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U.S. Sen. Dianne Feinstein.
California lawmakers, who employed a treasurer now facing federal embezzlement charges, reported steep financial losses Friday to the Federal Election Commission.
The treasurer, Kinde Durkee, is now facing federal embezzlement charges that cost Southern California Democratic Rep. Linda Sanchez some $322,000. Durkee specialized in Southern California and Los Angeles campaigns.
Sanchez — one of the hardest hit by the scandal — is among hundreds of California Democratic candidates and committees that used Durkee as their treasurer. Federal prosecutors have accused Durkee of siphoning nearly $700,000 from a California assemblyman, but the case took on more significance when she told authorities she had misappropriated money from other Democratic lawmakers over the years.
Sanchez' sister, Southern California Democratic Rep. Loretta Sanchez, also employed Durkee and reported a $125,000 loss. This past weekend, her campaign reported the missing money to the Federal Election Commission as an "adjustment for embezzled funds." Another California Democrat, Rep. Susan Davis, reported that $160,000 was missing and used the same description. Shortly after the scandal was discovered Davis said, in a letter to her supporters, that Durkee "may well become known as the Bernie Madoff of campaign finance treasurers."
Prior to the FEC filings, lawmakers had acknowledged that their campaigns had suffered steep losses, but the quarterly fundraising reports provided the first official accounting to federal regulators of specific losses.
The totals are estimates at best. First California Bank, which administered the Durkee accounts, has told a state court that the money in the various accounts had been mixed together and that it cannot say for certain how much each account should have in it.
The campaigns were required to submit their quarterly fundraising and spending reports by Saturday.
Her campaign had about $5.2 million in the bank going into July. Meanwhile, the bank estimated last month that about $650,000 were still in her accounts. Those two numbers were used by the campaign to estimate the amount of money lost.
Feinstein's new treasurer, William Wardlaw, said in a letter to the FEC that it's "possible and perhaps likely that additional information will be located in the coming weeks and months which will require an amendment to this report."
Feinstein moved quickly in the days after Durkee's arrest to try to offset the financial hit by providing her campaign with a $5 million loan. The House lawmakers who used Durkee don't have such personal resources at their disposal. Linda Sanchez reported that she had about $144,000 in the bank, or little more than half of the amount that she started the quarter with in July. The loss of that money could prove critical as Sanchez seeks re-election in a newly redrawn congressional district. Davis also has less money than she started with in July.
But Loretta Sanchez managed to add to her cash-on-hand despite the reported loss. She has about $597,000 in the bank.
Durkee had authority over about 400 bank accounts, including political campaigns, and she got most of her clients through word-of-mouth within the party. Smaller clubs were often steered toward her independent firm, Durkee & Associates, by local party bosses because she offered grass-roots groups her services at free or dramatically reduced rates.
Feinstein filed a lawsuit last month against Durkee and First California Bank. Her campaign is hoping that some of the millions of dollars that are believed missing will eventually turn up in other accounts, but that process could take several months.
The campaigns are required to file fundraising reports with the FEC despite the uncertainty of exactly how much money they're missing. Also, the campaigns face the prospect of sanctions if they report incorrect figures and did not take enough steps to prevent embezzlement.
For example, in June 2010, the FEC fined the National Republican Congressional Committee $10,000 after the committee's treasurer had transferred hundreds of thousands of dollars from the NRCC to other accounts for his personal use.