Terrence John “TJ” Cox and the federal government have different ideas about how much time he should serve for fraud.

The one-term former congressmember pleaded guilty to two counts of wire fraud in February. Several other charges were dropped as part of the plea deal.

Arrested in 2022 on 28 charges, Cox is scheduled to be sentenced at 10 a.m. on Monday, Dec. 15, before U.S. District Judge Dale A. Drozd at the downtown Fresno courthouse.

Cox said in court papers that he committed fraud not to enrich himself but to help the community in financial distress. Prosecutors said Cox played by his own rules and operated “above the law.”

A Fresno Democrat, Cox served in Congress from 2019 through 2021, defeating incumbent David Valadao, R-Kings County, before losing in a rematch.

Prosecution: Cox Put Himself First

Cox and prosecutors submitted briefs outlining what each side believes is a fair sentence.

Cox is asking for probation with one year of home confinement. The federal government is seeking a 41-month sentence, two years of supervised release, and $100,000 in restitution.

“TJ Cox told the public that he was focused on ‘putting people first.’ In reality, he always put himself and his financial interests first,” prosecutors said in a sentencing memo.

While some of Cox’s ventures did help the community, prosecutors said his “endeavors were not about philanthropy; they were about money … in each of those endeavors, Cox put his financial needs first.”

Prosecutors estimated Cox’s fraud at $3.48 million. Based on several factors, sentencing guidelines call for 41 to 51 months. Asking for the lower end “is sufficient but not greater than necessary,” they wrote.

Cox said his actions were for the greater good and that he did not personally benefit.

“Cox paints himself as a well-intentioned businessperson who faced bad luck and unforeseen financial challenges,” the government said. “But the reality is that Cox’s refusal to play by the rules limited his and his businesses’ chances of success.”

Mark Coleman, Cox’s attorney, and prosecutors also presented objections and rebuttals to several items in the presentencing report, including the amount Cox actually defrauded.

The two sides can’t even agree on how to spell the defendant’s name. Cox’s attorney and and Cox himself use “Terrence.” Prosecutors and the court list him as “Terrance.”

In 2024, Cox and his wife filed for bankruptcy.

Read the sentencing memos: TJ Cox sentencing memo; prosecution memo/response.

Cox Makes His Case

In a 25-page memo, Cox admitted wrongdoing but said the consequences were limited. He discussed his personal background — education, family, and commitment to philanthropy.

Cox founded the Central Valley NMTC Fund to help organizations secure investment through a federal tax credit program. That led to problems.

Coleman, Cox’s attorney, admits that his client used fake accounts to move funds to help as “ventures faced urgent cash flow problems” and keep their doors open.

“These were illegal attempts to sustain valuable organizations, not to enrich himself,” Cox’s memo said.

Cox said he fixed the problems before any FBI investigation. Several business partners — Terance Frazier of the Central Valley Community Sports Foundation, Joe Rossi of almond processor California Custom Company, and Oliver Baines, who took over CVNMTC after Cox won election — “affirm that they do not consider themselves or their organizations victims and assert that they have not suffered any loss.”

Since his arrest, Cox said he has lost his business, savings, and career in the tax credit industry. He has since rebounded by working at a nonprofit, the Latino Equity Advocacy and Policy Institute.

“Mr. Cox does not seek to excuse his conduct. He accepts full responsibility. The conduct was fraudulent. He has expressed deep remorse and has taken significant steps to rectify the consequences of his actions. Colleagues, partners, and community leaders uniformly describe him as hardworking, committed to service, and defined by resilience and humility,” Cox’s memo said.

Cox has already suffered “severe” consequences for his actions, his attorney said.

Incarceration is not necessary for a nonviolent, first-time offender, Cox’s attorney said. Sending him to prison would affect “innocent” third parties such as LEAP and his 93-year-old mother.

Cox’s attorney calculated that his crimes would warrant a 27- to 33-month sentence but asked for home confinement.

Prosecutors Respond

Prosecutors, in their 23-page rebuttal, said Cox often mixed his businesses in questionable ways. For example, he used the tax credit firm to make loans to the almond business and to guarantee loans for the sports nonprofit. He also encouraged tax credit clients to invest in sports foundation ventures.

The government broke down several of Cox’s alleged schemes. They all had a common element — diverting funds from his companies and investors into his own accounts.

The allegations also include loan fraud and soliciting campaign money from clients.

Fresno Audit Launched FBI Investigation

In 2018, the city of Fresno launched an audit into CVCSF, which had a long-term lease to operate Granite Park. Frazier, Cox’s partner, asked the city to double its subsidy under the lease agreement.

The audit found Cox had “given promissory notes to the Sports Foundation that were backed up by questionable documentation,” the federal sentencing memo said. Cox also loaned money to the nonprofit from the tax credit company but was repaid personally.

Prosecutors characterized Cox’s answers in the audit about the loan scheme as “nonsensical.”

The city referred the matter to the FBI, which opened the investigation.

Embezzlement Accusations

Prosecutors said Cox embezzled funds from the tax credit firm by opening an “off-the-books” bank account to divert money. He is accused of diverting more than $1 million.

One of the victims, according to the memo, was Campus Pointe, the retail and residential project across the street from the Save Mart Center on the Fresno State campus. Cox allegedly stole $160,000.

When he had to come up with $30,000 for a reimbursement Campus Pointe was owed, Cox used $20,000 from the stolen money and “borrowed” $10,000 from another business he managed, Sierra Meadows/Bella Vista, a senior living center, prosecutors said.

Prosecutors said Cox diverted $115,000 from North Fork Community Power to himself and his almond business.

In another complicated transaction detailed by prosecutors, Cox diverted $324,000 from United Health Centers, with the money disbursed to himself, his almond company, and a gold mine he had invested in. He did so by claiming he was paying off loans.

There was a similar arrangement with Omni Health, diverting money and disbursing it to Cox’s own interests. After joining Congress, Cox tried to persuade Omni to buy the Gateway Ice Center, operated by CVCSF, the sports foundation nonprofit.

Cox then tried to persuade Omni to develop health centers on land owned by Cox’s CVCSF partner, Terance Frazier. He was also soliciting campaign contributions from Omni’s CEO and CFO.

The tax credit firm discovered the fraud in September 2019, when client West Hills Community College District attempted to reconcile payments. In an email exchange, Baines told the district he was unaware of the dummy accounts Cox had arranged.

The federal memo said Baines was “shocked” when he learned of the fraud and hired an accountant to investigate.

Allegedly Defrauded Almond Company

The federal government also outlined similar fraud allegations involving the almond company, CCP. Cox allegedly diverted investors’ checks into his own account.

When three of the new investors showed up at CCP to view the facility, Cox’s partners had no knowledge about the new partners, prosecutors said. They also did not know about Cox’s off-the-books accounts.

Cox, in his memo, described an “acute financial crisis” at CCP. The illegal transactions, he said, were used to meet payroll and other obligations. He said he had to personally absorb losses “to protect CCP.”

Things were so dire, Cox said, the company’s operating manager asked him if he had “any Mafia connection” to make quick loans.

Instead, Cox diverted money from CVNMTC and investors. Prosecutors said he spent $30,000 on personal expenses such as private school tuition and a political consultant.

Cox said he surrendered 16%, or $960,000, of his stake in CCP to satisfy obligations.

Regarding a $100,000 loan from Laurence and Theresa Thomas, Cox called it a private transaction and said he was able to repay most of it until his indictment.

“Yes, Mr. Cox created false accounts, diverted money and made unauthorized guarantees, but he did not do so for personal gain,” Cox’s memo said.

Granite Park Loan Forgery

Prosecutors accused Cox of forging a 2016, $1.5 million construction loan agreement between CVCSF and Clearinghouse CDFI. The lender required a guarantor, and Cox offered his tax credit company, CVNMTC, as the backer.

Cox submitted fraudulent documentation claiming he had the backing of his CVNMTC partners. The loan went into default in 2019, leaving CVNMTC to repay despite the fraud.

“Mr. Cox accepts responsibility,” Cox said in his sentencing memo. He claimed members later reviewed and approved backing the loan.

“No evidence shows that Mr. Cox personally benefited from the guarantee, and the government itself acknowledged it could not identify any personal advantage. His actions were directed at supporting a public recreational facility that Fresno’s mayor has described as a ‘jewel of the Valley,’ ” Cox’s memo said.

The loan was later sold to Land Value Management, a company affiliated with Fresno developer James Huelskamp.

“Baines has expressly stated that CVNMTC does not consider itself a victim and recognizes that the organization greatly benefited from Mr. Cox’s work. These facts — full ratification, full disclosure, absence of loss and absence of victims — make clear that the CVNMTC Granite Park loan guarantee cannot support any loss enhancement or adverse inference for sentencing,” Cox’s memo said.

Other Allegations

The federal government also detailed mortgage fraud allegations against Cox. He allegedly agreed to buy a home from one partner at the almond company and rent it to another.

In loan documents, Cox allegedly made five misrepresentations, including claiming the home would be his primary residence, and fabricated bank statements. To come up with closing costs, Cox allegedly diverted a $43,000 check from the Fresno Rescue Mission to the tax credit company and then to himself.

“When the FBI interviewed Cox about the loan in September 2021, he commented, ‘With all the major crime going on — like people getting ripped off for millions — isn’t this kind of small potatoes?’” the prosecution memo said.

Cox also allegedly funneled money to family members and business associates, with the funds being circulated back as campaign contributions.