California Democratic operative gets prison for embezzlement

2:26 PM, Nov 28, 2012   |    comments
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In 1976, a 23-year old political science graduate student named Kinde Durkee had the research material for her masters thesis stolen from her car - material on which she had no doubt worked hard, over a long period of time, only to see it disappear through no fault of her own.

That kind of shock, and anger, is no doubt what dozens of the Democratic political operative's clients felt when they learned she had been stealing their campaign cash - mostly, it seems, to cover the tracks of her bad business decisions. The theft, over the course of almost two decades, totaled more than an astounding $10 million.

Now, Kinde Durkee is headed to prison.

Durkee, 59, was sentenced Tuesday morning in a Sacramento federal courtroom to 97 months behind bars for mail fraud, in connection with what investigators say was the largest political embezzlement case ever prosecuted in U.S. history. She only appeared briefly in the court of Judge Kimberly Mueller, with a short statement she read off a piece of paper.

"To those who trusted me and I betrayed," said Durkee in a trembling voice, "I take full and complete responsibility."

But U.S. Attorney Benjamin Wagner, speaking to reporters after court, said his investigators don't yet know whether Durkee was acting alone.  As such, the probe is ongoing.

Still, the sentencing marks the end of a political saga that ensnared everyone from small community Democratic clubs to U.S. Sen. Dianne Feinstein, all whose campaign bank accounts came up short under Durkee's watch.

"The individual candidates and committees that had money stolen may never know where their money is, and whether they can ever get any of it back," said Ann Ravel, chair of the state Fair Political Practices Commission. It was staffers at the commission, as California's campaign finance watchdogs, that turned over suspicious committee cash reports to federal investigators and led to Durkee's arrest in 2011.

In a court filing released to the public on Monday, Kinde Durkee's attorneys suggest there's no real mystery about where the money went - as much as $10.5 million in missing funds through the years, most of it coming from high profile candidates like Feinstein.

Bad business decisions "led to serious cash flow issues at Durkee and Associates," write her attorneys. "To cover shortfalls in one client account, Ms. Durkee started 'borrowing' funds from another account."

Attorneys claim that Durkee, who also used some of the money to pay for credit card purchases to places like Disneyland and for assisted living care for her parents, intended to pay all of the money back.

"Over time," the court document says, "she lost track of the amount she needed to replenish and it spiraled out of control."

During court, defense attorney Daniel Nixon referred to Durkee's "psychological issues" that may have been part of the story. Nixon declined to elaborate in talking to reporters after court. Durkee spoke to no one as she left.

It was the campaign committee reports that Durkee filed over the years, with fake cash balances and which were mailed to state and federal officials, that led to her conviction on mail fraud.

A campaign advisor to Sen. Feinstein said in a recent phone conversation that the Democratic politician's blitz of fundraising in 2012, even while facing a novice GOP opponent who she handily beat on Nov. 6, was an attempt to replace the money taken by Durkee.

Last fall, Feinstein told Politico that the case was painful, as she had known Durkee for decades. "She did my '92 campaign, my '94 campaign, my 2000 [campaign], my 2006 [campaign] ... my gubernatorial campaign,"Feinstein told the national political news site. "I trusted her implicitly."

But that trust may be the problem, say state officials. Some 300 campaign accounts were part of the investigation, though the final number of actual "victims" appears to be closer to 50. Even so, many of those accounts were completely controlled by Durkee; candidates in many cases didn't have signature power over their bank accounts and one southern California group told state officials in 2011 Durkee was the only one who knew the bank account number.

"Clearly," says FPPC chair Ravel, "the takeaway is that campaigns need to be much more vigilant in ensuring that their treasurers are doing the right thing by them."

Earlier this month, some of the campaign money frozen by banks that had done business with Durkee began releasing some of that cash, to be distributed back to the political groups affected. But state officials said they had no power to allow those organizations to have a do-over in raising the cash, and that unless the money from donors never actually made it to the bank accounts, it was lost for good in the Durkee scandal.

Durkee was not taken into custody, but is scheduled to turn herself in to federal authorities on January 2.


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