The political consulting firm owned by a San Diego City Council member’s chief of staff continued to do hundreds of thousands of dollars in business through the November election season, even though it was suspended by state officials early last year.
Grassroots Resources — which was founded and operated by Jesus Cardenas, the top adviser to Councilmember Stephen Whitburn — raised and spent more than $200,000 on digital advertising over the final months of 2022, according to recent election filings.
The latest spending — $87,500 — was disclosed in a San Diego County Democratic Party report to the California secretary of state late last month. The filing period covered revenue and spending between Oct. 23 and Dec. 31.
Grassroots Resources also collected $117,500 from the local Democratic Party between early September and late October, records show, pushing its election-season campaign activity to at least $205,000.
The funds were paid even though Grassroots Resources has been suspended by the state Franchise Tax Board since Jan. 3, 2022.
The San Diego Union-Tribune reported in August that Cardenas owned a political consultancy while also drawing a six-figure annual salary as Whitburn’s top adviser.
Whitburn declined to comment on the latest spending by the county Democratic Party, which until last May was chaired by Whitburn’s longtime roommate, Will Rodriguez-Kennedy.
When asked last summer, the District 3 council member said Cardenas is a highly sought-after adviser for whom he has great respect.
“He brings a wealth of successful business experience to our city,” Whitburn said at the time.
Cardenas issued a statement last week saying he is actively working with attorneys and state regulators to resolve his company’s issues with the Franchise Tax Board.
The statement also said the funds paid to Grassroots Resources were solely reimbursements for media buys that were requested by a separate vendor.
“Grassroots Resources did not perform any work nor did the company consult on the production of such,” it said. “This specific assistance is something that GR has historically provided to many consultants and organizations.”
Cardenas said his principal focus is serving the people and city of San Diego. He also said he does not manage the day-to-day operations of the company.
He told the Union-Tribune last year that he would resolve Grassroots Resources’ regulatory deficiencies. “I will ensure that this issue is addressed promptly,” he said in August.
State-mandated financial disclosures show that Cardenas collected up to $100,000 from Grassroots Resources in 2021, including one client, a cannabis dispensary, that is licensed by the city of San Diego.
He also is paid a salary of more than $10,000 a month from San Diego taxpayers.
An address at a UPS Store
The Jan. 31 filing by the county Democratic Party details just over $3.6 million in political contributions and spending last year in its nearly 400 pages.
According to the document, the party paid $68,750 for Grassroots Resources to buy Facebook ads to support several candidates, including Ammar Campa-Najjar for Chula Vista mayor and Carolina Chavez and Jose Preciado for Chula Vista City Council, among others.
The same document lists $18,750 in payments to Grassroots Resources from Margin Victories, an agent or independent contractor of the local Democratic Party. Those funds also paid for ads supporting the Campa-Najjar campaign.
Margin Victories, which only recently has become one of the San Diego County Democratic Party’s biggest vendors, is not registered with the California secretary of state. Its address is a UPS Store in the Allied Gardens neighborhood of San Diego.
The company website describes offering a series of campaign services, including direct mail, community organizing, social media and web development, many of the services promoted by Grassroots Resources.
There is no telephone number listed on the Margin Victories website. Emails to the address listed there bounced back as undeliverable.
Margin Victories is “a JE Strategies Company,” the website adds. State records show JE Strategies was established in 2020 at the same Allied Gardens address as Margin Victories by Jehoan Espinoza, who formerly worked for Cardenas and Grassroots Resources.
JE Strategies filed its initial paperwork with the Secretary of State’s Office in July 2020. By the following March it was delinquent in its reporting, state records show.
The company was issued a penalty certification in August 2021. A statement of information — the public record that regulators require of all registered businesses in California — was due by September 2020 but has not yet been filed, according to the Secretary of State’s Office.
Local Democrats paid Margin Victories more than $760,000 in the final months of 2022, according to disclosures, making it the party’s largest vendor in the latest election cycle. The party also owes the company at least $250,000 more, the same records show.
The $1 million-plus in business that Margin Victories conducted for San Diego Democrats last year was a first. The party reported no payments to the company in the prior year.
Virtually all of the Democratic Party money paid to Margin Victories was invested in “member communications,” a broad spending category that includes direct mail, social media advertising, phone banking and any other outreach to voters.
Espinoza, who is 30, said he has worked on political campaigns for more than seven years. After leaving Grassroots Resources, he worked as an independent contractor before setting up his own company.
Margin Victories is completely independent of Grassroots Resources, Espinoza said. He attributed his business success to his work on recent Campa-Najjar‘s losing campaigns for Congress and the Chula Vista mayor’s office.
“My track record speaks for itself,” Espinoza said. “Ammar Campa-Najjar’s mayoral race was one of the biggest races in the South Bay. When we passed through the primary (election), many candidates wanted to work with me.”
The Margin Victories founder said he turned to Grassroots Resources to buy online ads because Cardenas’ business has a greater spending threshold with Meta, the Facebook parent company.
“The reality is they are able to do ads with Meta at a higher level than I could,” he said. “I had a limit as to how much money I could spend on ads on behalf of clients.”
‘I need to follow up’
Espinoza said he did not know Grassroots Resources was suspended by state tax officials.
He also said he was not concerned that the San Diego County Democratic Party owes him more than $250,000, which is not an insignificant sum for a new company such as his.
“That’s something I need to follow up with them on,” he said. “But I have savings.”
Becca Taylor, who succeeded Rodriguez-Kennedy as chair of the local Democratic Party last year, downplayed the campaign services that Cardenas’ company performed to help elect Democrats last year.
“The party did not pay Grassroots Resources directly,” she said in a statement. “The direct payments were made to Margin Victories.”
Taylor did not answer questions about the ongoing tax-board suspension of Grassroots Resources or why a startup like Margin Victories, with almost no track record and a post office box for an address, generated so much spending by the local Democratic Party.
She said the party would review its process for approving campaign vendors and the sub-vendors they contract with but did not respond to questions about why no such review was undertaken last year.
“For now, the comments I’ve made on this will have to suffice,” she wrote.
