Capitol Alert: Campaign treasurer Kinde Durkee gets eight years in fraud case

U.S. District Judge Kimberly Mueller today ordered Kinde Durkee to serve eight years in prison for what has been called California's biggest case of campaign treasurer fraud.

Durkee pleaded guilty in March to mail fraud for taking more than $7 million from campaign accounts she controlled on behalf of Democratic politicians and other clients over a 12-year period. The hundreds of unauthorized transfers she made over that time resulted in six- and seven-figure losses for some clients, including U.S. Sen. Dianne Feinstein, Rep. Loretta Sanchez, and outgoing state Assemblyman Jose Solorio, and wiped out the accounts of some smaller committees and nonprofits she controlled.

In addition to the prison sentence, Mueller ordered Durkee to pay more than $10.5 million in restitution. She is turning over a 401(k) account worth about $90,000 and the government is auctioning of her office building later this week to raise more money

"I want to take this opportunity to apologize for my actions," Durkee said in a brief statement to the court. "To those who trusted me and I betrayed, to those who counted on me and I let down, to those who depended on me and I disappointed, I take full and compete responsibility for what I have done. I'm truly sorry for the hurt I caused to my former clients, my former employees, my friends and my family."

The longtime treasurer's attorney said she took the money not to fund a lavish lifestyle, but to keep her Burbank-based firm, Durkee & Associates, afloat amid financial struggles. He said she began "borrowing" money from accounts to cover the bills and keep accounts instead of laying off under-performing employees or confronting clients who stiffed the firm on payments. Her husband's unemployment and elderly parents in need of care also contributed to her personal financial issues, the attorney said.

"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," Daniel V. Nixon wrote in a document filed with the court. "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."

In some cases, client money went to personal credit card bills, health insurance companies and residential services for Durkee's elderly mother. In one 2010 transaction outlined in the U.S. Attorney's complaint, Durkee allegedly used $23,000 intended for Feinstein's federal campaign account to help pay a $30,000 American Express tab that included charges from the Los Angeles Dodgers, Amazon.com, Disneyland and Trader Joe's grocery store.

PHOTO CREDIT: Former Democratic campaign treasurer Kinde Durkee leaves the federal courthouse in Sacramento after she was sentenced to more than eight years in federal prison for defrauding high-profile clients, such as U.S. Sen. Dianne Feinstein, Associated Press/Rich Pedroncelli