A Federal Election Commission audit released today found several reporting irregularities with one of the many committees managed by the recently indicted Kinde Durkee. The agency’s audit is expected to be the first of many such investigations into committees controlled by the prominent Democratic campaign treasurer.
Durkee was arrested earlier this month on the suspicion that she used her role at Durkee & Associates to siphon about $677,000 from one of the about 400 client accounts that she maintained. She allegedly used this money to pay for an array of personal expenses that included clothing, cosmetics, her cable bill and an assisted-living facility for her mother.
The agency’s audit of the Democratic Party of Orange County shows Durkee’s reports understated tens of thousands in receipts, disbursements and cash on hand for the committee from 2007 to 2008. The FEC initiated its audit into the committee in March, well before the allegations into the treasurer were made public.
Though campaign finance rules require committees to deposit contributions within 10 days, the audit found most individual donations took an average of 41 days to find their way to the account under Durkee.
No fines were assessed during the audit, but the FEC asked the Democratic Party of Orange County to amend its reports to account for the missing money. Durkee filed these amendments in May.
The audit may be a first look of what is to come for dozens of campaigns and political committees, which may be facing huge legal bills, fines and other costs as federal and state agencies begin to pour through Durkee’s accounts. On the federal level, Durkee oversaw the accounting and reporting for many California Democrats including Sen. Dianne Feinstein, Rep. Susan Davis as well as sister Reps. Linda Sánchez and Loretta Sanchez.
In recent weeks, Loretta Sanchez has said that her campaign has been nearly wiped out of its reported $379,000 in cash on hand. Officials from Feinstein’s campaign have filed a suit against First California Bank for aiding and abetting Durkee in her alleged theft of millions in funds from the Senator’s 2012 re-election campaign. Feinstein’s campaign last reported more than $5 million in cash on hand when Durkee was treasurer.
Some campaigns may not have funds missing but may have funds in their accounts that were improperly transferred from other campaigns. In these cases, the campaigns will have to file corrected reports with the FEC and may face penalties for false filings, attorneys said.
The FEC in 2007 enacted a “safe harbor” program to protect candidates from fines in the event that campaign staffers stole funds and falsified reports, but only if certain controls are in place to prevent such wrongdoing. The FEC recommends having bank statements reconciled and reviewed for unauthorized transactions, requiring two signatures on large disbursements and having separate people handling accounting and contribution processing.