Sen. Barack Obama says he regrets financial arrangements with Ill. governor's fundraiser

(AP) Responding to a newspaper report, Sen. Barack Obama said Saturday that arrangements he had with a political fundraiser accused of shaking down companies might have raised the appearance of impropriety.

Antoin "Tony" Rezko, whom Gov. Rod Blagojevich has described as a friend and a fundraiser, has pleaded not guilty to charges that he plotted to squeeze millions of dollars in kickbacks out of investment firms seeking state business. He also has pleaded not guilty to obtaining a $10.5 million loan from General Electric Capital Corp. through fraud and swindling a group of investors.

Obama and his wife closed on a $1.65 million home last year in Chicago; the same day, Rezko's wife closed on a $625,000 lot next door, the Chicago Tribune reported Wednesday.

Both lots were once part of the same estate but were listed for sale separately. A city ordinance required Rezko to fence the dividing line.

Obama paid Rezko $104,500 in January for part of the lot, to create more space between his house and the fence. Obama has said the arrangements were ethical and proper.

However, he acknowledged Saturday that he "misgauged" the implications suggested by his purchase of the additional land.

"It was simply not good enough that I paid above the appraised value for the strip of land that he sold me," Obama said. "It was a mistake to have been engaged with him at all in this or any other personal business dealing that would allow him, or anyone else, to believe that he had done me a favor."

Rezko and his companies donated nearly $20,000 to Obama's state Senate races and federal fund.

Obama has said he would divest the federal donation.