Campaign Treasurer Scandal: "It's Quite a Mess"

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It was hard not to notice the campaign fundraising event held this week in Sacramento for Assemblymember Jose Solorio. Granted, it was for his 2014 Senate campaign. But Solorio's future political endeavors would no doubt be easier to pursue if his Assembly campaign account had in it the cash he he thought it did on September 2.

That's when Solorio was called by an FBI agent, who said investigators believed that much of his campaign cash had been unlawfully taken -- and spent -- by his campaign treasuer, Kinde Durkee.

"It's quite a mess," said the Orange County Democrat in an interview this week.

This morning on The California Report, we took a look at the complexity of what lies ahead for dozens of Democratic candidates now looking at campaign funds that are missing, frozen, or both.

Durkee was originally scheduled to make her first court appearance on Wednesday; that hearing has now been rescheduled for December 9, in large part because attorneys say the investigation is far from over into the workings of Durkee and her firm.

The case of Assemblymember Solorio may have only been the tip of the iceberg. "She was one of the premier, go-to treasurers" for Democratic campaigns, says Solorio.

And the Santa Ana Democrat doesn't mince words about what he thinks should ultimately happen to the person who investigators allege used more than $677,000 of his campaign funds for everything from professional to personal expenses.

"I think we all now are looking for justice," he said on Tuesday. "We're looking to make sure she be put behind bars."

Perhaps the greatest mystery talked about in political circles is where all the money went. Reports have made clear that Durkee doesn't have an opulent lifestyle, and the amounts tracked by investigators so far are only a fraction of what many believe will ultimately be millions of dollars of missing campaign money.

But just as unclear as the ultimate legal fate for the Long Beach woman is the financial fate of the political candidates and groups with whom she once worked. That was punctuated over the weekend by terse statements in the latest campaign filings from incumbent Democratic members of Congress who employed Durkee.

"Adjustment for unauthorized withdrawals," notes the FEC filing of U.S. Rep. Linda Sanchez (D-Lakewood). "Adjustment for embezzled funds," reports filings for U.S. Rep. Loretta Sanchez (D-Garden Grove) and U.S. Rep. Susan Davis (D-San Diego). In all, Durkee is listed as the campaign treasurer for 53 federal committees.

The biggest loser, at least from records so far, seems to be U.S. Sen. Dianne Feinstein, who reported a loss in the Durkee case of $4.7 million. Feinstein has loaned the campaign $5 million for her 2012 reelection effort.

Feinstein is also leading the legal charge against both Durkee and the bank most used by the campaign official's firm, First California Bank. In a 48-page complaint filed in state court late last month, Feinstein alleged the bank "had knowledge of Durkee's scheme and knowingly provided substantial assistance."

Meantime, the bank has transferred money from all 398 of its Durkee-related accounts to the custody of the courts -- an amount as of late September that totaled $2.5 million. First California has told the court that funds were "co-mingled" between accounts to the extent that it "cannot, with certainty, determine the proper amount due and the proper Defendant to whom the funds are due."

Two recent hearings on the Durkee saga by the state's Fair Political Practices Commission (FPPC) have highlighted just how uncharted the path forward for political organizations seems to be. Those hearings have also revealed just how dependent many of Durkee's clients were on her.

"They had full control over the banking," said Dennis White of the Riverside County Democratic Central Committee about Durkee's firm. "We didn't even know what our checking account number was."

Political professionals want the FPPC to do something, though commission chair Ann Ravel said at last week's hearing that commission attorneys have yet to determine just what they can do. Several Democrats who spoke suggested that if Durkee, as alleged, never actually deposited some campaign donations into a candidate's account, then why should those even be counted as "contributions" in terms of legal limits?

"The contributions weren't brought into being," said Dan Jacobson of the Democratic Foundation of Orange County.

(The FPPC's own investigators supplied the info for the FBI and the federal criminal charges against Durkee; the commission has also now posted online years worth of audits of Durkee and her firm's work.)

In the meantime, the agency is trying to look for what can be done better in the future; it's scheduled a hearing for today to talk about campaign treasurer training. And political candidates are having to take a much more active role in the accounting of their campaign finances.

"As the saying goes, 'trust but verify,'" said Assemblymember Solorio. "I think they're going to be many candidates from now on who look a little bit differently at their bank statements and the relationship with their treasurers."

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About John Myers

John Myers is senior editor of KQED's new multimedia California Politics & Government Desk.  He has covered California politics for most of the past two decades -- serving previously as Sacramento bureau chief for KQED News and, most recently, as political editor for KXTV News10 (ABC) in Sacramento. He moderated the only gubernatorial debate of 2014, and was named one of the nation's top statehouse reporters by The Washington Post. Follow him on Twitter @johnmyers.

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