Trump insider wanted to develop S. Loop site but couldn’t strike deal with Rezko
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For decades, a colorful and changing cast has been angling to build on 62 vacant acres along the Chicago River just south of the Loop, a project City Hall now hopes to jump-start with money from taxpayers before Mayor Rahm Emanuel leaves office next month.
Some of the names involved have been widely reported. Like Tony Rezko, the political fixer who spent more than eight years in prison after being convicted of kickback schemes under Gov. Rod Blagojevich. And Nadhmi Auchi, an Iraqi billionaire living in London who was convicted of accepting illegal commissions in an oil deal in France, fined and sentenced to probation.
The property also attracted interest, the Chicago Sun-Times has learned, from Felix H. Sater, a Russia-born New York developer with ties to President Donald Trump. Sater, a convicted felon who worked for the Trump Organization on a proposed skyscraper in Moscow, is now a figure in the federal investigations of Russian interference in the 2016 presidential election.
Rezko’s former business partner Daniel Mahru says, he had a deal set to sell the land at Roosevelt Road and Clark Street to Sater in the early 2000s for $175 million.
At the time, Sater was managing director of Bayrock Group LLC, the New York City firm that helped finance the Trump SoHo hotel.
But Mahru says Rezko rejected the deal.
“I wanted to sell it because the development was going to be huge, and it was beyond the capacity of my company,” Mahru says. “Felix never represented he had the money to buy it but that he had clients who had the money. Our total cost in it was $125 million, and we were going to sell it for $175 million. It would have been a tidy profit. Tony wouldn’t sell.”
These talks occurred while Sater was a cooperating witness with the federal government, something Mahru says he was unaware of.
Sater, a longtime friend of Trump’s former attorney Michael Cohen, joined Bayrock in late 2002. That was about four years after a federal grand jury in New York indicted him on charges of stock manipulation and money-laundering as part of a $40 million scheme involving the New York mafia.
Much of Sater’s federal criminal case still remains sealed, though federal officials are urging a judge to unseal parts of the case as part of the Trump investigation — including Sater’s efforts to build a Trump skyscraper in Moscow, about which he testified before Congress last month.
Following his indictment, Sater immediately pleaded guilty in 1998 and began cooperating with the FBI and other federal agencies, though that was kept secret for over a decade.
Sater provided “information crucial to national security and the conviction of over 20 individuals, including those responsible for committing massive financial fraud and members of La Cosa Nostra,” former Attorney General Loretta Lynch said at her confirmation hearing in 2015.
Sater’s sentencing was delayed until 2009, when he was fined $25,000 and sentenced to probation.
Sater, 53, says his cooperation with federal authorities included investigations of organized crime and, as he testified before Congress in 2017, providing information about Al-Qaeda and Osama bin Laden.
But Sater says his cooperation with authorities never involved Rezko or Mahru, who got millions of dollars in government funding to develop low-income housing in Chicago before they bought the 62-acre site in 2002.
“Nobody from any agency ever talked to me about Rezko,” Sater says.
Rezko and Mahru faced federal charges in separate crimes. Mahru was charged with wire fraud in late 2004, ultimately pleading guilty to defrauding his mother’s estate of $10,000 and serving three years of probation. Rezko was indicted in 2006 for using his influence with the Blagojevich administration to cut deals with companies seeking state business. He was found guilty and ended up serving about eight years in prison.
Sater and Mahru say they don’t remember how they met.
“He was recommended to me as someone who could put the deal together,” Mahru says. “He said he had a couple big investors who could put the deal together. He made me an offer. It was contingent on” tax-increment financing from City Hall. But Mayor Richard M. Daley never approved that taxpayer support for the property.
Sater says he remembers visiting Chicago a few times to look at the 62 acres after 2002, when he joined Bayrock, operating from the 24th floor of Trump Tower in Manhattan.
“I don’t know if we discussed purchasing it, but we discussed developing a project there,” Sater says. “The truth is I don’t remember every deal. But I do remember Dan. It was preliminary. On the preliminary side, it was serious.”
Asked about Bayrock and Sater, Rezko says: “I do recall the names. I just had nothing to do with them.”
Rezko and Mahru acquired the property in February 2002 for $72.3 million from Robert Wislow and Joseph Cacciatore, politically connected developers who maintained a stake in the deal through a mortgage on the property, public records show.
Rezko says he bought out Mahru in 2004, taking on a new partner in November 2005. Records show the property was sold that year for $65 million to Riverside District Development LLC, owned by Auchi.
Within a year, Rezko was indicted for shaking down companies that wanted to invest state pension funds under Blagojevich.
Auchi still owns the 62-acre site. His attorneys say neither Rezko nor Mahru has any financial interest in the land.
For the past three years, Auchi has had a new partner, Related Midwest. They plan to build homes, offices and retail around 11 acres of parks and open space on the 62-acre site that they’re marketing as “The 78,” proclaiming it will become Chicago’s 78th neighborhood.
They are awaiting approval of more than $550 million in city financing from the Emanuel administration to build a river wall, relocate Metra tracks, erect a new CTA station on the Red Line and make improvements to Clark Street.
The status of the project is uncertain. Emanuel is leaving office in May, and the land is in the 25th Ward, whose alderman, Danny Solis, hasn’t been seen at City Hall in weeks since the Sun-Times revealed in January that Solis has been cooperating in a federal investigation of Ald. Edward M. Burke (14th). Burke has been charged with trying to shake down a Burger King owner.
The City Council Finance Committee, which Burke headed until his arrest, meets Monday. A city planning official says it’s expected to consider approving taxpayer financing for the 62-acre project.
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