A real estate venture created by President Barack Obama’s onetime boss and a nephew of former Mayor Richard M. Daley squandered $68 million it was given to invest on behalf of pension plans for Chicago teachers, cops, city employees and transit workers, a Chicago Sun-Times investigation has found.

The five public pension funds haven’t made a dime on the investments they made nearly a decade ago with DV Urban Realty Partners, a company created by Obama’s ex-boss Allison S. Davis and Daley nephew Robert G. Vanecko, records show.

In fact, the financially troubled pension plans have lost most of the money they gave DV Urban, which used the money to invest in risky real estate deals, primarily in neglected neighborhoods.

It invested in eight real estate deals that, for the most part, had gone belly up by Dec. 31, 2015, when the investment deals with the Chicago pension plans expired.

Though the pension funds lost out, DV Urban and its affiliated companies got about $9 million of the pension money for management fees. And they were in line for more until pension officials, facing losses, got a court order in 2012 to remove Davis and Vanecko from managing the retirement investments.

Following the sale of two properties last year, the pension funds recovered $6 million of their original investments — but $293,716 of that went to DV Urban, which had also invested some of its own money in the real estate deals.

The pension funds are still hoping to recover more money this year by liquidating the final two properties in DV Urban’s portfolio: a Lakeview lot on which a Mariano’s supermarket is under construction and a few storefronts at 3508 S. State St., former site of the Chicago Housing Authority’s Stateway Gardens housing project.

But Angela Miller-May, director of investments for the Chicago Teachers’ Pension Fund, which had the biggest stake in DV Urban, says, “The sales from the two remaining assets will not completely offset the losses from the other investments.”

Jared Davis

Jared Davis

It’s unclear whether any proceeds from sales of the two remaining properties would go to either DV Urban, now run by Davis and his son Jared Davis, or Vanecko, who took part in all of the real estate deals involving the pension money.

Vanecko has said he “ended his involvement” with DV Urban in 2009 — two weeks after the pension funds were subpoenaed by a federal grand jury regarding their deals with DV Urban. What happened with that investigation isn’t clear.

Vanecko and Davis are being sued by SMS Financial, an investment company seeking to collect nearly $700,000 they borrowed from New City Bank a decade ago, when they were required to invest $7 million of their own money with DV Urban as part of their deal with the pension funds. Their investment in DV Urban was later reduced to $3.5 million.

According to Cook County court records, Vanecko and the Davises gave personal guarantees to repay the money they borrowed from New City Bank, which regulators shut down in 2012 over a string of bad loans.

Former Chicago Mayor Richard M. Daley in May 2015. AP file photo

Former Chicago Mayor Richard M. Daley in May 2015. AP file photo

In 2005, while Daley was mayor, Vanecko, a former attorney at the law firm Mayer Brown, went into business with Davis, an attorney who once headed the small Chicago law firm where Obama worked after graduating from law school.

At first, Vanecko and Davis had difficulty finding investors. Eventually, though, the teachers pension fund agreed to invest $25 million — a tiny sum for the multibillion-dollar fund.

DV Urban subsequently got $10 million to invest from the city’s laborers’ pension fund, $3 million from the CTA pension plan, $15 million from the municipal workers fund and $15 million from the police pension fund. One Chicago city workers retirement plan — the Chicago firefighters pension plan — declined to invest with Vanecko and Davis.

Since Davis is African-American, DV Urban qualified as a minority-owned business, helping the pension funds meet their diversity goals.

Daley has said he had nothing to do with lining up investors for his nephew’s real estate fund, though members of his cabinet served on three of the pension fund boards that invested with DV Urban. Those Daley appointees included Judy Rice, the city treasurer who is now a Cook County judge; Dana Levenson, the mayor’s chief financial officer, who now runs an assisted living facility in Massachusetts; and Steve Lux, the city comptroller, who is now chief financial officer for the Chicago Park District.

Rice, Levenson and Lux didn’t return calls seeking comment. Nor did Vanecko or the Davises.

Laurence Msall, president of the Civic Federation. | Ashlee Rezin / Sun-Times file photo

Laurence Msall, president of the Civic Federation. | Ashlee Rezin / Sun-Times file photo

“It was an enormously risky venture,” says Laurence Msall, president of the Civic Federation, a government watchdog that has long warned that these five pension funds are “in financial distress” because of underfunding by City Hall, the Chicago Board of Education and the CTA.

“It was a double whammy for the pension funds,” Msall says. “Not only did they lose their investments and not make money on it, they also lost the opportunity to invest it” elsewhere.

“At the end of the day, it will have to be tax dollars that are brought in to make up for these losses,” Msall says. “This is a sad but important lesson on why the governance of these pension funds need to be reformed.”

Here’s how the Davises and Vanecko handled the pension money, according to documents obtained over the past nine years from the five pension funds.

• $9.9 million was lost on the purchase of the 344-unit building at 1212 S. Michigan Ave. Using pension money, Davis and Vanecko paid $65.2 million in September 2006 to buy it — and sold it about five years later for $65.5 million. The pension funds never got any money from the sale.

• $2.8 million was lost on two loans to the owners of the Chicago Defender’s former home, a boarded-up building at 2400 S. Michigan Ave. It’s unclear why DV Urban lent pension money to developers Brian O’Connell of LaGrange and his partner, Matthew A. O’Malley, a politically connected restaurateur who has been battling City Hall over a sweetheart deal to operate the Park Grill restaurant in Millennium Park. After a bank foreclosed on the Defender building, O’Connell and O’Malley sold the property in 2014. The pension funds didn’t get any money from the sale.

• $2.65 million helped DV Urban pay $11.7 million in 2007 for a commercial building at 217 N. Jefferson St. The building was sold last year for $14.5 million — one of the deals that helped the pension funds recover $6 million.

• $6.5 million was used by DV Urban toward $11.5 million it paid for a 162-unit apartment building at 7100 S. South Shore Dr. It was sold last year for $6.75 million, helping return some money to the pension funds.

• $3.5 million went toward $4.2 million DV Urban paid for the stores at 3508 S. State St., part of the CHA’s redevelopment of Stateway Gardens. The pension funds hope to sell the land this year.

• $16.9 million went to loans to developers of 3030 N. Broadway, where a Mariano’s store is being built, and to buy adjacent land at 3013-17 N. Waterloo. The property is expected to be sold this year.

• $4.2 million was invested with the firm Sydney Partners, which paid $10.5 million for a 15.6-acre industrial property at 3348 S. Pulaski. DV Urban leased part of the space to the city. But, beset by environmental problems including polluted soil, the property was sold for just $5.4 million in 2014, and the pension fund money was lost.

• $4.5 million was earmarked to buy the former headquarters of the National Association of Letter Carriers’ Chicago branch at 1411 S. Michigan, next door to the Chicago Firehouse restaurant owned by O’Malley. The deal ended up in court when DV Urban backed out of the deal, asking the letter carriers to return the money — which the union had used to build its new headquarters. The lawsuit was settled out of court, but the pension funds lost all of their money.

“The investment was effectively a total loss for DV Urban,” says Miller-May of the teachers pension fund.

DV Urban was paid $8 million in management fees between 2006 and 2012, when the pension funds got permission from a Delaware judge to fire the company.

A little over $1 million, for property-management fees, went to a company owned by Cullen Davis, another Davis son, who oversaw some of the apartment buildings bought with pension money.

Another $1.7 million went to two companies, including Newport Capital Partners, to manage the DV Urban portfolio and sell off the assets in an effort to recover as much money as possible for the pension funds.

Beyond the money lost on the investments with DV Urban, the pension funds also had to pay $2.5 million for attorneys who fought the firm for two years in courtrooms from Chicago to Delaware over control of the real estate investments.

“Bad investments are things that are going to happen to you,’’ says Charles Burbridge, who was hired as executive director of the teachers pension fund a year ago, long after the DV Urban deal soured. “Hopefully, we have controls in place to minimize these problems.

“This is still in litigation,” Burbridge says, noting that the pension funds are still trying to recover money in court from DV Urban. “The story’s not finished.”