Culture of Corruption: Obama and His Team of Tax Cheats, Crooks, and Cronies (45 page)

“This seems a straight-up quid pro quo. Dodd helped his apparently crooked friend and seems to have received a cut-rate real estate deal on a property in Ireland in exchange. Moreover, it appears Dodd attempted to cover up the gift by failing to disclose it on his financial disclosure forms. To put it mildly, this type of behavior clearly does not reflect well on the United States Senate,” stated Judicial Watch President Tom Fitton .
²⁹

Yes, it reflects poorly on Dodd and on the U.S. Senate. But most of all, this sordid mess reflects poorly on the man in the White House who cast himself as the only political leader in the country capable of transforming how Washington works. When he launched his presidential bid in February 2007, Barack Obama inspired millions and rallied the world with his pledge to “build a more hopeful America.” He told a cheering crowd in Springfield, Illinois, land of Lincoln, that he recognized “that there is a certain presumptuousness in this, a certain audacity to this announcement. I know that I have not spent a long time learning the ways of Washington, but I have been there long enough to know that the ways of Washington have to change.”
³⁰

Two years later, Barack Obama declared his support for an entrenched U.S. senator knee-deep in the decrepit old politics of pay-for-play.

Two years later, at an “historic” and “unprecedented” record pace, Barack Obama presided over a heap of botched nominations, crony appointments, lobbyist paybacks, union and left-wing activist payoffs, and abandoned promises to make government more transparent and accountable to ordinary Americans.

As you’ll see in the new epilogue to the paperback edition, while Senator Dodd announced his retirement in January 2010, there was another tainted Democratic ally of Barack Obama’s ready, willing, and eager to take his place.

“Washington is broken,” Obama lamented on the campaign trail. Yet, under President Obama, the business of Washington is booming. The collapse of the Era of HopeNChangeyness demonstrates the first and last law of political physics: as government grows, corruption flows. Massive new federal spending plus tens of thousands of pages of new regulations plus unprecedented new powers over taxpayers and the economy = limitless new opportunities for sleaze, favor-trading, deal-cutting, and influence-peddling. The president’s blind faithful may still cling to the belief that he can work miracles. But no one, not even Barack Obama, can drain a swamp by flooding it.

* AFTERWORD TO THE PAPERBACK EDITION *

MARRIED TO THE MOB

“A
lexi Giannoulias is the Democratic nominee for the United States Senate, and has the support and the backing of the White House.”

With that unequivocal endorsement, delivered through White House press secretary Robert Gibbs at a daily briefing in March 2010,
¹
the Obama administration sealed its corruption-enabling legacy once and for all. What comes around goes around—and in backing the candidacy of a mob-linked, scandal-tainted banker from his political hometown, the back-scratcher-in-chief has traveled full circle.

Giannoulias, the self-proclaimed Windy City “basketball buddy” of Barack Obama, was nominated by the Democrats in Illinois to take the Senate seat that his pal left behind for 1600 Pennsylvania Avenue. Giannoulias played pickup games with an elite group that included Obama, Michelle Obama’s brother, Chicago edu-crat Arne Duncan (now Education Secretary), and hedge fund manager John Rogers (the ex-husband of the Obamas’ first White House social secretary, Desiree Rogers).
²
Currently the elected state treasurer of Illinois, Giannoulias spread his wealth and influence around early and often to support Obama’s fledgling political career. He pitched in $7,000 in 2003-2004 to the then-fledgling Obama’s Illinois State Senate bids. He hosted fundraisers for Obama’s U.S. Senate campaign in 2004 and for his presidential campaign in 2007.
³

Obama gushed over his young Democrat friend in 2005: “I’ve got a very personal relationship with Alexi. . . . He was critical for me in terms of reaching out to the Greek community, other ethnic communities in the city. He was there from the start, when people didn’t give me a shot.”
⁴
Later, Obama would describe him as “one of the most outstanding young men that I could ever hope to meet.”
⁵
In return, Giannoulias used his coveted speaking slot at the Democratic National Convention in 2008 to tout his “friend,” “mentor,” and “inspiration” of more than ten years. Obama’s story, Giannoulias said, was “our story, my story, your story.”
⁶

So, what’s the 34-year-old Giannoulias’s story? It’s a sordid tale that Chicagoans have known about for years—and yet, like his mentor Barack Obama, he continues to ascend the political ladder. Giannoulias’s Greek immigrant family founded Chicago-based Broadway Bank, a teetering financial institution that has loaned tens of millions of dollars to convicted mafia felons and faced bankruptcy after decades of engaging in risky, high-flying behavior. It’s the place Obama parked his 2004 U.S. Senate campaign funds. And it’s the same place that a mutual friend of Obama and Giannoulias’s—convicted Obama fundraiser/slum lord Tony Rezko—used to bounce nearly $500,000 in bad checks written to Las Vegas casinos.
⁷

In January 2010, the bank entered a consent decree with the federal banking regulators at the Federal Deposit Insurance Corporation (FDIC) and the State of Illinois Department of Financial and Professional Regulation Division of Banking in Springfield. It required Broadway Bank “to raise tens of millions in capital, stop paying dividends to the family without regulatory approval, and hire an outside party to evaluate the bank’s senior management.”
⁸
The city’s former inspector general blasted Giannoulias and his family for tapping $70 million worth of dividends in 2007 and 2008 as the real estate crash loomed. Broadway Bank was sitting on an estimated $250 million in bad loans.
⁹
In late April, federal regulators shut it down. Giannoulias refused to drop out of the race—and instead used the company failure to argue that it made him more qualified to serve in office: “I have a renewed vigor and a new perspective on just how horrible it is out there for so many people.”
¹⁰
That’s audacity.

Giannoulias served as Broadway Bank vice president and senior loan officer for a mere four years. According to the
Chicago Tribune
, during Giannoulias’s tenure, some $27 million of Broadway Bank’s funny money went to mob crooks Michael “Jaws” Giorango and Demitri Stavropoulos. Giorango is a hustler who fronted a nationwide prostitution ring and was served six months in prison; Stavropoulous is behind bars for operating a multistate bookmaking ring. Giorango ran the $400-an-hour call girl operation out of high-rise luxury apartments in Chicago with the infamous “Gold Coast Madam,” Rose Laws.
¹¹
Giorango and Stavropoulos used their Broadway Bank loans to start their own risky lending business for non-traditional borrowers unable to secure traditional bank financing.
¹²

Despite Giorango’s criminal record exposed by the
Tribune
in 2004, Broadway Bank approved massive mortgages for him. Giannoulias’s brother, Demetris, explained that as a “relationship bank,” Broadway wouldn’t just throw someone under the bus because of a “bad article.” Instead, the bank went ahead and rubber-stamped a September 2005 loan for $3.4 million to buy a 32-unit Los Angeles apartment complex. The application falsely stated that the borrower, Giorango, had “not been convicted of a felony.”
¹³
Giannoulias oversaw the servicing of such shady loans totaling $11 million. Remember: he was no low-level staffer. He was, as he reminded supporters when he needed to deflect attention away from his youth, top management at Broadway Bank.

No wonder presidential candidate Obama kept a 2007 campaign fund-raising appearance hosted by Giannoulias at a Greek restaurant off his public schedule and prevented media from attending.
¹⁴
Even the
New York Times
took note of Giannoulias’s spotty tenure:

Construction-related lending jumped to more than triple the bank’s required regulatory capital during this period, and the loans started to go bad. By the time Mr. Giannoulias departed, Broadway was left with nearly $14 million in real estate on its books, more than 10 times the level when he arrived. Foreclosures take time, though—often about 18 months. And within two years of Mr. Giannoulias’s departure, the bank was left holding $38 million in real estate.

The move into real estate coincided with a headlong push into brokered deposits. This is quintessential hot money—large amounts that jump from bank to bank, each bank offering the lure of high interest, which the banks then must fund by making ever-riskier loans.

During Mr. Giannoulias’s time at the bank, brokered deposits catapulted fourfold, to $640 million. The typical bank at this point was growing brokered deposits at about 9 percent a year. Mr. Giannoulias’s bank was increasing its load by as much as 48 percent in a single year. Broadway Bank’s brokered deposits reached 80 percent of total deposits in 2006 .
¹⁵

The Obama-Giannoulias alliance is a toxic mix of criminal vice, favor-trading, ethnic power brokers, self-dealing, and reformers in corruptocrats’ clothing. In other words: textbook Chicago politics.

Like Obama, Giannoulias has wielded his political power to try and stifle his critics. He sicced his lawyers on television stations that ran an ad critical of the FDIC’s bailout of Broadway Bank.
¹⁶
And like Obama, Giannoulias had the audacity to cast himself as a “reformer” of the very same political and financial system he played a part in corrupting. After winning a heated primary in February 2010 and fending off criticism from other Illinois Democrat leaders who preferred state attorney general Lisa Madigan (daughter of state Democratic Party chairman, Mike Madigan), Giannoulias trained his sights on GOP opponent Mark Kirk. The moderate congressman voted for the Democrats’ cap-and-trade energy tax scheme, votes reliably for abortion rights, and supports gun control, but it wasn’t enough to stop Giannoulias from attacking him as a radical conservative. And without batting an eye, Giannoulias framed Kirk as a water boy for the wealthy and an enabler of Wall Street greed. When the U.S. Securities and Exchange Commission filed suit against President Obama’s erstwhile friends at investment banking giant Goldman Sachs, Giannoulias was first out of the gate to demand that Kirk return campaign donations he had received from company executives.
¹⁷

Instead of asking when Giannoulias would demand the same of Barack Obama (who received nearly $1 million
¹⁸
in contributions from Goldman Sachs employees, their families, and the company political action committee) or of his own campaign chairman, Democrat Senator Dick Durbin (who received $19,500 from Goldman Sachs entities),
¹⁹
Kirk dutifully returned the money.
²⁰
Instead of retorting that Giannoulias’s friend and mentor in the White House had filled his administration with Goldman Sachs money men (see chapter 6), Kirk rolled over.
²¹

Hammered by the local media and anti-corruption activists, Giannoulias did what Leftists do best: he played the victim card. The
Chicago Sun-Times
reported on Giannoulias’s pity party in April 2010:

Democratic Senate candidate Alexi Giannoulias—tired of hearing about his family’s beleaguered Broadway Bank all the time—tried hard to change the focus of the campaign Monday.

“Since he became the Republican nominee, Mark Kirk hasn’t campaigned or even talked about these issues . . . he has campaigned on one thing and one thing only: Broadway Bank,” Giannoulias complained during a speech at the City Club. “Ask Congressman Kirk why he now opposes a ‘Cap and Trade’ policy that he himself said he voted for as a matter of national security and you know what answer you’ll get? Broadway Bank.”

President Obama’s health care plan, which Kirk opposes, Kirk’s pledge to make Obama a one-termer, lowering drug prices—every question to Kirk, the congressman answers by pointing to the Giannoulias’ family’s controversial bank, Giannoulias said. Playing off Vice-President Joe Biden’s complaint about Rudy Giuliani’s focus on 9-11, Giannoulias said, “Just about every sentence that Congressman Kirk utters these days is a noun, a verb, and ‘Broadway Bank.’”

. . . Giannoulias has had a rough year. The bank he was vice-president of when he ran for state treasurer four years ago entered into a consent decree with federal and state regulators, and even Giannoulias says he expects the bank to fail. Reporters are finding more loans the bank gave to people with ties to organized crime during Giannoulias’ tenure.

And minutes before Giannoulias spoke today, Crain’s Chicago Business reported a $10,000 IRS tax lien filed against the bank for underpayment of money owed. Giannoulias said today that he was not familiar with the lien .
²²

After all that, with a permanent ethics cloud hanging overhead, the White House stood behind Giannoulias. He told the press in March 2010 that the president had given him “encouragement” and “told me that he was proud of me.”
²³
Democrat political guru-turned-White House senior advisor David Axelrod met and counseled Giannoulias in the spring of 2010 as his poll numbers sagged. And when President Obama announced his “financial regulatory reform” plan in late April 2010, Giannoulias was ready with his irony-challenged, me-too message. “Alexi ended pay-to-play politics in the Treasurer’s office,” his campaign website boasted. “Now, he’s the first U.S. Senate candidate from Illinois to refuse contributions from corporate PACs and federal lobbyists. He’ll take on special interests in Washington, making sure the voices of Illinois families are heard loud and clear.”
²⁴
In a mass e-mail to supporters, Giannoulias played the perfect Obama mini-me: