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?