Aug. 16, 2022, 5:30 p.m. – Three hours after pleading not guilty to 28 counts of various financial crimes in a 25-page Federal grand jury indictment, former Rep. TJ Cox (D–Fresno) left Fresno County Jail flanked by his attorney, Mark Coleman.
During a post-release gaggle, Cox said that he wasn’t fully aware of the details of the charges filed against him by Federal prosecutors, as he hadn’t read the lengthy indictment.
He pointedly blamed his criminal situation as being politically-motivated.
“Politics is a tough game,” Cox said. “I wouldn’t be in this position today but for the politics. I think we know that.”
Aug. 16, 2022, 2:03 p.m. – Eight hours after his arrest by Federal agents, former Congressman TJ Cox (D–Fresno) appeared before a Federal magistrate judge and pleaded not guilty to a recently-unsealed 28-count indictment.
Cox appeared via Zoom from Fresno County Jail, along with Fresno attorney Mark Coleman.
Coleman, who was stepping in for Cox’s attorney Roger Nuttall, initially sought to delay Cox’s arraignment between one month and six weeks while pressing for the former lawmaker to immediately be released on his own recognizance, due to insufficient time to determine if a conflict of interest arose.
Oberto wouldn’t have it and sought clearance to proceed with Cox’s arraignment if the lawmaker consented to waiving conflicts for Tuesday’s hearing or keep Cox behind bars and await a conflict check no earlier than Wednesday.
Cox opted to waive conflicts and be arraigned immediately.
Cox was approved to be released on his own recognizance with conditions, including him surrendering his passport, being restricted to pre-approved travel within the state of California, a ban on contacting potential witnesses without counsel present, a bar on possessing firearms, and restricting his ability to serve as a financial iduciary to businesses.
Cox queried Oberto if the restriction applied to businesses solely-owned by him. Oberto referred him to Federal pre-trial service officials for clarity on how to manage financials for his companies.
U.S. Attorneys Henry Carbajal III and Jeffrey Spivak represented the U.S. Attorney’s Office for the Eastern District of California.
They announced that, along with turning over the indictment to Coleman, they delivered 28,000 pages of discovery along with a draft protective order.
Carbajal, amid the arraignment, noted that there was “a lot more [discovery] that we’ll be processing.”
The parties are set to return on Oct. 12 before U.S. District Court Judge Barbara McAuliffe.
Aug. 16, 2022, 10:43 a.m. – A Federal grand jury indicted former Congressman TJ Cox (D–Fresno), alleging multiple financial crimes tied to his time as the head of a local community development firm predating his time as a member of Congress.
The indictment, filed on Aug. 8, was sealed at the order of Magistrate Judge Shiela K. Oberto, was unsealed Monday, Federal court records report.
Cox was arrested by the Federal Bureau of Investigation at 8:30 a.m. on Tuesday and booked into Fresno County Jail. He remains in custody.
The indicment alleges that from 2013 through 2019, Cox “knowingly devised, intended to devise, participated in, and executed a material scheme and artifice to defraud clients of [Central Valley New Market Tax Credits LLC] and the Tax Credit company of money and property, and to obtain money and property from clients of the Tax Credit company.”
The 28-point indictment includes multiple counts of wire fraud, money laundering, wire fraud affecting a financial institution, financial institution fraud, and making a campaign contribution under the name of another person.
The charges carry penalties between 20 and 30 years in prison and multi-million-dollar fines, along with lengthy supervised release upon exit from prison.
The 25-page indictment alleges frauds involving his principal pre-Congressional business – Central Valley New Market Tax Credits – a Madera-based almond processing plant, the Central Valley Community Sports Foundation (of which he served as treasurer), and diversion of business funds to improve a rental house in Fresno.
Bank account shell games
The indictment alleges Cox created secondary bank accounts for Central Valley New Market Tax Credits and California Customs Processing to siphon off funds from the primary businesses without the knowledge or consent of co-owners.
In total, Cox is alleged to have diverted $225,000 in wires from health care firms seeking investment from Central Valley New Market Tax Credits, LLC to a separate firm, dubbed MJTJ, LLC, by utilizing “Central Valley New Market Tax Credits” as a fictitious business name.
He is also alleged to have laundered $196,000 from the tax credit firm between August and October of 2018, during the heat of his campaign to oust Rep. David Valadao (R–Hanford).
With California Customs Processing, prosecutors alleged Cox solicited investment by falsely claiming the business was in need of additional capital to continue operations, needed funds to expand, or to acquire additional processing equipment.
Granite Park loan fraud
A key element of the indictment is a $1.5 million loan Cox helped secure for another side business, nonprofit Central Valley Community Sports Foundation.
Cox, who served as treasurer, and developer Terance Frazier led the nonprofit prior to Cox’s election.
Prosecutors allege that, after CVCSF secured its ground lease and management agreement for Fresno’s woebegone Granite Park (which included an annual $150,000 taxpayer subsidy), Cox sought a $1.5 million construction loan from Lake Forest-based lending institution, Clearinghouse CDFI.
Clearinghouse is noted as a longtime financing partner with Cox’s NMTC business, yet it sought “a guarantee from a financially viable source to support the loan.”
Cox is alleged to have submitted NMTC as a commercial guarantor of the loan.
“Because, Cox was not the sole owner of the Tax Credit company, Clearinghouse required proof that all owners of the Tax Credit company agreed to guarantee the loan to the Sports non-profit,” the indictment reads.
Cox allegedly submitted “a false and fabricated board resolution purporting to be a record of the Tax Company that falsely indicated a board meeting took place and falsely represented that all three Tax Credit company owners agreed to guarantee the $1.5 million loan to the Sports non-profit.”
No meeting took place, prosecutors state, and the owners did not consent to guarantee the loan. Despite that, Cox signed the guaranty paperwork for the seven-figure loan.
In 2019, after Cox left both NMTC and CVCSF amid his single, two-year term in Congress, CVCSF defaulted on the construction loan.
The loan is currently in default, causing New Market Tax Credits owners a loss of $1.28 million.
The current management of Central Valley New Market Tax Credits is currently seeking $1.4 million in reimbursement from the City of Fresno on its loss.
Straw Donor Contributions to 2018 Campaign
Cox is also alleged to have funneled more than $25,000 to his successful 2018 campaign for Congress via straw (or conduit) donors, a violation of Federal law.
Prosecutors allege Cox “gave money in his personal possession to adult members of his family, with the intent and purpose that this money would be used to make maximum allowable contribution to his campaign under the name of the family member knowing that money in his personal possession was used to advance funds and reimburse these individuals.”
Cox withdrew $20,000 from the off-the-books bank account of California Customs Processing and deposited it in a family member’s bank account, this enabled three family members to make maximum $5,400 contributions to TJ Cox for Congress, the indictment states.
Cox arranged a similar scheme for two business associates in late 2017 to do the same, withdrawing from a personal account.
He also withdrew $11,000 from CVCSF, the sports non-profit operating Granite Park and Gateway Ice Center, to fund straw donor contributions.
Read the indictment
Sun reporter Daniel Gligich contributed to this reporting