Democrat Madeleine Dean to amend financial report in Montco Congress race

Like a lot of candidates seeking votes in the November elections, state Rep. Madeleine Dean, the lawyer and former LaSalle University English professor whom Democrats chose to run in Montgomery County's Fourth Congressional District, says there ought to be more well-paid jobs for U.S. workers.

"We can and must grow our economy," Dean said in announcing her campaign. She called for "good-paying jobs. Strong union jobs. A livable wage." She faces Republican Dan David in November's general election for the seat, which has no incumbent, in a district with more Democrats than Republicans.

But does Dean practice what she preaches? Her husband's bicycle company has deep financial ties to a Taiwan-based company that makes bikes in mainland China and has invested buckets of money in her husband's business. She hasn't answered basic questions about those relationships as required by law. In response to my questions, her campaign promised this week to amend her filings.

I've written about her opponent's business. David is a partner in GeoInvesting LLC. His work investigating China-based companies listed on U.S. stock markets was a basis for last year's documentary The China Hustle, directed by Jed Rothstein. So I wasn't surprised when David suggested I also look at Dean's family assets, including a company that imports bicycles from China and other countries, to see how well they fit Dean's economic program.

Dean's financial disclosure, filed with Congress in April, lists her assets and those of her husband, Patrick Cunnane. These include retirement accounts, plus an investment in Advanced Sports Enterprises, a holding company Cunnane set up in 2016. Incorporated in North Carolina, it has an office and warehouse in Philadelphia and 1,900 employees, many of them at a chain of bike stores that the company bought two years ago.

The holding company's properties included a stake in Advanced Sports Inc., a firm that Cunnane has headed for years. It owns Fuji bikes, made at a large plant in Dongguan, China, and in smaller plants in Taiwan and Poland, among other bicycles.

According to Dean's disclosure, Advanced Sports paid Cunnane $415,485 last year, or about $8,000 a week, not counting benefits. Dean valued Cunnane's 3.55 percent stake in the holding company at $250,000 to $500,000. (That implied a total value, for the founder plus other owners, between $7 million and $14 million.)

By far the couple's largest listed asset  — between $1 million and $5 million, in Cunnane's name — was in a different company, Jadeland Pacific. The federal disclosure form requires candidates when listing a business they or family members invest in, to explain "the nature of its activities and its geographic location." Dean didn't do that for Jadeland in her filing for Congress.

Oops, her campaign manager, Koh Chiba, told me Monday after I asked him about it last week: "We will be amending that." Chiba referred detailed questions to Cunnane's company.

I looked into Jadeland Pacific. It was set up in 1998 in the British Virgin Islands, one of the places identified by the Organization for Economic Cooperation and Development and the European Commission as tax havens that dragged their feet implementing global tax rules.

B.V.I. sounded like an offbeat choice to incorporate. I asked Chiba, Dean's campaign manager: Why did the company pick the B.V.I. as its legal home?

It was because the investors who formed the company were mostly "non-U.S. citizens," Chiba told me. Jadeland is an owner of Fuji bicycles, which Advanced Sports sells. And, Jadeland owns 55 percent of Advanced Sports Enterprises, Thomas Durling, Advanced Sports' general counsel, told me.

So who were the non-U.S. citizens who set up Jadeland, in a Caribbean tax haven, and who now control it, and what country are they from? Durling told me the identity of the other owners is "confidential."

Cunnane emailed that he had nothing to do Jadeland's founding and did not get an equity interest in that company until 2016. He said he joined Advanced Sports Inc. in 2001 and gained an ownership stake in that firm in 2008.

Making bikes in Asia has become standard industry practice. "I think that 96 percent of all American bikes are made in China or Taiwan," says Brian Powell, of Junto Bicycle Works Ltd., Fishtown. "This isn't Pat [Cunnane's] fault," he added, noting Cunnane, although a competitor, has counselled Junto's leaders on how they might start assembling motorized bikes in Philadelphia. For now, "it is impossible to be in the bike business without China," Powell concluded.

How much are Chinese workers paid for putting Fujis together? Advanced Sports' Durling said he did not know.

I asked David. He sent me a picture of a colorful Ideal Bike Help Wanted poster ad, picturing and describing the Dongguan plant, with wages that convert to around $2.20 an hour, more on weekends and holidays.

He also suggested I look into Ideal Bicycle Co., also known as Ideal Bike, founded in Taiwan in 1980 by China native Chang Pen-Tsao and run, also from Taiwan, by his son Hermes Chang. Ideal has invested millions in Cunnane's businesses since Ideal began moving production to Guangdong province, China, in 1997.

In 2004, a company controlled by Ideal invested $4 million in Advanced Sports Inc. for a 17 percent stake, according to bicycle industry accounts. The next year, Ideal opened a new plant in Dongguan to make Fuji bicycles and export them to Advanced Sports Inc.

In July 2016, Ideal invested $7 million more in Advanced Sports, according to securities filings. The next month, Cunnane and his partners set up Advanced Sports Enterprises as a holding company and used it to acquire Performance Holdings, the U.S. bike-store chain, with help from $100 million borrowed from Wells Fargo Capital Finance.

In 2017, Ideal raised $20 million in two investment offerings. Early this year, Ideal bought 50 percent of Advanced Sports Inc., Cunnane's company, also for $20 million. "To my knowledge, they were separate transactions," Durling, Advanced Sports' attorney, told me.

Cunnane said he has used the investments to create American jobs, citing the 1,900 workers doing retail and warehouse work for Advanced Sports Enterprises. "ASE has worked with its partners, including Jadeland, to bring millions in investments from around the world into the U.S., and with it American jobs and growth," he wrote by email.

As I noted above, Dean reported a valuation that implies her husband's holding company was worth up to $14 million. I asked David if that sounded right, given the level of investment. David said either Dean has valued the business conservatively, or Ideal has invested aggressively.

So we are left with more questions.

Who controls Jadeland, which Dean listed as her family's largest asset?

What is her position on the tariffs that President Trump has proposed for China-built bicycles and other products, and how will these affect her family's interests?

Is it a conflict for her family to profit from low Chinese wages, while she calls on American employers to raise theirs?

This story was updated with comments from Patrick Cunnane.