“Southern Californians need leaders like Mike Levin serving in Congress, leaders who understand the real challenges facing working families and our communities and have real solutions to get things done. Voters turned out in force to show their support for Mike and his vision for their future, and they’ll turn out again in November to flip this district,” said DCCC Chairman Ben Ray Luján.
To: Interested Parties
From: Drew Godinich, DCCC Regional Press Secretary
Date: June 11, 2018
RE: The Case Against Diane Harkey
Diane Harkey is a general election nightmare for Republicans. She brings with her a significant baggage, including her senior leadership position at her family’s business that was found guilty of engaging in a Ponzi scheme to rip off seniors and retirees, as well as her own disgraced tenure as the Chairwoman of the California Board of Equalization, where she was accused of using her staff for her own political advancement.
Democrats turned out in overwhelming fashion in the primary in the 49th District, building on more than a year’s work to register and turn out voters desperate for change. Grassroots activists were key to forcing Issa’s retirement earlier this year, and they were key to this primary victory, despite the risk of being boxed out of an open seat under California’s top-two system.
Diane Harkey will be busy this fall trying to explain to voters why she is qualified to run for Congress after being involved with an alleged Ponzi scheme that defrauded investors of millions of dollars — and using those profits to fund her political campaigns. If that wasn’t enough, her political career is mired with accusations of corruption and misuse of taxpayer dollars.
Meanwhile, Democrats have a compelling, battle-tested candidate in Mike Levin. He relied on grassroots support to withstand negative ads and navigate a challenging and crowded primary, and his background as an environmental advocate presents a strong contrast to the career cronyism of Diane Harkey.
In a district that Hillary Clinton won by 7 points in 2016, and where Democratic turnout edged out Republican votes in last week’s primary, Democrats have the clear momentum — and flawed Republican opponent — to flip this district.
WHAT THEY’RE SAYING
HEADLINE: “Chair of embattled state tax board will run for Darrell Issa’s seat in Congress” [Los Angeles Times, 1/10/18]
HEADLINE: “Accused of mismanagement, California’s tax collection agency ‘is in complete disarray,’ officials say” [Los Angeles Times, 5/7/17]
“The board Harkey chairs has been plagued with accusations of mismanagement and nepotism, including putting $350 million in sales taxes in the wrong accounts. A scathing audit by the state Department of Finance detailed a conference Harkey held in her district, which diverted tax collections staff to help with parking and crowd control. Last year, Gov. Jerry Brown signed a new law that decimated the tax collection agency’s staff and stripped it of most of its powers, transferring them instead to two new state departments.” [Los Angeles Times, 1/10/18]
Cook Political Report: CA-49 is a Toss-Up [Cook Political Report, 5/22/18]
“A majority of voters, 54%, said they would be less likely to reelect their representative if that member of Congress voted to repeal the healthcare law.” [Los Angeles Times, 5/23/18]
DIANE HARKEY: CORRUPT, CAREER POLITICIAN DAMAGED BEYOND REPAIR
Ponzi Schemes, Elder Abuse
Diane Harkey’s name has become synonymous with corruption and cronyism in California. Harkey held a senior position and was invested in her family’s company, Point Center Financial, which was sued by its investors – including retirees – for operating “a classic Ponzi scheme.” The company was found liable for $10 million in damages, and then found guilty of 11 charges of elder abuse. What’s more, Harkey used the profits from the company to fund her own political campaigns. She was even sued by people who were ripped off by this shady company to recoup their losses that she allegedly spent on her own political ambitions.
Diane Harkey’s name has become synonymous with corruption and cronyism in California. Harkey held a senior position and was invested in her family’s company, Point Center Financial, which was sued by its investors – including retirees – for operating “a classic Ponzi scheme.” The company was found liable for $10 million in damages, and then found guilty of 11 charges of elder abuse – and then counter-sued the very victims that were ripped off, of which Harkey joined. What’s more, Harkey used the profits from the company to fund her own political campaigns. She was even sued by people who were ripped off by this shady company to recoup their losses that she allegedly spent on her own political campaigns.
As the fraudulent company was under investigation by the SEC, and while Harkey was in the California State Assembly, she accepted $16,600 from firms borrowing millions from the fraudulent company. She even doubled down, saying it was “totally proper.”
Despite trying to distance herself from the fraudulent company, Harkey’s connections are obvious. Besides using the profits to fund her political campaigns and being named in lawsuits related to the company, Harkey was: invested in the company, listed herself as the company’s secretary in official filings, and it was even listed as her employer in campaign finance documents. And when pressed about the source of her massive political spending, Harkey admitted that it possibly came from the company’s fraudulent profits.
Already Part of the Swamp, Used Taxpayer-Funded Staffers for Political Purposes
As head of the state Board of Equalization (BOE), Harkey’s mismanagement of the body was so catastrophic that Governor Brown was forced to interfere and strip it of most of its decision making powers and reduce its staff by 90%. A state audit found that the organization had misallocated tens of millions of dollars and that Harkey had violated state rules and regulations by using public employees and resources to advance her own political career. Specifically, a state audit found that Harkey misused 113 taxpayer-funded employees in an event that “appear[ed] self-promoting”, and that the BOE had tripled its spending on “education and outreach events” to nearly $3 million.
Harkey even opposed efforts to rein in special interests and combat pay-to-play, and in one instance “lashed out” at a fellow BOE member for supporting a bill that would prevent such members from voting on tax issues involving campaign contributors. No surprise that Harkey had already been called out for taking thousands from groups who had business in front of the BOE.
These sorts of contributions are widely known to be “another way for the well-heeled to curry official favor” with politicians and a way to circumvent conflict of interest laws.
Despite claiming that she had no interest in becoming ‘a career politician,’ Harkey repeatedly pursued higher office – sometimes several simultaneously.
THE PATH TO VICTORY
California’s 49th Congressional District is an affluent, college-educated swing district that is trending increasingly Democratic. Despite it’s 7-point Republican registration advantage, the district voted for Hillary Clinton by 7 points in 2016, and Darrell Issa only narrowly squeezed out a win by less than 1 point.
Diane Harkey is a Democratic dream opponent in this district. Republicans have chosen to nominate a damaged career politician whose vulnerabilities are sure to turn off Independents and moderate Republicans.
Moreover, Democrats had a banner night last Tuesday in California’s 49th district – with total Democratic votes edging out Republicans despite the GOP holding a 7 point registration advantage in the district.
In the face of overwhelming Democratic enthusiasm, Issa retired early rather than face a Democrat in the fall. With Mike Levin on the ballot this fall, Democrats have a strong candidate with a compelling, powerful message and campaign that can win this seat.