Candidate’s financial history under scrutiny in California controller’s race

Malia Cohen aspires to be the chief financial officer of the nation’s most populous state, overseeing more than $100 billion in revenue and expenditure of public funds each year.

But the sole Democrat in November’s California controller contest faces scrutiny over the recent suspension of a business license and foreclosure on her San Francisco condo more than a decade ago.

Her Republican opponent, Lanhee Chen, points to her Cohen’s personal financial problems and questions her suitability for the office.

Franchise Tax Board records show that Cohen’s social media consultancy Power Forward had its license suspended in March 2021 for “failing to file” a tax return and “failing to pay” taxes.

Cohen, who chairs the Board of Equalization, told the Times she couldn’t remember why the license was suspended.

“I can’t explain what happened there because I don’t remember,” Cohen said. “I’ve requested closure for this before – I think it was 2019 – because Power Forward wasn’t operational.”

Cohen later said through a campaign spokesman that the suspension came about after she missed the post because of a change of address.

Cohen describes the foreclosure of her home as a traumatic experience that caused her much embarrassment when it came up in her successful 2010 campaign for the San Francisco board of directors.

She said the foreclosure boosted her motivation to run for public office.

“I’ve learned from the experience and being able to coach and share my experiences and talk to other people, and it’s really made me a staunch advocate for holding corporations and banks accountable,” said Cohen, who has a master’s degree in public Politics and Management graduated from Carnegie Mellon University.

In 2019, after eight years as a supervisor, Cohen joined the state Board of Equalization, which oversees some areas of property, liquor and insurance taxation.

She was Chair of the Board for a year and is Chair again in 2022. As Chair, she also has a seat on the Franchise Tax Board and would remain a member if she becomes State Controller.

David Beltran, an advisor at Bearstar Strategies and spokesman for Cohen, said their business partner closed the Power Forward account after discovering the error.

The Franchise Tax Board would not disclose the amount of money Cohen owed when the license was suspended because there was no outstanding balance on the account. Records show the tax issue was resolved and the company’s license restored in April this year. According to records, the account was closed just before the primary the following month.

Cohen finished second in the June 7 primary, behind Chen — a tax consultant, Stanford educator, and former political adviser to U.S. scythes Mitt Romney and Marco Rubio during their respective presidential bids.

With one Republican, four Democrats and one Green Party candidate, Chen ended up receiving 37.2% of the vote. Cohen finished with 22.7%, beating the other Democrats.

In the November election, Cohen is the only Democrat running for controller in a state where Democrats outnumber GOP voters 2-to-1.

Chen has raised more money than Cohen, reporting $4 million in donations with less than $1.2 million being spent at the end of September. Cohen reported nearly $2.3 million in donations and has spent $1.8 million.

Though voters often pay little attention to the nationwide race for constitutional office, that hasn’t stopped Preventing Chen from naming Cohen’s past positions on social media and now questions her ability to do the controller’s job.

“How does Malia Cohen expect to become chief financial officer of one of the world’s largest economies when she can’t even manage her own finances?” Chen said.

Darry Sragow, a veteran strategist, said Cohen’s financial history is an easy target for Chen.

“There’s no way your opponent won’t pick that up,” Sragov said. “It would be political misconduct on the part of your opponent not to make this an issue.”

It remains to be seen if the issue will make a difference for voters in the down-ballot contest.

“It partly depends on how she handles it,” Sragow said. “You just deal with it, and the quicker you deal with it, the more likely you’ll get over it.”

The foreclosure involved a two-bedroom, two-bathroom condo that Cohen purchased in December 2006 for $581,500.

She bought a top-floor unit in a new development on Crescent Way in Candlestick Point with no money and financed the property with two separate conventional adjustable-rate loans, according to public records of the loan and foreclosure.

Cohen said the lender has an office under development. She said she doesn’t remember details about her decision to buy the home on two loans.

“So it was presented to me that I didn’t have any flexibility to look around,” Cohen said. “That’s how it was suggested to me to structure it.”

Home prices peaked in the US months before Cohen bought her condo. The ensuing financial crisis caused homes across California to plummet in value, including their 9,000-square-foot lot.

Millions of Americans lost their jobs and ended up in foreclosures or short sales because they couldn’t make their payments.

Cohen said her financial situation gradually improved between buying the property — when she was working as a legislative adviser to a member of the San Mateo County Board of Supervisors — and losing the house months before she became a supervisor in San Francisco. She said her interest rate has not gone up.

But like many homeowners at the time, she said she owed her condo far more than it was worth after the real estate market collapsed. Having not paid a deposit, she found herself underwater.

She said she stopped making mortgage payments in hopes the bank would renegotiate the terms of her loan — not because she couldn’t afford to pay.

“I received advice that said to me, ‘Hold your payments; Save them having to deal with the bank to refinance your loans,” she said. “So my financial situation hasn’t changed. It was the quality of the advice I received.”

She said the bank pushed her around for months or didn’t return calls.

Wells Fargo Home Mortgage filed a notice of default on the property in January 2010, stating that Cohen was $11,190.02 in arrears on their payments. According to public records, the bank sold the property for $320,000 the following year.

Cohen said she doesn’t remember how she made the decision to leave the property.

“I can’t tell where my head was in that room,” she said. “I mean it was traumatic. To be honest, I just don’t remember it anymore.”

Brent White, author of Underwater Home, was among the first experts to advise underwater homeowners to abandon their homes during the financial crisis. In general, he said, too many people view a mortgage as a moral obligation rather than a business transaction.

“All of these people were just barging at homeowners and telling them that if they didn’t pay their bills, it was unethical and immoral,” White said. “People are maxing out their credit cards to pay their mortgage. They’re using their kids’ future accounts and college tuition, and making all kinds of horrible financial decisions under the false impression that they have a moral obligation to pay their mortgage.”

Buyers who didn’t make down payments on their homes would lose less money in a foreclosure than those who put money down, White said.

Cohen recovered from foreclosure and owns a home in San Francisco with her husband.

She said she stands by her decision to leave her property.

“I came out of it in the best possible way,” she said. “Yes, my credit score took a hit. But I acknowledge the fact that I was fortunate enough to still be able to find a home, rebuild that credit, and have good credit, and now I’ve moved on and owned other properties in San Francisco.”

Times researcher Scott Wilson contributed to this report. Candidate’s financial history under scrutiny in California controller’s race

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