Capitol Alert

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.