Obama passes on donations

Sen. Barack Obama announced Saturday that he would donate to charity $40,350 in past political contributions, after his identity surfaced in a public corruption case headed to trial.

The case and the contributions involve Antoin Rezko, one of Obama’s earliest patrons. Rezko, 52, is scheduled to go on trial next month on federal charges alleging he joined a scheme to force investment firms seeking business from Illinois state pension funds to pay kickbacks.

There is no suggestion that Obama knew the source of the donation, and he faces no allegations of wrongdoing.

Obama is referred to, albeit not by name, in a single paragraph in a 78-page court document as a “political candidate” for whom Rezko raised money. A source familiar with the case confirmed that Obama is the unnamed politician.

According to the document, Rezko used a business associate to funnel $10,000 to Obama’s U.S. Senate campaign in March 2004 -- money that came from an alleged $112,000 kickback intended to benefit the Chicago businessman.

But the government’s reference to the political candidate amounts to the first time Obama’s identity is hinted at in the case against Rezko. It raises the prospect Obama’s name will surface in Rezko’s trial, an unwanted distraction as the first-term senator from Illinois seeks the Democratic presidential nomination.

In a hearing last week, U.S. District Judge Amy St. Eve said she anticipated the trial, set to open Feb. 25, would last three to four months. Federal prosecutors said they expected to call 23 witnesses. Rezko’s attorney, Joseph Duffy, said Rezko was innocent and intended to fight all charges.

The indictment alleges that Rezko and his co-conspirators -- some of whom are expected to testify against him -- aspired to receive millions in kickbacks from the pension funds and ended up receiving hundreds of thousands.

The main witness against Rezko is expected to be Stuart Levine, a longtime member of the board that oversees the Illinois public school teachers pension fund. Rezko, who had also been a major fundraiser for Democratic Gov. Rod R. Blagojevich, helped persuade Blagojevich to reappoint Levine, a Republican, to the Teachers’ Retirement System board.

Seeking to quell questions about the Rezko case, Obama’s aides announced the candidate would return the $40,350 from seven Chicago-area individuals who appear to be linked to Rezko. That pushes to $85,185 the amount that Obama will donate of the Rezko-related contributions between 1995 and Obama’s 2004 Senate race.

“Recent public information has called into question contributions to the Obama campaign from a donor and fundraiser,” Obama campaign spokesman Bill Burton said in a statement. “Our consistent practice in these circumstances is to give the funds to charity out of an abundance of caution.”

Obama is not the only presidential candidate who has sought to distance himself from questionable donors. Republicans and Democrats have returned or donated tainted money.

Obama’s main rival, Sen. Hillary Rodham Clinton of New York, returned $850,000 raised by Norman Hsu, who faces federal fraud charges in New York.

In past statements, Obama has portrayed Rezko as a fundraiser with whom he would dine a few times a year. Their relationship dates to Obama’s early years in Chicago and to his start in politics.

“It is a rule in politics: Early money is very important,” said Jay Stewart, head of the Better Government Assn., a nonprofit watchdog in Chicago. “Tony Rezko helped put Barack Obama on his political feet. Tony Rezko was consistently a significant contributor.”

In a review of Obama’s donations, the Los Angeles Times has identified as much as $185,000 from Rezko-related donors. Sources familiar with Obama’s 2004 Senate campaign said Rezko’s name was prominently displayed on a white board that totaled the amount his bundlers had raised in the Senate race.

“Rezko was there from the beginning,” said a source who had been close to Obama’s political operation and did not want to be identified for fear of alienating political associates in Illinois where Obama’s support is strong. “He is closer than Obama is putting on. The guy was always raising money.”

Among their connections, Rezko hosted a fundraiser at his home, a mansion in the wealthy suburb of Wilmette, as Obama began running for U.S. Senate in 2003.

In the court filing last month, the U.S. attorney’s office in Chicago describes a $10,000 contribution to a “political candidate” -- now identified as Obama -- for whom Rezko raised money. The donation was made in the name of a business partner of Rezko, called “Individual D” in the document but widely believed to be Joseph Aramanda.

Obama’s campaign finance reports show he received $10,000 from Aramanda on March 5, 2004. Obama previously donated that money to charity. Aramanda declined to discuss the matter when contacted at his home last Sunday. Also on March 5, 2004, Obama received $10,000 from Craig Morgan, a systems analyst who works at a firm linked to Rezko.

Morgan’s donation is part of the $40,350 that the Obama campaign announced Saturday is being donated to charity.

The Chicago Sun-Times first reported the connection between the unnamed candidate in the court document and Obama in its Saturday editions.

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dan.morain@latimes.com