Mayoral Candidate Daniel Valenzuela Failed to Mention Debt on Financial Disclosures

Mayoral candidate Daniel Valenzuela neglected to disclose outstanding debt owed in his name when he filed two recent public financial statements.

Filing a false or incomplete financial disclosure statement is a misdemeanor for local candidates under the Phoenix City Code.

In the first instance, Valenzuela listed no debts in a disclosure required to run for mayor. However, during the period of time covered by the filing, Valenzuela's city salary was still being garnished for a $12,208 debt that he owed to the Arizona Federal Credit Union. He also didn't list the debt on his 2017 Phoenix City Council member disclosure.

Valenzuela has represented the council's District 5 since 2012, but resigned his seat in July to run for mayor.

Phoenix New Times reported Valenzuela's debt and salary garnishment on Thursday, and learned after publication about his disclosure forms.

Valenzuela's campaign staff said he didn't need to disclose the debt because it was "disputed" when he filled out the disclosure forms. A spokesperson maintains that the debt was incurred by his ex-wife, Sonya, who signed a notarized letter in May saying that the debt was her responsibility.

Nevertheless, it was Valenzuela who signed for the open-end credit plan in 2006. Court records show he stopped making minimum payments on a $6,668 balance in 2013. In March 2017, after he was sued by the credit union, Agua Fria Justice Court ruled against him and ordered him to pay back the balance, plus about $5,000 in interest and attorneys' fees.

Public officers and candidates in Phoenix are required to disclose certain debts over $1,000 — not doing so is a misdemeanor. Not all debts need to be disclosed. Exemptions listed on the disclosure form include debts that are the result of business conduct, debts on personal property or motor vehicles, and personal credit card transactions.

But so far, Valenzuela’s campaign has not argued that any of the exemptions apply to Valenzuela’s debt.

Barrett Marson, a spokesperson for Valenzuela's campaign, repeatedly argued that this debt was not Valenzuela's responsibility.

"There was nothing to disclose because it was a disputed debt," Marson wrote in an email. "When it was resolved it was determined it was not Daniel's debt. His wife assumed responsibility, paid the debt and reimbursed Daniel."

However, as New Times learned on Thursday, Sonya Valenzuela signed the notarized letter a few weeks after another reporter contacted the aspiring mayor about his outstanding debt.

Evan Wyloge, then a journalist with the Arizona Center for Investigative Reporting, told New Times he questioned Valenzuela and Marson about the debt in April, at which time the notarized letter did not exist.

According to Wyloge, during an interview on April 12, Valenzuela declined to give specific answers about the nature of his debt, before ultimately blaming the debt on his ex-wife.

"He wouldn't say what the original [credit] charges were for, or how he had gone through a divorce and not settled the debt," Wyloge wrote to New Times in a Twitter direct message.

Wyloge, now the data and investigations editor for The Desert Sun newspaper in southern California, said that Valenzuela didn't immediately offer the information that his wife was involved. When Wyloge asked what the debt was for, Valenzuela "said he had been advised not to offer any more details about it."

The court released Valenzuela from garnishment on April 23. Efforts to reach Sonya Valenzuela were unsuccessful.

Julie Watters, a city of Phoenix spokesperson, declined to say whether or not Valenzuela may have committed a disclosure violation, but officials have no reason to believe his forms are inaccurate.

"We do not know whether this debt fits within one of those [exempt] categories," Watters said. "The public officer himself determines whether a personal debt must be disclosed or whether it falls within a category exempt from disclosure."

A spokesperson for the Arizona Secretary of State's office declined to comment on the matter.

Valenzuela launched his mayoral bid last fall, after former mayor Greg Stanton announced plans to resign to run for Congress.

In Phoenix special election in November, Valenzuela faces Kate Gallego, a fellow Democratic city council member who also resigned to run for mayor.

On her financial disclosure, Gallego listed a home mortgage from Wells Fargo and a recently discharged student loan through the servicer Nelnet. Ben Meers, Gallego's campaign manager, declined to comment on Valenzuela's financial disclosure issues.

Another candidate in the race, Nicholas Sarwark, the national committee chair for the Libertarian Party, said of Valenzuela's debt that "involuntary wage garnishment doesn't just happen."

"The debtor has to ignore a lot of collection letters and phone calls, legal notices, and court summonses to get to that stage," Sarwark said. "Ignoring a debt and hoping it will go away seldom works out well. The people of Phoenix deserve to know how this happened, why it was ignored, and why it was hidden."

Correction: An earlier version of this article said that Daniel Valenzuela has represented District 5 since 2011. Valenzuela was elected in 2011; his inauguration was in January 2012.