Calif. Democratic treasurer perpetrated $7M fraud

[March 28, 2012]  SACRAMENTO, Calif. (AP) -- Democratic campaign treasurer Kinde Durkee defrauded at least 50 candidates, officeholders and political organizations out of $7 million in a scheme that dates back more than a decade, according to a court filing made Tuesday by federal prosecutors.

The U.S. attorney's office in Sacramento filed the additional charges in federal court, providing the most detailed account to date in a case that has left some Democratic candidates scrambling for campaign cash in an election year.

Such filings typically are a prelude to a plea, but prosecutors would not confirm such a development or offer any further details.

Durkee, who heads Durkee & Associates in Burbank, was arrested in September and charged with suspicion of mail fraud after millions of dollars disappeared from the campaign accounts of U.S. Sen. Dianne Feinstein, other Democratic members of Congress and several Democratic state lawmakers.

The filing details a complex shell game in which Durkee shifted campaign money to cover an array of personal and business expenses.

In one example, $23,000 taken from Feinstein's account was used to help pay American Express credit card charges from the Los Angeles Dodgers, Amazon.com, Disneyland, Trader Joe's and Turners Outdoorsman.

Other misappropriations from Feinstein's account covered payments for a Long Beach condominium owned by Durkee and to the 401(k) plan for her employees.

The court filing said Durkee had devised a scheme from January 2000 until she was arrested last September "to defraud clients of Durkee & Associates, and to obtain money from them by means of materially false and fraudulent pretenses, representations and promises."

It said she had signature control over roughly 700 bank accounts, including those used by political campaigns.

Durkee's attorney, Daniel Nixon, did not return telephone and email messages Tuesday evening.

John Kevin Vincent, the assistant U.S. attorney listed as the chief prosecutor in the case, declined to discuss the material in the latest filing and would not say whether a plea deal was in the works.

"When we get to that point, we'll send out a notification," Vincent said.

Durkee was scheduled to appear in court Friday afternoon at a hearing that had been set before Tuesday's developments.

She has been accused of looting the accounts of dozens of Democratic officeholders, candidates and political organizations. Prosecutors also say Durkee filed false information with the Federal Election Commission and the California Secretary of State, which track campaign contributions and expenditures.

Feinstein alone estimated that she may have lost $5 million, but there has been no firm accounting of the losses because the money has been so difficult to track.

As an example, the complaint filed Tuesday details some of Durkee's actions in June 2010, after she became aware of an investigation by the California Fair Political Practices Commission into campaign filings by Jerome Horton, a former lawmaker and member of the state Board of Equalization.

It said she began repaying some of the $200,000 she had misappropriated from Horton's campaign account by shifting varied amounts of cash from the accounts of Feinstein and U.S. Reps. Loretta and Linda Sanchez.

Durkee also misappropriated at least $180,000 from National Popular Vote, a group that advocates electing the president by popular vote rather than by electoral votes. Prosecutors say she used money from the group's account to cover health care costs, credit card bills and backfill the bank accounts of other candidates and committees.

One victim was state Sen. Lou Correa, D-Anaheim, who had nearly $208,000 taken from his campaign account. His money was then comingled with some from Feinstein and shifted to the accounts for numerous other candidates and committees, including that of Linda Sanchez.

That was done even after Durkee knew about the FPPC investigation, according to the court filing.

"To just think that this lady just came by and took that hard-earned money that took me years to raise, it's just essentially criminal," Correa said. "No amount of time could make up for the type of damage in terms of confidence to the political system."

In a separate order filed Monday, the U.S. attorney's office and Durkee agreed to a forfeiture auction of her Burbank home, which it says she owns with her husband, John Forgy. The couple owes $671,000 on the house, as well as $17,471 in state tax liens, according to the filing.

[Associated Press; By TOM VERDIN and DON THOMPSON]

Associated Press writers Judy Lin and Juliet Williams contributed to this report.

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