Self-Funded Millionaires Are Forcing Promising Democrats Out of California Primaries

Things looked to be going well for Jay Chen. A son of Taiwanese immigrants and a Navy reservist, Chen entered the race for California’s 39th Congressional District, which covers parts of Orange, San Bernardino, and Los Angeles counties, two days after incumbent Republican Ed Royce retired in early January. By the end of the month, he had already racked up several endorsements and earned 47 percent of the vote at the Democratic Party’s endorsement conference. He recently won a poll of Indivisible members in the district.

Chen was the 2012 candidate in this seat and a Bernie Sanders delegate to the Democratic National Convention in 2016. As a former Hacienda Heights school board member and current Mt. San Antonio College trustee, he was the only Democratic candidate who had ever won an election. The combination of public service experience, progressive bona fides, and local support looked good enough to flip the seat, which went for Hillary Clinton by 9 points in the 2016 presidential election.

But last Tuesday, barely two months after his entry, Chen dropped out of the race, citing California’s unusual “top-two” primary. Under those rules, the top two finishers, regardless of party, advance to the general election. Three Republican hopefuls to replace Royce are longtime officeholders in the area, while the eight Democratic challengers are all first-time candidates and would split the liberal vote. In this and other races, Democratic officials in California have expressed alarm about their candidates totally missing the general election as a result.

“The probability of two Republicans advancing in November, and Democrats squandering a historic opportunity, is real,” Chen wrote. “The greatest contribution I can make right now is to help consolidate the field, by stepping away from it. … We must all put the greater good over personal ambition.”

Chen earned praise for his “remarkable sacrifice” from Reps. Judy Chu and Mark Takano, who both had endorsed him. Another member of Congress singled out Chen’s action in a statement: “The character that Jay Chen has demonstrated is exemplary, and clearly he has a bright future where he will continue to fight for his community, his constituents, and the progressive causes that matter to them.”

That came from Rep. Ben Ray Luján, chair of the Democratic Congressional Campaign Committee.

It’s unclear what “bright future” means, or whether the DCCC promised Chen help in some other race in exchange for dropping out (the DCCC often encourages candidates to run for state office rather than the House if the committee wants them out of the race, as they did with Allentown, Pennsylvania, candidate Greg Edwards). Chen campaign manager Eugene Tseng would only refer back to the candidate’s statement, adding, “Jay came to this decision for the good of the Democratic Party, and more importantly, for the good of our country.”

The DCCC has not formally endorsed in this or any races in California, where a flood of candidates is trying to flip seven districts carried by Clinton in the last presidential election. But it has a longstanding preference for candidates who bring their own money to the table. And the 39th District is home to some of the biggest Democratic self-funders in the country. It’s become something of a BYOB primary — bring your own bankroll.

No House Democratic candidate nationwide has self-funded more than Thorburn this cycle.

Four of the eight candidates running haven’t raised any money and aren’t much of a factor. Out of the other four, three of them — Dr. Mai Khanh Tran, Gil Cisneros, and Andy Thorburn — have loaned themselves a total of $3.86 million for their campaigns. Cisneros, an ex-Republican whose main claim to fame is hitting the lottery for $266 million, gave himself $1.3 million. And Thorburn, a former insurance executive, provided a whopping $2.33 million of his own money for the race. No House Democratic candidate nationwide has self-funded more than Thorburn this cycle, and only Thorburn and one other have self-funded more than Cisneros, according to data from the Center for Responsive Politics.

Thorburn and Cisneros clearly aren’t going anywhere; a source close to the process said that at a meeting in D.C. last week, “We were told both millionaires are each willing to write themselves another $5-6 million check” if they were pressed to give way.

The winnowing, then, shifted elsewhere. In addition to Chen, Phil Janowicz, a professor and education consultant who had loaned his campaign $160,000, dropped out Wednesday, also citing fears of Democrats being locked out of the top-two primary. Janowicz got the second-most votes at the Democratic Party local endorsement conference, meaning the two most popular candidates in that test of grassroots support are gone from the race.

All campaigns cost money, of course. But the experience in California’s 39th District suggests that the doors to the Capitol are closed to anyone but the rich, distorting where elected representatives come from and who they listen to. Sam Jammal, a former congressional staffer and the only Democrat left in the race not self-funding his campaign, hasn’t yet given up. “I’m a case study in whether a regular person can run for Congress,” he said. “The amount of money pouring into this race is like I’ve never seen in my life.”

Committee chair Rep. Ed Royce, R-Calif., listens to testimony from Thae Yong-ho, former chief of mission at the North Korean embassy in the United Kingdom, during a House Foreign Affairs Committee hearing on Capitol Hill, Nov. 1, 2017 in Washington, D.C.

Photo: Drew Angerer/Getty Images

The car crash in District 39 actually stemmed from some re-routing. None of the three self-funders in the race — Cisneros, Thorburn, and Tran — lived in the district as of 2017. Cisneros and Tran lived in District 48, which Republican Dana Rohrabacher represents. But the DCCC had their own preferred candidate there, so they were told to run in Royce’s district, thought to be a lesser target for Democrats. But then Royce retired.

Orrin Evans, campaign manager for Cisneros, acknowledges that he has a home in Newport Coast, one of the richest ZIP codes in the country. But Evans contends that Cisneros’s wife lives in Yorba Linda, and they moved there so their young children could be closer to their extended family. “What other candidates in the race own a home in the district?” Evans queried. Thorburn and Tran haven’t moved yet; Jammal grew up in and lives there, in Fullerton. But he isn’t a homeowner.

Cisneros only became a registered Democrat in 2015, after being a lifelong Republican and then an independent for a few years. “What a Republican was in the ’80s is kind of what a Democrat is today,” he told the Orange County Register last July, referring to Ronald Reagan’s passage of the Brady Bill and the 1986 immigration amnesty bill. Cisneros donated small amounts to John McCain in 1999, and voted for McCain over Obama in 2008. 

“It was more like, I got blessed by the lottery, so here I am.”

He is described by campaign observers as affable, but lacking a solid rationale for running. “It was more like, I got blessed by the lottery, so here I am,” said one top Democratic operative. “The activists say they only heard of him because he’s sent mailers.”

At a daylong candidate training in Washington run by the public employee union AFSCME, Cisneros reportedly spent 10 to 20 minutes at the event before leaving. “I run across these candidates who just want a business card that says ‘congressman,’” said Howie Klein of Blue America, a fundraising group for progressive candidates. Blue America has endorsed Jammal.

What Cisneros does know how to do is line up support. While the DCCC is not officially on his side, a DCCC-sponsored poll showing Cisneros as the only Democrat able to make the top two has been reportedly making the rounds, as an inducement for other campaigns to pack it in. End Citizens United, seen as a cat’s paw for the DCCC, has also endorsed Cisneros.

After winning the $266 million Powerball jackpot in 2011, Cisneros and his wife Jacki set up a foundation to assist underprivileged Latino youth. But they also became big-time campaign donors. They were bundlers for Hillary Clinton in 2016, raising over $300,000. (Cisneros says he supported Bernie Sanders in 2016, though there are donations in his name to Clinton before the primaries ended.) They sat on the finance committee of the Democratic National Committee, donating hundreds of thousands more. They gave at least $22,000 to the California Democratic Party and another $10,000 to the Democratic Party of Orange County.

In 2011, the foundation pledged $700,000 to the Congressional Hispanic Caucus Institute, creating the Cisneros Family Endowment to send two interns annually to the caucus. It was the largest donation in the history of the CHC. Jacki Cisneros has sat on the CHC’s advisory council. In November, Cisneros announced the endorsement of the CHC PAC.

According to campaign disclosure data, Gil and Jacki have separately made at least $110,000 in donations to members of the CHC since 2012, and most of those members have endorsed his campaign. This includes former Rep. Loretta Sanchez (at least $17,800 in career donations), and current California members Raúl Ruiz ($32,000), Linda Sánchez ($23,990), Grace Napolitano ($8,700), Pete Aguilar ($8,100), Nanette Barragán ($5,200), and Lou Correa ($2,700).

Cisneros also earned the endorsement of the Giffords Courage PAC, a gun control group. Back when the PAC was called Americans for Responsible Solutions, Cisneros’s foundation gave it $25,000. SEIU and VoteVets have also endorsed.

The spate of endorsements didn’t translate into support at the CDP endorsement conference, where Cisneros got exactly one vote. That was reportedly one more than what he earned at the Tri Counties Democratic Club, one of the larger grassroots clubs in the district. In the Indivisible poll, he got 4 percent of the vote. Public polling from the campaign has shown Cisneros in better shape, though in January he was 3 points behind Young Kim, one of the three experienced Republicans running.

Asked whether the trend of big donations to future endorsers reflects a kind of purchase of credibility for a recent convert to the Democratic Party, Evans, Cisneros’s campaign manager, said “Gil and Jacki are proud of their long history of giving to progressive causes and candidates.”

The spate of endorsements didn’t translate into support at the CDP endorsement conference, where Cisneros got exactly one vote.

Thorburn, a rumpled New Jerseyite, has tacked hard left in the race, endorsing single-payer health care and a $15 an hour minimum wage. He’s the first candidate in California to unionize his campaign staff. “If you say big money and the rigged system, that resonates more than anything else,” he told The Intercept at the state party convention in San Diego.

But Thorburn’s $2 million donation to his own campaign rankles some. “I would support a public financing option,” he said, while adding that he would do what he needs to do to win the race. “It wouldn’t take too many cycles for the voting public to insist that all candidates take the public option. Eventually, it would become a mark of distinction.”

Perhaps a bigger obstacle concerns where the money came from. He is a director of Global Benefits Group, which did an IPO last year on the London stock exchange. But the company, which provides insurance around the world for expats and third-country nationals, also directs two related entities, GBGI Limited and GBG Insurance Limited, based in the U.K. territory of Guernsey, a known tax haven featured in the Paradise Papers. In December, the European Union put Guernsey on a “gray list,” warning the island that it had to reform its tax structure so that corporations couldn’t use it to hide profits.

Thorburn told The Intercept that the leaking of his business background is a signal of how well he’s doing in the race. On the particulars, he said that his company was registered in Guernsey for regulatory reasons, not tax purposes, and that the registration allowed them the flexibility to make and quickly sell individualized insurance products around the world. He added that it was already structured that way when he took it over.

GBG Insurance Limited’s CEO is Bob Dubrish, the former CEO of subprime lender Option One Mortgage, a subsidiary of the tax preparer H&R Block. The company had to shut down in 2007 amid a wave of toxic mortgages and foreclosures; it ended up getting sold to current Commerce Secretary Wilbur Ross. The Securities and Exchange Commission later fined Option One $28.2 million for deceiving investors; it earned its reputation as one of the more spectacular subprime failures.

Dubrish, Thorburn said, was not involved himself in any of the firm’s wrongdoing.

The links to offshore tax havens and one of the worst subprime lenders aren’t great resume items for a Democrat.

The candidate, meanwhile, has depicted himself as a “risktaker” who “sometimes … ran off the cliff, not intentionally.” The links to offshore tax havens and one of the worst subprime lenders aren’t great resume items for a Democrat, yet his issue profile has earned him the endorsements of Our Revolution, the California Nurses Association, the United Steelworkers, and more.

Jammal, a child of immigrants who is half Latino and half Arab, did civil rights advocacy during the George W. Bush era for the Mexican American Legal Defense Fund before moving into congressional staff work. He was an aide to Sen. Michael Bennet, D-Colo., and chief of staff to Rep. Tony Cardenas, D-Calif., one of the few state Hispanic Caucus members not to endorse Cisneros. Under Cardenas, Jammal helped derail the proposed Comcast/Time Warner merger. In between his congressional gigs, he served in the Obama Commerce Department. Most recently, he worked for Solar City until Tesla took them over.

“I was one of a small group of staffers in its student loan program,” Jammal said. “I’m a working-class guy, and Congress is a playground for rich people. Members are not willing to stand up because they don’t want to piss off donors.”

Now he’s in a race in which the donors are mostly the candidates. Going by amount raised, Jammal’s $280,000 by the end of 2017 would be a close third place in the primary, behind Tran, who has the support of EMILY’s List, and within $37,000 of Gil Cisneros. Adding the self-funding dollars, he’s way behind, even after “maxing out” with a $5,000 contribution.

Congress already is teeming with wealthy candidates. A Los Angeles Times study of California’s 53 congressional districts tallied up the net worth of its members as at least $439 million, with 20 millionaires. And more wealthy candidates are at the gates, in District 39 and across the country, with at least 40 Democratic primary elections featuring millionaire candidates.

“It’s damn important to show that regular folks can be in these positions.”

Millionaires can certainly be effective leaders for the working class; take Franklin Roosevelt, for example. But the worldview of an elected official is just necessarily different in an environment of privilege, Jammal believes. “We haven’t been the party of new ideas and working people in some time, we all know that,” Jammal said. “We left economic issues behind a while ago. That’s what drove me in. It’s damn important to show that regular folks can be in these positions.” Jammal recently released a reform agenda (some of which is well-meaning but silly, like term limits and cutting congressional pensions) that includes ending self-funding of campaigns.

On Monday, Cisneros filed a challenge to Jammal’s ballot designation as a “civil rights attorney.” In a statement, Jammal responded by pointing out his history of civil rights work, including leading a group of attorneys working on Latino voter protection in swing states, and said “An out-of-district millionaire is trying to use his high-priced, Sacramento attorneys to bully our local grassroots campaign into submission.”

Jammal said nobody has directly asked him to drop out of the race, though the DCCC has “shared their thoughts.” The state party has also held talks with candidates. Jammal thinks being the only candidate with ties to the district will help, citing a state legislative race where Sukhee Kang, a Korean-American who moved to the district and lost to a longtime resident, Josh Newman. 

But competing with carpetbaggers is one thing; competing with millions of dollars put toward visibility and voter contact is quite another. It’s a function of the opportunity in California to flip several Republican seats, and the DCCC’s predilection toward self-funders. There may be a dearth of millionaires in Midwest or Great Plains states willing to run; but California has more millionaires than any state in the union.

Combine that with the concerns about the top-two primary, likely to bring more money into the race — super PACs have already been formed to winnow fields — and you get a situation in which practically everyone gets squeezed out except those with enough money to be untouchable. Even worse is the idea that Democrats don’t really care who wins District 39, as long as they don’t make a rich donor angry. Cisneros’s history of donations makes him formidable not only because he can call in favors, but because of the well of future support the party can expect. 

One solution to at least part of this is to reverse the top-two primary, an artifact of a budget compromise with Republicans in 2010. It would have to be defeated at the ballot box, but nobody particularly likes it, as it artificially narrows choices out of fear of getting locked out of the general election, and leaves third parties off the November ballot most of the time. “Democrats should vote for Democratic leaders,” said Andy Thorburn. “If you started a club, you don’t let anybody walk in the door and pick the president of it.”

The other solution, Jammal says, is to improve turnout to make top-two concerns irrelevant, focusing on a vision for the country instead of internecine warfare. “It’s about getting out there and talking to voters and letting voters decide.”

Correction: March 20, 2018, 12:42 p.m.
An earlier version of this story said that Gil Cisneros donated to John McCain and the Republican National Committee as recently as 2008. Those donations were made by other individuals named Gil Cisneros. This Gil Cisneros donated to McCain’s presidential campaign in 1999. We regret the error.

Top photo: Sam Jammal, candidate for California’s 39th Congressional District, is interviewed by CQ Roll Call at their D.C. office, July 28, 2017.