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Treasurer to California Democrats Sentenced to 8 Years for Embezzlement

Bill Clark/CQ Roll Call
Feinstein told the Federal Election Commission that her campaign lost about $4.5 million because of Durkee’s embezzlement scheme.

The California campaign treasurer whose embezzlement scheme emptied the coffers of some of Congress’ most prominent Democrats was sentenced Wednesday to roughly eight years in prison by a federal judge in Sacramento.

Kinde Durkee, 59, will also pay $10.5 million in restitution to her former clients and will be subject to three years of supervised release after she serves her sentence. She has until Jan. 2 to surrender to authorities.

The case is believed to be the largest campaign embezzlement scandal to date.

Durkee pleaded guilty in March to five counts of mail fraud after the government found that between $7 million and $20 million was missing from the accounts of Durkee & Associates clients. Sen. Dianne Feinstein and Reps. Loretta Sanchez , Linda T. Sánchez and Susan A. Davis, all California Democrats, were among those on Capitol Hill who lost money.

In a pre-sentencing memo filed with the court Tuesday, Durkee agreed that the sentence proposed by the government was a “just and appropriate” end to a decade-long scheme to cover her firm’s cash-flow problems by moving money in and out of client accounts that spiraled out of control.

“Unlike many other defendants, Ms. Durkee did not use the stolen funds to finance a lavish lifestyle,” her attorney wrote. “A great deal of the stolen funds were used to keep the business afloat and her employees employed. ... She lost track of the amount of the shortfall and it ultimately reached a level that she will be unable to repay in her lifetime.”

Even so, the judge handling the sentencing described her behavior as an “egregious” violation of trust that hurt the democratic process.

Durkee, an Oakland, Calif., native, got her start in politics when she volunteered as a bookkeeper for George McGovern’s 1972 presidential campaign while at California State University. After that race ended, Durkee began working nearly full-time for a firm operated by the campaign’s treasurer while she completed her political science degree.

Over the years, as Durkee was given increasing amounts of responsibility, her stress level grew. At times, she covered for co-workers who made mistakes on campaign-finance filings and personally paid some of the fines that resulted from those mistakes as they accrued. When the firm’s proprietor died, Durkee thought about closing the company’s doors. Instead, she assumed the helm in 2000 and the business name changed to Durkee & Associates.

“The financial condition of Durkee & Associates deteriorated over time. Although the number of clients grew, so did the number of non-paying clients and Ms. Durkee found that she had trouble confronting her clients to collect payment,” her attorney wrote.

Durkee’s inclination to avoid confrontation also created problems within the company, the court filing noted.

“Rather than confront an employee who made a mistake, or fire them, Ms. Durkee paid the fines. She had a very difficult time laying off incompetent employees and continued to employ individuals who were not able to adequately perform the jobs,” her attorney wrote.

Durkee faced challenges in her personal life as well. Her husband of nearly 30 years, John Forgy, has been unemployed for more than a decade. He was a caregiver for his elderly parents, both of whom are now deceased. Some of the siphoned funds were used to pay for routine expenses such as an assisted-living facility for Durkee’s mother, the mortgage on their home and credit card charges.

“Although she initially intended to replace the funds, over time, she lost track of the amount she needed to replenish and it spiraled out of control,” her attorney wrote.

When Durkee was interviewed by FBI agents in September of last year, she admitted to the transgressions. Since then, she has cooperated with government authorities as they attempt to recover what they can in order to repay her clients.

Durkee agreed to hand over roughly $90,000 from a retirement account, and the building where her firm was once located will be auctioned off on Friday. Any proceeds will go into a fund for her victims.

Because there is no parole in the federal system, Durkee will serve at least 85 percent of her 8-year-and-1-month sentence. During that time, she will pay restitution of $25 per quarter.

Feinstein’s re-election campaign told the Federal Election Commission that $4.5 million was missing from its accounts. Linda T. Sánchez reported that about $322,000 is gone, Davis was hit with a $160,000 loss, and Loretta Sánchez is out about $125,000, according to filings.

Attorneys representing Feinstein’s re-election campaign earlier this year asked the FEC whether it could re-solicit donors who had already contributed the maximum amount permitted by law in order to replace the missing funds. The commission decided that if the checks were never cashed, the campaign could ask for another contribution but if the funds were deposited but misappropriated, the campaign could not.

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