NC Councilman's Campaign Finances Questioned After More Self-Loans
By Arturo Castañares
A National City Councilman who lost his 2022 race for Mayor last year loaned his failed campaign nearly $30,000 last month to pay off debt just one day after a La Prensa San Diego story exposed him as part of a wide-ranging scheme orchestrated by a local political consultant.
José Rodriguez, who was elected to the City Council of National City in November 2020, ran unsuccessfully for Mayor in last November’s election which saw incumbent Mayor Alejandra Sotelo-Solis lose her seat to Councilman Ron Morrison who had previously served three terms as Mayor.
Rodriguez ended up only 68 votes behind Morrison who won with a total of 3,385 votes, and Sotelo-Solis was in third place with 2,499 votes.
Before being elected to the City Council in 2020, Rodriguez ran unsuccessfully for City Council in 2016 and 2018.
Rodriguez, 37, was one of several local Democratic candidates, along with the San Diego County Democratic Party, who ended their campaigns last year with a combined total of more than $250,000 in unpaid bills for campaign mailers sent to voters without being paid for before the election and over $200,000 worth of invoices still remain outstanding.
In National City, Rodriguez ended his mayoral campaign with $46,982 in outstanding bills, including $36,982 owed to Margin Victories, a local political consulting firm owned by Jehoan Espinoza.
Espinoza also helped several other local candidates last year, including Ammar Campa-Najjar’s run for Chula Vista Mayor, Chula Vista City Councilmembers Jose Preciado and Carolina Chavez, and billed nearly one million dollars to the San Diego County Democratic Party for helping their efforts for multiple candidates.
Margin Victories has worked closely and in association with another local political firm, Grassroots Resources, owned by Jesus Cardenas. Espinoza was employed by Grassroots Resources through 2022, and continued to use that firm as a sub-contractor on several campaigns last year.
Cardenas, along with his sister, Chula Vista City Councilwoman Andrea Cardenas, were indicted last week on 12 felony counts related to a fraudulent COVID-era federal loan obtained by they company, Grassroots Resources.
Rodriguez’s outstanding invoices to Margin Victories included $18,214 owed to TMC Direct, a local printing and mailing services broker, and $7,127 owed to the US Postal Services, for postage costs associated with campaign mailers sent during the campaign. An additional $3,641 was owed to Margin Victories for political consulting.
$10,000 of the debt was money Rodriguez loaned to his own campaign on September 19, 2022.
Rodriguez, who serves as his own campaign treasurer with the help of a professional assistant treasurer, reported raising a total of only $54,720.62 from donors but spending $102,118.56, including the $46,982 in debt, and maintained $980.16 of cash on hand at the end of the year. He did not report raising any additional donor contributions between election day on November 8th and the end of the calendar year.
The next campaign finance report Rodriguez filed in July for the first half of 2023 did not show any contributions received from donors, but included an additional $8,000 he loaned to his campaign on February 7, 2023.
Rodriguez used the money from the loan to pay two Margin Victories invoices; one for $1,300 for consulting services, and another for $6,700 for campaign telephone calls made before the election. Rodriguez did not make any payments toward the $18,214 owed for campaign mailings or the $7,127 owed for postage.
At that point in time, the outstanding invoices for mailings were for campaign literature sent to voters nine months earlier.
Last month, La Prensa San Diego contacted Rodriguez in preparation for a news article relating to outstanding debt incurred by several campaigns run by Margin Victories and Grassroots Resources, including Rodriguez, County Supervisor Nora Vargas, Chula Vista City Councilman Jose Preciado, and Andrea Cardenas.
During two separate phone calls, Rodriguez acknowledged the debt but did not give any indication that he was working toward paying the outstanding invoices.
A La Prensa San Diego news article on October 10th exposed a web of campaigns run by Margin Victories and Grassroots Resources since 2020 that all ended their efforts with campaign debt, including Rodriguez, calling the use of unpaid mail a “massive campaign cheating scheme” that delivered an estimated 500,000 campaign mailers to voters without candidates having to pay for it beforehand.
The article also showed that the San Diego County Democratic Party employed the same scheme and ended their 2022 election cycle owing Margin Victories $214,089 for work to assist several local candidates, including Rodriguez.
None of the campaigns managed by either Grassroots Resources or Margin Victories, including Rodriguez, properly disclosed the name of the companies that actually printed their materials.
NEW PERSONAL LOAN TO HIS CAMPAIGN
A new campaign finance report filed by Rodriguez on October 16th shows that, just one day after the La Prensa San Diego article was published, Rodriguez loaned $29,492 to his 2022 mayoral campaign and used that money to pay two outstanding Margin Victories invoices; one for $25,341 for campaign mailings, and another for $3,641 for campaign consulting.
In addition to the latest personal loan of nearly $30,000, Rodriguez had previously loaned his campaign committees a total of $32,000 during the past year, raising questions about the source of his income and why he would maintain any debt if he had access to funds so quickly. None of the loans have yet been repaid.
The timing of the loan made the day after being exposed in a news article raised concerns from several individuals involved in National City politics.
One long-time community leader who asked not to be identified by name questioned why Rodriguez did not make any effort to pay the outstanding invoices for campaign mailers sent more than one year earlier, and questioned the sources of income Rodriguez may have that provided enough money to loan himself nearly $62,000.
SOURCES OF INCOME
As a candidate and elected official, Rodriguez is required to file official economic disclosure forms which include his income and assets located in National City or which could create a conflict-of-interest related to his official service.
Rodriguez lists his principal source of income as “Mommy's Creative Thinkers Daycare, LLC”, a child care facility operated from his home, and his income level is listed as between $10,001 and $100,000 per year.
The financial disclosure also includes his income from his position as a City Councilmember which is currently $1,189 per month for his part-time service, plus an additional $350 per month for expenses, $1,200 monthly allowance for health care coverage, pension service credits, and a $25,000 life insurance plan.
The only asset Rodriguez lists is his primary residence in National City which is valued at between $100,001 and $1,000,000, according to his disclosure forms.
The San Diego County Recorder's Office lists two recent loans attached to Rodriguez's home, including a loan on April 4, 2022, and a $100,000 loan filed on July 31, 2023. It is not clear if Rodriguez used any of the proceeds of those loans to fund his campaigns.
Rodriguez lists no other assets, investments, or sources of income.
OTHER CAMPAIGN FINANCE ISSUES
Critics have also raised concerns that Rodriguez violated state and local campaign finance rules when he failed to properly report expenditures for campaign yard signs used during his 2022 mayoral campaign.
Although Rodriguez distributed yard signs throughout the City during the election, none of his campaign finance reports show any expenditures reported for sign printing. The signs have a disclosure notice stating the signs were "Paid for by Rodriguez for Mayor 2022."
Campaign reports must list all expenditures paid by a campaign under specific categories, including literature, consulting, professional services, and campaign paraphernalia where yard signs would be listed.
Rodriguez disclosed payments to Margin Victories listed as "CNS" for campaign consulting and also for "LIT" for literature, as well as the outstanding invoices for the mailings, but listed no disclosures for yard signs which should be listed as "CMP" for campaign paraphernalia or listed as a sub-vendor to another vendor and itemized in a separate line item.
The California Fair Political Practices Commission (FPPC), which oversees campaign finance laws, confirmed to La Prensa San Diego that expenses for yard signs must be disclosed individually and not lumped into other payments to vendors.
CONTROVERSIAL CAMPAIGN CONTRIBUTORS
Just four days before the November 22 mayoral election, Rodriguez received a $2,000 contribution from the Latino Food Industry Association PAC, a local political action committee created and controlled by Jesus Cardenas who is now under indictment on 5 felony counts.
Rodriguez also received was $1,000 contribution from Innercity Redevelopment LLC, a company solely owned by Nick Inzunza, a former Mayor of National City who left office in 2006 after he was exposed for owning dozens of dilapidated rental properties.
In recent weeks, Inzunza has been meeting with National City officials to gauge their support of him to replace National City's Port Commissioner Sandy Naranjo. Inzunza has maintained businesses in National City and, until recently, served on the National City Chamber of Commerce board of directors.
But the most unusual contribution Rodriguez received last year was listed as coming from "Border Investment Group LLC / Valley Auto Supply / Charles B. Lempesis" in Calexico, California.
A company named Border Investment Group LLC in Calexico was suspended by the Franchise Tax Board in 2015 and no current contact information can be found online for any such company.
Valley Auto Supply is a closed company in Calexico with no contact information available.
There is no record of a Charles B. Lempesis in Calexico and no person by that name is registered to vote in Imperial County. A person by that name was a lawyer in Idaho who wrote a book about mediation training entitled "The Art of Making Peace" but there does not seem to have any connection to Calexico.
USING TAXPAYER SLUSH FUND
The City Council recently approved a $100,000 fund for each of the four Councilmembers to use for expenses they can each direct, including for outreach efforts and contributions to local organizations and constituents.
In the past few weeks, Rodriguez has asked the City to hire four local individuals with political connections to serve as support staff for his Council service: Jose Cerda, a former member of the South Bay Irrigation District and now a real estate agent in the cannabis industry; Cindy Lopez, a teacher and former candidate for the Sweetwater Union High School District board; Barbara Avalos, a member of the National City School District board; and Ken Seaton-Msemaji, a longtime labor and civil rights leader.
Rodriguez has asked to hire these assistants as independent contractors utilizing agreements that are usually used to hire experts, licensed professionals like lawyers or engineers, and other service providers who deliver specific duties not customarily conducted by staff.
The process seems to violate state laws that distinguish between work conducted by employees and contractors who are sometimes mischaracterized as independent.
California laws were strengthened in recent years by AB 5, a state bill authored by San Diego Assemblywoman Lorena Gonzalez Fletcher to protect employees. Gonzalez Fletcher resigned from the Legislature early last year to take the position of CEO of the California Labor Federation, the largest union advocacy group in the state.
Rodriguez describes himself as "a firm believer in unions and worker justice" in his online X social media profile, yet his move to use contract laborers would circumvent worker protections by excluding them from employment protections, health care, and retirement benefits.
Two labor attorneys contacted by La Prensa San Diego said the arrangement would seem to violate the provisions of Gonzalez Fletcher's AB5 and tests established by subsequent legal cases which outline the elements that differentiate employees from contractors, including whether the employer can direct their work, the contractors offers the same services to others, and whether the contractors deliver the service directly to the employer instead of to the public.
Two City officials confirmed that none of the contracts have been signed yet because the proposed contractors had not yet provided the adequate insurance coverage required in the contract
Rodriguez was endorsed in his mayoral campaign by the San Diego-Imperial Counties Labor Council, individual labor unions, and the local San Diego County Democratic Party.
After losing his mayoral campaign in November 2022, Rodriguez opened a campaign committee for his re-election to the City Council in the November 2024 election. Rodriguez loaned his new committee $5,000 on July 3, 2023 while he still had the outstanding campaign debt from last year's mayoral campaign.
When Rodriguez was elected to the City Council in 2018, he and other candidates ran at-large in a citywide election for two open seats. Rodriguez received the most votes, followed by Marcus Bush. The two were sworn into office in December 2020.
In December 2021, the City Council voted to change the Council elections to be run from four distinct districts while the Mayor will continue to run citywide.
The 2022 elections were the first under the new district elections. Two new members were elected by districts; Luz Molina and Ditas Yamane.
Rodriguez, along with Bush, will be running for re-election in their respective districts.
Under the new rules, Rodriguez will now run in District 2 which encompasses his home in the northern area of the City. Election experts predict Rodriguez, who was elected in 2020 with 7,708 votes citywide, could be re-elected with as few as 1,500 votes within his district.
In the 2022 elections, Luz Molina ran unopposed and received 1,597 votes in District 1, and Ditas Yamane won the District 3 race with 1,507 votes over one opponent who received 1,070 votes.
The next election will be held on November 5, 2024.
Correction: an earlier version of the story included a paragraph that Rodriguez used City funds to pay for Thanksgiving turkeys donated to residents last weekend. La Prensa San Diego has not confirmed the money used to purchase the turkeys was from City funds.