ABEL MALDONADO

Abel Maldonado can’t be trusted to help fix the economy, he can’t even manage his own finances or those of his family farm. Maldonado served as auditor for his family farm, Agro-Jal, and yet the farm has been named in nine federal, state and local tax liens totaling over $245,000 between 1992 and 2010. The most recent of these was filed by the IRS in April 2010 for over $111,000. The farm has also been subject to 28 OSHA violations between 1990 and 2010. Maldonado’s own tax problems are even worse: the IRS claims that he and his wife owe over $600,000 in back taxes from wrongful deductions between 2006 and 2008. Maldonado’s problems aren’t just limited to failing to pay his taxes: he also sold his vote for the 2009 California budget, breaking his no-new-taxes pledge, in exchange for support on an open primary system, which he has benefited from politically.

Tax Problems
MALDONADO SAID HIS ROLE AS AUDITOR FOR AGRO-JAL QUALIFIED HIM TO BE STATE CONTROLLER
Maldonado Argued His Experience on His Family Farm Would Allow him to Balance Books as State Controller. According to Los Angeles Times, “Maldonado, meanwhile, touts his experience running his family’s farm. ‘I know what it is to make a payroll,’ he said, noting that the controller’s job involves keeping the state’s finances in order. ‘I know what it is to look at a bottom line.’” [Los Angeles Times, 5/26/06] Maldonado: I was a Controller for Agro-Jal Farms, “I Know What it is to Audit the Books.” According to The San Francisco Chronicle, “‘I’m running for controller because I have been a controller of a small family farm that we grew into a large business,’ said state Sen. Abel Maldonado, R-Santa Maria. ‘I know what it is to make payroll. I know what it is to audit the books. I know what it means to look at the profit/loss table.’” [The San Francisco Chronicle, 5/17/06] VIDEO: Maldonado Defended His Vote for 2009 Budget: “I was not Raised to not Pay My Bills. I’m Not Raised to Bankrupt a Company.” In June 2012, Maldonado defended his vote for the 2009 California budget, which included nearly $13 billion in tax increases. Maldonado said, “At the end of the day, I was not raised to not pay my bills. I’m not raised to bankrupt a company. And in those days, California, for the first time in the history, was sending IOUs to taxpayers, was on the verge of going into bankruptcy, and I did what I thought at the time was the best thing to do to keep California from going into bankruptcy.” [KEYT, 6/3/12]

AGRO-JAL INCURRED MAJOR STATE AND FEDERAL TAX LIENS ON MALDONADO’S WATCH
Agro Jal Named in Nine Federal, State and Local Tax Liens Totaling $245,732.97 (1992-2010)
Between 1996 and 2010, Agro-Jal was named in nine federal, state and local tax liens totaling $245,732.97. Of these nine liens, the three largest were filed by the IRS in 1994, 1995 and 2010 for $41,407.73, $81,129.11 and $111,146.49 respectively. The lien documents stated that the federal tax liens were for non-payment or underpayment of federal unemployment taxes and taxes for agricultural employees. In 1997, The California Employment Development Department also filed a $3,709.46 lien against Agro Jal for non-payment of State Unemployment Insurance taxes. All nine liens have since been paid and released. [Santa Barbara County Clerk Grantor-Grantee Index, Accessed 3/9/2012]

AGRO-JAL AND MALDONADO UNDERPAID TAXES
$3.6 Million Unpaid Agro-Jal Taxes
IRS Alleged Agro-Jal Underpaid Taxes by $3.6 Million Between 2006 and 2008. According to Los Angeles Times, “Maldonado, a Republican who is running for a congressional seat on the Central Coast, has co-owned a 6,000-acre Santa Maria farm that grows cauliflower, celery and strawberries. In April, he said he was severing his ties to the business, after reports of a battle in tax court over the IRS’ contention that he and his wife owed the government $470,000. But court records reviewed by The Times show that the Maldonado family business, Agro-Jal, is also challenging an IRS finding that it underpaid its taxes by $3.6 million between 2006 and 2008. The case is now in settlement discussions.” [Los Angeles Times, 5/31/12] • Maldonado Said the Dispute was Complex and He was Attempting to Resolve It. According to Los Angeles Times, “In a statement Wednesday, Maldonado said he was looking forward to ending the matter. ‘This dispute involves a lot of very complex accounting issues that other small businesses are attempting to navigate on a daily basis…. I want this resolved, and the second we get a bill that correctly defines our tax liability, it will be paid,’ he said.” [Los Angeles Times, 5/31/12]

IRS Investigator: Agro-Jal “Has Demonstrated a Pattern of Deducting Expenses … Which Have No Business Purpose Whatsoever.” According to Los Angeles Times, “Susan Braunz, an IRS technical services territory manager, wrote in court documents: ‘I asked the taxpayer [Agro-Jal] to show me the places on the property that were not accessible by tractor and to show me what the horses were used for. The taxpayer refused. The testimony is considered to be selfserving and not supported by any documentation establishing a business purpose for the expenditures.’ She also took issue with receipts that were marked ‘Abel’s house’ and indicated that Agro-Jal paid for renovations at the Maldonado residence. Braunz contended the company improperly deducted $4,444 it spent to re-tile a bathroom shower there, $732 for tools to re-seal the house’s deck, $10,000 for tile and $6,000 for unspecified work at the house. ‘The taxpayer has demonstrated a pattern of deducting expenses … which have no business purpose whatsoever,’ Braunz wrote.” [Los Angeles Times, 5/31/12] Agro-Jal Deducted Golf Course Membership as a Business Expense. According to Los Angeles Times, “The IRS has challenged deductions by Agro-Jal that authorities said showed no

apparent benefit for the business. They included $20,000 worth of memberships at the Santa Maria golf club, work on a residence at the resort community of La Quinta, near Palm Springs, and the cost of two horses on the farm.” [Los Angeles Times, 5/31/12] Agro-Jal Deducted Renovations to Maldonado’s Home as Business Expenses. According to Los Angeles Times, “The IRS has challenged deductions by Agro-Jal that authorities said showed no apparent benefit for the business. They included $20,000 worth of memberships at the Santa Maria golf club, work on a residence at the resort community of La Quinta, near Palm Springs, and the cost of two horses on the farm. […] [IRS Technical Services Territory Manager Susan Branz] also took issue with receipts that were marked ‘Abel’s house’ and indicated that Agro-Jal paid for renovations at the Maldonado residence. Braunz contended the company improperly deducted $4,444 it spent to re-tile a bathroom shower there, $732 for tools to re-seal the house’s deck, $10,000 for tile and $6,000 for unspecified work at the house.” [Los Angeles Times, 5/31/12] Agro-Jal Deducted Cost of Two Horses as Business Expenses. According to Los Angeles Times, “The IRS has challenged deductions by Agro-Jal that authorities said showed no apparent benefit for the business. They included $20,000 worth of memberships at the Santa Maria golf club, work on a residence at the resort community of La Quinta, near Palm Springs, and the cost of two horses on the farm. Susan Braunz, an IRS technical services territory manager, wrote in court documents: ‘I asked the taxpayer [Agro-Jal] to show me the places on the property that were not accessible by tractor and to show me what the horses were used for. The taxpayer refused. The testimony is considered to be selfserving and not supported by any documentation establishing a business purpose for the expenditures.’” [Los Angeles Times, 5/31/12] Agro-Jal Deducted $2,000 Catering Bill for an Event that an IRS Investigator Questioned as Possibly Political as a Business Expense. According to Los Angeles Times, “[IRS Technical Services Territory Manager Susan Braunz] also questioned a $2,000 catering bill for an event marked as ‘Abel Maldonado Wednesday December 5, 2007.’ Noting that Maldonado was a state senator, she wrote: ‘The party could have just as easily pertained to his political career’ as to company business.” [Los Angeles Times, 5/31/12]

2006 – 2008: $600,000 Unpaid Personal Taxes
IRS Alleged Laura and Abel Maldonado Under-Reported their Income Between 2006 and 2008 by $1.8 Million. For tax years 2006, 2007, and 2008 the IRS alleged Laura and Abel Maldonado under-reported their total taxable income by a net total of $1,809,38. The IRS alleged the Maldonados under-reported their total taxable income by $1,422,276 for the tax year ending December 31, 2006, over-reported total taxable income by $207,837 for the tax year ending December 31, 2007, and under-reported total taxable income by $594,942 for the tax year ending December 31, 2008. [Maldonado and Maldonado v. Commissioner of Internal Revenue, Docket No. 15102-10, Petition, Exhibit A, Form 4549-A, Income Tax Discrepancy Adjustments, Line 2, filed 7/2/10; Maldonado and Maldonado v. Commissioner of Internal Revenue, Docket No. 3926-11, Petition, Exhibit A, Form 4549-A, Line 2, filed 2/15/11] Between 2006-2008, the IRS Alleged Laura and Abel Maldonado Owed Nearly $600,000 In Additional Taxes. The IRS sent Laura and Abel Maldonado two notices of deficiency in their tax payments: one for tax years 2006 and 2007, and one for tax year 2008. According to the delinquency notices, Laura and Abel Maldonado faced a tax deficiency of $598,064. For the tax year ending December 31, 2006, the IRS alleged the Maldonados under-assessed their tax liability by $470,343, for the tax year ending December 31, 2007, the IRS alleged the Maldonados over-assessed the their tax liability by $3,000, and for the tax year ending December 31, 2008, the IRS alleged the Maldonados under-assessed their tax liability by $130,721. [Maldonado and Maldonado v.

Commissioner of Internal Revenue, Docket No. 15102-10, Petition, Exhibit A, filed 7/2/10; Maldonado and Maldonado v. Commissioner of Internal Revenue, Docket No. 3926-11, Petition, Exhibit A, filed 2/15/11] Laura and Abel Maldonado Contested the IRS Assessment and Petitioned the U.S. Tax Court. Laura and Abel Maldonado contested the IRS’s allegation that they had tax deficiencies for tax years 2006 through 2008. The Maldonados petitioned the U.S. Tax Court, denying all tax deficiencies. [Maldonado and Maldonado v. Commissioner of Internal Revenue, Docket No. 1510210, Petition, filed 7/2/10; Maldonado and Maldonado v. Commissioner of Internal Revenue, Docket No. 3926-11, Petition, filed 2/15/11]

Family Farm Has Been Cited For Multiple Worker Violations
WAGE HOUR DIVISION INVESTIGATIONS
Investigator: Agro-Jal “Demonstrated a Disregard for the Law.” In March 2009, the U.S. Department of Labor issued a report investigating Agro-Jal’s compliance with the Migrant and Seasonal Agricultural Worker Protection Act (MSPA) and the Fair Labor Standards Act (FLSA). From the report’s final recommendations: “Civil Monetary Penalties of $1,350.00 should be highly considered and ultimately collected! This is the Company’s 4th WHD investigation; and 2nd investigation with repeat violations. There isn’t any doubt that Agro-Jal Farming had been previously advised of the rules and regulations under the Migrant and Seasonal Worker Protection Act and other applicable Acts; yet again, the Company demonstrated a disregard for the law. Therefore, this being the 2nd investigation with repeat and aggravated violations, CMP should be assessed.” [U.S. Department of Labor, Wage and Hour Division, MSPA Narrative Report, Case ID #1537384, dated 3/25/09] 2008-2009: Agro-Jal Cited for Nine Violations, Fined $4,325. Between June 2008 and March 2009, the U.S. Department of Labor issued two reports on Agro-Jal’s compliance with the Migrant and Seasonal Agricultural Worker Protection Act (MSPA) and the Fair Labor Standards Act (FLSA). The investigators found nine violations including failing to pay wages when due, and failing to disclose employment conditions to workers. [U.S. Department of Labor, Wage and Hour Division, MSPA Narrative Report, Case ID #1537384, dated 3/25/09; U.S. Department of Labor, MSPA/FLSA Narrative Report, Case ID #1509267, dated 6/16/08] • June 2008: Agro-Jal Fined $2,300 for Failure to Pay Wages When Due. In June 2008, the U.S. Department of Labor issued a report on Agro-Jal Enterprises for violations of the Migrant and Seasonal Agricultural Worker Protection Act (MSPA) and Fair Labor Standards Act (FLSA). The Department of Labor fined Agro-Jal $2,300 for “Failure to pay wages when due,” which the report detailed was an Agro-Jal requirement that employees bought their own uniform and work tools. From the report, “Employee interview statements indicated that they were required to buy their own uniform and tools for working in the fields. Employees purchased their own special knife that cuts broccoli and cauliflower stems. Also, due to the nature of the field work, employees were required to wear yellow plastic overall pants over their regular clothes. They also wore rubber shoes over their regular shoes. […] An average cost of $108.00 was reconstructed for pants, shoes and knife[,] which were purchased by employees.” [U.S. Department of Labor, Wage and Hour Division, MSPA/FLSA Narrative Report, Case ID #1509267, dated 6/16/08] Agro-Jal Said It Would Pay Full Amount of Back Wages – Over $2,500 – by the End of the Month. In June 2008, the Department of Labor issued a report on Agro-Jal Enterprises for

violations of the Migrant and Seasonal Agricultural Worker Protection Act (MSPA) and Fair Labor Standards Act (FLSA). From the report, “The employer agreed to pay the full amount of the back wages ($2,634.00) by 6/30/08.” [U.S. Department of Labor, Wage and Hour Division, MSPA/FLSA Narrative Report, Case ID #1509267, dated 6/16/08]

OSHA VIOLATIONS
LA Times: Agro-Jal Accumulated 28 Cal/OSHA Violations Between 1990 and 2010, Including Multiple Citations for Exposing Workers to Toxic Pesticides. According to Los Angeles Times, “Early on a winter morning in 2007, a 25-year old Mexican farmhand was crushed beneath a tractor on Lt. Gov. Abel Maldonado’s family farm, sparking an investigation that resulted in citations for four workplace safety violations, including failure to have a spotter direct the tractor driver and failure to have someone on the scene with first-aid certification. Although the young employee’s death was an isolated tragedy, the run-in with regulators was part of a pattern for Agro-Jal Farming Enterprises, the farm in Santa Maria that pays Maldonado a six-figure salary to serve as controller. Maldonado, a telegenic former state senator, is running for the seat Gov. Arnold Schwarzenegger appointed him to earlier this year. […] Agro-Jal, where Maldonado still plays an active role, according to his annual financial disclosures, has not always exhibited a similarly high level of concern for employees’ safety, records show. In fact, Cal/OSHA has cited the firm 28 times for workplace safety violations since 1990.” [Los Angeles Times, 10/15/10] • 2007: 25-Year Old Mexican Farmhand Crushed Beneath Tractor on Maldonado’s Farm. According to Los Angeles Times, “Early on a winter morning in 2007, a 25-year old Mexican farmhand was crushed beneath a tractor on Lt. Gov. Abel Maldonado’s family farm, sparking an investigation that resulted in citations for four workplace safety violations, including failure to have a spotter direct the tractor driver and failure to have someone on the scene with first-aid certification. […] Just before backing over 25-year-old Raul Garcia Osorno on Maldonado’s farm, the driver of that tractor honked his horn and waited until he saw three cauliflower pickers who he knew were standing behind the massive machine move out of the way. But the driver didn’t realize that a fourth picker, Osorno, had joined the others, Cal/OSHA investigators reported. Osorno was crushed beneath the wheels as the tractor rolled over his abdomen, according to the coroner’s report. OSHA investigators determined that Agro-Jal had violated regulations by not having a spotter guide the driver and failing to have anyone with valid first-aid certification on hand. It’s not clear from the reports whether any amount of first aid could have saved Osorno, but Brooke Armour, Maldonado’s campaign spokeswoman, argued that the Cal/OSHA investigators seized on a technicality. ‘The crew boss, who was there on the day of the accident, was trained in first aid, but unfortunately his certification had expired,’ Armour said.” [Los Angeles Times, 10/15/10] Agro-Jal Cited for OSHA Fumigation Violations. According to Los Angeles Times, “In 2009, the Santa Barbara County Agricultural Commissioner’s Office fined Agro-Jal $1,350 for failing to post signs warning employees and neighbors that the company was fumigating with the pesticide methyl bromide, which the U.S. Environmental Protection Agency’s website says can cause severe respiratory and neurological problems after short-term exposure. Agro-Jal had been cited and fined $1,400 the year before for the same thing. In that case, inspectors saw farmhands working in an adjacent field during fumigation, with no warning signs posted. Maldonado acknowledged the spraying began before all the signs were up, but said, ‘The farm had notified all neighboring owners of land, as required by law.’” [Los Angeles Times, 10/15/10]

Agro-Jal Cited for OSHA Water and Toxic Runoff Violations. According to Los Angeles Times, “Agro-Jal also ran afoul of the Central Coast Water Quality Control Board for a longdelayed response to a 2004 order to prove the company was preventing toxic runoff from the farm. The firm gained a reputation among board staff for stubbornly resisting regulation. ‘They got letters from us; they didn’t comply.... They got follow-up letters; they didn’t comply with that. Staff went out; they didn’t comply,’ said Roger Briggs, the board’s executive officer. AgroJal agreed to pay $14,000 in December 2008, half in fines and half to join a cooperative water monitoring program with other local farmers, county documents show.” [Los Angeles Times, 10/15/10] Agro-Jal Cited for Multiple OSHA Violations for Use of Driverless Tractors. According to Los Angeles Times, “In separate investigations, Cal/OSHA has cited Ago-Jal four times since 1999 for running tractors across the fields with no driver at the wheel and four times for failing to provide adequate access to shade or water for employees, records show. Investigators have also cited the company for failing to provide tractor-operator training and adequate medical provisions in the farm’s remote location. The stiffest penalty Cal/OSHA levied against the farm came in 2005, after two inspections found tractors rumbling across the fields with nobody in the driver’s seat. Instead, the crews were relying on furrows in the ground to keep the tractors straight. The agency demanded a fine of $22,950, which was reduced to $3,150 after an appeal from Agro-Jal.” [Los Angeles Times, 10/15/10] Agro-Jal Cited for OSHA Violations for Unsafe Labor Practices. According to Los Angeles Times, “The fine for four violations stemming from the death, which also included failing to have heat-illness prevention plan and an accurate summary of injuries and accidents, was $930. In separate investigations, Cal/OSHA has cited Ago-Jal four times since 1999 for running tractors across the fields with no driver at the wheel and four times for failing to provide adequate access to shade or water for employees, records show. Investigators have also cited the company for failing to provide tractor-operator training and adequate medical provisions in the farm’s remote location.” [Los Angeles Times, 10/15/10] Labor Groups Have Criticized Practice of Driverless Tractors as Dangerous to Farmhands. According to Los Angeles Times, “Agro-Jal had also been cited for using driverless tractors in 1999 and 2001, records show. The California Rural Legal Assistance, which represents injured farmhands, has been trying to stop the practice for years. ‘The thing’s in motion and somebody slips on muddy terrain in front of it, that’s deadly,’ said Mike Meuter, an attorney for the organization. Driverless tractors have been an industry-wide problem, not just an issue on Maldonado’s farm, his campaign argues. ‘Unfortunately, drivers would jump off to grab a glass of water or go to the bathroom,’ Armour said, adding that Agro-Jal now guides the machines by remote control. Expert opinion is divided on how to interpret the farm’s safety record. Worker advocates focus on the repeated driverless tractor violations. ‘I would argue that this employer did not learn its lesson from previous run-ins with Cal/OSHA and continued operating a hazardous workplace that finally led to the death of a worker,’ said Lora Jo Foo, an attorney for Worksafe, an Oakland-based nonprofit.” [Los Angeles Times, 10/15/10]

Accused of Selling Vote Raising Taxes For Political Gain
MALDONADO VOTED TO RAISE TAXES BY NEARLY $13 BILLION

Maldonado’s Opposition to a Gas Tax Led to Lost Revenue Being Replaced by Federal Stimulus Monies and Increased Income Taxes on all Income Brackets. According to Sacramento Bee, Capitol Alert, “Leaders also agreed to Maldonado’s demand to eliminate the 12-cent additional gas tax, which was estimated to have brought in $2.1 billion through June 2010. As part of the changes, a 5 percent surtax on income taxes will be replaced by a 0.25 percent boost in each income-tax bracket. That increases the state’s highest income tax rate from 9.3 percent to 9.55 percent (actually 10.55 percent for millionaires with the Proposition 63 mental-health tax). If the state receives at least $10 billion in federal stimulus money, that surcharge would drop to 0.125 percent. The new formula would raise about $400 million more in income taxes than the previous proposal. The rest of the lost gas-tax revenues will be replaced by federal stimulus money and $600 million to $700 million in Schwarzenegger line-item vetoes. ‘Right when we’re trying to move California forward, people are paying more in gasoline, and I made a request,’ Maldonado said.” [Sacramento Bee, Capitol Alert, 2/19/09] Budget Compromise Included $12.8 Billion in Tax Increases. According to San Jose Mercury News, “The breakthrough, after more than five full days of sometimes round-the-clock negotiations in the Legislature, came around 1 a.m. when Senate Democrats agreed to meet the key demands of GOP Sen. Abel Maldonado in exchange for his vote to support $14 billion in temporary tax increases. The deal pushed the budget plan over the two-thirds threshold it needed to pass. At the last minute, the tax hike was reduced to $12.8 billion by eliminating a 12-cents-per-gallon excise on gasoline that Maldonado had opposed funding that will be made up with California’s share of federal economic stimulus money.” [San Jose Mercury News, 2/18/09]

Maldonado Broke Americans for Tax Reform Pledge, Criticized by Grover Norquist
Americans for Tax Reform: Maldonado Voted for Largest State Tax Increase in U.S. History. In June 2012, Americans for Tax Reform issued a press release titled “Abel Maldonado Voted For Largest State Tax Increase in U.S. History.” They wrote, “Congressional candidate Abel Maldonado is no friend of taxpayers. Not only has Maldonado refused to sign the Taxpayer Protection Pledge for his CA-24 race, he betrayed voters by violating his written commitment to them to ‘oppose any and all tax hikes’ as a state legislator. In 2009, Maldonado cast the deciding vote for a $13 billion tax hike. Although the former State Senator and Lieutenant Governor may have the talking points of a Republican candidate, he is far from a supporter of limited government and pro-growth economic policies.” [Americans for Tax Reform Press Release, 6/1/12] Americans for Tax Reform Awarded Maldonado Its “Richard Rich Backstabber Award” for His Vote for 2009 Tax Increase. In June 2012, Americans for Tax Reform issued a press release titled “Abel Maldonado Voted For Largest State Tax Increase in U.S. History.” They wrote, “Under the facade of “compromise,” Maldonado stood with Sacramento special interests and against Californians. For that, Americans for Tax Reform awarded him the ‘Richard Rich Backstabber Award’ for what he did to taxpayers.” [Americans for Tax Reform Press Release, 6/1/12]

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