Seeking crossover appeal in a heavily Democratic state, Republican gubernatorial candidate John Cox highlights his experience in the private sector as the salve for California’s problems.
“I’m a businessman, I’m not a politician,” he told the audience at a Jan. 13 debate, in a variation of a theme he has used at campaign events and in previous bids for public office. “We’ve got to sit down and we’ve got to focus on solving problems. That’s what a businessman does. That’s what I’ve done for 40 years.”
So just how successful has Cox been? It’s hard to get a complete picture, though it’s readily apparent that he has built a vast personal fortune.
Cox reported an income of $1.86 million last year, according to a partial 2017 tax return shared by his campaign.
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He has also put $5.6 million of his own money into his run for governor so far, more than half of the $10.7 million in contributions that his campaign has reported this election cycle.
Cox declined to participate in this story, and many of his business associates did not respond to interview requests. But in recent ads and campaign rhetoric, he has emphasized humble roots on the South Side of Chicago and a self-made success story, in contrast to moneyed connections that boosted his Democratic rival, Lt. Gov. Gavin Newsom.
Dan Herren, who worked on Cox’s failed bid for president during the 2008 election, said growing up “on the poorer side” – Cox’s mother was a teacher and his stepfather worked for the postal service — seemed to drive his professional achievement as a real estate investor.
“I understand that he would take properties that were dilapidated or falling apart and fix them up and turn them into affordable housing,” said Herren, a real estate agent and Republican Party activist in South Carolina who ultimately served as Cox’s national campaign manager. “The feeling I got, working with him, is that he’s got an appreciation for helping people help themselves and not giving a handout.”
After graduating from the University of Illinois at Chicago in 1976 with degrees in political science and accounting, Cox began his career at the public accounting firm Coopers & Lybrand. At night, he attended law school at Chicago-Kent College of Law at the Illinois Institute of Technology.
“I knew I wanted to be financially successful and knew at the time that the best way was to become either a lawyer or a doctor. I was too squeamish to become a doctor and my interest was in public service, so law school it was,” Cox wrote in Politic$, Inc., a book he published in 2006, in anticipation of the presidential campaign on which he would spend more than $1 million.
Upon getting his law degree in 1980, Cox briefly joined a small firm in Chicago. But he branched out on his own within months, establishing a law and accounting office that he continues to own.
“Over the next dozen years, under the guidance of Presidents Reagan and George H.W. Bush, the tax laws were changed about a dozen times, creating great opportunities for a young tax lawyer to advise and re-advise clients of the system’s changing nature,” he wrote in Politic$, Inc. “This was exhausting, but lucrative work that helped my young family enjoy a nice life in Chicago’s suburbs.”
Running unsuccessfully for the U.S. Senate in 2003, Cox told the Illinois Leader that “I made my first million before I was 30.”
Cox served as outside counsel for the potato chip company Jays Foods in the 1980s, handling its legal, tax and regulatory affairs. He frequently touts this period in personal biographies.
Originally connected with the company through “an old college classmate of my wife’s,” according to the Illinois Leader interview, Cox impressed its owners, the Japp family, and was eventually appointed to the board of directors.
Cox helped the family sell the company to food and beverage manufacturer Borden in 1986. Then eight years later, he put together a deal to buy it back.
“Under Borden’s bureaucracy, it lost $17 million the year before we bought it back. I assembled the team to plan and execute a turnaround plan and the company was profitable the first year,” Cox wrote in Politic$, Inc.
That relationship with the Japp family eventually soured, however; they sued him in 1997 for alleged financial misconduct. Cox settled in 1999 for $1.7 million, the Los Angeles Times reported.
Cox told the Times that it was a “frivolous lawsuit” and an attempt by the plaintiffs to secure a better deal in a real estate transaction that had nothing to do with his role in Jays Foods.
During this time, Cox substantially expanded his business empire, investing in real estate and opening an investment advisory firm and a real estate management company.
His campaign website calls it a “$200 million enterprise with almost 100 employees,” though it’s difficult to verify the scope. The companies are not publicly traded and do not have to make public financial disclosures.
In 1996, Cox formed Equity Property Management to oversee six apartment complexes in which he had invested. He remains the president and sole shareholder of the company, which now manages nearly two dozens properties in Indiana, Illinois, Wisconsin and Kentucky.
Cox, who moved to Rancho Santa Fe in 2011, is also invested in a dozen limited partnerships that own at least 15 apartment complexes in the Midwest, according to a statement of economic interest filed with the state in March. The most recent assessment records for those properties, available through the LexisNexis database, put their combined market value at around $79 million.
Cox received more than $1.5 million from rental real estate and other business partnerships in 2017, and another $243,000 from interest on his real estate limited partnerships.
But the picture was far worse in 2016, when he reported a $106,000 loss from rental real estate and business partnerships on his tax return, as well as $378,000 in interest.
The Bee was only allowed to review Cox’s tax returns for the past two years, excluding the Schedule E form with detailed information on his earnings from rental real estate and business partnerships.
In both years, Cox also reported a $50,000 salary, which his campaign said was from his continued involvement in his law firm. Its largest clients are primarily limited partnerships Cox is invested in, according to his statement of economic interest.
He earned an average of about $119,000 in dividends across the two years. The state financial disclosure form lists stock and bond holdings worth between $9.3 million and $93.5 million. They encompass more than 90 investments in major brands such as Apple, Bank of America, McDonald’s, Nike and Shell.