Try digitalPLUS for 10 days for only $0.99

Feds probe real estate deals

Federal agents are investigating real estate deals involving Gov. Rod Blagojevich's wife as part of a three-year corruption probe into allegations of favoritism and fraud within his administration.

Several federal sources familiar with the inquiry confirm that agents are interested in hundreds of thousands of dollars in real estate commissions Patricia Blagojevich has earned in recent years as a real estate broker for political supporters, fundraisers and state contractors.

One real estate agent told the Tribune that FBI agents contacted her in recent weeks with questions about her dealings with Patricia Blagojevich in a $3.2 million sale of a Gold Coast home in 2004. The seller was an investment banker and generous contributor to the governor's campaign fund who hired the first lady as his second agent on the deal.

It is the latest in a series of real estate deals disclosed by the Tribune in which the governor's wife received commissions from politically connected clients. Most of those deals involved people seeking favor from the government her husband leads.

Neither the governor nor his wife has been accused of any wrongdoing.

But the revelation is the strongest indication yet that the federal investigation into allegations that state business, jobs and other favors were traded for campaign donations reaches beyond the governor's public administration and into his family's finances.

The governor's chief spokeswoman described the first lady as an ethical businesswoman who has been a licensed real estate broker and appraiser for more than 15 years.

"No one -- and I mean no one -- has told us that she is under investigation, and there's no reason she would be," said Abby Ottenhoff in an e-mailed response to questions Thursday. "She has done nothing wrong.

"But what is really sad is that someone has resorted to malicious rumors and innuendo to attack the governor's wife. This has sunk to an outrageous new low."

Randall Samborn, a spokesman for the U.S. attorney's office, declined to comment.

In an interview this week with the Tribune, real estate agent Mary Bennett said FBI agents contacted her firm's attorneys requesting she sit down with them. She said agents wanted her to explain why she agreed to add Patricia Blagojevich as a second agent in the 2004 sale of a home in the 1200 block of North Astor Street.

Bennett said she included Patricia Blagojevich at the request of the owner, John H. Simpson, an investment banker who has donated $97,000 to Gov. Blagojevich's campaign fund since 2002.

"I figured the seller wanted to throw her a little business," said Bennett, who was the agent when Simpson bought the house in 1997. "Half a listing is better than none at all, so that's what I did.

"I had sold the house before, I figured I could sell it quick -- so I agreed," said Bennett, a longtime real estate agent in the toney, historic neighborhood.

The 2004 real estate listing shows Patricia Blagojevich as co-listing agent. Bennett said Patricia Blagojevich collected a quarter of the 4 percent commission on the sale -- about $32,000.

Simpson, reached by telephone at his California office, declined to comment. Before moving, he worked at a Chicago investment firm that also used to employ U.S. Rep. Rahm Emanuel (D-Ill.), a close ally of Gov. Blagojevich's and the man who succeeded the governor in his seat in Congress. A check of state records indicates that neither Simpson nor his firm has any state contracts.

JoAnn Turnquist, who with her husband bought the home from Simpson, said she had not been contacted by federal agents. She said she met Patricia Blagojevich during the home inspection.

Bennett said that because of her firm's rules on contact with law enforcement, the FBI agents requested an interview through her firm's lawyer, Richard Perna. He declined to comment on the FBI contact.

Bennett canceled her first appointment with the FBI because of business commitments, she said. She has yet to reschedule the interview.

Federal agents also recently contacted another individual with ties to an influential supporter who paid a commission to Patricia Blagojevich.

On Nov. 4, the Tribune disclosed that Mark Wight, head of the architecture and engineering firm of Wight & Co., won $10 million in no-bid state contracts after paying Patricia Blagojevich a commission on the sale of his $650,000 Chicago condominium. Wight sold the condo to his state government lobbyist, John Wyma, a longtime insider with Gov. Blagojevich.

Renewed IRS interest

The day after the report was published, an Internal Revenue Service agent on a federal team investigating the governor's administration contacted a fired executive of Wight's firm about unrelated financial accusations he had made against the company years earlier.

Mike Webber, a former chief financial officer who lost his wrongful-termination lawsuit against Wight & Co., said agents spoke with him at the IRS offices in Chicago for about 90 minutes but told him the statute of limitations had expired on his accusations. The IRS agents were reluctant to discuss the reason for their renewed interest and asked no questions about the real estate deal, Webber said.

But a federal source confirmed that the renewed IRS interest was because of Patricia Blagojevich's role in the real estate deal reported in the Tribune.

Wight and the governor's office said the commission had nothing to do with the state contracts Wight's firm received. Wight declined to comment through a spokesman for this report.

Patricia Blagojevich earned what both sides called a standard commission, which would put her fee in that condo deal between $26,000 and $39,000.

The governor's office has characterized inquiries about Patricia Blagojevich's dealings as sexist, saying she was a successful businesswoman long before her husband became governor in 2003.

While releasing their jointly filed income-tax returns that show profits from her River Realty Inc., the Blagojeviches have refused to provide tax documents from the company or her list of clients.

A steady income

But the Tribune's investigation into Patricia Blagojevich's real estate dealings has documented a steady income -- more than $200,000 -- to the Blagojevich household from key political supporters, campaign fundraisers and state contractors since he was elected.

Two influential political supporters who hired Patricia Blagojevich as a real estate agent have since been indicted on unrelated corruption charges involving their dealings with the governor's administration.

Patricia Blagojevich's real estate deals with power brokers close to her husband first came under scrutiny in 2005 when the Tribune disclosed her eight-year business relationship with Antoin "Tony" Rezko, a Chicago developer who became one of the governor's top fundraisers and a member of his kitchen cabinet.

Rezko was indicted last year on federal charges of soliciting kickbacks from firms seeking state business. He has pleaded not guilty.

Last year, Cook County prosecutors indicted Anita Mahajan, the owner of a now-defunct drug-testing firm, on charges that she bilked $2 million from a long-standing no-bid state contract. She has pleaded not guilty.

Mahajan and her banker husband, Amrish, first came under scrutiny last year following Tribune disclosures that they accounted for more than $113,000 in real estate commissions to River Realty.

The first indication that federal authorities were interested in the Blagojeviches' personal finances came when the Tribune reported in September 2006 that a state worker told the FBI she suspected she got her job after her husband, a longtime friend of Gov. Blagojevich's, wrote a $1,500 check to one of the governor's daughters. Gov. Blagojevich acknowledged helping the woman get a state job but said the check was a birthday present that played no role in the hiring.

- - -

Connected clients

Here are some of the previous real estate deals handled by Patricia Blagojevich disclosed by the Tribune. They involve politically connected clients and state contractors, including Amrish and Anita Mahajan and Mark Wight, whose state lobbyist is a longtime insider with Gov. Rod Blagojevich.

Client: Wight

Address: 2012 W. St. Paul Ave., Chicago

Sale Price: $650,000

Date: Jan. 7, 2005

Commission: $26,000-$39,000

Client: Mahajans

Address: 2121 W. Granville Ave., Chicago

Sale price: $1.425 million

Date: May 25, 2006

Commission: $28,350

Client: Mahajans

Address: 814 Mulford St., Evanston

Sale Price: $1.375 million

Date: May 26, 2006

Commission: $27,400

Client: Mahajans

Address: 3101 W. Devon Ave., Chicago

Sale Price: $1.75 million

Date: June 28, 2006

Commission: $34,825

Client: Mahajans

Address: 18659 S. Dixie Highway, Homewood

Sale Price: $1.16 million

Date: Sept. 28, 2006

Commission: $23,125

Source: Multiple Listing Service records and Tribune research

----------

dkidwell@tribune.com

jcoen@tribune.com

rlong@tribune.com

Copyright © 2015, The Baltimore Sun
Comments
Loading

73°