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Real estate deal looked at by G
Friday, Dec 7, 2007 - Posted by Rich Miller * During that bus trip I took with Gov. Blagojevich and his crew last spring, I had a long chat with Patti Blagojevich about her real estate business. She had a pretty good explanation for some of the deals we talked about, but it was clear to me - and I said so - that this business absolutely had to end. I was told later that she had wound down her real estate business and we wouldn’t be seeing any stories about recent deals. Today’s Tribune story is about a 2004 deal. Hopefully, there won’t be too many more of these. Still, what’s done is done and the feds (like all humans, including reporters and blog commenters) often take their prejudices into a case…
The problem for Mrs. Blagojevich in this particular instance is that she was belatedly added as a second agent. It just looks fishy. Real estate is more about “who you know” than anything else. And who does Mrs. Blagojevich know? Well, she’s the daughter of a longtime and powerful alderman and the wife of a governor. That means she knows a ton of politicos. Unfortunately, some of those people may have used her to get to her husband, and then, of course, there’s the idle chatter around the campfire that the Blagojevich family was using the real estate business to take financial advantage of the governor’s position. $200,000 over five years may seem like a lot of cash, but if they were selling out for that little I’d be surprised (although people have sold out for much less). Those commissions won’t even cover the legal bills. Here’s the response from the governor’s office…
Try to refrain from angry little “drive-by” blurts in comments. They annoy me and don’t move the discussion along. Thanks.
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- GoBearsss - Friday, Dec 7, 07 @ 9:31 am:
You are right, Real Estate is about who you know.
I found my realtor through my wife’s business. One of her major client’s significant other was a real estate agent.
Our primary goal was to find someone we could trust. And so we wanted to go with someone we knew, instead of just picking up the phone book.
Frankly, I see almost a perfect correlation with my experience and the one with the First Lady.
- OneMan - Friday, Dec 7, 07 @ 9:32 am:
The only problem with Abbys statements is since the admin does not share when they are being investigated who knows if what she is saying is correct.
Reguardless of if anything wrong occured, you think even back in 2004 they would have tried to manage the perceptions a bit better.
- Cassandra - Friday, Dec 7, 07 @ 9:34 am:
I still say…it’s tacky (and selling real estate is, well, tacky) but it’s not illegal and it’s probably not even corrupt.
Actually, Mrs. B. has, thankfully, been less visible and has done less overt meddling than many Illinois first ladies.
- Skeeter - Friday, Dec 7, 07 @ 9:37 am:
“but if they were selling out for that little I’d be surprised”
Really? I’m not. I’ve seen that both in politics and in other businesses. People will sell out way cheaper than could ever be imagined. You need only look to the “expert witness” field to see how cheap many MDs or engineers will sell out. In politics, look at the Louisiana Congressman — $95,000.00. That’s not much (although in his case, that might just be his cash on hand).
Which brings us to the ultimate irony: A hard working real estate agent with decent connections and some decent skills could do far better than Ms. B did. There is real money to be made in real estate for people who put the nose to the grindstone.
Although I hate to tar an entire family, but it seems that the Blago family just doesn’t like to work hard.
- L.S. - Friday, Dec 7, 07 @ 9:43 am:
much like the $1,500 birthday gift to the daughter, it’s probably not illegal, but the apperance is AWFUL. For being such a “savy” politco, the gov’s camp allows a lot of these little mishaps.
- Snidely Whiplash - Friday, Dec 7, 07 @ 9:45 am:
Was she added when there was already a contract, or a contract was imminent? Did she actually do any work on the sale? Those are the real questions on that deal. Other questions which should be asked include: does she have an office? if so, does she actually go to it every day? Does she actually work as a real estate agent on a full time basis? If the answer to any of these is “no,” to smell starts to get worse.
If she’s getting substantial income from political supporters, fundraisers and contributors, that to me at least has the appearance of personal goodies, and it ought to be avoided.
- DuPage Dave - Friday, Dec 7, 07 @ 9:47 am:
This is the key fact in the story: the original broker is described as having lots of experience in the neighborhood and was handling the sale quite well when the seller of the property requested that Patti Blagojevich be added as a second broker. If you already have a broker, why add another one? It is apparent that the seller intended that half the commission be paid into the Governor’s household.
So the next question is: Why would the seller (or anyone else)want to put money into the Governor’s family bank account? There are a number of possible answers to the question, but none of them are likely to end up looking good for the Governor, or Mrs. Blagojevich.
- GoBearsss - Friday, Dec 7, 07 @ 9:51 am:
Also when I bought my home - I was advised of all the legal issues that arise if there is only one real estate agent who represents both the buyer AND seller.
Essentially, nothing is said in confidence. They are obligated to tell the other side.
Maybe that was just my real estate agent not wanting to be left out if I found some place on my own. But he also would have been giving up a double commission by insisting the other side had an agent, too.
I don’t know what happened in this case.
- Garp - Friday, Dec 7, 07 @ 9:56 am:
Enough is enough.
How much more can the people of Illinois take? This Governor has failed on so many levels it amazes me that he bothers to come to work. Oh wait-nah forget that cheap shot.
The guy waiting in the wings is not corrupt or even corruptible, which is why the boys from Illinois won’t give him the time of day much less donations. Pat Quinn’s best shot would be for this Governor to step aside, develop a track record and run as an incumbent.
Come on Rod, take your foot off the State’s throat and let it breath again. Step aside. Who knows, you may-indirectly-accomplish your original campaign pledge to clean up Illinois.
- And Not Knowing... - Friday, Dec 7, 07 @ 9:56 am:
…what “angry little “drive-by” blurts” means, how’s this?
Quoting from a commentor on another gov. related article in the SJ-R: “Unfortunately, if it walks like a duck and talks like a duck, odds are its a duck.”
- He makes Ryan Look like a Saint - Friday, Dec 7, 07 @ 9:58 am:
Let say there is nothing inproper going on with her real estate dealings. The PERCEPTION once her husband does something for her clients is that there IS something improper. It should be up to both of them to make sure they don’t put themselves in that situation, one of them if not both should say No.
If a normal state worker was in that situation during an RFP and their spouse did business all of a sudden with a party trying to win the RFP, the STATE WORKER WOULD BE FIRED. It is in the ETHICS test.
- NIEVA - Friday, Dec 7, 07 @ 10:01 am:
If it is all above board and no laws were broken it still looks bad. Common sense tells you that everything you do as a Gov.or a Govs wife or close family will be looked at to see if you are taking advantage of your office. What was Rods reason for running,helping the people or helping himself?
- Anon - Friday, Dec 7, 07 @ 10:05 am:
I was surprised that comments were so civilized until Garp jumped into the game. The fact remains that her real estate dealings are legal. A salesperson who benefits from their relationships is not uncommon, and a good network of relationships tends to make a person more successful in the world of sales.
The question remains if any of those directing business to the first lady got state work or jobs in return. I assume this is what the G is looking at and, if it happened, we will hear about it. If it was done illegally, there will be indictments. However, until that time comes, she, like all Americans, is innocent until proven guilty.
I believe that the governor has done nothing wrong. I believe that Patti has done nothing wrong. That is my opinion.
I hope that civility resumes in comments.
- FG - Friday, Dec 7, 07 @ 10:07 am:
I recently was involved with a real estate transaction with one of my wife’s employers, am i in trouble for trying to suck up to the boss, his wife made some good money on the deal, i can afford my mortgage but not a lawyer i think we will give the money back so i can sleep tonight. Shame on me no more sucking up i promise.
- publius - Friday, Dec 7, 07 @ 10:16 am:
george ryan was man enough to take all the heat and keep his kids from getting indicted—suppose rod will help her out—or is patty going under the bus?
- Sweet Polly Purebred - Friday, Dec 7, 07 @ 10:17 am:
No drive by shots here. Just a comment from a state worker regarding the verbage in the gov’s own “ETHICS” test - Even if something may be legal, if the action raises the spectre of being unethical, it(the action) should be avoided. So, even if these “deals” with say the Mahajans were legal - 4 real estate transactions in 5 months that brought Mrs. B. $113,700 they give the aura of political pay for play and in turn should have been avoided. Mrs. Mahajan during that time received another huge no bid contract with the state and her husband - a big Blago supporter/fund raiser had business pending before state regulators. And as it later turned out Mrs. M. was arrested and charged with basically defrauding the state by charging for services never rendered. While these transactions may not have been a very calculated ploy to insinuate themselves into the world of Blago, they certainly give the appearance of unethical behaviour. The final nail in the coffin is this: Per the Trib: “While releasing their jointly filed income-tax returns that show profits from her River Realty Inc., the Blagojeviches have refused to provide tax documents from the company or her list of clients”.
- Truthful James - Friday, Dec 7, 07 @ 10:21 am:
It is common that there are two agents participating in a transaction, one representing the seller, one representing the buyer. I take it that Mrs Blago was a sub-agent of seller’s agent and not representing the buyer.
The original seller’s agent — the listing broker — was between a Rod and a hard place. It used to be that the listing agent had a written agreement for a fixed period of time (six months was not uncommon then.) Sellers wised up and requested shorter and short terms. However, seller’s agent is usually protected by the concept of ‘procuring cause.” That is, if seller’s contract ends and he closes a deal with some qaulified buyer whom the listing agent had brought to the table, the latter is deemed to have earned a commission. That requires appeals through the brokerage system (arbitatration) or in the courts.
Sometimes for a busy broker perfroming the myriad of duties necessary to bring the deal to a close, may just agree with seller’s request that a tick (an animal who performs no duties other than ministerial but sucks blood from the deal) be added. To ease the pain (satisfy his agent and conceal the true purpose) the seller may suggest an increased commission. In this case the seller is funneling a political contribution (in essence tax deductible to the seller because it it is processed as an offset to the net profits from the sale), but recorded as earned income by the tick, against which the tick may deduct supposed expenses of acting as a real estate broker, if she is one, or as a salesperson, in which case her sponsoring firm usually takes a cut.
Frankly, as a licensed real estate broker, I believe this stinks.
- Greg - Friday, Dec 7, 07 @ 10:26 am:
That it’s not necessarily illegal doesn’t mean it’s not troubling. It suggests poor decision-making. And FG, if your wife ran Rolls Royce and the transaction involved the head of Boeing outsourcing, then yes, I could understand if the board got upset with her. The context generated bad appearences that were entirely predictable.
- DuPage Dave - Friday, Dec 7, 07 @ 10:35 am:
One other item to consider: What percentage of River Realty (Mrs. Blagojevich’s firm) comes from “politically connected” clients? From the annual tax returns in the papers, and the numbers quoted in the Tribune, it seems that nearly all of Patti Blagojevich’s real estate income is from the Mahajans, Tony Rezko, John Simpson and others who do business with the state, or are political operatives or fundraisers for political figures or donors to the Governor’s campaign fund.
Does Mrs. Blagojevich sell any real estate to ordinary customers? To the extent that she does have a regular real estate business, the occasional deal with politically connected individals is less meaningful. However, to the extent that her real estate business consists primarily of deals with politically connected individuals, the income to the Blagojevich family looks increasingly suspicious.
Also- love the term “tick” from Truthful James. I didn’t know it was used in the profession.
- 312 - Friday, Dec 7, 07 @ 10:38 am:
The adage about ‘friends + family’ being your best real estate clients is very true — and the line between spousal careers becomes blurry when one is in real estate, mortgages, financial planning or any sales career. Spouse opens a restaurant? Other spouse tells their contacts to try the place.
But if one says ‘Shop at my husband’s store, or you’re fired,’ that’s when it’s a problem.
I hope in HER case she didn’t cross that line — but wonder if GRod — or any of his fundraising buddies — did.
- Rich Miller - Friday, Dec 7, 07 @ 10:39 am:
===it seems that nearly all of Patti Blagojevich’s real estate income===
Good question, but I think she made far more than $40K a year on her business - which is the average of how much she made off of “connected” clients that we know of.
- Sad for Illinois - Friday, Dec 7, 07 @ 10:42 am:
The whole thing is a perfect example of the state’s ethics test being a farce. It’s only purpose is to scare the hell out the little state workers. If your are connected, the people who should be monitoring these things all look the other way, because they live in fear of losing their jobs if they say anything.
How long has House Bill 001 been tied up by Rod and Emil?
House Bill 0001 or something like it should have been made into law 5 years ago. But that would have cramped Rod and Emil’s style. It again all boils down to power and and greed of epic proportions.
- Just My Opinion - Friday, Dec 7, 07 @ 10:43 am:
Many years ago, I was a teacher at a preschool in Springfield where Governor Thompson’s daughter attended. I grew to know Jayne Thompson. What I admired about her was that she gave up her law career for several years while her daughter was preschool age. When going back into practice, she made absolutely sure that she was not involved with anything relating to the State of Illinois. I don’t remember anything questionable coming up about Jayne’s career, but readers are encouraged to correct me if I’m wrong.
I simply don’t understand Mrs. B. Sure she is entitled to still have a career in real estate and there is much to be gained for an aggressive realtor. However, if you cannot divorce yourself from campaign contributors or other politically connected people for an average of $40K per year, then I would say you are not a real aggressive realtor and you are looking for an easy buck. Sometimes those decisions have serious consequences. And I, for one, do not have much sympathy for people in politics who have lost their discernment ability. In this particular case, I would say that Mrs. B has lost all credibility as far as choosing clients and she should abandon her career for the rest of the time her husband is governor. Stupid is as stupid does.
- Anonymous - Friday, Dec 7, 07 @ 10:44 am:
All you need to do is go back to the Ryan case. I was shocked to see how little these guys would settle for.
$200,000.00 is a pretty good perk. If that’s truly the case.
- Sweet Polly Purebred - Friday, Dec 7, 07 @ 11:23 am:
Rich:
“THAT WE KNOW OF” is the scary part of your comment. As I quoted previously, if the Blago’s refuse to release pertinent documents relating to clients, income etc. then we can only guess at the client list, their connections and the amount of money gained from them. Based on what HAS been released or ferreted out by the media and the feds, I would have to say we have only uncovered the tip of this iceberg. Only time and Patrick Fitzgerald will tell …..
- Ghost - Friday, Dec 7, 07 @ 11:30 am:
I have to go with Dupage Dave on this…
===Does Mrs. Blagojevich sell any real estate to ordinary customers? To the extent that she does have a regular real estate business, the occasional deal with politically connected individals is less meaningful. However, to the extent that her real estate business consists primarily of deals with politically connected individuals, the income to the Blagojevich family looks increasingly suspicious. ===
Is any information available about what percenatge of her income was from these real estate deals? if it accounts for 25% or more of her income then it raises some flags. The I just happen to hang with these people arguments are fair enough, but also keep in mind that this does not mean these were not deals done to win favoritism. Just because your paranoid does not mean you aren’t being followed.
- Jake From Elwood - Friday, Dec 7, 07 @ 11:40 am:
Are there any real estate sales ethics codes that have been violated here? Is anyone from the Ill Ass’n of Realtors out there that might know this?
It is at the very least an appearance of an impropriety.
- Golly Ggee Wilakers - Friday, Dec 7, 07 @ 11:49 am:
I think we should ignore all of this unpleasantness and just give Patti and her wonderful husband the benefit of the doubt. Please fellas be nice.
- Ghost - Friday, Dec 7, 07 @ 12:01 pm:
===…just give Patti and her wonderful husband the benefit of the doubt.===
Patti married somone else?
- Sad for Illinois - Friday, Dec 7, 07 @ 12:03 pm:
I see know unpleasantness here, I do see conversation and that’s what Rich ask us to do.
But if someone and anyone had their hand in your pocket or purse would you give them the benefit of your doubt?
- Rich Miller - Friday, Dec 7, 07 @ 12:03 pm:
===Patti married somone else?===
LOL. Great comeback, but let’s not get too personal here. Still, I did laugh out loud at that one.
- Get a Grip - Friday, Dec 7, 07 @ 12:15 pm:
For those who think this is ok, here is the deal. Truthful James and Du Page Dave have the brokerage industry and public perception points dead right. For the legal, look to the Ryan case where the conviction now has Court of Appeals approval. He was proven to have received a flow of benefits which was never this type of direct six figure in the pocket immediate family income. It was a $3,000 wedding gift to a child from a friend, small loans to family members, and an assumption with no proof that the “wads of cash” (never quantified) must have come from people who received state business/favors. The Government claimed these indirect sometimes tenuous benefits came to about $170,000 which included $55,000 from the campaign fund to a son in law who paid tax. Most importantly, it was also proven that Ryan interceded on behalf of those providing him with the flow of benefits. Usually he did not make or direct the government decisions but kind of showed an interest that caused subordinates to “get the message.” SO, if Rod can be proven to at least have shown similar interest in deals that went to her customers-it ain’t legally ok.
- OneMan - Friday, Dec 7, 07 @ 12:57 pm:
We do have information on their tax returns (when they are filed after the extension…) and you know how much the governor makes so you may be able to draw a rough conclusion on how much the real estate side of the house draws in.
If she is an agent on a deal it goes into the MLS I think and you can draw some data from that as well.
Some reporter is likely up to the task…
- Dan M. - Friday, Dec 7, 07 @ 1:02 pm:
Doesn’t seem to be to many enterprising reporters in Illinois these days. Wonder if they are somehow intimidated by Blago and Co.?
- Levois - Friday, Dec 7, 07 @ 1:14 pm:
This story looks bad and I would have to hand it to the US Attorney’s office to be able to connect the necessary dots to prove that something was wrong here. A lot of this seems fishy especially if you look at it thru an ethics lens.
- Truthful James - Friday, Dec 7, 07 @ 1:24 pm:
I know it is small potatoes, but I see that Mrs. B according to the article qualified for one quarter of the sale side 4% Commission. That would make hers 1% and the listing agent 3%, if there were no buy side representation or if that were not separately accounted for. The original listing and the closing documents should reveal the whole set of payouts. Was the co-listing agreement made after the listing agent went out and got the listing? Four percent is a strange number, especially when it breaks down to 3% after Patti.
There is no fixed commission, by law, It is negotiated before the listing agreement is signed and sellers have been driving down the commission arrangements.
Title companies keep Respa agreements and I am sure that PatFitz and his folk are working off of that and the rest of the closing statements.
To us peasants there is not enough information to reach, duck-wise, an informed conclusion.
- Sari - Friday, Dec 7, 07 @ 1:34 pm:
Seems like all parties involved have covered their tracks adequately. Game over!
- BehindTheScenes - Friday, Dec 7, 07 @ 3:51 pm:
There’s no particular reason I ask it of this story, but I have been wondering if the Governor’s spokes-people actually ever speak to the media, or if all their replies are by e-mail. And, if they are, is there any hard proof (photos, maybe?) that they actually exist
- Rich Miller - Friday, Dec 7, 07 @ 3:53 pm:
===I have been wondering if the Governor’s spokes-people actually ever speak to the media, or if all their replies are by e-mail And, if they are, is there any hard proof (photos, maybe?) that they actually exist===
LOL. We see them regularly and speak by phone. They exist.
- A Citizen - Friday, Dec 7, 07 @ 4:01 pm:
A couple of hours ago the radio news spot had the story on this and indicated that the Feds are reviewing the details of her real estate activities relative to guv’s campaign contributions for any possible connection. If guv’s pr machine is saying no then something seems disconnected in the report. ??? Wonder what the real story is!