Former Democratic Campaign Treasurer Pleads Guilty to Defrauding Clients of Millions
Kinde Durkee, once California’s go-to Democratic political campaign treasurer, pleaded guilty March 30 in Sacramento to five counts of mail fraud stemming from filing false campaign reports to cover up stealing millions of contributions made to her clients — the largest campaign embezzlement scheme in state history
Durkee, 59, “routinely” defrauded at least 50 candidates, office holders and political groups of more than $ 7 million over more than a decade, according to federal prosecutors.
Under the deal, prosecutors recommend Durkee spend 11 and one-half years in federal prison. The maximum term under federal sentencing guidelines is 14 years.
She also agreed to pay restitution, including between $100,00 and $120,000 in a 401K account and the proceeds of the sale of an office building in Burbank where her now defunct business was located.
“She should get – and she will get – a substantial prison term,” said Benjamin Wagner, U.S. Attorney for the Eastern District of California.
“We’re going to be looking for restitution,” Wagner said. “Unfortunately, the reality is the likelihood of the victims being made whole is very slim.”
Democratic Rep. Susan Davis of San Diego last fall described Durkee, her former treasurer, as “the Bernie Madoff of campaign finance treasurers.”
Wagner said the comparison was apt. Davis says Durkee pilfered $250,000 from her campaign.
The money embezzled by Durkee totals at least $7 million, federal prosecutors say. Her victims number at least 10 and prosecutors believe more than 50. She had signing authority for more than 400 bank accounts.
Wagner said the money Durkee absconded with is spent.
“You don’t have to live like Donald Trump to burn through that kind of money,” Wagner said.
Durkee quietly admitted her guilt to U.S. District Court Judge Kim Mueller, adding that she suffered from high cholesterol and high blood pressure.
“She’s very remorseful,” Durkee’s lawyer Daniel Nixon told reporters after the court hearing.
Durkee remains free on bail. Sentencing is scheduled for June 20. Nixon said he will argue for less time behind bars for Durkee, who lives in Long Beach.
Campaign funds Durkee supervised for her clients, including U.S. Senator Dianne Feinstein, were illegally used to pay her mortgage, company payroll and her mother’s assisted living costs as well as sundry other expenses from gasoline and veterinarian bills to purchases at Disneyland’s “Ariel’s Grotto.”
Feinstein said in a filing last fall with the Federal Elections Commission, her campaign treasury had been shorted $4.5 million.
Durkee was arrested Sept. 2 and charged with one count of mail fraud for filing false campaign reporting statements after taking more than $677,000 from the political account of Orange County Democratic Assemblyman Jose Solorio in October 2010.
“I’m pleased the FBI’s investigation on my behalf and hundreds of other victims has found success,” Solorio said in statement after federal prosecutors charged Durkee with four more counts of mail fraud on March 27. “I’ve asked that the FBI be aggressive in making sure Durkee serves as many years as possible in federal prison.”
The four additional charges of mail fraud involve National Popular Vote, a Los Altos-based non-profit, Feinstein’s campaign account and those of Reps. Loretta and Linda Sanchez and state Sen. Lou Correa, a Santa Ana Democrat.
Aides to Loretta Sanchez said last fall Durkee had taken $400,000, nearly all of Sanchez’s campaign war chest.
In each instance cited by prosecutors, Durkee – without authorization — took “substantial sums of money” from the political treasuries of her clients and moved it either into her business account or to the accounts of other clients.
Nearly $208,000 was withdrawn from the campaign account of Correa and apparently used to replenish other accounts Durkee had pilfered.
Durkee lied about the amount in Correa’s account saying in a July 2011 disclosure report the Santa Ana Democrat had more than $796,000 on hand when in fact the account had a balance of $357.71
Of the $677,000 Durkee took from Solorio in October 2010, court records show $199,000 being paid to Durkee’s Burbank-based Durkee & Associate.
Some of the money paid the mortgage for the firm’s office building. Some paid employee salaries and some paid off an American Express bill that included charges at Baskin Robbins, Ulta (cosmetics) and the Aquarium of the Pacific in Long Beach.
When initially interviewed by Federal Bureau of Investigation agents last fall, Durkee admitted “she had been misappropriating her clients’ money for years and that forms she filed with the state were false,” federal authorities say.
Investigators at the Fair Political Practices Commission alerted federal authorities to the possibility of Durkee being an embezzler in late 2010 after a random audit of former state Assemblyman Jerome Horton’s campaign committee for the state Board of Equalization.
Durkee, Horton’s campaign treasurer, took $200,000 from Horton’s account and, once she knew of the commission’s investigation, repaid $60,000 of the amount with money from the federal campaign committees of Feinstein and the Sanchez sisters, court documents show.
Three weeks after Durkee’s arrest, Feinstein filed a civil suit against her and First California Bank, where Durkee’s business accounts were held, claiming her campaign treasurer since 1992, 1994, 2000 and 2006 had stolen $5.2 million.
Federal prosecutors document more than $191,000 Durkee took from Feinstein.
Durkee had come under the scrutiny of regulators before. She was fined $185, 860 by the Fair Political Practices Commission in eight cases over the past 10 years.
San Francisco Chronicle political editor Carla Marinucci reported in July 2007 that Durkee and former movie mogul Emmett Cash III ran a fraud called “California for Obama” that pitched fake Obama fundraisers on cruise ships and “grand openings.” The campaign raised a reported $10,000 that records show went back to Cash and Durkee. The Obama campaign issued a cease-and-desist warning to Durkee.
In 2009, Sen. Christine Kehoe, a San Diego Democrat, fired Durkee after a state tax board auditor told Kehoe that $57,166 appeared to have been embezzled from her senate campaign account. The money was returned two years later, Kehoe told the Los Angeles County District Attorney, who declined to file charges.
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