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If you're in Southern California or Sacramento Democratic circles these days, the talk is all about Durkee, Durkee, Durkee.  That's Kinde Durkee, one of the biggest campaign/committee Treasurers (or Controllers, or Accountants) on the Democratic side.  I wrote about this scandal a week and a half ago calling it "pretty much the worst thing that I could imagine in Orange County Democratic politics, short of someone's death" and then saying that it was worse than that.

Well, now we know more -- and it's even worse than that that.

Note: please read in the word "alleged" behind every assertion about what Durkee did; I'm just going by what others are saying about this mess -- and others, including officeholders, are not being shy.

This may affect Democratic candidates from the U.S. Senate down to the smallest local level.  Some of the damage done isn't obvious at first glance, which is why I update today.  The sole saving grace in this situation is that at least it didn't happen a year from now, just before the election, when freezing accounts could be deadly.

If Kinde Durkee had set out to destroy the Democratic Party here, she could not have done a more effective job.

Where to begin?  Well, click the link up there to my previous diary for an overview of what things looked like on the day that the news came out.  Since then, you have a lot more choices.

I should note again that I sit on the board of one committee (Democratic Party of Orange County) that may have lost funds held by Durkee & Associates -- I'm not being coy here; like other potential victims, we're trying to find out -- and have dealings of various sorts, mostly as a campaign volunteer, with various others.

Toting up the Damage

Around the Capitol gives a nice overview both of how much people appear to have lost and of some of the implications.  (It's the last, long story following a series of quick hits.)

Here are the losses we know about based on news reports and the complaint:
Los Angeles County Democratic Party: $200,000
Congresswoman Susan Davis: $250,000
Senator Dianne Feinstein: "wiped out" -- had $5 million on hand June 30.
Congresswoman Loretta Sanchez: $379,000
Assemblymember Jose Solorio: $677,000
[My addition: Senate Senator Lou Correa has also estimated his losses as being in the hundreds of thousands.  And, I just saw on the news that Irvine Mayor Sukhee Kang, who will be running for Congress next year, says that he had one account reduced from $20,000 to $700 and may have lost $25,000 out of a second one.]

And, the list is likely to grow, as sorting this out, particularly when Durkee can't help folks find the money will take some time.

Some of this money still may be somewhere. The fraud alleged in the complaint was that Durkee set up duplicate bank accounts at different banks.  According to the complaint, Jose Solorio had two different accounts at two different banks, one official and, uh, for Durkee. Therefore, there could still be undiscovered accounts with money still in them, or, worse, there could be more fraud.

But, even if some of the money is discovered, it may not be freed up for a couple of years as a trial sorts everything out and a "fair" redistribution is approved by the court. This is a mini-Madoff, and three years after Bernie's arrest, they are still sorting out the money. Thus, it is foreseeable that millions of dollars of Democratic campaign cash that was available a month ago will not be available in 2012.

ATC's Scott Lay hypothesizes that the Durkee embezzlement may be the final straw that gets California legislators to pass SB 202, which would limit initiatives and referenda to November elections.  They can currently also be voted upon in primary elections, where the electorate is smaller and, depending on which party is out of office, a relatively biased sample of the general electorate.  The reason?  Democrats now can't afford the extra set of expensive campaigns in a given year.

The Newest Victims

The first two names on that list (after the LA Democratic Party) were just added.  The target may have been U.S. Senator Dianne Feinstein:

A political consultant for U.S. Sen. Dianne Feinstein said the senator is still sorting out how much she may have lost.

Monday afternoon, the news website Politico quoted Feinstein as saying her campaign funds had been wiped out. But shortly after, her office took it back. Feinstein political consultant Bill Carrick told the Orange County Register that the senator meant to say that “she was hit, too.”

“We know we were victimized, we just don’t have a number. We don’t know how much,” Carrick said. “It’s very difficult to figure this out.”

I'm hearing, from people who perhaps don't know any more than I do, that the Feinstein figure may be around $2 million.  As I noted to a friend, at some point this stops being a game of Three-Card Monte -- quickly shuffling the pea around the table -- and becomes a mugging.  If Durkee took $2 million from Feinstein alone, and perhaps twice that or more overall, how did she ever think she would be able to replace it in time?

Rep. Susan Davis of San Diego got her chance to contribute what may be a winning entry in the sweepstakes for vivid complaints by ripped-off officeholders:

“As this scandal emerges, she may well become known as the Bernie Madoff of campaign finance treasurers....

Davis, whose campaign reports showed $456,000 on hand in June, told supporters $250,000 of that is missing.

“We have been robbed!” Davis wrote.

The question many are asking is whether this will turn off donors.  The early signs reported in the above article look good for Davis -- but we'll get to that below:

La Jolla resident Louise Arnold, who contributed $1,000 to Davis, said she does not blame Davis and would donate again.

“Well there’s another person not doing what they should be doing,” Arnold said. “I don’t mean Susan Davis, I mean the treasurer. I don’t know why we have so many people who aren’t honest and straightforward and doing what they should be doing. It’s really discouraging. There are so, so many of these cases.”

San Diego resident Marcy Krinsk, who has given the maximum $2,400 contribution to Davis, said she felt bad for the Congresswoman, and hoped that some of the funds would be recovered. She wanted to know if contributors who gave the maximum would be able to make another contribution.

“It’ll be interesting to see what the election commission will come up with,” Krinsk said.

Difficulty Telling Where Things Stand

Brian Leubitz of Calitics, also one of the State Democratic Party's 21 elected "Regional Directors," notes that candidates and committees can't even find out where they stand.

Part of the problem is that the bank that Durkee used is being rather unhelpful.  She kept millions of dollars at the bank, and they are concerned for their own liability.  I have heard that they are now attempting to get campaigns to sign a waiver of legal liability to access their accounts.

I'm not giving the bank, or any of the campaigns, any legal advice, but let me explain a legal concept right quick: promises given in exchange for no consideration are called "illusory" and are thus unenforceable.  The campaigns should legally have the right to access their accounts.  The money in those accounts belongs to them.  Giving them the access they are legally empowered to have is not consideration. Heck, even giving them the money to transfer out of the account is not consideration.  It is their money, and they should be able to access it.

One problem with accessing the money, of course, is that the accounts are frozen; if money was transferred between accounts to cover up shenanigans, and it was, the question becomes whose money is in the account.  It's not yet clear when the accounts will be unfrozen -- or even whether it will be in time for the 2012 primary or even general election.  

Why This Affects All Democrats, Everywhere

This goes beyond money of out campaigns' pockets and frozen accounts.  It cuts into the operations of fundraisers themselves, who may not be paid commissions on money they raised, in some cases possibly threatening their own operations.  It also means that everyone will be trying to replenish their stockpiles at one time -- and do, say, State Senator Correa and State Assemblyman Solorio have as much call on donor money as does Congresswoman Sanchez?  My guess is not.  To the extent that that pushes them even more strongly into the arms of well-heeled corporate donors, it could affect their votes for the rest of the time they serve.  More then ever, and perhaps more desperately than ever, everyone is competing with everyone else for limited money.

And that "everyone" includes you, even if you don't live in California.  California -- cash-strapped as a state but with many wealthy individuals -- has often been called "the ATM of American Politics."  Some of those lining up at that ATM are politicians of your own state, if you live in the U.S.  The multiple millions apparently embezzled by Durkee mean that they, too, will have to stand further back in line.  And all of this comes at a time when we have new districts in most states and localities after the census, where becoming an incumbent this year can pay long-term dividends.

It's hard to believe that one small business could have such a disproportionate national impact on Democratic candidates and organizations seeking to raise money.  And yet there we are.  Tell me again how much we can trust the private sector?

Originally posted to Doane Spills on Tue Sep 13, 2011 at 06:07 PM PDT.

Also republished by California politics.

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Comment Preferences

  •  You'll want to follow this story (16+ / 0-)

    because this story may be following you home.

    In my avatar, the blue bars show how many want Reps who COMPROMISE; the aqua bars show who wants Reps who STAND FAST no matter what. (Left=Overall; Center=Democrats; Right=Republicans.) And there's the problem!

    by Seneca Doane on Tue Sep 13, 2011 at 06:07:26 PM PDT

  •  Whoa (7+ / 0-)

    It's bigger than even this. I have a nonprofit organization client, who (unbeknownst to me) had all of their funds with Durkee, and now may be completely wiped out. It's not just politics. It goes way beyond that.

    •  I didn't know that she did non-political as well (1+ / 0-)
      Recommended by:
      wilderness voice

      Do you think that she was developed in a lab by Karl Rove and the Kochs?

      In my avatar, the blue bars show how many want Reps who COMPROMISE; the aqua bars show who wants Reps who STAND FAST no matter what. (Left=Overall; Center=Democrats; Right=Republicans.) And there's the problem!

      by Seneca Doane on Tue Sep 13, 2011 at 06:22:33 PM PDT

      [ Parent ]

  •  I'm with Atrios (2+ / 0-)
    Recommended by:
    Seneca Doane, means are the ends

    I want to know where the money went. Up her nose? Real estate? The casino? A Nigerian Prince?

    Ok, so I read the polls.

    by andgarden on Tue Sep 13, 2011 at 06:25:54 PM PDT

  •  Poor DiFi (3+ / 0-)
    Recommended by:
    DaleA, means are the ends, wu ming

    I guess she'll just have to have disaster capitalist, military contractor hubby Dickie Poo Blum write a check to cover the $2 million loss.  In fact, why doesn't the whole California Democratic Party ask Dickie Poo to write a check to cover all the losses?

    This aggression will not stand, man.

    by kaleidescope on Tue Sep 13, 2011 at 07:00:50 PM PDT

    •  The former may happen (1+ / 0-)
      Recommended by:

      The latter won't because of contribution limits.  Among other things.

      I have to admit: when someone is embezzled from, I feel sympathetic.

      In my avatar, the blue bars show how many want Reps who COMPROMISE; the aqua bars show who wants Reps who STAND FAST no matter what. (Left=Overall; Center=Democrats; Right=Republicans.) And there's the problem!

      by Seneca Doane on Tue Sep 13, 2011 at 07:03:08 PM PDT

      [ Parent ]

      •  I Feel for Them Too (3+ / 0-)
        Recommended by:
        Seneca Doane, DaleA, wu ming

        Even for fabulously wealthy DiFi.

        But think about the California Democratic Party this way:  There are "favored" campaign consultants, treasurers and others who cash in on the gravy train of campaign spending.  The Democratic campaign industrial complex, if you will.  For example, Don Perata let Tom Umberg know that if Umberg didn't hire a favored campaign manager, then Umberg would face a primary.  Umberg demurred on hiring the manager and Perata marshaled the muscle to primary Umberg.  

        So, to what extent was Durkee -- given her ubiquitous use -- one of those favored insiders forced on candidates by connected party "leaders" like Perata?  I am not saying that this is necessarily the case.  But California Democrats should take a hard look to see if it is.

        Who gets hired and who you as a candidate are forced to hire is an important part of how power is wielded in California.  So is who votes on things important to Darius Anderson, and who gets do-nothing $160,000 a year appointments to, say, the Waste Management Board when they are termed out also reveals how political power is wielded in California.  Tip over a rock and you will see sausage making that would gag Upton Sinclair.  

        Durkee-gate should be the occasion for California Democrats to start tipping over rocks to look at the campaign industrial complex works and how the Democratic Party is corrupted by the power of money.

        But I doubt that will happen anytime soon.

        This aggression will not stand, man.

        by kaleidescope on Tue Sep 13, 2011 at 07:34:31 PM PDT

        [ Parent ]

  •  Wonder why they gave the accountant (2+ / 0-)
    Recommended by:
    Seneca Doane, DaleA

    this much authority?  An honest accountant would have rejected that much authority even if offered.  

    •  I think that she appeared to be doing (0+ / 0-)

      such a good job, both knowledgeable and ethical, and came highly enough recommended by prominent people such as DiFi, that people literally could not believe that she'd be doing this, so they trusted her.  This wasn't a Ponzi scheme, like Madoff.  She had a good legitimate business that should have paid her plenty.  She could have raised her prices and kept her clientele.  It is still hard to fathom.

      In my avatar, the blue bars show how many want Reps who COMPROMISE; the aqua bars show who wants Reps who STAND FAST no matter what. (Left=Overall; Center=Democrats; Right=Republicans.) And there's the problem!

      by Seneca Doane on Wed Sep 14, 2011 at 09:12:56 AM PDT

      [ Parent ]

      •  In a prior life, I did burglary, robbery, (1+ / 0-)
        Recommended by:
        Seneca Doane

        and embezzlement loss control analysis.  While "trust" cannot nor should it be totally eliminated, it is a very poor substitute for separation of duties.  Non-profits and small businesses rely too much on trust and historically have paid a high price for it.

  •  if they have helped us, perhaps (3+ / 0-)
    Recommended by:
    Seneca Doane, BlueStateRedhead, DaleA

    we should help them. Starting with the ones down-ticket perhaps, who have the least name recognition?

    Also we could funnel volunteers that direction.

    We do need California.

    Nowhere do I understand that national security is a substitute for the law.---Thomas Drake You cannot tell from appearances how things will go.--Winston Churchill

    by SouthernLiberalinMD on Tue Sep 13, 2011 at 08:00:07 PM PDT

    •  I think that we can cover our own volunteers, but (3+ / 0-)

      some of these people (and organizations, notably the Dem Party of LA) could certainly use -- and deserve -- help in the short term.  Loretta SSanchez and Susan Davis, for example, would probably like to ward off Republicans sniffing around to see if they are vulnerable.  I don't know whether Linda Sanchez was affected, but she will have a tough race upcoming in a new district.

      In my avatar, the blue bars show how many want Reps who COMPROMISE; the aqua bars show who wants Reps who STAND FAST no matter what. (Left=Overall; Center=Democrats; Right=Republicans.) And there's the problem!

      by Seneca Doane on Tue Sep 13, 2011 at 08:23:54 PM PDT

      [ Parent ]

  •  with the new districts, this may present (0+ / 0-)

    an opportunity for some new dems to make challenges. hopefully this sends feinstein into retirement, so we can get a democrat in that slot, instead of a trojan horse DINO.

    •  Feinstein will get back her money (1+ / 0-)
      Recommended by:
      wu ming

      (and can self-fund if need be.)  Loretta will probably get back her money too, with work.  I don't know about the others.  While theoretically this could free things up -- not in the Senate, obviously, as there's no redistricting -- looking at the actual maps I don't see how it would happen.  Most of those affected look like better Democrats.

      Correa is safe until 2014 (and then termed out).  Solorio is termed out (and presumably aiming for Correa's Senate District, which is now more Republican.)  Turning back to "the list," the people I see in potentially competitive races who used Durkee & Assocs are better Democrat Sukhee Kang (and that's a very hard district to start with, against John Campbell) and Ted Lieu (who has three years to get ready for a tough race against perhaps Mike Feuer).  "Better Democrat" Linda Sanchez isn't on the list but I thought that she used Durkee as well; obviously the list is not complete, omitting Susan Davis, among others.  Linda S. faces a tough "top-two" race for re-election in a new district where she'll face "Worser Democrat" Ron Calderon.

      The worst impact may be from the losses to the LA County Democratic Party, which does great work up and down the line.

      In my avatar, the blue bars show how many want Reps who COMPROMISE; the aqua bars show who wants Reps who STAND FAST no matter what. (Left=Overall; Center=Democrats; Right=Republicans.) And there's the problem!

      by Seneca Doane on Wed Sep 14, 2011 at 07:50:02 AM PDT

      [ Parent ]

      •  is this just a socal dem thing? (0+ / 0-)

        i don't see any norcal names in the list.

        •  DiFi is one from NorCal (1+ / 0-)
          Recommended by:
          wu ming

          and I believe that there were others, but it was disproportionately SoCal.  She was from Burbank, though, and for some reason was very popular in OC.  (She had a great rep here.)

          In my avatar, the blue bars show how many want Reps who COMPROMISE; the aqua bars show who wants Reps who STAND FAST no matter what. (Left=Overall; Center=Democrats; Right=Republicans.) And there's the problem!

          by Seneca Doane on Wed Sep 14, 2011 at 05:15:10 PM PDT

          [ Parent ]

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