Campaign treasurer Kinde Durkee admits $7-million theft

SACRAMENTO AND WASHINGTON, D.C. -- Kinde Durkee, once a go-to campaign treasurer for Democrats in California, pleaded guilty Friday to five counts of mail fraud after an FBI investigation found she stole more than $7 million in political funds from at least 50 clients, including U.S. Sen. Dianne Feinstein.

U.S. Atty. Benjamin B. Wagner said the theft appears to be the largest embezzlement scheme ever by a campaign treasurer. He estimated that Durkee may have pilfered as much as $10 million in the last 11 years, using the funds for such routine expenses as meeting her business payroll and buying Baskin-Robbins ice cream.

“Her casual embezzlements over a decade added up to devastation for many of her clients,” Wagner said. “Like any fraudster, she depended on trust to perpetuate and conceal her scheme.”

Some of Durkee’s clients face tough elections in the June 5 primary and have sued her and her bank to try to recover the funds they would now be spending on polling and political ads. But prosecutors think little money is left.

“It’s essentially spent, from what we can tell,” Wagner said. “It may be that we will never be able to determine exactly where all of it went.”

Prosecutors are recommending a sentence of 11 years and three months for Durkee, 59, though they say that may change if the continuing investigation uncovers more crimes. As part of her plea agreement, which includes an admission that she stole the millions, the former treasurer agreed to surrender a Burbank office building with about $400,000 in equity and a 401(k) account that may contain up to $120,000.

Durkee appeared in court in a black pantsuit, her face somber as she provided short answers to the judge when asked if she understood her rights and wanted to plead guilty.

U.S. District Judge Kimberly J. Mueller warned Durkee that she could disregard the prosecutor’s recommendation and impose a higher sentence, up to 20 years for each count.

“You understand that’s my call?” Mueller asked Durkee.

“Yes, Your Honor,” Durkee responded.

Wagner said Durkee’s age and health problems such as high blood pressure were factors considered in initially recommending a sentence on the low end of the range normally considered in mail fraud cases.

Durkee declined to comment as she left the courtroom, but her attorney, Daniel V. Nixon, said he would argue for a lesser sentence than the 135 months under consideration. Durkee will be required to serve at least 85% of her sentence, even if she earns credits for good behavior

“She is accepting full responsibility for her actions and she has come to court today to acknowledge what she has done,” Nixon told reporters outside the courtroom. “She is remorseful.”

Prosecutors decided not to go after Durkee’s Long Beach home because it is mortgaged to the hilt and would not yield any money for restitution, Wagner said.

Durkee used much of the embezzled funds to keep her business afloat, Wagner said, noting that she was charging clients far lower fees than others in her industry but had big expenses, including a staff of up to 20 people.

In addition to paying her mortgage and business expenses, Durkee used her clients’ money to pay for medical services for her mother, pay cellphone bills and buy Dodgers tickets, Disneyland passes and Amazon gift cards.

Her clients have asked state and federal regulators to allow them to raise money again from donors who gave them maximum contributions before Durkee stole their funds. This is a particularly fraught election year in California, with legislators defending their seats in new, nonpartisan primaries and in newly drawn voting districts that were not gerrymandered to protect incumbents.

“It brings a certain level of anger and frustration to know that all that hard work raising that money is for naught,” said state Sen. Louis Correa (D-Santa Ana), who has reported that he lost nearly $800,000 in campaign funds to Durkee. He is not running for office this year.

Feinstein, who is running for reelection, lost an estimated $4.5 million. But the wealthy senator was able to write a personal check as a loan to her campaign coffers to cover the loss.

Bill Carrick, Feinstein’s chief campaign consultant, was hopeful that the guilty plea would lead to a better understanding of “how exactly this enormous fraud was perpetrated.”

Other victims who are running for reelection this year include Democratic Reps. Laura Richardson of Long Beach; Loretta Sanchez of Garden Grove; Linda T. Sanchez of Lakewood; and Susan A. Davis of San Diego.

“It’s good that the first phase of this investigation is over,” Davis said in a statement. “I remain unsympathetic to someone who continually embezzled from people engaged in the democratic process.”

California College Democrats lost about $3,000, which is a hardship given that the money came from college students, said Paul Murre, the group’s president.

“It’s great that she pleaded guilty, but ... it won’t bring our money back,” Murre said. “We’re really angry.”

patrick.mcgreevy@latimes.com

richard.simon@latimes.com