Did “Plastic” Jeff Denham Fail to Disclose Loans from JP Morgan?

Steve Ringhoff

Steve Ringhoff’s careers as a journalist and attorney led him to a love of investigation and publication. His “Modesto Explained” website features detailed analysis of how our government does, and, more often, does not, serve the people. We hope to be publishing more of Steve’s fine work soon.

Would it be important to know a congressman’s relationship with the country’s largest bank, especially with banking regulation legislation pending?

Well, two businesses partially owned by Congressman Jeff Denham have received loans totaling more than $2,500,000 from JPMorgan Chase Bank, but Mr. Denham has never publicly disclosed those transactions.

Information and documents related to these loans have been submitted to the Office of Congressional Ethics of the US House of Representatives.  The OCE will not confirm the existence of an investigation until it makes a formal accusation, which has not been done to date.

The submission claims that Mr. Denham either signed personal guarantees for the loans or received more favorable treatment than the public would have.  In either case, disclosure should have been made.

The loans were made to purchase commercial real estate in Salinas through Limited Liability Corporations (LLCs), incorporation papers which show Mr. Denham as one of the owners. The notes and deeds of trust were signed by Mr. Denham, along with the other owners of the LLC.

Mr. Denham’s primary asset and primary source of income has been Denham Plastics, LLC. In 2012 Denham Plastics was leasing a warehouse in Salinas. During the summer of that year, the warehouse was destroyed by a fire of undetermined origin and cause. The firm moved to nearby commercial warehouse property almost immediately after the fire.

That warehouse was purchased in early 2013 by MTJ Properties LLC, in which Mr. Denham had a one-third interest, according to the incorporation papers which were filed shortly before the purchase. The loan was for $1,820,411.

If disclosure was required, this loan should have appeared on the 2014, 2015, and 2016 Form A annual disclosures filed with the Clerk of the House. It does not.

In late 2013, Kanaha Properties LLC was incorporated showing Mr. Denham as a 50 percent owner. In early 2014, Kanaha purchased a commercial property next door to the property owned by MTJ Properties. The loan was for $740,000.

If disclosure was required, this loan should have appeared on the 2015 and 2016 Form A annual disclosures. It does not. (The Form A disclosures are usually filed by Mr. Denham in August following the close of the calendar year. So, the 2016 filing is the latest on file.)

In making loans to LLCs, bankers normally require more than the note and deed of trust as security in the event of a default. This is especially true in commercial properties where the use of the property could imperil the security, for example as a result of liens, or for clean-up costs stemming from the use. The usual format for this is a personal guarantee by which the LLC owner agrees to be personally responsible where the existence of the LLC might otherwise provide a shield from liability.

Sources: The LLC information comes from the California Secretary of State. Documents regarding the loans, notes and deeds of trust came from the Monterey County Recorder. Requirements for disclosure are found in the guidebook issued by the Clerk of the House and on the page of the disclosure Form A which contains the “obligations” category.

 

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