Rezko talking to prosecutors

CHICAGO " Jailed political fundraiser Antoin "Tony" Rezko, the Chicago real estate developer who helped launch Barack Obama on his political career, is whispering secrets to federal prosecutors about corruption in Illinois and the political fallout could be explosive.

Democratic Gov. Rod Blagojevich, whose administration faces multiple federal investigations over how it handed out jobs and money with advice from Rezko, is considered the most vulnerable.

Rezko also was friendly with Obama " offering him a job when he finished law school, funding his earliest political campaigns and purchasing a lot next to his house. But based on the known facts, charges so far and testimony at Rezko's trial, there's no indication there'll be a so-called "October surprise" that could hurt the Democratic presidential nominee " even though Rezko says prosecutors are pressing him for dirt about Obama.

"I think this strikes fear into the Blagojevich administration and the Statehouse Democrats but not into the Obama campaign," says state Sen. Kirk Dillard, R-Westmont, a John McCain delegate to the GOP convention but an old friend of Obama.

Rezko, 53, a real estate developer, was convicted in June of scheming to use his clout with the Blagojevich administration to squeeze $7 million in kickbacks out of a contractor and seven money management firms seeking to do business with the state.

Within two months, Rezko was seen in U.S. Attorney Patrick J. Fitzgerald's office, along with his attorneys.

There has been no official confirmation that Rezko is talking but his sentencing has been postponed indefinitely and both sides say they are going to "engage in discussions that could affect their sentencing postures."

"They never would have delayed the sentencing if he weren't talking " it's proof positive," said Jay Stewart, executive director of the Better Government Association of Chicago.

In addition, attorneys say federal investigators have been questioning Blagojevich contributions around the state using information that only Rezko could have supplied.

Finally, courthouse personnel requesting anonymity because grand jury probes are secret said Rezko has been repeatedly brought from his cell to the U.S. attorney's office to talk to prosecutors.

Rezko could have a lot to tell. He has raised millions of dollars in campaign money for many Illinois politicians and according to federal prosecutors used his clout to control appointments to state boards.

Obama has sent to charity $159,000 that Rezko raised for his campaigns for the state legislature, the House and the Senate. Rezko raised nothing for Obama's White House run.

Obama's name came up in testimony at the trial four times, twice in connection with an obscure legislative memo, as a guest at a Rezko party and when defense attorney Joseph Duffy told jurors his client was a friend of the senator.

None of the witnesses accused the Democratic nominee for president of doing anything improper. In June, Duffy told the Chicago Tribune that prosecutors had not asked him a single question about Obama.

But questions concerning Obama's relationship with Rezko linger, particularly over Rezko's role in the purchase of the Obamas' home.

The two have known each other for years, starting when Rezko offered Obama a job after he graduated from Harvard Law School in 1991. Obama didn't take it, but a friendship developed.

The men talked politics frequently and occasionally dined together with their wives.

In 2005, the Obamas paid $1.65 million for their home near the University of Chicago. The sellers wanted a parcel they owned next door to sell on the same day, and Rezko's wife, Rita, was the buyer. At the request of the Obamas, Mrs. Rezko later sold them a 10-foot strip of land to enlarge their lot. They paid $104,500.

The deal took place while Rezko was under investigation and when details of the cozy relationship surfaced, Obama said it was a "bonehead" error to have asked for the additional land because it looked like he was getting a favor.

"I regret it," Obama said at the time. "I'm going to make sure that from this point on I don't even come close to the line."

McCain and vice running mate Sarah Palin have mentioned Rezko little if at all. But Republicans have aired a television ad focusing on Rezko. And McCain aides have repeatedly tweaked their opponent over the real estate deal in e-mails to reporters.

"We're delighted to have a debate on judgment with Barack Obama, who bought his million-dollar mansion in a shady deal with a convicted felon," McCain spokesman Brian Rogers said in August.

Blagojevich, meanwhile, got a black eye from the trial.

One witness testified that Blagojevich talked about hiring him for a major state job while his $25,000 donation to the governor's campaign fund was lying on the table.

Two attorneys testified that Blagojevich hinted that they could get lucrative state contracts if they raised money " possibly for a future White House campaign.

Obama's name has not surfaced in accounts of the investigation since the trial. But Rezko himself raised it in a letter to the judge months ago.

"Your Honor, the prosecutors have been overzealous in pursuing a crime that never happened," he wrote. "They are pressuring me to tell them the wrong things that I supposedly know about Gov. Blagojevich and Sen. Barack Obama."