CA Dem shock: Kinde Durkee arrested for fraud

Terrible system (0.00 / 0)

After reading this, I have to ask, why in the hell do CA Dem campaigns pay exorbitant fees to third-party operators like Durkee to manage their finances? And why, after repeated warnings and investigations, didn't they drop her firm like a hot potato?

Campaign managers I know who've worked in other states say this arrangment is fairly unique.

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by: Marta Evry @ Sun Sep 04, 2011 at 15:40:53 PM UTC

Huh? (0.00 / 0)

I don't understand the question. Are you asking why the campaigns don't do the financial reporting themselves?

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by: mst @ Sun Sep 04, 2011 at 18:12:45 PM UTC

[ Parent ]

No.... (0.00 / 0)

See my comment below. I'm more concerned that only one firm handled nearly every Dem campaign and org in the state.

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by: Marta Evry @ Sun Sep 04, 2011 at 21:48:16 PM UTC

[ Parent ]

not true (4.00 / 1)

You're way over-stating this. If you look at the list, she handled only a good handful of them, and mostly only in So Cal.

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by: mst @ Mon Sep 05, 2011 at 16:09:21 PM UTC

[ Parent ]

What list are you referring to? Eom (0.00 / 0)

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by: Marta Evry @ Mon Sep 05, 2011 at 18:17:45 PM UTC

[ Parent ]

Marty, this list was in the Sac Bee (0.00 / 0)

If you follow the link to my DKos diary, I've updated with a copy of it there.

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by: Seneca Doane @ Mon Sep 05, 2011 at 22:04:02 PM UTC

[ Parent ]

Because in a Treasurer, one wants (0.00 / 0)

precision, professionalism, and someone who can answer the critical questions competently when regulators or other authorities ask them.  These laws are not easy and straightforward in their application.  I would not want to run even a small campaign without a professional Treasurer.  The potential liability is too great.

Until now, the only "dings" I've been aware of to the firm's reputation have involved isolated instances of negligence.  That is a completely different animal from mail fraud and not the sort of thing that would lead to "hot potato" treatment.

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by: Seneca Doane @ Sun Sep 04, 2011 at 19:31:47 PM UTC

[ Parent ]

One more thought (0.00 / 0)

As complex and confusing as election finance laws may be, they can't be worse than dealing with taxes if you run a small business - as my husband and I do. We have neither the time nor the expertise to do our own returns, yet unlike Dem campaigns in this state, we have literally thousands of competent, licensed professional business accountants we can chose from.

It's insane there isn't more competition for this work. Yet candidates are told Durkee "is the only game in town".

CA consultants like their monopolies. Maybe this scandal is the exactly the thing we need to shake things up.

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by: Marta Evry @ Sun Sep 04, 2011 at 17:33:57 PM UTC

monopolies (5.00 / 1)

Durkee isn't the only game in town, but she built a brand that  came to be trusted and offered a wide variety of services -- some of which are available from relatively few other political treasurers.

I know people who've used Olsen and Hagel, Gould, and several smaller folks. But how can you argue with using the same firm Feinstein and Westly have used?

Personally, I always liked the fact that campaign treasurer was all the firm did. They're not lawyers or CPAs or fundraisers for whom the treasurer job is a sideline.

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by: mst @ Sun Sep 04, 2011 at 18:29:23 PM UTC

[ Parent ]

Durkee (5.00 / 2)

There are a lot of reasons why a Kinde Durkee gets work, but the main one has to do with the complexity of campaign finance laws. Several are CPA's, but many are not, but have some background in finance.    The reason only a few people work as treasurs is that the reports are very labor intensive in short periods of time.  As an example at the end of a campaign when the highest quantity of checks come in, you have a 24 hour reporting period which means you have to get the information to Sacramento within 24 hours of receiving the checks.  Beyond that, the treasurer takes on personal liability in some cases for violations by the committe and few people are willing to do that.  You also have situations where donations are given at an event and the information isn't forwarded to the treasurer until after the reporting period is over.  There are a million things like that which go on.  There are many good campaign treasurers out there, but there are also many very disorganized people who take the job because it pays well and then have to get out because they mess it up.   But because there is such a shortage of available people, the quality is not always what you would want and sometimes the candidates with the most on the table (i.e. some of the people who were perhaps hit in this case) simply hire the person they think is cheapest without worrying about how well they do their job.  

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by: doughnut70 @ Mon Sep 05, 2011 at 04:45:11 AM UTC

[ Parent ]

I don't think that people thought they were cutting corners (0.00 / 0)

by getting a cheaper and less competent Treasurer.  Does Dianne Feinstein really need to cut corners?  What Dianne Feinstein needs is not to have things like this happening 14 months before a general election.

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by: Seneca Doane @ Mon Sep 05, 2011 at 22:12:22 PM UTC

[ Parent ]

Clarification (0.00 / 0)

This is not to say that Durkee & Associates was seen as less competent, although they may have been cheaper.  (I don't really know.)  My point is: I think that its clients thought that they were getting excellent quality work.

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by: Seneca Doane @ Mon Sep 05, 2011 at 22:27:09 PM UTC

[ Parent ]

Cheaper (4.00 / 1)

Politicians by nature look to cut corners.  It comes from living a life where people every day are basically asking you to hand them money.  They generally are to quick to say yes to the big things and then get real picky about the small ones.  They also have a lot of vendors who basically try and rip thenm off because everyone knows how much money they have.  So when the Kinde's of the world are willing to do things more cheaply, they tend to give them the benefit of the doubt and sometimes it bites them.

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by: doughnut70 @ Tue Sep 06, 2011 at 01:34:39 AM UTC

[ Parent ]

Many businesses employ a bookkeeper (0.00 / 0)

I don't think the reasons for this really demand much explanation.

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by: Seneca Doane @ Sun Sep 04, 2011 at 19:32:54 PM UTC

[ Parent ]

BCRA (ie McCain-Feingold) (5.00 / 1)

BCRA makes a FELONY out of innocent campaign reporting mistakes...  Show me any tax law that does the same.

There are a small handful of professional treasurers in California that can handle the enormous complexities of both FPPC and FEC filings, not to mention the immense document backups for audits and the like.  And this is on top of the normal payroll taxes, income taxes, etc of running a business.

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by: Hermit9 @ Tue Sep 06, 2011 at 23:48:01 PM UTC

[ Parent ]

Let's have a look (4.50 / 2)

I file this one under, let's look further.  Kinde Durkee is in fact innocent right now.  It is possible that after a full investigation and the criminal process runs its course, I will have a different viewpoint, but for now, I only want a larger look at what's happening.  Judgment later.

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by: smoker1 @ Sun Sep 04, 2011 at 20:17:08 PM UTC

Agreed...... (0.00 / 0)

To be crystal clear about this, I'm not passing judgment on this person's guilt or innocence. I'm more concerned to discover how few outfits there are that handle this type of work.

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by: Marta Evry @ Sun Sep 04, 2011 at 21:51:19 PM UTC

[ Parent ]

It's hard work, especially given the personal liability (0.00 / 0)

as another commenter has noted above.

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by: Seneca Doane @ Mon Sep 05, 2011 at 22:09:57 PM UTC

[ Parent ]

guilt and innocence (4.00 / 1)

The issue of legal guilt or innocence is one thing, but for many people in leadership the larger question is whether they have lost money and whether they'll ever get it back. OJ Simpson may or may not have killed Nichole Brown, but either way she's dead!

If political organizations have lost hundreds of thousands of dollars, as some are speculating, their concern is really not about the outcome of some future trial or plea agreement.

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by: mst @ Mon Sep 05, 2011 at 03:52:18 AM UTC

[ Parent ]

Kinde is a rock (0.00 / 0)

Kinde has handled all my campaigns, our club's resportng and my 527, SCV Clean Money.  I can't imagine this could be true.  She's always been wonderful  I trust her and never have had any indication of any wrong doing.

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by: Carole Lutness @ Mon Sep 05, 2011 at 00:07:29 AM UTC

It would be great if it turns out that way (0.00 / 0)

Based on their public statements, Lou Correa and Jose Solorio appear to have already accepted that she defrauded them.  (Correa: I may have lost hundreds of thousands of dollars; Solorio: I was robbed.)  I am not inclined to convict people before trial or plea, so for now this is a political story -- one with substantial practical and reputational implications for Democrats.  (One thing I'm not sure about, but which I'd think would be true: don't the funds she had get frozen for now?)

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by: Seneca Doane @ Mon Sep 05, 2011 at 22:09:02 PM UTC

[ Parent ]

Nichole Brown (0.00 / 0)

Once again, it's really not a matter of whether Durkee or anyone in her firm is ever found guilty of something. Personally I don't care about this a whole lot, but I do care whether money has been lost.

Durkee and/or her staff may never be convicted due to a plea bargain or whatever. It doesn't matter. If the money is gone, the money is gone regardless. That's what's important.

Nichole Simpson is DEAD, regardless of whether the glove fit.  

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by: mst @ Tue Sep 06, 2011 at 02:33:03 AM UTC

[ Parent ]

yet another reason for public campaign financing (5.00 / 2)

democracy is imperiled just by the presence of huge sums of money in campaign coffers, even when no laws are officially broken. the whole process is functionally corrupt, and a huge temptation for those at the center of money flows. it's not worth it.

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by: wu ming @ Tue Sep 06, 2011 at 05:18:46 AM UTC

Is there a good alternative? (0.00 / 0)

Especially since in areas that have laws to limit the influence of money on campaigns (like the City of Los Angeles) money has found a way into the system through circuitous routes that are even harder for the average person to police.  

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by: doughnut70 @ Tue Sep 06, 2011 at 16:05:17 PM UTC

[ Parent ]

One idea I've seen (0.00 / 0)

And this is mainly in line with your comment that the money will always get there:

Get rid of all contribution limits, etc - but make all expenditures/contributions immediately reportable on the internet.

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by: Hermit9 @ Tue Sep 06, 2011 at 23:50:30 PM UTC

[ Parent ]

Charges didn't seem to relate to treasurer's work (5.00 / 1)

I read a story about this yesterday, and the mail fraud she's accused of did not seem to relate to her work as a treasurer. The details in that story were that she'd solicited donations by mail and never given the money to the campaigns and candidates they were supposed to be for. One example was a cruise that was supposed to have celebrities and raise money for the Obama campaign. The celebrities never materialized and the Obama campaign said they never got the money. So, while the work Durkee was doing for most candidates may not have had anything to do with fundraising, the fraud charges do.

On another topic that's been raised several times: politics is an insider's game. I've tried to break in as a consultant, only to hit the most solid brick wall of my long professional career. I do advertising. Have done for a long time, and I'm pretty good at it. I'm also a political activist. So I thought I'd combine my experience and my passion. I also thought I could do some good because, honestly, most political advertising is FAR below commercial standards. I got in to a couple of grassroots campaigns. Did some good work. Helped elect one congressman. And that was as far as I could get.

Others I know have had the same experience. It doesn't seem to matter what results you've achieved or how good you are. It's all about who you've worked for and who you know. So the same people get the work over and over and over again. The congressman I worked for replaced the staff that got him elected with ones more senior officials in his caucus recommended. Many of these professional political consultants rake in huge fees from one losing campaign after another. But they still get recommended by the people who matter. Makes no sense to me.  

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by: cfinnie @ Tue Sep 06, 2011 at 23:51:09 PM UTC

We resisted using Durkee (0.00 / 0)

When I was on the Board of our Democratic Club, we resisted calls to use Durkee to file reports because we thought her work was sloppy, and she was unresponsive to our questions.  I think the club had since hired her, unfortunately.

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by: riversidemike @ Wed Sep 07, 2011 at 14:15:48 PM UTC

[ Parent ]

I doubt that you had read the Complaint (0.00 / 0)

when you wrote that, but it all involved her embezzling from Jose Solorio's account and it was in the course of her duties as a Treasurer.

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by: Seneca Doane @ Thu Sep 08, 2011 at 04:13:53 AM UTC

[ Parent ]

Well... (0.00 / 0)

you're the lawyer, not I, but my sense was that the case with Solorio was the strongest and the first one they encountered, so it's what was fully documented in the complaint. But now that the info is out, other clients will start examining their accounts and will tell the FBI what they found. And the complaint could be amended to involve dozens of victims. (But probably not hundreds.)

Logically, it's more likely funds will be discovered to be missing from the large stable accounts where money was being amassed for a future campaign. The clubs and central committees, where the funds are smaller and the dollars come and go more quickly, would be trickier to embezzle from without someone noticing.

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by: mst @ Thu Sep 08, 2011 at 17:10:57 PM UTC

[ Parent ]

You are not alone in that (0.00 / 0)

If you get the chance, you should pick up a book by Bill Hillsman where he talks about his experience in political consulting.  Hillsman was Paul Wellstones consultant because Wellstone had been his teacher in college and then he was pushed aside by insiders in Washington after Wellstone got there, but his work was so good that he was hired for a bunch of other campaigns while being sabotaged from getting work at every stage of his efforts.  The reason they get recommended by the way is that one hand washes the other and they all get paid that way.

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by: doughnut70 @ Sun Sep 11, 2011 at 17:08:29 PM UTC

[ Parent ]

It just got worse. A lot worse. (0.00 / 0)

TPM is reporting tonight that Durkee has admitted to embezzling her client's money for years.

Prominent Democratic campaign treasurer Kinde Durkee, arrested in California on mail fraud charges over the weekend, routinely moved substantial sums of money out of the accounts of her clients and into the coffers of her firm, federal authorities alleged in a newly released criminal complaint on Tuesday.

An affidavit from an FBI agent alleges that Durkee, who has served as treasurer on hundreds of political campaigns, took money from campaign funds that she controlled and used the money to pay her own personal and business expenses. She also allegedly used cash from some campaigns to cover shortfalls in the accounts of other campaigns.

Specifically, Durkee allegedly took nearly $700,000 out of the account of California Assemblyman Joe Solorio. Some of that cash ended up in the campaign account for Rep. Loretta Sanchez, but there isn't any suggestion that the California Democrat knew what was taking place.

Durkee, head of the California firm Durkee & Associates, had signature authority for more than 400 bank accounts. She allegedly used money from various political campaigns to pay her mortgage, American Express bills for everything from Ulta cosmetics to Baskin Robbins purchases, and even the bill for her mother's care at an assisted living facility.

In an interview with an FBI agent, Durkee allegedly said that she used the D&A business account to pay for her daily living expenses, including her food, entertainment and mortgages.

The San Francisco Chronicle points out that it first reported in 2007 that Durkee was involved with a fake "Californians for Obama" campaign that ripped off state residents who donated to an effort which sent no money to the actual Obama campaign.

Here's a link to the FBI complaint: http://talkingpointsmemo.com/d...

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by: Marta Evry @ Wed Sep 07, 2011 at 11:56:03 AM UTC

Eric Bauman - so accountable (1.00 / 1)

"I have been chair for 12 years and she predates me," Chairman Eric Bauman told TPM in a phone interview Tuesday. "We never had any issues until this last year or so."

Bauman said the county party has five employees and raised $200,000 last month.

"I just don't know if it's in the bank," Bauman said.

This story:

http://tpmmuckraker.talkingpoi...

was bound to happen with Eric at the helm of the LA County Democratic Party.

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by: pbriggsiam @ Wed Sep 07, 2011 at 15:48:17 PM UTC

I don't see any basis at all expressed for believing that conclusion (0.00 / 0)

I don't see what Bauman would reasonably have been expected to do differently.  Your comment sounds like ax-grinding.

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by: Seneca Doane @ Thu Sep 08, 2011 at 04:17:12 AM UTC

[ Parent ]