Feinstein, others 'wiped out' by campaign treasurer

Sen. Dianne Feinstein (D-Calif.) questions witnesses at a hearing on Capitol Hill on March 30, 2011.
Sen. Dianne Feinstein (D-Calif.) questions witnesses at a hearing on Capitol Hill on March 30, 2011.
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A long-time campaign treasurer who managed finances for a multitude of California campaigns was released on bail Friday after being arrested by the FBI earlier this month. Kinde Durkee has been charged with fraud, and many of her clients are speaking out about their own financial losses at her hand.

Durkee, whose firm is in Burbank, is free on bond. She hasn’t entered a plea yet on the charges and is scheduled for a pretrial hearing in federal court next month. The allegations of fraud against her involve more than half a million dollars in state assembly campaign funds.

Durkee's role in campaign finance is "a combination of your banker and accountant" and she has specialized specifically in Southern California and L.A. campaigns, Democratic strategist Chris Lehane said on the Madeleine Brand Show Tuesday.

"My sense is that it was a pyramid type of endeavor here," Lehane said.

Feinstein's campaign, which had a cash balance of $5 million on June 30, believes it suffered losses, said campaign adviser Bill Carrick, but determining how much will take time. He said Durkee commingled clients' funds, making it difficult to understand whose money went where.

"This is an extraordinarily complex situation," Carrick said. "Nobody really knows what happened here."

A Southern California congresswoman told supporters "We've been robbed" as she detailed the losses she said her campaign suffered thanks to longtime Democratic campaign accountant Durkee.

U.S. Rep. Susan Davis told her contributors in a letter released Monday that her campaign was looted of over $250,000 and she blamed Durkee, whose clients included U.S. Sen. Dianne Feinstein and dozens of other California politicians.

"As this scandal emerges, she may well become known as the Bernie Madoff of campaign finance treasurers," the San Diego Democrat wrote.

Davis told supporters that reports to the Federal Election Commission accurately reflected her contributions and spending but Durkee falsely reported account balances to the campaign.

Jonathan Allen, a reporter for Politico, said Feinstein had trusted Durkee implicitly with her campaign finances for years.

"[Durkee] had run her campaigns at least dating back to the early 1990s," Allen said.

Durkee had authority over more than 400 bank accounts, including political campaigns, according to the federal complaint filed earlier this month.

The complaint said investigators found substantial sums were routinely placed into her company accounts or channeled to other campaigns, apparently when suspicions were raised about missing money.

"It remains to be seen what the breadth of this is," Allen said. Assuming there is no reasonable explanation for Durkee's actions, Allen said, "it could be the biggest campaign scandal in history."

The affected politicians can't wait for a full investigation or legal settlement to get their money back.

"They face re-election before they'd ever be able to get money out of a civil suit or anything," Allen said. And in a "competitive election where every dollar counts," these losses could substantially affect the outcome of the election.

Davis, a six-term congresswoman in a heavily Democratic district, sought to reassure supporters in her email dated Saturday and released Monday.

"If there is any positive news in all of this, it is that although many of her clients lost virtually everything, we had an account in reserve for our operational expenses that she did not have access to (for our ease, not because we suspected anything)," the congresswoman wrote.

Federal prosecutors say Durkee siphoned off nearly $700,000 from state Assemblyman Jose Solorio's 2010 campaign to pay her credit cards, a mortgage and business bills. A complaint outlines an elaborate shell game in which Durkee furtively shifted money out of Solorio's 2010 campaign to pay for an array of debts, from shopping at Costco to her mother's care at an assisted-living facility.

Lauren Horwood, a spokeswoman for the U.S. attorney's office in Sacramento, said more charges are likely.

Durkee's attorney, Daniel Nixon, didn't immediately respond to a phone message seeking comment.

The Associated Press contributed to this story.