By JOHN BRESNAHAN & MANU RAJU | 9/20/11 11:53 PM EDT
Sen. Dianne Feinstein, who is up for reelection in 2012, will put $5 million of her own money into her race, the latest sign that a mega-fraud case involving a top Democratic campaign treasurer is roiling California politics.
Feinstein, first elected to the Senate in 1992, raised more than $5 million for her reelection campaign as of June 30, according to a Federal Election Commission report.
But that was before Kinde Durkee, a top Democratic political consultant who served as the treasurer for dozens of Democratic political committees and campaigns throughout the state, was accused by the Justice Department of improperly diverting more than $670,000 from the campaign account of a California state assemblyman.
Durkee also worked as Feinstein’s treasurer for two decades. And Feinstein now fears that part, or even all, of her reelection fund was improperly redirected by Durkee to personal accounts that Durkee controlled. Durkee has been accused by Justice of mail fraud after allegedly using hundreds of thousands of dollars of campaign funds to cover business and personal expenses, including American Express bills and payments for her mother’s nursing home.
The 78-year-old California senator now faces an incumbent lawmaker’s worst nightmare — having to dig deep into personal funds to help pay for a reelection campaign in a state where the cost of such races routinely runs into the tens of millions of dollars.
“That is my intention at the present time to try to work it out so that it’s possible,” Feinstein said Tuesday. “The effort is simply to replace the money that is lost.”
Feinstein will transfer the money to her campaign by the end of September. Candidates and incumbents can spend an unlimited amount of personal funds on their own campaigns, although Feinstein is not expected now to commit any more of her own money beyond the initial $5 million, according to sources close to the campaign.
Feinstein and her campaign aides have not been able to access her Senate reelection campaign account since the Durkee scandal broke nearly three weeks ago. Whatever funds remain there are being held in the First California Bank, the bank that Durkee relied on for a number of the campaign accounts that she oversaw. Durkee alone was legally authorized to access many of those accounts.
Officials at First California Bank have asked political committees that want to get into the Durkee-controlled accounts to sign a release holding the bank harmless for any potential fraud before allowing them to tap those funds, according to several sources close to the investigation. And Feinstein’s campaign has refused to do so.
“We cannot get banks to give us either our records or the money we believe is deposited there,” Feinstein complained.
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