Before resigning to head California governmental affairs for Chevron Corp., Democratic Sen. Michael Rubio participated in two real estate deals with a Kern County oil executive who has contributed to his campaign.
The Fair Political Practices Commission is deciding whether to open an investigation into the transactions, which involve Rubio's current and former homes, to determine if they amounted to an improper gift to an elected official.
Rubio surprised many in the Capitol when he announced last week that he was stepping down to work for Chevron. In a statement titled "family comes first," the freshman Democrat said he decided to leave office to focus on his family as a young daughter receives treatment for Down syndrome.
Rubio, contacted Wednesday night, said the dealings with an investment firm owned by Majid Mojibi, president of the San Joaquin Refining Co. Inc., were done by the book.
He said that Mojibi last year properly loaned him money to buy a $681,000 home in El Dorado Hills after a bank turned him down for a conventional mortgage. Two months later, still unable to get a conventional loan, he gave the house to Mojibi and is now renting it, he said.
DCM Assets Management, a company registered to Mojibi, also purchased the Bakersfield home Rubio had to put up for a short sale in 2011. The company paid $185,000 for the two-bedroom house, according to records.
The real estate website Zillow.com estimated that the Bakersfield house was worth less than $100,000 at the time of the sale. Rubio said the site undervalued the home based on a dispute over the updated square footage after renovations.
Rubio had to move from that home during his 2010 campaign, after it was discovered that the property was not in the 16th Senate District he was seeking to represent. Local election officials had mistakenly included the address in the wrong Senate district.
Rubio said the company purchased his former house for another Mojibi family member after the home, which he bought for $270,000 in 2004, was put on the market through a real estate agent.
"They didn't get it for a dollar more or a dollar less," he said. "It went through every normal process consistent with any normal real estate transaction that was approved by the lender we were doing the short sale on."
After the short sale, Rubio was unable to get a loan for the five-bedroom home in El Dorado Hills. Rubio made $95,291 a year as a state senator and his wife, a dental hygienist, also made less than $100,000, according to a financial disclosure form filed last year.
He said he was anxious to move his wife, daughters and in-laws to the area so they could spend more time with him when he was in Sacramento for legislative work.
He said Mojibi's company gave him a "market-rate" 6 percent loan to purchase the 4,660-square-foot house, which has four fireplaces and a swimming pool, for $681,000 in March 2012.
There is no record of a loan available through El Dorado County deed records.
Two months later, Rubio transferred ownership through a quitclaim deed to DCM Assets Management.
Once he realized he would not be able to get a conventional loan for some time, Rubio explained, he went back to DCM Assets Management and arranged to relinquish ownership and lease the property for $3,000 a month.
Rubio, who consulted with a political attorney on the agreement, said he did not make any money in either transaction. The most recent loan and lease, he said, will be included in his annual financial disclosure form set to be filed later this week.
Gary Winuk, enforcement chief for the Fair Political Practices Commission, said the watchdog agency is reviewing a complaint it received related to the transactions. It has not formally decided whether to open an investigation.
"In general, you're only entitled to either enter into a business transaction where if you receive income you need to report it or if you receive a gift you need to report it," he said. "If you are getting a loan or anything like that, it has to be on terms that are available to the general public."
Rubio said the investment company has worked with other individuals who could not get a loan. Mojibi did not respond to requests for comment left at his home and office.
The former senator also said the Mojibis and their interests received no special treatment in his time in office "just as no other donor or contribution would influence what I did in the Legislature." Mojibi and his companies have given $14,697 in contributions to Rubio's Senate campaign.
"Regardless of his occupation, I consider him family and a very close friend," Rubio said. "That's who he is in my life."