With funds missing or frozen, a campaign treasurer facing charges and an election 14 months away, many go looking for money.

By Richard Simon and Patrick McGreevy, Los Angeles Times
September 25, 2011, 6:29 p.m.

Reporting from Washington and Sacramento— A suspected embezzlement scheme that has ensnared hundreds of campaign accounts of Democrats has sent candidates scrambling for new cash as they prepare for an election season that could reshape California’s political landscape.

Just when they need to start hiring staff and commissioning polls, many candidates have no idea how much might have been taken from them or how much they have left, and they cannot find out: As many as 400 political accounts have been frozen by the banks holding the funds since the Sept. 2 arrest of treasurer Kinde Durkee.

She controlled funds for numerous politicians, predominantly Democrats, and it could be years before litigation sorts out who is owed what.

“It couldn’t happen at a worse time,” said Rep. Laura Richardson (D-Long Beach), who is expected to face Rep. Janice Hahn (D-San Pedro) in a tough June primary in a newly drawn district. “I hope for my sake, and for all of my colleagues, that we’re able to recoup the funds.”

More than a dozen state and federal candidates in next year’s election have had funds frozen. Scores of others who have not announced their plans or will not be on the 2012 ballot also employed Durkee, which complicates their efforts to promote themselves now by, for example, spending money to raise funds for future races.

Party officials may not be able to provide their usual help. The Los Angeles County Democratic Party lost $220,000 to Durkee and has $85,000 more stuck in related legal limbo. Durkee also handled the finances of numerous smaller Democratic clubs that provide campaign foot soldiers and are now scrambling to meet payroll.

Some lawmakers are taking dramatic action.

Rep. Loretta Sanchez (D-Garden Grove), a top target of Republicans next year after they took a drubbing in California in 2010, had $378,000 in cash as of June 30, according to her last public campaign finance report. That is as good as gone, she has told supporters. She is asking for help to replace it — as soon as possible.

“As we rebuild our campaign, it’s critical that we show we still have the financial strength to fend off Republican attacks,” she said in a note to backers after Durkee’s arrest.

“We have a report due September 30th to show our campaign’s cash on hand. If you are able to donate $10, $20, $100, or up to $5,000 to me today … it would go a long way to helping me continue to fight for you,” the note said.

U.S. Sen. Dianne Feinstein, who is up for reelection next year, had about $5 million in her campaign accounts when Durkee was taken into custody. The wealthy senator’s aides have said she plans to put an equal sum of her own money into her campaign.

“We will do what we have to do, believe me, to have a very strong campaign,” Feinstein said in a Capitol hallway interview.

On Friday, Feinstein’s campaign sued Durkee, her company and her bank, First California Bank, alleging that it ignored “numerous red flags” as the treasurer moved funds among accounts she controlled there.

Few candidates have Feinstein’s personal resources. California’s representatives in Washington say they may ask the Federal Elections Commission for leeway on campaign limits, which would allow them to go back to maxed-out donors to replenish their campaign coffers.

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