Gov. Rod Blagojevich's wife earned more than $113,000 in real estate commissions this year through a woman who holds a longstanding, no-bid state contract and whose banker husband has business pending before state regulators.
The four real estate deals involving the Chicago couple Anita and Amrish Mahajan, the last of which closed Sept. 28, account for the only commissions Patricia Blagojevich has earned this year.The governor's office scoffed at questions about whether it is a conflict of interest for the governor's spouse to make money from a couple whose businesses depend on decisions made by the Blagojevich administration.
"It's unfair and completely ridiculous to suggest she should be expected to keep track of every client she does business with to see if they have contracts with the state," said Abby Ottenhoff, the governor's chief spokeswoman. She said the questions were rooted in outdated attitudes toward working women.
Get the Chicago Tribune delivered to your home for only $1 a week >>
"Mrs. Blagojevich has no authority over state contracts, and she has every right to conduct her private real estate business the same way everyone else does," Ottenhoff said. "To suggest otherwise, quite frankly, is a throwback to the 1950s."
State law does not prohibit the spouses of public officials from doing business with state contractors.
Ottenhoff said the Mahajans are longtime friends with the Blagojeviches and that the real estate contracts were not intended to curry favor with the governor. She said there is no conflict--real or perceived--with a state contractor supplementing the governor's family income.
Questions of influence
But Kent Redfield, a professor of political studies at the University of Illinois in Springfield, said the governor must be sensitive even to "the appearance of a conflict of interest.
"Fair or unfair, this situation opens them up to questions of influence peddling from both sides of the equation--either you're trying to curry favor with the governor or pressure is being put on you to do business with the governor's wife," Redfield said.
Amrish Mahajan--who has donated $10,000 to Blagojevich's political campaigns--is president of a Harvey bank with requests pending before state banking regulators to acquire two out-of-state banks. His bank has lent millions of dollars to indicted Blagojevich fundraiser Antoin "Tony" Rezko.
Anita Mahajan's drug-testing contract with the state's child welfare agency is worth about $739,000 this year.
"We understand how it may look, that there is a problem with appearances," Amrish Mahajan said Thursday. "But if we had even thought about that, we would never have hired Mrs. Blagojevich.
"We didn't even consider that this might affect her state contract," he said of his wife. "She's had it now for 15 years."
Anita Mahajan owns K.K. Bio-Science Inc., a Chicago urinalysis company that won a renewal June 29 of its longstanding annual contract to screen clients of the state's Department of Children & Family Services. The contract, initiated under a Republican administration, goes back to at least the mid-1990s and has been repeatedly renewed, according to state records.
This year the contract obligation was increased to $739,025 from an estimated $693,696.79, records show.
The state agency refused a Tribune request for records related to the contract, including any internal audits, reviews or correspondence. The agency's denial cited an "unwarranted invasion of privacy."
Real estate deals
The commissions to Patricia Blagojevich involved four real estate deals on apartment buildings and retail centers in the Chicago area that sold for a combined $5.71 million. Patricia Blagojevich earned $113,700 in commissions, according to real estate records.
Anita Mahajan is named in county records as a beneficiary of two private land trusts that bought two apartment buildings in May.
In June, other investors took over a contract for a retail and apartment property Anita Mahajan decided not to buy, but kept Patricia Blagojevich as the buyer's agent, according to the Mahajans and their lawyer.
In September, Anita Mahajan's brother bought the fourth property, a strip shopping center in Homewood."The Mahajans were happy with the work she did for them and so they recommended her to Mrs. Mahajan's brother and other family members," Ottenhoff said.
She acknowledged the four real estate transactions are the only commissions Patricia Blagojevich has earned this year. "Some years are better than others," Ottenhoff said. Patricia Blagojevich declined to be interviewed.
When questioned by a Tribune reporter, Anita Mahajan denied her friendship with the Blagojeviches and said didn't know who Patricia Blagojevich was until someone brought it up at the first closing.
"I didn't hire her," Mahajan said in a brief interview from the balcony of her Chicago townhouse. "I didn't even know who she was until closing. That's when I heard she was the governor's wife. I try not to get involved in politics."
Mahajan said her lender--Western Springs National Bank and Trust--sent her all the listings and hired Patricia Blagojevich.
She referred further questions to her attorney, James Regas of the Chicago law firm Regas, Frezados & Dallas. Regas also is board chairman at Western Springs National Bank and Trust.
"Why shouldn't she hire Patricia Blagojevich?" Regas said. "They've been friends for a long time. He [the governor] is very close to the Indian community here."
He said Mahajan was mistaken if she thought the bank hired Blagojevich.
Regas also is listed as vice chairman of the board of directors at Mutual Bank, where Amrish Mahajan is president and chief executive officer.
On June 19, Regas filed Mutual Bank's notices of intent to acquire two out-of-state bank branches with the Illinois Department of Professional Regulation's division of banking. The move triggers examinations of the bank's business practices by state and federal regulators, said Susan Hofer, spokeswoman for the department.
Mahajan said Thursday the bank's applications to expand have hit a temporary snag and he has withdrawn them from federal regulators "within the past two months."
"We want to expand, yes, but it has been delayed for business reasons I would rather not go into," he said. He declined to elaborate.
State officials in New Jersey and in Illinois were unaware that the acquisition had stalled.
Ties to Rezko
Mahajan and his bank also have had business dealings with Rezko, who pleaded not guilty this month to federal charges he tried to squeeze millions in kickbacks and campaign contributions from firms seeking approval from two state boards.
Since 2002, Mutual Bank has lent more than $3.4 million to Rezko and his partners in three deals, according to a review of public records.
In one, Mahajan's bank lent $1.32 million to Rezko on several pieces of property that were deeded back and forth between Rezko partners both before and after the loan was secured. Banking experts said such moves raise questions about who owned the property used as collateral for the loan.
Mahajan said Thursday he had no idea Rezko and his partners had transferred the property used to secure the loan and said that would be a violation of the mortgage contract.
"We do not go checking on every loan," Mahajan said. "The mortgage was paid on time, and if I remember correctly it has been satisfied."
In 2005, records show, the Rezko partner who took out the loan with Rezko--Abdelhamid Chaib--paid off most of the loan and renegotiated a smaller loan of $156,000. Mahajan signed the renegotiated loan papers.
Rezko also has done real estate business with Patricia Blagojevich. The Blagojevich's 2004 tax returns included what they identified as $38,000 in income from Rezko.
The governor said earlier this year his wife no longer does business with his longtime adviser.
Ottenhoff noted there was no indication the deals involving Patricia Blagojevich and the Mahajans had any connection to Rezko, saying, "Mr. Rezko borrows money from a lot of banks."
Redfield, the political studies professor, said the federal government's investigation of Rezko and the Blagojevich administration has raised the stakes for the governor, who campaigned on a platform of ethics reform.
"If you're going to claim that you're a leader and hold yourself out as a reformer, then you need to lead by example."
- - -
Governor's wife benefits from real estate deals involving friends with state business interests
Patricia Blagojevich received commissions through four real estate deals on apartment buildings and retail centers in the Chicago area that sold for a combined $5.71 million. She earned $113,700 in commissions, according to real estate records.
Address: 2121 W. Granville Ave., Chicago
Sale price: $1.425 million
Date: May 25
Address: 814 Mulford St., Evanston
Sale Price: $1.375 million
Date: May 26
Address: 3101 W. Devon Ave., Chicago
Sale Price: $1.75 million
Date: June 28
Address: 18659 S. Dixie Highway, Homewood
Sale Price: $1.16 million
Date: Sept. 28
Source: Multiple Listing Service records and Tribune research
email@example.comCopyright © 2014, The Baltimore Sun