Capitol Alert

The latest on California politics and government

November 27, 2012
Attorney says bad business practices led to Durkee's troubles

A new court filing suggests that bad business practices and an inability to confront under-performing employees and non-paying clients sparked the most extensive campaign treasurer fraud in the history of California.

The document, filed ahead of Kinde Durkee's Wednesday sentencing hearing, provides the most detailed account so far of what led the Burbank-based campaign treasurer to take millions of dollars from political accounts she controlled on behalf of big-name Democrats and where the money went. Durkee, 59, pleaded guilty earlier this year to five counts of mail fraud in connection with the embezzlement scheme.

In a response to the probation office's sentencing recommendation, Durkee attorney Daniel V. Nixon wrote that "most of the (misappropriated) funds appear to have been used to keep the business running." not to fund a lavish lifestyle.

"Although a significant amount of money was used to pay for personal expenses, including mortgage payments and credit card charges, a great deal of the stolen funds were used to keep the business afloat and her employees employed," Nixon wrote. "Unfortunately, it spiraled out of control, she lost track of the amount of the shortfall and it ultimately reached a level that she will be unable to repay in her lifetime."

According to the filing, the trouble started in 1999 when Durkee assumed control of the campaign bookkeeping company where she worked after the firm's owner died. When financial problems at what became Durkee & Associates, including Durkee's reluctance to lay off staff and the firm's responsibility for paying fines that resulted from sloppy or incomplete filings, led to "serious cash flow issues,' Durkee began "borrowing" funds from one account to cover bills and make sure other clients' accounts could meet payment obligations and remain open.

Durkee also faced personal financial pressure because her husband was unemployed and she was caring for elderly parents, her attorney wrote.

Federal prosecutors are expected to ask a judge to sentence Durkee to eight years behind bars. Nixon wrote in the defense response that his client feels genuinely remorseful and believes the recommendation represents a "just and appropriate sentence."

"Ms. Durkee acknowledges that her conduct amounted to a serious criminal offense, she breached the trust placed in her by her clients and caused the campaigns to suffer significant monetary losses," he wrote. "She accepts full responsibility for her actions and will accept the sentence imposed by the court."

Click here to read the full document.

November 27, 2012
State auditor rips public health contracts, oversight

The California Department of Public Health mismanaged public funds for child abuse and injury prevention programs, violating state contracting laws and improperly spending millions of dollars on administrative costs, the state auditor said today.

State Auditor Elaine Howle said in a report that the Departments of Public Health and Social Services "exhibited weaknesses in their administration" of two relatively small funds established by the Legislature to support programs designed to prevent childhood injuries and abuse.

Howle said the Department of Public Health violated state contracting law when it contracted with the San Diego State University Research Foundation to administer the state's Kids' Plates Program, a prevention program for unintentional childhood injuries funded in part by the sale of special license plates. The department contracted with the research foundation from 2004 to 2010 without complying with provisions of state law prohibiting state agencies from contracting with private entities for work state employees could perform, the audit said.

November 27, 2012
Jerry Brown criticizes UC for raising new chancellor's pay

University of California regents drew criticism from Gov. Jerry Brown today as they hired Nicholas Dirks to be the next chancellor of UC Berkeley and agreed to pay him a salary $50,000 higher than outgoing chancellor Robert Birgeneau.

"The $50,000 increase above the incumbent, even though that incumbent has not received a pay raise, does not fit within the spirit of servant leadership that I think will be required over the next several years," Brown said during a telephone meeting of UC's governing board of regents.

Brown, who sits on the board but rarely participated in meetings until voters approved his Proposition 30 tax increase this month, voted against Dirks' compensation package which includes:

  • An annual salary of $486,800, of which $50,000 will be paid by private donors
  • An annual auto allowance of $8,916
  • A house on the Berkeley campus
  • Moving expenses
  • A one-time relocation bonus of $30,425 paid in installments over four years

Brown said UC needs to create a "new paradigm...which is a university that functions at a lower cost ratio than currently is the case."

"I've just come through a campaign where I've pledged the people that I will use their funds judiciously and with real stewardship, with prudence," the governor said, adding that he would continue to press UC "for greater efficiency, greater elegance, modesty."

"We are going to have to restrain this system in many, many of its elements and this will come with great resistance," Brown said.

November 27, 2012
California doesn't do well in state-to-state wellbeing match-ups

So how does California compare to other states in measures of economic, fiscal, educational and personal wellbeing?

Not so well, it appears, according to new national study by a heavyweight academic consortium and another report from the U.S. Department of Education.

"The States Project" is a joint effort of Harvard University's Institute of Politics, the University of Pennsylvania's Fels Institute of Government and the American Education Foundation. It gathered data on state and local government finances, educational attainment and other "fundamentals" to create the issue-by-issue and state-by-state comparisons.

Overall, California ranks 33rd among the state in what the project calls "best fundamentals," in which Virginia was No. 1 and Mississippi was No. 50.

November 27, 2012
Luis Alejo will vow to honor the Constitution, then to honor his fiancee

JV_050712_YES_04.JPGFor Assemblyman Luis Alejo, next week will be one that he'll never forget.

He'd better not.

The 38-year-old Watsonville Democrat will be sworn into office for his second term Monday, but the highlight of his week will come five days later, when he weds longtime love Karina Cervantez.

Alejo made headlines last May by surprising Cervantez with a marriage proposal on the floor of the Assembly after introducing her to colleagues as the love of his life, his best friend, and the smartest person he knows.

Alejo said that he would be the "happiest man on Earth" if Cervantez would be his wife.

"Karina Cervantez, would you marry me?," he asked.

Alejo said the wedding will take place Dec. 8 in San Juan Bautista Mission, followed by a busy month of Christmas and New Year's celebrations before the Legislature reconvenes in January.

"We don't have a (legislative) session to deal with at the same time, so we thought it would be a great time to make that commitment to each other," he said.

"But I'm getting nervous because it's less than two weeks away."

PHOTO CREDIT: Assemblyman Luis Alejo, D-Watsonville, proposed to his fiancee Karina Cervantez on the Assembly floor during the session Monday, May 7, 2012. The Sacramento Bee/Jose Luis Villegas

November 27, 2012
Dan Walters Daily: Let the 2014 race begin

Dan Walters notes that Leland Yee's announcement will set off a game of musical chairs.

Have a question you'd like Dan to answer? Post it on our Facebook page.

See other Dan Walters Daily clips here.

November 27, 2012
AM Alert: Musical chairs

VIDEO: The votes are still being counted in the 2012 election, but Dan Walters raises the green flag on the 2014 contests.

The last few months have been a game of musical chairs on California's higher education scene, as officials fill vacancies created by the retirements of three big deal chancellors: Jack Scott, head of the 110-campus California Community College system; Charles Reed, head of the 23-campus California State University and Robert J. Birgeneau, head of University of California, Berkeley.

In September, we saw Brice W. Harris, former head of the Los Rios Community College District, take over as chancellor of the statewide community college office. Earlier this month, UC Riverside Chancellor Timothy P. White announced he would leave to take the top position at CSU (where he asked for a 10 percent pay cut). And today, the musical chairs continues as University of California regents vote for an interim chancellor to fill White's position at UC Riverside and a new chancellor for UC Berkeley.

UC President Mark G. Yudof is recommending Nicholas B. Dirks as the 10th chancellor of UC Berkeley and Jane Close Conoley as acting chancellor of UC Riverside. Dirks is an executive vice president at Columbia University in New York and dean of its faculty for Arts and Sciences. Conoley is the dean of UC Santa Barbara's Gevirtz Graduate School of Education. Compensation packages for both will be made public after regents consider the appointments in closed session at 11 a.m.

COASTAL COMMISH: Speaking of musical chairs, Assembly Speaker John A. Pérez has appointed a new member to the California Coastal Commission to replace outgoing commissioner Mark Stone, a Santa Cruz Democrat who will be sworn in to the Assembly on Monday. The new Coastal Commissioner is Carole Groom, a San Mateo County Supervisor.

NEW JOB: Michele Pielsticker has joined the state Board of Equalization as Legislative and Research Division chief. Previously, she was an attorney with Sutherland Asbill and Brennan and general counsel to the California Taxpayers' Association. She has also been a consultant to the Assembly Revenue and Taxation Committee. Pielsticker replaces Margaret Shedd, who has retired.

LAW & ORDER: Under the dome today, the Little Hoover Commission holds a public safety hearing with panels on jail constraints, bail schedules and sentencing reform.


Capitol Alert Staff

Jeremy White Jeremy B. White covers California politics and edits Capitol Alert's mobile Insider Edition. Twitter: @capitolalert

Amy Chance Amy Chance is political editor for The Sacramento Bee. Twitter: @Amy_Chance

Dan Smith Dan Smith is Capitol bureau chief for The Sacramento Bee.

Christopher Cadelago Christopher Cadelago covers California politics and health care. Twitter: @ccadelago

Micaela Massimino Micaela Massimino edits Capitol Alert.

Laurel Rosenhall Laurel Rosenhall covers the Legislature, the lobbying community and higher education. Twitter: @LaurelRosenhall

David Siders David Siders covers the Brown administration. Twitter: @davidsiders

Dan Walters Dan Walters is a columnist for The Sacramento Bee. Twitter: @WaltersBee

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