or six hours of work for the partners.
Rezko has contributed thousands of dollars to the campaigns of both Obama and Gov. Rod Blagojevich _ neither of whom is accused of any wrongdoing.
Rezko is due to start trial Feb. 25 on charges of mail fraud, wire fraud, money laundering and attempted extortion. He is charged separately with swindling the General Electric Capital Corp. out of $10 million in the sale of a pizza restaurant business.
Obama's name has not come up in connection with any of the corruption charges swirling around Rezko. Prosecutors indicate the source of Rezko's clout was somewhere within Blagojevich's administration.
Federal prosecutors say Rezko was deceptive in leading St. Eve to allow various relatives and friends to post their property to secure his bond while claiming he was broke and living off relatives' generosity.
An FBI affidavit said Rezko actually received $3.5 million from a Lebanon-based bank account of General Mediterranean Holdings, a Luxembourg company owned by London-based Iraqi billionaire Adhmi Auchi. Rezko's attorney said Rezko has had business dealings with Auchi.
Forbes magazine listed Auchi in 2007 as the world's 279th richest man. He also has been convicted of fraud in France, the government said in a court filing seeking the warrant to arrest Rezko.
Prosecutors said in their filing that $3.5 million was wired into a fund maintained at a Chicago bank by attorneys handling Rezko's tangled finances. They said the money was later transferred into other accounts and disbursed within a week.
Some of the money was transferred directly to Rezko, some to a company he owned, some to his wife, Rita, and some to friends and relatives who had posted their homes to secure his bond, according to the filings. Rezko's legal bills also were paid with a portion of the money, they said.
A 62-acre parcel south of downtown Chicago has been described as Rezko's major asset. The judge did not require him to post it as part of his bond after he described it as not a liquid asset and of speculative value only. But the government said Rezko has since "transferred, restructured or sold" much of his interest in the property.
In one of several filings Monday, prosecutors said they have a cooperating informant who claims to have seen documents describing Rezko's transfer of "a significant portion of his 62-acre property" to General Mediterranean. The informant understood the transfer to be in exchange for General Mediterranean forgiving $20 million in debt, according to prosecutors.
St. Eve reminded Rezko that when she granted him bond, she had ordered him to keep her advised of any changes in the tract's ownership.
Defense attorney Joseph Duffy tried to take some of the blame himself, saying he may not have adequately explained to Rezko his obligations. St. Eve brushed that aside, saying Duffy was not in any way at fault.
Monday's hearing was confused at some points. Duffy told St. Eve that the $3.5 million payment from General Mediterranean had been a loan secured by Rezko's interest in the 62-acre parcel. A minute later, he interrupted the proceedings to say he had just been told that it was not.
"I am not convinced by what I am hearing today," St. Eve said.
She scheduled a hearing Tuesday for Rezko's lawyers to present any information that might persuade her to reinstate the bond.