Bankruptcy and conflict: One of California’s tightest races is packed with financial baggage
.jpg "David Valadao, left, a Hanford Republican, lost his congressional seat to Fresno Democrat TJ Cox, right, in 2018.")
Voters in a contentious congressional district in California’s San Joaquin Valley will choose next November between two candidates with significant financial issues, one stemming from a complicated network of now-dissolved businesses and the other from a now-bankrupt family business.
The same choice in 2018 resulted in the election of Rep. TJ Cox, D-Fresno. But voters at the time were less aware of his business issues, including his repeated failure to disclose all his business interests as required of a congressman.
Cox’s opponent, former Rep. David Valadao, a Republican from Hanford, had his family farm in the middle of bankruptcy proceedings in 2018. Since then, records show he’s failed to pay small businesses, workers and banks that have filed suit against the business and him in particular.
Fresno State political science professor Thomas Holyoke doubts both candidates’ financial histories will matter to voters.
“It doesn’t seem to resonate a lot with voters. It shows, sadly, how deeply cynical the electorate has become regarding politicians and the nation’s leaders,” he said. “A lot of voters now assume everybody they elect, including the people they voted for, are in fact deeply flawed individuals.”
Valadao has a bigger hurdle to overcome, though, Holyoke said. That hurdle is the “Trump problem.” Democratic voters are likely to reject Valadao since he’s from the same party as Trump. But if Valadao distances himself from Trump, he may lose Republican support.
“It will be a tough race, but Valadao has a decent chance. Cox comes into it with a natural advantage,” Holyoke said. “President Trump will be a potential liability for Valadao. Trump is so polarizing, and he will be on voters’ minds.”
Democrats are strongly motivated to beat Trump, according to new polling by the Public Policy Institute of California. Nearly eight in 10 likely Democratic primary voters say they are either extremely enthusiastic or very enthusiastic about voting.
“This could spell trouble for Republicans,” the poll results said.
Disclosure failures
Cox ran for office touting his accomplishments as a job-creating investor and executive, but he’s failed repeatedly to disclose all of his financial interests to voters.
Members of Congress and even candidates are required by law to report those financial connections, ensuring they are accountable to any potential conflicts of interest as they vote on laws governing the country.
The Fresno Bee reported in April that he had failed to disclose ties to five businesses, including a foreign company, on his candidate disclosure form. Then, in August, Cox revealed in another financial disclosure that he had failed to disclose a total of 11 business positions as a candidate.
Now, it turns out he left off at least two other businesses — his position as a manager for Sequoia Senior Properties, LLC and Sequoia Senior Operators, LLC. His financial disclosure submitted in August did not include the companies, but after his staff was contacted by McClatchy about one of the businesses Cox submitted an updated form on Saturday.
The entities were created under the umbrella of Sequoia Care LP but never used, according to Cox’s staff. Sequoia Care is a company providing elderly care and the entities were considered for the purpose of applying for tax credits, but were never actually used.
“Congressman Cox is proud of his record creating small businesses and jobs across the Central Valley,” Cox’s campaign said in a statement. “Although the previously disclosed Sequoia family of companies never operated, out of an abundance of caution the relevant filings were amended immediately when the matter came to our attention.”
It’s unclear why Cox would leave the companies off his report. Cox had signed documents in June to dissolve both companies — the same month he dissolved dozens of other business connections, according to the report. But his financial disclosure statement initially submitted in August makes no mention of the company.
Additionally, the Canadian government had to take steps to force him to pay a settlement against mining workers. Even after the Canadian government’s intervention, Cox still didn’t pay the workers until a few days before he had to disclose the settlements on his latest public disclosure form.
It’s not the only time governments have had to take action against him to make him pay up. He’s had multiple liens against his businesses, and a $50,000 lien against him and his wife. When McClatchy reported on the liens in April, Cox’s office showed one of the liens had been settled the same day McClatchy contacted his staff with questions about it.
Bankruptcy fallout
In contrast to Cox’s dozens of businesses, Valadao has only been involved in a few. One of them, Triple V Dairy, has caused a mess of problems after it had to declare bankruptcy last year.
In newly obtained court filings by McClatchy, lawyers for Rabobank and a small business called Lawley’s, an animal nutrition company, dismissed lawsuits against Triple V right as Valadao started his campaign for re-election in August and September. Rabobank was suing Valadao and other partners involved in Triple V for $8.3 million owed in loans, and Lawley’s was suing Triple V for about $1 million in failed payments for products.
“Due to the nature of the litigation and the various bankruptcy proceedings, it appeared there was insufficient assets to pay the unsecured creditors, so the case was dismissed,” said Lawley’s lawyer, John Samberg.
Valadao’s campaign said Rabobank dismissed the suit under similar reasoning. Andrew Renteria, a spokesman for Valadao’s campaign, said Valadao was not involved in the day-to-day operations of the family farm.
“David knows the difficulties and pressures that small businesses and especially farmers face every day because he has lived them,” Renteria said in a statement to McClatchy. “He’s running for Congress because farmers in the Central Valley need an advocate in Washington D.C. who will fight for our struggling community instead of spending every ounce of effort on an impeachment process that is paralyzing our country and doesn’t help working families.”
It’s not the only payment that Valadao-affiliated farms walked out on following the bankruptcy. His family farm was also sued for lost wages and agreed to pay a $325,000 settlement, but the case closed without payment in April due to the bankruptcy proceedings.
That settlement was not specifically indicated on Valadao’s latest financial disclosure, though he lists “various unsecured creditors” for an amount between $5 million and $25 million. He no longer lists any financial interest in Triple V Dairy.
Party first
The financial issues both candidates have faced has not changed the level of support from local party leaders.
Despite Cox’s failure to disclose his business interests, Michael Evans, chairman of the Fresno Democratic Party, said the freshman congressman has represented his constituents better than Valadao did.
“There’s widespread support for him. He’s served well,” Evans said. “We certainly want him to be forthcoming on these personal finance issues as we would expect for any other candidate or elected official.”
Valadao’s voting record made it clear he didn’t prioritize constituents’ interests, Evans said. And now that Cox is the incumbent, the 2020 race should be easier for him to win, he said.
Fred Vanderhoof, chairman of the Fresno Republican Party, chalked up Valadao’s legal and financial challenges to widespread challenges in the dairy industry. Valadao’s roots in the district give him credibility, he said.
“He understands the issues of the district better than TJ Cox, having been raised there and being a congressman before,” Vanderhoof said.
He thinks the revelations of Cox’s “unscrupulous” business dealings over the last year will weigh on voters.
“I think people want someone who has integrity and is going to work hard and represent the district,” he said. “That’s David Valadao.”
That both Cox and Valadao have financial woes in their past will make for a nasty race, Fresno State professor Holyoke said, especially since both candidates are likely to raise a lot of money.
“That will translate to a bunch of negative ads hurling accusations at each other,” he said. “Probably, in the end, a lot of voters are going to go numb.”
This story was originally published November 21, 2019 at 6:00 AM.
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