Campaign treasurer pleads guilty to looting $7M

Associated Press
File - This Jan. 2008 file photo provided by the California Democratic Council shows Kinde Durkee at a California Democratic Council Leadership Training session in Ventura, Calif. 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. (AP Photo/California Democratic Council,File)
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File - This Jan. 2008 file photo provided by the California Democratic Council shows Kinde Durkee at …

SACRAMENTO, Calif. (AP) — A former California campaign treasurer pleaded guilty Friday to looting at least $7 million from the accounts of dozens of Democratic candidates and political organizations, in one of the nation's most egregious political embezzlement cases.

Kinde Durkee, who had operated Durkee & Associates of Burbank until her arrest last September, entered the plea to five counts of mail fraud in U.S. District Court in Sacramento. The plea deal carries a sentence of 11 to 14 years in federal prison.

U.S. Attorney Benjamin Wagner said he believed the actual fraud was closer to $10 million and described Durkee as "the Bernie Madoff of campaign treasurers," referring to the infamous New York financial manager who pleaded guilty to operating the largest Ponzi scheme in history.

"She embezzled millions of dollars from her many clients," Wagner said during a news conference after the court proceeding. "This is believed to be the largest embezzlement scheme ever by a campaign treasurer."

The plea ended a criminal case that left numerous state and federal candidates with little or no money in their campaign accounts, heading into an election year in which they face newly drawn districts and a new primary system.

Durkee, 59, now faces civil lawsuits from U.S. Sen. Dianne Feinstein, who believes she may have lost as much as $5 million, and other victims.

Durkee also was ordered to pay restitution, in part through the value of her home and business assets, but it was not immediately clear how much money the sale of those assets would provide to victims. A court filing earlier in the week said she and her husband, John Forgy, had agreed to put up for federal forfeiture an office they owned in Burbank.

Durkee also agreed to hand over the assets in her 401(k) retirement account, estimated to be valued between $100,000 and $120,000.

Despite the demand for restitution, Wagner was not hopeful that Durkee's former clients will see much, if any, of their campaign money returned.

"The likelihood of the victims being made whole is very, very slim in my opinion," he said.

Durkee had not spoken publicly or appeared in court since her arrest. On Friday, she entered the courtroom wearing a loose-fitting, black pantsuit and black Crocs. She avoided eye contact with visitors in the courtroom and spoke only in response to questions from the judge, doing so barely above a whisper. Her attorney said she would not speak outside of court.

She was released after the hearing until her sentencing, which is scheduled for June 20.

Durkee's attorney, Daniel Nixon, said he planned to argue for a lesser sentence even though he agreed her victims lost more than $7 million.

Asked what she did with her clients' money, Nixon said, "I really would prefer not to get into the specifics." He said Durkee accepted responsibility for her actions and feels remorse.

Prosecutors say Durkee controlled some 700 bank accounts and embezzled money from at least 50 victims, including members of California's Democratic congressional delegation, Democratic state lawmakers and various political organizations.

Court filings say the money went to pay mortgages on Durkee's homes, various business expenses that included health care benefits and 401(k) contributions for her employees, and her mother's care in a home for seniors.

She also used the political accounts to pay for an array of personal expenses, including bills from Disneyland, Costco, Amazon.com, Ulta cosmetics and the Los Angeles Dodgers.

The California Fair Political Practices Commission said the Durkee case was by far the largest political embezzlement case in state history. Officials with the Federal Election Commission said it was the largest they could recall.

Prosecutors said Durkee also filed false information with the FEC and the California Secretary of State, which track campaign contributions and expenditures.

The case arose at the state level in 2010, when the Fair Political Practices Commission began investigating complaints related to state officeholders.

It unraveled as a complex shell game, in which Durkee was transferring tens of thousands of dollars between various campaign, business and personal accounts. The sheer volume of transactions complicated the case and led to multiple delays ahead of the plea deal reached this week.

Her former clients have been in limbo because their campaign accounts were frozen as investigators tried to trace the money.

The Fair Political Practices Commission has delayed a decision about whether affected state candidates would be allowed to request additional contributions from donors who already gave the maximum amounts allowed by law.

The state commission is awaiting a decision on that matter regarding federal candidates from the FEC in a case filed by Feinstein. A hearing in the federal case is scheduled for April 12.

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Associated Press writers Hannah Dreier, Judy Lin and Don Thompson contributed to this report.

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