Political Hay

Feinstein Swindled

Some 200 California Democrat clients have fallen victim to a Madoff in their midst. Could it turn the state light blue?

By 9.19.11

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It's said that word-of-mouth advertising is the best kind. It certainly worked for Ms. Kinde Durkee for more than 12 years. It would still be working if she hadn't helped herself to some of her clients' bank accounts once too often.

Durkee's nearly 200 clients weren't stores and small factories. They were California Democratic office holders, candidates, and committees. For all those years she was the go-to person to be treasurer for any Democrat's campaign accounts. Campaign treasurers serve as bankers and accountants for campaigns and see to the many complex state and federal reports required. There are few experts at this arcane craft in California. She was the best known and was trusted.

It isn't yet known how much of her donors' money she used for personal expenses, but it was a lot. It is alleged that as much as $1 million is missing collectively from client accounts. It may be months -- even years -- before this is unscrambled. Meanwhile, most of these clients do not have access to what is left in their accounts because she was the only person on their bank signature cards. Most of the accounts were at one bank in Southern California and it says it won't release the remaining funds unless the clients sign "hold harmless" agreements to protect the bank.

To make matters more complicated, Durkee used a Ponzi-like technique to keep all the balls in the air. If she helped herself to a few thousand dollars from Officeholder A's account, she would transfer that much from Officeholder B's into A's to make up for it. And so forth.

Garry South, a veteran Democrat consultant, told the Wall Street Journal that "...she might have removed millions of dollars from Democratic campaign coffers of 2012 and it might not be easy to replace." The Los Angeles Democratic Central Committee, alone, estimates it has lost $200,000.

It's not often that the California Democrats are in disarray, but they are right now. The affected parties are rushing to get access to their accounts, on the one hand, and trying to raise new money, on the other. It's not the best position to be in with the 2012 election campaign not far off (the primary will be next June, campaign season will be in full swing by March, and planning season is now). 

Sen. Dianne Feinstein is a Durkee victim. She doesn't yet know how much her campaign account is out. She is up for re-election in 2012. A shrunken campaign bank account adds to some other factors that make her position less solid than it has been. She has been a big vote-getter for years (winning with 59 percent in 2006), but she is now 78 and may draw a strong challenger (Michael Reagan is considering it and, if well-funded, could mount a good campaign). 

The latest Field Poll shows that 41 percent of California voters favor her re-election; 44 percent say "no." In June it was 43 percent "for." At this stage in her last campaign (2005) it was 52 percent. Her job approval rating is also 41 percent, down from 46 percent in June. All these factors might make the idea of retiring look more attractive than it has. 

Meanwhile, the California Republican Party continues to labor under a registration deficiency (outnumbered by Democrats by better than 3-to-2). Under its new chairman, Tom Del Baccaro, it is mounting a statewide petition drive to put on the next ballot a referendum to stop the redistricting of the state senate. The new Citizens' Redistricting Commission, threw two Republican seats together. The net loss of one would drop the party's representation in the senate to under one-third, making it easier for Democrats to pass anything they want (i.e., spending and taxes). 

He has also been conducting a series of town-hall type meetings around the state to pump up party worker enthusiasm and to tell the public of the party's emphasis on opportunity, pro-growth tax policies, and state spending restraint. 

When your party is in the numerical minority, your best chance lies in uniting all your members, then trying to pull in others. An unexpected campaign blessing may be the damage done to Democrats' treasuries by Kinde Durkee's use of their accounts to pay her own bills.

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About the Author
Peter Hannaford was closely associated with the late President Reagan for a number of years. He is a member of the board of the Committee on the Present Danger. His latest book is “Presidential Retreats.”