Scandal, demographics and political machinations affect the race to fill Darrell Issa’s House seat

Two years ago, Republican Rep. Darrell Issa kept his seat by 1,621 votes, making the race in his sprawling coastal 49th District in Orange and San Diego counties the closest congressional tally in the nation that year.

Now the district, covering 54 miles of coastline and mansion enclaves, that has long been controlled by the GOP looks as if it could flip to Democrats, with scant funds and few ad buys going to support the Republican trying to succeed the retiring Issa.

Diane Harkey is polling double digits behind Democrat Mike Levin in a race crucial to which party controls the House and whether President Trump can continue advancing his agenda.

“Some people don’t like his style, which is very New York and in your face,” Harkey, State Board of Equalization chairwoman, said of Trump during a recent debate. “But on substance, on the economy, which hits people’s pockets, we need to keep that going.”

Democrat Mike Levin, congressional candidate for the 49th District, calls voters in Vista in June.

(Eduardo Contreras / San Diego Union-Tribune)

Levin, an environmental attorney, said at the debate, “I think it is critically important to have a member of Congress who is not just a rubber stamp for the Trump administration.”

The fortunes of Democrats all over California have gotten a big boost by outrage over the president. But even apart from the Trump factor, Republicans may have a tough time holding on to the 49th seat for a handful of reasons, including financial scandal in their candidate’s family, Democratic scheming in the primary, and changing demographics.

The area once defined by President Nixon, who strolled the beach at his San Clemente estate in black dress shoes, has lured newly affluent college-educated voters, many of whom work in high-tech industries. And the political playing field has tilted slightly leftward.

Registered Republicans still outnumber Democrats here, though their hold on the district, like other high-income coastal areas, has weakened. The Orange County portion remains heavily Republican, but the San Diego County part is near parity. About a third of registered voters are independents and will probably decide the outcome of the race.

Democratic maneuvering in the primary helped propel Harkey to the general election. The Democratic Campaign Committee of California funded an attack campaign against Assemblyman Rocky Chavez, fearing the Latino retired Marine Corps colonel would be the most likely person to stop a Democratic challenge, according to committee sources.

The strategy worked, the Democrats say, and put Harkey on the ticket — along with her husband’s legal and regulatory baggage.

Dan Harkey owned Point Center Financial and related companies, which enticed elderly investors into a multimillion-dollar real estate investment scheme that collapsed starting in 2007. A jury in 2013 found that Point Center had operated as a Ponzi scheme and awarded $14 million to 89 mostly elderly investors; a California appeals court confirmed the verdict three months ago.

Diane Harkey was an officer employee of the company, but not at the time of its failure. Its profits, however, helped fuel her political career. She was not a defendant in the suit but has defended her husband’s conduct.

Levin has made hay with the Harkey legal issues, putting out an eight-minute documentary that focuses on the elderly investors. The blitz also includes one-to-one digital ads about Dan Harkey that pop up on district voters’ computer screens, for example when they play online games.

And the case remains a raw issue in the district among many elderly retirees.

“The Harkeys have destroyed my life, my life savings and my faith in government,” said Steve Cash, of north San Diego County, who invested his retirement savings in Point Center Financial. “It torments my life what the Harkeys have done to me. And now she wants to be my congressperson?”

Dan Harkey transferred his interest in the couple’s $6-million Dana Point mansion to his wife during the Point Center meltdown, shielding it from being taken, said David Grant, the Orange County attorney for the plaintiffs. The Harkeys filed for divorce in 2015, but it was never finalized, according to Orange County Superior Court documents.

Diane Harkey has sharply disputed attacks by the investors, noting in a recent letter to the editor of the Capistrano Dispatch that “numerous hurtful allegations against me were dismissed or ruled in my favor, including false claims about my home.” She added, in a swipe at Levin, “Understand that wannabe political opponents, with no record of service, regurgitate unfounded smears.”

Diane Harkey declined to be interviewed. Her campaign staff offered to answer written questions, then declined to answer any of a dozen written questions on a variety of subjects.

Levin leads Harkey 55% to 41%, according to a September poll by UC Berkeley’s Institute for Government Studies. A New York Times poll released Oct. 24 shows Levin leading 53% to 39%.

Levin has raised almost $5.6 million this election cycle to Harkey’s roughly $1.5 million. These figures don’t take money raised by outside groups into account. Major Republican donors have written off her campaign, according to Democratic and Republican sources.

Tony Krvaric, chairman of the San Diego County Republican Party, insisted that Harkey’s run is not a lost cause. “We should be able to win this race,” he said. “She is working hard.”

Harkey, who grew up in Orange County and has an economics degree from UC Irvine, touts her early career as a banker. She began her political run on the Dana Point City Council and has served nearly four years on the state Board of Equalization after six years in the Assembly. Her positions embrace the mainline Republican agenda: She agrees with extending walls along the Mexican border and advocates for tax cuts. She has championed the ballot measure to reverse the gas tax increase. She supports gun ownership and has said that whether she would support arming teachers would depend on the location of the school.

Levin, who grew up in Long Beach, graduated from Stanford University and Duke University School of Law. He has largely spent his career since law school in Orange County environmental organizations, including the methane gas recovery company Ener-Core, the environmental paperwork processing company CleanTech OC and the alternative power firm FuelCell Energy.

But some environmentalists weren’t impressed with Levin’s credentials and in the primary, several groups including San Diego Democrats for Environmental Action endorsed a civil rights attorney and retired Marine colonel who almost knocked off Issa in 2016.

“Mike is what I call a business Democrat,” said Jessica Hayes, chairwoman of the San Diego County Democratic party.

Levin supports single-payer healthcare and a pathway to citizenship for participants of the Deferred Action for Childhood Arrivals program for young people who were brought to the country illegally as children. He supports reversing the Trump tax plan and opposes repealing the increase in the state gas tax to fund road and infrastructure improvements, calling it a safety issue. Levin supports an assault weapon ban and background checks on all gun sales.

At a rally with independent Vermont Sen. Bernie Sanders in San Diego County last month, Levin warned college students in the audience of a dark future if the House doesn’t change hands: “You stay home on election day and Republicans stay in charge, and your healthcare gets taken away and your student loans become more impossible to pay off and places like Pulse and Parkland are joined by many more preventable tragedies.”

Republicans paint a dark vision of their own, saying Levin would be a likely vote to impeach Trump. (Levin would not state whether he would cast such a vote.) But county GOP chairman Krvaric contended independent voters would be turned off at such an “extreme” possibility; that, he said, could help Republicans keep the district they’ve held so long.

ralph.vartabedian@latimes.com

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