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

That in itself was an unusual arrangement. A group that shares a treasurer with the candidate it supports is not exactly independent.

But the more troubling thing came to light when Long Beach sued Durkee and the "independent" group, accusing them of using the committee to get around the city's $600 limit on campaign contributions. The city's lawyers subpoenaed checks and bank records in an effort to trace the source of the group's funds. They found, to their surprise, that $11,200 had come from Durkee herself.

Kinde Durkee’s mugshot

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More About

• Kinde Durkee
• Jules Glazer
• Dianne Feinstein
• Election Campaigns
• Politics

Why would she pay for the mailers out of her own pocket?

"It struck me as very odd that she would do that," recalls Monte Machit, the deputy city attorney who took Durkee's deposition. "It didn't make a lot of sense to me."

Durkee's explanation was that she had overdrawn the committee's account and had to make up the difference to preserve her relationship with her bank. She said she had done the same thing for other campaigns, including an Assembly candidate in 2000.

As weird as that was, it was as far as the inquiry went. The independent group ultimately agreed to pay a $17,500 fine, and the case was closed.

A troubling pattern was taking shape — though you probably had to be an FTB auditor to see it. Durkee was sloppy. But worse, she was routinely using her own business funds to pay her clients' political expenses. Was it such a stretch to imagine that money might also flow the other way?

Durkee wasn't about to help anybody figure that out.

In fact, her firm maintained a blanket policy against disclosing candidates' personal bank records during audits. Government auditors seek those records when a candidate loans money to himself, to ensure that some wealthy donor isn't secretly bankrolling the campaign.

But Durkee and her employees simply refused to provide them, citing the First Amendment and Article 1, Section 1, of the California Constitution. (The section guarantees, among other things, the right to privacy.) Durkee withheld such records at least a dozen times. Each time her refusal was noted in the audit findings, but she was never sanctioned.

If stonewalling didn't work, she could provide an explanation that was just plausible enough to make the issue go away.

"There were suspicious things, but we were never able to get any traction with them," says Grant Beauchamp, a former FTB auditor who now works at the Fair Political Practices Commission. "Most of the things that looked suspicious, when they were pursued, we were told they were legitimate payments."

For example, a candidate might pay Durkee for some expense, and Durkee would then refund the money. That could be legitimate: a simple billing error that was caught and corrected. But when auditors looked at the bank records, it often turned out that Durkee had held on to the money longer than she had claimed in her public filings.

"It's suspicious," Beauchamp says, "but it's not embezzlement."

Over the course of 100 audits, many such issues were flagged. In isolation, each case didn't seem like a big deal. Taken as a whole, they pointed to trouble.

But the Franchise Tax Board never took the step of seeking Durkee's own bank records — action that might have revealed the full scope of the scandal.

Defending the tax board's handling of the matter, spokeswoman Denise Azimi argues that it was up to the FPPC to enforce violations.

"We disclosed our findings in the audit reports," she says. "We sent the audit reports to the proper authorities."

Instead of adapting Glazer's business strategy to the modern era, Durkee doubled down on it. She had a lot of clients and a big staff, yet she kept her rates unusually low.

The low prices were strategic: They built goodwill in the political world.

One of her larger clients was the L.A. County Democratic Party, which paid her $15,000 a year. She should have been charging more, because that work brought with it pro bono assignments with 70 or 80 smaller Democratic clubs and committees, such as the Democratic Women of the San Fernando Valley. "We thought, 'She's wonderful. She's generous. She's doing this because she believes in the Democratic Party,' " says Lyn Shaw, president of the club.

When Durkee wasn't working for free, she almost gave her services away. She charged the Stonewall Young Democrats just $25 per month — far below cost.

When there were mistakes — and there were — she paid the fines herself. In those cases, clients tended to blame her undertrained staff.

"I never found that her business was managed well," says Steve Afriat, a lobbyist and political consultant who has known Durkee for 30 years. "She was one of the nicest people you deal with in this business ... [but] it was not uncommon for her employees to be flaky."

In at least one case, that blame was well placed. Elsa Martinez went to work for Durkee in 2002. In early 2006, she began writing checks to herself out of Christine Kehoe's Senate account.

According to the letter Kehoe sent to the DA's Office, Martinez forged the signature of Frank Altamirano, another Durkee employee, ultimately pocketing $57,000.