Feinstein Among Politicians Allegedly Defrauded by Campaign Treasurer

Senator Dianne Feinstein is the latest – and highest profile – California politician to be swept up in an embezzlement scandal hitting the state’s democratic party. Politico was the first to report Feinstein saying may have been “wiped out” by Kinde Durkee, a treasurer to hundreds of Democratic campaigns in California.

Durkee was arrested by the FBI on Sept. 2 on allegations of fraud surrounding the diversion of more than $670,000 from the reelection committee for a California state assemblyman, and a growing list of California Democrats, including Feinstein and Reps. Susan Davis and Loretta Sanchez, now appear to victims as well.

“I was wiped out too, we don’t know how much,” said Feinstein, indicating the losses in campaign funds could run into hundreds of thousands, or even millions, of dollars. Feinstein, who is up for reelection next year, reported just over $5 million in the bank as of June 30, according to disclosure reports filed with the Federal Election Commission.

“She did my ‘92 campaign, my ‘94 campaign, my 2000 [campaign], my 2006 [campaign] … my gubernatorial campaign,” Feinstein told POLITICO on Monday, describing her long relationship with Durkee. “I trusted her implicitly.”

Very little information is known about the extent of the alleged fraud. The one public record so far details Durkee’s alleged fraud against the Jose Solorio for Assembly campaign in 2010… to the tune of $677,000. But other victims have started coming forward.

I asked KQED’s Sacramento bureau chief John Myers what he made of the story. Here’s his quick take:

This story is still at the very early stages. Given Durkee’s far reach into Democratic politics in California — authorities have said she had signature control to some 400 campaign accounts — the shock waves are going to keep reverberating for a while.

Also worth noting: some of these Democrats could be navigating some uncertain waters in 2012. Almost all of them are running in newly drawn congressional and legislative districts, which may mean reaching out to new voters — which costs money.

That means Democrats could feel an effect in next year’s election. The liberal blog, Calitics, lead a post with the fact that many of its readers may have gotten an influx of emails from Democratic politicians asking for money. And while we are still learning the extent of the embezzlement, Calitics suggests there are already lessons to be learned:

California campaigns have given far too much power to external campaign treasurers. They are given sole access to bank accounts, sole authority to write checks, and typically get very little oversight from the campaigns. If we are to learn anything from this mess, we should be sure that campaigns are better managed, we have better oversight systems, and campaigns don’t allow individuals too much access. Campaign treasurers are 99.99 honest, but at the same time we need to ensure that campaigns see actual bank statements once in a while, know how much money is in their account, and can handle their business in case of emergency.

Stay tuned. Durkee is due in federal court October 19.

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