Former Fresno Congressman Terrance John “TJ” Cox pleaded not guilty Tuesday afternoon to federal criminal charges of wire fraud, money laundering, financial fraud and campaign contribution fraud.
Cox, who surrendered Tuesday morning to Federal Bureau of Investigation agents, addressed U.S. Magistrate Judge Sheila Oberto by teleconference from the Fresno County Jail, where he was detained following his arrest. Cox was represented on the Zoom videoconference by Fresno attorney Mark Coleman.
Oberto approved a conditional release from jail for Cox, who walked out of the Fresno County Jail early Tuesday evening accompanied by Coleman.
A 28-count indictment unsealed Tuesday in Fresno’s U.S. District Court charges Cox with 15 counts of wire fraud, 11 counts of money laundering, one count of financial institution fraud, and one count of campaign contribution fraud.
The charges revolve around the financial dealings of Cox, a Democrat, from both before his election in late 2018 to represent the 21st Congressional District and during his two-year term in Congress in 2019 and 2020.
The indictment includes allegations related to Cox’s actions as head of a Fresno company that served as a conduit for New Market Tax Credit assistance to spur development investment in financially distressed areas; as a partner in a sports nonprofit that leased the troubled Granite Park recreation complex in central Fresno from the city of Fresno; as a partner in an almond processing company; and as a candidate for Congress in the run-up to the 2018 election.
Under scrutiny in the past
Cox defeated incumbent Republican David Valadao in the 2018 election to represent the 21st Congressional District, which covered Kings County and parts of Fresno, Kern and Tulare counties. In a 2020 rematch, Valadao recaptured the seat from Cox.
Coleman told The Bee that he was unable to offer comment on the charges. “I Just obtained a copy of the indictment, so this is the first we’ve seen it,” he said following Tuesday’s hearing.
Cox’s business dealings have come under question in the past. He faced a California state tax lien of about $30,000 in early 2020 for unpaid personal income taxes for the year 2017. Also in 2020, the federal Internal Revenue Service filed liens against Cox seeking $145,000 in unpaid taxes in 2016 and 2017.
A previous federal lien for $48,000 against Cox and his wife for taxes owed from 2015 was paid off in the fall of 2017.
After his election to Congress, Cox also had to file amendments to the financial disclosures that representatives are required to file. Among the changes were acknowledging business interests he had originally omitted, and to report payment of a two-year-old settlement with employees of a Canadian mining company who claimed Cox had underpaid them.
None of those, however, rose to a level that resulted in criminal prosecution that emerged when the federal grand jury indictment was unsealed Tuesday morning.
Federal prosecutors allege that Cox perpetrated “multiple fraud schemes” targeting companies he was affiliated with as well as their clients and lenders.
“Cox created unauthorized off-the-books bank accounts and diverted client and company money into those accounts through false representations, pretenses and promises,” according to information from Phillip A. Talbert, U.S. Attorney for the Eastern District of California.
Talbert was appointed as the U.S. Attorney for the district by President Joe Biden earlier this year.
“From 2013 to 2018, across two different fraud schemes, Cox illicitly obtained over $1.7 million in diverted client payments and company loans and investments (that) he solicited and then stole,” the U.S. Justice Department said in a press release.
Additionally, Cox is alleged to have created false records and a fraudulent loan guarantee reputed to be from his tax credit company in order to secure a $1.5 million construction loan for another Cox enterprise, a sports nonprofit he led, for improvements and development at the Granite Park complex at Cedar and Dakota avenues in Fresno.
“The loan later went into default causing a loss of more than $1.28 million,” prosecutors allege.
As a candidate for Congress, the indictment accuses Cox of violating campaign contribution laws by giving more than $25,000 to family members and business associates in 2017 to in turn make donations to his campaign, described by prosecutors as illegal straw or conduit donations.”
Another allegation in the indictment is that Cox got a mortgage loan from a lender for a home by making multiple false representations to the lender, including a statement that he intended to live on the property as his primary residence. The indictment alleges instead that Cox bought the property from one business associate in order to rent it to another business associate.
Cox’s release from jail has several conditions imposed by Oberto, including that he surrender his passport, that his travel be restricted to within California, that he not have any contact with potential witnesses, refrain from using alcohol or non-prescription drugs, and that he check in with federal pre-trial monitoring officials.
Coleman said the next step in the case is a status conference in October. Between now and that time, prosecutors and defense teams will exchange what is likely to be thousands of pages of documents, witness interviews and other evidence to prepare for the trial.
Assistant U.S. Attorney Henry Carbajal told Oberto that prosecutors provided Cox’s attorneys with more than 28,000 pages of evidence on Tuesday.
The Oct. 12 conference “is where we can keep up with the status of the case,” Coleman said. “There will be voluminous discovery, so the time makes sure attorneys can review interviews, financial records and see where the case is going in terms of mounting a defense.”
Prosecutors said that the indictment is only a set of allegations, and that Cox is presumed innocent until proven guilty at trial.
If convicted, the criminal penalties could be a maximum of 20 years in prison and a $250,000 fine for wire fraud and money laundering; up to 30 years and a $1 million fine for wire fraud against a financial institution; and a maximum of five years and a $250,000 fine for campaign contribution fraud.
This story was originally published August 16, 2022 4:09 PM.