NOTE: The article below is from last year. It’s a story that was never picked up by the media (since when have they ever picked up anything about Obama?) and the Clinton campaign did not know what to do with this — people we’ve spoken to said that, in retrospect, they realize what a mistake this was because what Obama did here is actually a prosecutable crime. We were told, specifically, that the bribe Obama took as a state senator is the thing David Axelrod has lived in terror of this whole campaign — he has been praying this does not get out.

One reason this never came back to bite Obama is that the article below is overly long — and the part about the bribe is buried in the middle — it’s no coincidence this story appeared in the LA Times. The article’s author, Dan Morain, tried to bring this bribe up in the primaries, but never had any support in the media to go anywhere with it.

One of the greatest advantages Obama has is that he’s surrounded by so many crooked deals, kooks, loons, and criminals that it’s hard for the public to understand most of what’s going on. Here in Chicago, Team Hillary kept trying to bring up Obama’s connections to Tony Rezko and the land deal for Obama’s Mansion — but people couldn’t understand what the Rezko dealings were all about. They still don’t understand it.  And they won’t read a long article like the one below about the rest of Obama’s dirty dealings.

In short, Obama had massive campaign debt coming off of his failed bid to challenge Bobby Rush for a seat in Congress. Smarting from that loss, Obama needed money, so he turned to Yesse Yehudah. What’s so strange about this is that Yehudah is a Republican — so why would he raise money for Obama? What the article below does not say is that, magically, 10 people who work for Yehudah and have never given money to any elected official before – AND WHO COULD NOT AFFORD TO MAKE $1,000 donations – all made $1,000 donations to Obama simultaneously. As if someone else made the donations for all of them, in their names, with money that came from somewhere else.

The quid pro quo on this is simple: Obama took a $10,000 bribe from Yehudah for using his position in the state senate to throw a $75,000 grant to Yehudah’s nonprofit organization. People here in Chicago say this was obvious politics in Illinois: where Obama agreed to get Yehudah a grant, but Obama’s fee for this transaction was $10,000 to pay off his campaign debt.

Yehudah’s nonproft later came under investigation, and Obama panicked: he dumped $5,000 of the bribe money he took over to Yehudah as fast as he could after that.

Read the story below from Dan Morain.  We know this one is tough because it’s not easy for most people to understand Illinois politics — but what Obama did here with this grant is illegal, and it’s the kind of things politicians in Illinois go to jail for all the time — including our last governor George Ryan, and most likely our current governor Rod Blagojevich too.

Bribes like this are what people mean when they refer to “dirty Chicago politics”.

Fresh face or old-school player?

By Dan Morain
September 08, 2007 in print edition A-1

He managed to burnish a reformer’s reputation while swimming in the muddy waters of special-interest- infested state politics.

He worked on a nice-guy image while practicing the hardball and brawling tactics of Chicago-style politics.

Now, promoting himself as a fresh face on the national political stage, proclaiming his distance from lobbyists and the Washington culture of special interests, Sen. Barack Obama (D-Ill.) has to contend with his own history.

From Chicago to Springfield, his past is filled with decidedly old-school political tactics – a history of befriending powerful local elders, assisting benefactors and special interests, and neutralizing rivals.

Obama may be packaged as something new among presidential contenders, but in this town where politics is played like a blood sport he fit right in.

“He knows how the game is played,” said Jay Stewart, executive director of Better Government Assn., a nonpartisan group that honored Obama for helping overhaul state ethics law. Stewart called Illinois politics “deeply troubled, if not corrupt” at its core.

“It is very difficult to come out of a system that is flawed and walk out unscathed. Sen. Obama has done better than most. But it’s not as if he is a babe in the woods,” Stewart said.

In fact, Obama’s first venture into politics suggested he came to the game ready to throw elbows. That was in 1995. He had been invited to succeed Alice Palmer when she left the state Senate to run for Congress.

He reached out to local power brokers and financial backers – among them entrepreneur Antoin Rezko and politically connected Al Johnson, a retired auto dealer who was the late Mayor Harold Washington’s bridge to the business community.

Palmer backed Obama too. But friendly succession hit a bump when Palmer’s congressional bid failed. She asked Obama to step aside and let her run for her old seat in the state Senate.

Obama did more than refuse. The onetime voting rights activist in Chicago’s poor districts challenged the signatures qualifying Palmer for the ballot. Palmer was disqualified, and Obama, then 35, took office running unopposed.

“Some can say it was cold, but that is how the game is played,” said Illinois state Sen. Donne E. Trotter, a Democrat whose district bordered Obama’s.

That first race cemented ties with Johnson and Rezko that have spanned Obama’s political career. Both made significant donations. And Rezko became one of Obama’s most important patrons. He and his associates are responsible for $160,000 in campaign aid over the past 12 years.

Rezko has helped numerous politicians from both parties. In 2003, he gave President Bush $4,000 and co-hosted a fundraiser in downtown Chicago said to have generated $3 million for the president’s reelection.

But Rezko also represents another rule of old-style politics: Beware of your friends. Last fall, Rezko was indicted here on federal public corruption charges, forcing politicians, including Obama, to distance themselves.

Armed with ambition

Obama arrived in Springfield with another familiar tool from the kit of Chicago politics – ambition.

Cynthia K. Miller, who ran his district office, recalls an incident shortly after Obama’s election. She had taken a longer-than-normal lunch break and returned to find an impatient state senator waiting for her.

He didn’t raise his voice, she said, but he turned stern as he explained the importance of time management and the need to focus on goals. Then he shared his own goal: “I plan to be president.”

“When he said it, he wasn’t just whistling Dixie. I believed,” Miller said. “I thought I needed to work harder” to help make it happen.

Obama’s state Senate district was a mix of mansions, trendy town homes and tenements. It encompassed the leafy campus of the University of Chicago, where Obama worked part time as a law school lecturer before and after his election.

Talk-show host Oprah Winfrey, who is having a fundraiser for Obama at her Montecito estate in Santa Barbara County today, keeps a residence in the old district. The Rev. Jesse Jackson, who has endorsed Obama, and Minister Louis Farrakhan, head of the black separatist Nation of Islam, live within three blocks of Obama’s home.

As the new state senator, Democrat Obama cut an independent swath in Springfield.

He teamed with Republican state Sen. Kirk Dillard to revoke a law that allowed lawmakers to convert campaign money to personal use, for some legislators a source of substantial largesse.

“It didn’t take long to see he is a man of intelligence and ethics,” said Dillard, who recently taped a pro-Obama television ad that aired in neighboring Iowa.

In 1999, Obama voted against an expansion of gambling, even though two of his biggest backers – Rezko and Johnson – were to share interest in a new casino planned in suburban Chicago.

And Obama backed a ban on fundraising on state property – again teaming with Dillard – an action aimed at Springfield lobbyists, like Alfred Ronan, noted for handing out campaign checks in the Capitol.

But there are other, less flattering examples.

Obama later would tap Ronan, who represented state gambling interests, and others in his firm for $10,500 in campaign donations. And in 2003, while running for the U.S. Senate, Obama switched positions and cast a decisive vote authorizing the state to operate casinos.

Ronan said his financial support for Obama was unrelated to any legislative assistance. “I supported him for U.S. Senate, and I support him for president – and he voted against me 100% of the time; or, maybe it was only 98% of the time,” he said in a recent interview.

The lobbyist also recalled that any time he had lunch or played golf with Obama, the state senator paid his own way.

As a presidential candidate, Obama has been critical of the congressional system of doling out money for pet projects. But he is no stranger to pork-barrel politics and the practice of spreading government money around his district. In Springfield he once directed state funds to a nonprofit group headed by a Republican and former ballot foe, Yesse B. Yehudah.

Yehudah barely registered a ripple of meaningful opposition, drawing only 10% of the vote in his 1998 challenge of Obama.

The following year, a nonprofit run by Yehudah, a social services organization called Fulfilling Our Responsibility Unto Mankind, began seeking state support. At the same time, Obama was considering mounting an ambitious challenge to U.S. Rep. Bobby L. Rush, a fellow Democrat.

Former foe Yehudah stepped up early to help. In November 1999, five people who worked for the Republican’s nonprofit organization each gave $1,000 checks to Obama’s congressional campaign committee. Yehudah makes no secret of his goal.

“We want [politicians] to know that when we sit down, we’re serious,” Yehudah said. “They know it when a $1,000 check comes in.”

Obama lost his congressional bid. President Clinton backed incumbent Rush, who received twice as many primary votes as Obama. Obama was left with a $40,000 debt.

Later that year, Yehudah associates pitched in an additional $5,000 to help retire Obama’s debt. The contributions were recorded on Oct. 7, 2000, three days after the Illinois Senate, at Obama’s behest, approved a $75,000 state grant to Yehudah’s nonprofit, state records show.

In an interview, Yehudah said the commitment for the grant was secured months earlier, in July. He called timing of the donations a coincidence.

The donations were modest by political standards, as was Obama’s relatively small assist to the nonprofit group of his ex-rival and new benefactor. But in Illinois, “government actions often occur around the time of campaign donations,” said Stewart of the Better Government Assn. “The answer is always the same: It’s always a coincidence.”

Obama spokesman Bill Burton said there was no connection between the campaign donations and the grant to Yehudah’s organization. “Of course not,” he said.

By 2002, Obama was preparing for his next challenge, a run for the U.S. Senate. Also that year, the Illinois attorney general sued Yehudah over allegations of kickbacks unrelated to the state grant. It was settled out of court.

Three days after the suit was filed, Obama returned one batch of donations totaling $5,000.

Political alliances

In November 2002, Democrats took control of the Illinois Senate. Emil Jones Jr., 71, a 34-year veteran of Springfield and the new Senate leader, said he was approached immediately by Obama.

He “knew if he had me, it would give him power,” Jones said in a recent interview. “Having me would force politicians in Chicago to be supportive. I could leverage folks to raise money.”

Obama told Jones: “You have the power to make a U.S. senator.”

“That sounds damned good. Let’s go for it,” Jones said he replied.

With Jones’ help, Obama got his pick of bills to champion leading up to the 2004 election.

In a state where numerous death row inmates were wrongly convicted, Obama took the lead on legislation requiring that police videotape murder confessions. After a Northwestern University football player died, Obama pushed a ban on the sale of an herbal stimulant, ephedra, thought to be implicated in the death.

For Jones, it was more than a political alliance. He said he came to regard Obama “like I feel about my own son.”

From his early days in state politics, Obama also opened relationships with moneyed interests that have continued into his presidential campaign, contributing to his record-breaking fundraising statistics.

One of his biggest backers is a firm he helped to land state pension fund investments.

Black-owned investment fund managers came to Obama in 2000 and 2001, complaining that they were “not getting any business from our own state pensions,” he recounts on the campaign trail.

Obama took up their cause and led delegations of minority investment firms to Illinois state pension board meetings, urging board members to shift some of their funds to such firms. During a recent appearance before the Urban League, Obama singled out Ariel Capital as one respected investment house that he had championed.

“I simply said, ‘Listen to what these folks have to say,’ ” Obama said, “and in about six months they got about a half billion dollars’ worth of business simply on their own excellence.”

By 2005, Ariel Capital managed $452 million in teacher pension money. And as his investor-friends won business, Obama received political benefit.

In the four years after he went to bat for them before state pension boards, partners in those minority-owned firms donated $190,000 to his campaigns, including his U.S. Senate run.

Ariel has been particularly generous. Its partners and employees have donated $135,000 to Obama’s campaigns, including more than $50,000 to his presidential run. Two of its principles are among Obama’s presidential campaign fundraisers, having raised at least $50,000 more each.

In 2006, meanwhile, the teacher pension board severed its relationship with Ariel Capital, concluding that returns on its investment were insufficient. Ariel executives declined to discuss the matter but defended their strategy as one that favors long-term returns over volatile short-term gains.

Potential fallout

Operation Board Games is Illinois’ latest corruption scandal, and the name of a federal law enforcement crackdown on alleged extortion of individuals and companies doing business with state boards.

Obama and the investment funds he promoted are not implicated in any wrongdoing. But the case resulted in Rezko’s indictment last October, sending shivers through the reelection campaign of another of his political friends and beneficiaries, Gov. Rod R. Blagojevich.

The governor’s supporters questioned the timing of that indictment, coming one month before the November 2006 election. Nonetheless, Blagojevich won reelection in a tough race.

It remains to be seen whether any fallout from Rezko’s case will cloud Obama’s presidential campaign.

Already the senator has had to admit to poor judgment in a personal transaction involving his financial patron. It arose during Obama’s purchase of his current house.

In 2005, after winning his U.S. Senate seat, Obama bought a Hyde Park home for $1.65 million. But there was a glitch. The seller also wanted to sell an adjoining strip of vacant land, according to an account in the Chicago Tribune, which first disclosed details of the transaction.

Rezko’s wife, Rita, stepped in to buy it. The Rezkos later sold back a 10-foot portion of that strip to the Obamas, and they have since transferred the remaining strip to their attorney.

Obama, who appears to have benefited from the odd transaction, concedes his role in it was “boneheaded.”

Rezko remains part of the history that is likely to trail Obama into the presidential campaign. His federal trial is scheduled to begin in February, during the opening rounds of the 2008 Democratic primary season.