District Attorney Summer Stephan filed criminal charges Wednesday against Jesus Cardenas, the former chief of staff to San Diego Councilmember Stephen Whitburn, and his sister, Andrea Cardenas, a sitting member of the Chula Vista City Council.
According to prosecutors, both siblings have been charged with multiple felonies related to some $176,000 in federal COVID-19 relief funds provided to Grassroots Resources, the political consulting firm Jesus Cardenas founded.
“The defendants have both been charged with conspiracy to defraud by false pretense, grand theft, conspiracy to commit money laundering, money laundering (and) failure to file tax returns,” the District Attorney’s Office said.
“The investigation was conducted by the D.A.’s public integrity unit with assistance from the Department of Homeland Security Office of Inspector General, Covid Fraud Unit,” the news release said.
Both Jesus Cardenas, 40, and Andrea Cardenas, 31, are scheduled to be arraigned in San Diego Superior Court next Thursday. Neither responded to requests for comment on Wednesday.
If convicted of all charges, Andrea Cardenas faces up to five years and eight months in state prison. In addition to five criminal counts she faces with her brother, she faces two additional counts of failing to file tax returns. Jesus Cardenas could receive up to four years and four months in custody if convicted of all charges.
Grassroots Resources, which started as a consulting business working to get cannabis companies licensed, was the firm that prompted Jesus Cardenas to resign from his San Diego City Hall job earlier this year. The company not only helped Whitburn and Andrea win their respective city council seats in 2020, it also was a key adviser to Nora Vargas, who won election to the San Diego County Board of Supervisors that same year.
Andrea Cardenas, who was elected in 2020 with her brother’s help and guidance, is up for re-election in March. It was not immediately clear if she plans to continue her campaign, nor how the charges brought against her may impact her current term in office.
The Chula Vista charter lists several reasons for when a vacancy occurs on the City Council, including when a member is convicted of a felony or crime involving moral turpitude, resigns from office, is removed by judicial procedure or other state law proceeding, or no longer meets the qualifications necessary to hold the position.
Last year, council members debated whether felony charges — not just a conviction — should be grounds for removal from office via a City Council vote. They ultimately decided to forgo that provision in a list of Charter amendments that voters approved in 2022.
Mayor John McCann did not respond to a request for comment. Deputy Mayor Jose Preciado said he was “saddened to hear this news” and that he was unsure what the criminal allegations his colleague faces mean for the council.
Christine Brady is, so far, the only District 4 challenger this March primary. She said it was too soon to say whether she believed the councilmember should suspend her re-election campaign but thought the allegations “looked really bad for her.”
The six-page complaint lays out a months-long fraud it alleges both Jesus Cardenas and Andrea Cardenas perpetrated in the first half of 2021, when both were public officials.
At the time, Jesus Cardenas was Whitburn’s chief of staff, a position that generally calls for managing the day-to-day responsibilities of the district office and helping to set policy for the elected official.
He resigned from San Diego City Hall in April — eight months after The San Diego Union-Tribune first reported that he was running a political consulting firm at the same time he was being paid some $10,000 a month as Whitburn’s top adviser.
The District 3 council representative, who had defended Jesus Cardenas, did not respond to questions about the fraud charges against his longtime chief of staff.
Andrea Cardenas at the time of the alleged crimes was — and remains — an elected member of the Chula Vista City Council.
According to the seven-count complaint filed Wednesday, both Cardenases conspired to defraud the federal government of COVID-19 relief funds made available to private businesses under what was called the Paycheck Protection Program.
The charges also accuse the siblings of conspiring with “another person or persons whose identity is unknown” to prosecutors.
Investigators said Jesus Cardenas and Andrea Cardenas knowingly fraudulently obtained $176,227 by representing that Grassroots Resources had 34 employees. Instead, those employees worked for a San Diego cannabis dispensary.
“The employees listed in the supporting documentation in fact were employees of Harbor Collective, a business engaged in the sale of marijuana, a federally illegal activity,” the charges state.
The PPP loan received by Grassroots Resources was first disclosed by La Prensa San Diego, the bilingual news organization. It reported that the 34 workers Cardenas cited in its application in reality worked for the San Diego dispensary.
In an interview with the Union-Tribune that same week, Cardenas said the La Prensa report was wrong and he would be requesting a formal correction. He supplied some worker documentation, but the material did not prove the employees were on his payroll.
“The PPP loan was requested and used to cover Grassroots Resources employees in their various responsibilities associated with other clients unrelated to Harbor,” Cardenas said at the time.
Once the Cardenases received the federal relief money, they diverted tens of thousands of dollars to credit-card payments, a Venmo account and personal checking accounts, the complaint asserts.
More specifically, Jesus Cardenas used the proceeds to make two payments to American Express totaling $21,010, the complaint states. Andrea Cardenas directed $35,000 of the funds to her personal checking account, then steered $33,500 of that to her council campaign account, prosecutors said.
“On May 17, 2021, Andrea Cardenas’ campaign wrote a check (check 8064) from her campaign account ending 7401 to TMC Direct in the amount of $34,166.89,” the complaint states.
TMC Direct is a campaign print and mailing firm that has done hundreds of thousands of dollars in business with candidates represented by Jesus Cardenas. The company was at the center of a series of likely campaign violations by Andrea Cardenas during her council campaign.
The print and mailing firm is a “participating member” of Political Strategies Inc., a San Diego company whose founding members include Grassroots Resources.
Andrea Cardenas has represented herself in public documents as both an employee of Grassroots Resources and as an independent contractor for the firm.
On her state Form 700, she listed herself as a Grassroots Resources employee. In an email seeking a public contract obtained and published by La Prensa San Diego, she told a prospective client that she was an independent contractor.
Grassroots Resources, meanwhile, was suspended by the California Franchise Tax Board early last year for failing to submit required paperwork.
But state campaign records filed by the San Diego County Democratic Party show that despite the suspension, Grassroots Resources continued to raise and spend political contributions even after the company was prohibited from doing business.
By late February, under increasing public scrutiny and pressure from his boss, San Diego Councilmember Whitburn, Jesus Cardenas told the Union-Tribune he would shutter Grassroots Resources.
“Acknowledging my steadfast commitment to the residents of District 3 in the city of San Diego and to end even the appearance of impropriety, I have been working to clear the company of any outstanding liabilities and have decided to close the business,” he said by email at the time.
But instead, Cardenas resigned from his job as Whitburn’s chief of staff in early April.
“Given the recent political climate, I want to put all of my energy and effort into electing Democrats,” he said at the time.
Both Jesus Cardenas and Andrea Cardenas are due to answer the criminal charges in Superior Court at 1:30 p.m. next Thursday. It was not immediately clear if they had retained attorneys to assist in their defense.
