Kinde Durkee Was Trusted by California's Top Democrats — Until Millions of Dollars Vanished 

Thursday, Dec 15 2011

When the Democratic Women of the San Fernando Valley held an awards banquet for their bookkeeper, they had no reason to think they were honoring a thief.

Kinde Durkee was an inconspicuous person. Quiet. Pleasant. Unassuming. She had been around local political circles for decades, often helping small Democratic clubs with their accounting at discounted rates. Her contributions had not been previously recognized, which made her the perfect choice for the club's inaugural Susan B. Anthony Award.

Durkee purchased a table for the event, which was held in April 2007 at the Sportsmen's Lodge in Studio City, and party officials paid tribute. When they gave her a crystal bowl with an inscription on it, she didn't have anywhere to put it. She didn't have a trophy case. So when she got it back to her office, she filled it with candies and set it out for clients.

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That was the Kinde Durkee that everyone in local politics knew: cheerful, sweet and modest to the point of vanishing.

So when Durkee was arrested in September, accused of a massive embezzlement scheme, it was almost impossible to believe. Not Kinde.

But according to the FBI, she had confessed. And as her clients rushed to check their balances, a sinking feeling set in. The accounts were frozen. Those who could get information from the bank found they were short hundreds of thousands of dollars.

Sen. Dianne Feinstein — Durkee's top client — lost nearly $5 million. But smaller clients were not spared. Even the Democratic Women of the San Fernando Valley — which had less than $100 in the bank — found its account frozen.

In all, Durkee may have robbed her clients of as much as $7 million — maybe more. She allegedly shuffled money from one account to the next to hide the losses, earning comparisons to Bernie Madoff.

"Everybody feels like they've been kicked in the teeth," says Cynthia Conover, who serves on the Democratic Women's board. "Nobody suspected anything."

In hindsight, there were plenty of clues that all was not right with Kinde Durkee's work. But you had to be paying close attention to see those clues, and most clients didn't have the time. They simply trusted Durkee because everyone else did.

"When I would ask for my cash on hand, they would tell me" the amount, says state Sen. Ted Lieu, a Durkee victim. "It would never occur to me that that may not be true."

The closer one got to Durkee's operation, the more suspicious it became. Durkee's committees were audited 100 times in the last decade, and some of those audits turned up troubling things. Auditors flagged unusual payments, which Durkee backed up with implausible explanations.

Yet Durkee escaped detection for a very long time. Only in the last year did investigators begin to piece it all together. Until then, she danced between the raindrops.

"I am stunned that she could get away with it for this long," says Nancy Warren, a Bay Area political treasurer. "The audits are random. ... The thinking that you're going to get away with it is either amazingly arrogant or crazy."

Durkee's firm, Durkee & Associates, accumulated a hefty docket of campaign-finance violations, leading to nearly $200,000 in fines — far more than its competitors. But in the political community, that was chalked up to carelessness, not fraud.

The Franchise Tax Board deserves some of the blame, because its auditors were more familiar than anyone with Durkee's bookkeeping problems — and yet, time and again, failed to follow up with a more aggressive investigation.

But the biggest lapse was committed by the L.A. County District Attorney's Office. In 2009, state Sen. Christine Kehoe blew the whistle on Durkee. In a letter to the DA, she said Durkee had covered up for an employee who fled to Mexico after embezzling $57,000. By following that lead, the DA's Office could have unraveled the whole affair. Instead, it took no action — a failure that almost certainly worsened the damage to Durkee's victims.

While the FBI is still piecing everything together, several mysteries remain. How did this start? How did it go on for so long?

And what about the money? Durkee lived modestly. She drove a beat-up car. Her office was in a dingy part of Burbank, between a body shop and a boat dealer. Her 1,600-square-foot house in Long Beach badly needs a fresh coat of paint. So where did the millions of dollars go?

"I don't think she bought shoes or diamonds or clothes or pearls," says Bettina Duval, founder of a committee that supports women running for state office and a Durkee victim. "She was not that kind of woman."

But who was she?

Like many wealthy people, Dianne Feinstein knows a bargain when she sees one. In 1991, the San Francisco Democrat was coming off a failed bid for governor. She had broken with a previous treasurer, one who had gotten her into some compliance problems. Preparing to run for the Senate, she needed someone to straighten things out.

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