What's believed to be the largest campaign treasurer fraud case prosecuted in California came to an end Wednesday, as former Democratic treasurer Kinde Durkee received an eight-year prison sentence.
Durkee, who managed the books for some of the state's most prominent Democrats, pleaded guilty in March to charges she took more than $7 million from campaign committees and other accounts she controlled over a decade. The unauthorized transfers resulted in six and seven-figure losses for some clients, including U.S. Sen. Dianne Feinstein and outgoing Assemblyman Jose Solorio, and wiped out the accounts of some of the smaller committees and nonprofit groups she controlled.
U.S. District Judge Kimberly J. Mueller ordered Durkee to pay more than $10.5 million in restitution, but very little of that amount is expected to be recovered for the victims, whose losses range from $499 to more than $4 million. She has agreed to turn over a 401(k) worth about $90,000 and her office building, which will be auctioned by the government later this week.
Benjamin Wagner, U.S. attorney for the Eastern District of California, said the government has found no evidence so far of additional money stashed away in other accounts. While Durkee maintains she acted alone, Wagner said his office is continuing to investigate whether anyone else could be charged in the case. Some victims are hoping to recoup some funds through a separate lawsuit against the bank Durkee used for many of the accounts.
"It's possible, but I wouldn't hold out a lot of hope," Wagner said of additional stolen money being discovered.
Mueller called Durkee's actions a "significant and egregious offense" and a "deep violation of public trust" during Wednesday's sentencing hearing. But she also noted that Durkee did not gain substantial personal benefit from her actions, saying the defendant "essentially inherited a business that she should not have accepted" and could not run herself.
"It was her inability to acknowledge her limits in this business that she carried on for so many years that led to her ultimate downfall," she said.
Durkee, 59, made her first public comments since her 2011 arrest during the hearing, offering an apology in a brief statement.
"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," she said. " I'm truly sorry for the hurt I caused to my former clients, my former employees, my friends and my family."
Federal prosecutors and Durkee's attorney say much of the stolen money was used not to fund a lavish lifestyle, but to keep her Burbank-based firm, Durkee & Associates, open amid financial struggles.
Her attorney wrote in a court filing that she began "borrowing" money from accounts to cover the bills and keep accounts instead of laying off under-performing employees or confronting clients who failed to pay the firm. "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," he wrote.
Durkee also faced personal financial issues, including her husband's unemployment and the need to care for an elderly parent. 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.