Kinde Durkee, now accused in federal fraud case, continued to work as a campaign treasurer for Democratic lawmakers despite numerous fines and audits.

By Abby Sewell, Los Angeles Times
September 17, 2011

When state Sen. Ted Lieu (D- Torrance) learned a few months ago that a state audit had found irregularities in his campaign finances, staffers immediately called Lieu’s longtime treasurer, Kinde Durkee.

Durkee assured them that everything was fine, Lieu said, and he took her word for it. He forgot about the incident until this month, when Durkee was arrested in a sweeping federal fraud case that is sending shock waves across the Democratic Party establishment.

Durkee is accused of stealing perhaps millions of dollars from her clients, who include dozens of prominent California Democrats. Authorities have not laid out the full scale of the alleged crime, but clients including Rep. Loretta Sanchez (D-Garden Grove) and Sen. Dianne Feinstein (D-Los Angeles) have said that that they believe Durkee wiped out their campaign funds. Feinstein announced Friday that she plans to put $5 million of her own money into her reelection campaign to make up for funds that may have been taken.

But well before the criminal complaint against Durkee was filed, multiple state audits had found major problems in campaign accounts controlled by Durkee, according to documents reviewed by The Times this week.

One question emerging in the scandal is why so many elected officials stuck with Durkee despite several red flags about her performance.

In fact, Durkee remained one of California’s top treasurers despite racking up more than $185,000 in fines for campaign finance violations over the last decade and being the subject of criminal investigations by the Los Angeles County district attorney’s office in 2008 and 2009.

At the time of her arrest, Durkee had control of more than 400 bank accounts, many of them campaign accounts.

Some experts said Durkee was able to survive for so long because she had so many prominent clients.

“Politics in both parties is an old boys and old girls club, and most of the candidates … figure if everyone else is using Durkee, she must be all right,” said Dan Schnur, director of the Jesse M. Unruh Institute of Politics at USC. “If you were the only campaign thinking about hiring a person with this record, you might think twice about it, but there’s safety in numbers.”

In Lieu’s case, an audit by the State Franchise Tax Board found that $186,190 in credit card contributions to his unsuccessful 2010 race for attorney general had not been deposited in the campaign bank account, in some cases for well over a year. An additional $161,964 that was reported as having been transferred from Lieu’s Assembly committee to his attorney general campaign in December 2008 was not deposited until two years later.

Lieu said he trusted Durkee and always assumed his funds were in capable hands — even after he learned of the audit. As of Thursday, he still had not seen the final audit report.

He said he barely knew Durkee when he hired her in 2002 for his Torrance City Council campaign, but more experienced politicians recommended her. Over the years, the money was there when he needed it, and with nearly $2 million in contributions flowing into his race for attorney general, he didn’t have time to count every penny, he said.

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