Victims of the California campaign treasurer who embezzled more than $7 million from dozens, if not hundreds, of clients’ accounts may have to hire private attorneys and scramble to replenish re-election funds even as the government’s case ended in a guilty plea Friday.
Since Kinde S. Durkee, 59, was arrested in September, everyone touched by the case has been asking one question: Where did the money go?
Now, those facing imminent California primaries and November’s general election are forced to consider another: What if they never find it?
“Everyone is trying to figure that out, and nobody seems to know,” attorney Atticus Wegman said of the money trail. “Even if, for the past five or 10 years, she was just taking money out and spending it here or there, it’s hard to say how that would take up all the money that she pulled out.”
Wegman’s firm, Aitken Aitken Cohn, is representing California Democratic Reps. Linda Sánchez, Loretta Sanchez and Susan Davis and California state Sen. Lou Correa in a civil lawsuit filed against Durkee and the bank in which she maintained their accounts.
Durkee pleaded guilty Friday to five counts of mail fraud in a Sacramento courtroom. She was initially accused of using her firm, Durkee & Associates, to siphon nearly $700,000 from the election campaign of California Assemblyman Jose Solorio to pay for an array of personal expenses that included clothing, cosmetics, her cable bill and an assisted-living facility for her mother.
The scope of the embezzlement probe has widened since her arrest — prosecutors now say Durkee stole at least $7 million, and that figure could rise to as much as $10 million by the time they sort through account statements and banking records.
Lawmakers and organizations that have already told the Federal Election Commission that Durkee embezzled funds from their accounts include Sen. Dianne Feinstein (D-Calif.), Rep. Laura Richardson (D-Calif.), Davis, both Sanchez sisters and four separate Democratic Party groups representing Los Angeles and Orange, Ventura and Santa Barbara counties.
Though most of the treasurers of the accounts that fell victim to Durkee’s embezzlement scheme simply told the FEC that they were missing money and would provide details at a later date, Feinstein’s account now estimates it is missing $4.5 million, Linda Sánchez reports that about $322,000 is gone, Davis was hit with a $160,000 loss, and Loretta Sanchez is out about $125,000, according to recent filings.
Government prosecutors provided further details about funds Durkee diverted from client accounts in a formal charging document they filed with the court last week. In that document, which is called an “information” and is used in place of a grand jury indictment, transactions totalling about $1.5 million were traced, including about $250,000 that was taken from the accounts of Feinstein’s campaign, meaning there are millions of dollars that still need to be tracked.
Feinstein’s legal team prepared for this eventuality. In January, the law firm Perkins Coie made its case to the FEC that the California Democrat should be able to resolicit donors who had already given the maximum amount permitted to Feinstein’s campaign. If Feinstein recovers money after Durkee’s case concludes, they will make the “appropriate refunds to ensure that it does not receive more than $2,500 per election from any one contributor.”
“The Committee — and its donors — suffered a severe injustice at the hands of Durkee. In the past, the FEC has shown a commendable willingness to rectify wrongful acts, where the law allows it to do so. The law clearly allows it to do so here,” attorney Marc Elias wrote after citing analogous examples.
The FEC has not announced its decision.
A similar effort was launched on behalf of Durkee’s state-level victims.
Attorney Stephen Kaufman asked California’s Fair Political Practices Commission to consider a number of issues created by Durkee’s embezzlement, including whether those affected could resolicit donors. The commission held a number of public meetings and a memo from its general counsel to committee members cited a legal path to allow victims to do so, but the commission has not yet made a decision.
“One the one hand, it’s not at all fair to the candidate because the money is gone,” Caplin & Drysdale attorney Joseph Birkenstock said. “On the other hand ... if the whole premise of contribution limits is you are overly beholden to a donor who gives more than the limits allow, why would that premise change because the person that candidate counted on turned out not to be trustworthy?”
As part of her plea agreement, Durkee agreed that the U.S. Marshals Service could sell her office building in Burbank, Calif., which was valued at more than $600,000 in 2005. She also agreed to liquidate a 401(k) account and promised not to discharge her obligation to pay restitution to her victims during any bankruptcy proceeding.
Even though the maximum penalty for each count of mail fraud is 20 years in prison and a $250,000 fine, Durkee’s cooperation means she will likely face far lesser penalties, which will be announced at a sentencing hearing scheduled for June 20.
Each year since 1990, CQ Roll Call has reviewed the financial disclosures of all 541 senators, representatives and delegates to determine the 50 richest members of Congress. This year's report, derived from forms covering the calendar year 2012, shows it took a net worth of $6.67 million to crack the exclusive club.