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.
dan.morain@latimes.com
