Before Congress, Rep. Ruben Gallego boosted a migrant bank plan that crumbled

Rep. Ruben Gallego, before he ran for Congress, was a state lawmaker and political consultant who wanted to recall then-Maricopa County Sheriff Joe Arpaio, in part because of his regular raids on undocumented immigrants.

Gallego, D-Ariz., and an ally met Joseph J. Carrillo, a Phoenix resident who told them in 2013 he wanted to do even more for that community. He wanted undocumented people to have a bank that wanted to work with them.

Gallego wanted in. He worked closely with Carlos Sierra, a well-connected political consultant then based in Arizona, and quickly found influential allies for the idea.

Former Louisiana Gov. Buddy Roemer, who had a banking background, was interested, as were former Florida Gov. Jeb Bush and others.

But Carrillo’s potential allies, who had varying experience in banking and finance, didn’t want Carrillo to play a prominent role in running the bank he envisioned.

Carrillo didn’t stand down, and his idea disintegrated. Not long afterward, Arizona regulators shut down Carrillo’s business, which illegally sold shares to investors before and after Gallego’s tenure in 2013 and 2014.

It is a brief and largely unknown chapter in Gallego’s career before Congress, a period when he was mostly known as a state lawmaker and a political activist. The failed business venture came as Gallego tried to help change economic conditions in a needy community in a way that could have brought him wealth as well.

Gallego, who is running for the Senate seat now held by Sen. Kyrsten Sinema, I-Ariz., said through a spokesperson that he focused on running for Congress after the banking idea fell through.

"Ruben was inspired to help create a bank for underserved Latino communities, who were being denied access to mortgages because they didn’t have credit scores," said Rebecca Katz, Gallego’s campaign consultant. "When the project’s leadership struggles became apparent, Ruben left and found new ways to serve and expand economic opportunities for working families."

Sierra said he and Gallego were trying to sell Carrillo’s banking concept and didn’t know of Carrillo’s problems or those of the company he operated, Partisan Alliance Corp.

In an interview, Carrillo agreed. He said he tasked them with selling the idea of banking people who were responsible but couldn't qualify for standard loans. Gallego helped Carrillo understand the political side of a complex business idea.

"It got pretty far," a rueful Carrillo remembered. "It was fairly well developed. I just got caught up in the money."

Gallego’s financial disclosures from 2013 and 2014 show he received about $27,000 from Carrillo’s Partisan Alliance working as its communications director. He also owned stock in the company, but Arizona regulators said shareholders were not compensated.

The troubled history of Partisan Alliance emerges from records with the Arizona Corporation Commission. Neither Carrillo nor his company filed any formal response to the commission’s findings.

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More about the entrepreneur who employed Ruben Gallego

Carrillo, now 48, said his business ideas grew out of empathy for the struggling undocumented population.

"I'm Hispanic," he said. "In my church, 90% undocumented. All of a sudden, everybody in my church is getting arrested — women, men, tearing families apart. They weren't getting bailed out because no one had any money. ... I saw the pain."

Carrillo was involved in several business ventures before meeting Gallego, from a Latino-oriented theater to a real estate company. He said it was an attempt to create an immigrant-friendly ecosystem. Records show those efforts didn’t last.

In 2007, Carrillo incorporated Partisan Alliance with plans for the business to become a financial asset for the Hispanic community, according to court papers filed by the Corporation Commission.

“Partisan’s original plan was to be a mortgage bank offering … loans to immigrants without (Social Security) numbers,” the state regulators wrote. “A Partisan subsidiary previously had a mortgage banking license, but this license lapsed, and the subsidiary never made any mortgage loans.”

Instead, the company offered other services to the immigrant community, such as classes on English as a second language, obtaining U.S. citizenship and getting a GED for Spanish speakers.

“The original purpose of Partisan’s educational and immigration advocacy services was to increase immigrant confidence in Partisan as a mortgage bank,” the Corporation Commission wrote.

The company wanted to expand into real estate development, a plan it later ditched.

“Partisan struggled with very small earnings from 2007-2015,” the corporation commission found.

Carrillo described himself as someone trying to protect immigrants from exploitation. But he couldn’t deliver a nurturing environment for immigrants, either.

"I ended up taking money from friends I shouldn't have taken money from, ever," Carrillo said.

Between 2007 and 2013 — the year Gallego began working with the company — Partisan Alliance took money from five investors totaling $470,000, records show. About half the money went to Carrillo from Partisan Alliance in the form of a loan, according to the corporation commission.

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How did Ruben Gallego get involved with the venture?

In 2013, Sierra and Gallego met Carrillo at events related to their work trying to remove Arpaio.

“He would hang out with us and talked about some anti-Arpaio stuff at the time,” said Sierra, who worked with the late Sen. John McCain's presidential campaigns and operates a political consulting firm in Texas. “He pitched this idea. He wanted to start this kind of an immigrant bank focused on banking the unbanked.”

Nearly 6 million people nationwide fit the definition of a population the Federal Deposit Insurance Corporation call the unbanked, according to the FDIC’s latest national survey on the subject. Another 18 million are underbanked, meaning they rely on non-bank financial services, such as money orders and high-rate payday lending.

At the time Carrillo discussed his plans with Sierra and Gallego, the unbanked population was nearly twice as high as it was during the latest survey.

Latinos make up a disproportionately high share of the nation’s unbanked population, an estimated 8.4%, making it an especially important demographic for any bank that wants to serve that market.

Sierra had just finished working with Roemer’s short-lived 2012 presidential campaign. He said he turned to Roemer for a reality check on Carrillo’s plan.

Roemer, a Democrat turned Republican, founded several banks before and after his tenure as Louisiana’s governor. He was a former member of the committee that had oversight of banks during his four terms in Congress in the 1980s.

“Gov. Roemer wanted to keep talking about it,” Sierra said. Carrillo brought Sierra and Gallego on board to help advance the plan, Sierra said. They never knew of the problems Partisan Alliance already had, he said.

In his federal disclosure, Gallego listed his income for 2013 from Partisan Alliance as $15,000.

After joining Congress in 2015, Gallego listed Partisan Alliance as a source of income in two ways for 2014. First, he had stock in the company valued at $15,000 or less. Second, he listed a $12,000 salary from the company.

Sierra said their efforts quickly seemed headed in the right direction.

“We flew to Baton Rouge to meet with Gov. Roemer and his team,” he said. “We pitched the idea to them. They loved it.”

Rosario Marin, the U.S. treasurer under President George W. Bush, initially liked what she heard. Gov. Jeb Bush “loved the idea and said he was in,” Sierra said.

For his part, Bush remembers it less effusively.

“I met Carlos once in Miami,” Bush told The Arizona Republic in an email. “I thought he was impressive but I didn’t move forward with an investment. I don’t recall Joe Carrillo.” 

Marin does and said Carrillo was inflexible.

“I liked the idea. I thought it was very noble,” said Marin, who traveled to Phoenix to discuss the matter. “Joseph was really set on how he wanted this to happen. Long story short, I wasn’t totally sold on how it was going to work.”

"They were right," Carrillo said. "I was pretty much under the impression people would mess it up. It's your baby and you don't want to give it up. ... I should have listened."

Marin said she had many potential business dealings at the time and didn’t like the name of Carrillo’s company or the role he envisioned for her. She didn’t know about the problems involving Carrillo and his business, which would have only added to her reservations about any deal.

Before that, Roemer, who died in 2021, had agreed to finance the new bank and identified possible CEOs to run it. He and the others recruited by Sierra and Gallego wanted to change the name from Partisan Alliance, too.

The bank as Roemer envisioned it would create a new creditworthiness score for its customers based on their activities and embrace a community segment that was usually overlooked.

The idea abruptly ended with Carrillo’s potential partners walking away.

“Our job was to build this credible board of directors,” Sierra said. “That’s when it fell apart. Joseph Carrillo’s ego got the best of him.

“Joseph refused to let go of power and said, ‘No. I’m going to be the CEO and chairman and that’s it,’” Sierra said. “Once (Roemer) was like, ‘I can’t deal with Joseph anymore,’ we were all out. That’s when we disappeared from the whole project. … I lost money on the project.”

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What happened after Ruben Gallego walked away from the company?

Not long after Gallego and Sierra left, others did as well. Partisan Alliance began spiraling downward.

In March 2015, just months after Gallego’s departure, Partisan Alliance’s landlord sued the company for $57,000 in back rent on office space in Phoenix. The company had been delinquent for eight months by the time of the lawsuit. A Maricopa County Superior Court judge ordered Partisan Alliance evicted and required the company to pay the back rent.

In May 2015, the landlord sought to recover the money, which had grown to $70,000, though Partisan Alliance’s bank reported the company’s account had “no funds available.”

Regulators found the company had a dismal financial outlook at that point.

For all of 2015, Partisan Alliance had revenue of just $1,540, the corporation commission wrote. It lost more than $17,500 that year, and its liabilities outstripped its assets by $87,000.

Even worse, “over $352,000 of the assets Partisan claimed were debts owed to it by Carrillo and other entities either controlled by Carrillo or no longer operating.”

For most of 2016, Carrillo raised $83,000 from at least six Latino investors to cover Partisan Alliance’s operating expenses, records show. Two of the investors had been students in the company’s foreign-language classes.

Those who invested in the company were told they would recoup their money with interest within two years, the Corporation Commission found. Some of the investors worked with Carrillo intending to use the proceeds to buy a home with his guidance.

Carrillo told at least one investor that his money would “double.”

Even with help from the investors, Partisan Alliance had an operating loss of $105,000 in 2016. Its debts exceeded its claimed assets by $152,000, and Carrillo owed the company $364,000 in claimed assets.

In April 2019, the corporation commission filed legal papers to force Partisan Alliance to stop violating the state’s laws against selling securities while unlicensed to do so. By that time, none of the investors had received any return on their money, the Corporation Commission noted.

The commission sought $83,000 in restitution and a $20,000 penalty. Carrillo, who is an insurance agent today, said he is paying back his debts through garnished wages.

In August 2021, the corporation formally dissolved the Partisan Alliance after it failed to submit annual reports beginning in 2018.

Arizona Republic reporter Robert Anglen contributed to this report.

Reach the reporter Ronald J. Hansen at ronald.hansen@arizonarepublic.com or 602-444-4493. Follow him on Twitter @ronaldjhansen.

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