Wednesday, November 28, 2012 at 12:34 p.m.
Update below: Durkee sentenced to 8 years and 1 month, ordered to pay $10.5 million restitution.
Kinde Durkee, the campaign treasurer who admitted embezzling more than $7 million from a long list of California Democrats, has agreed to an 8-year prison sentence.
In a sentencing memo (posted below), Durkee's attorney, Daniel Nixon, said that she did not lead a lavish lifestyle, and instead used much of the embezzled money to keep her accounting business afloat.
"Unfortunately, it spiraled out of control, she lost track of the amount of the shortfall and it ultimately reached a level that she will be unable to repay in her lifetime," Nixon wrote.
The memo provides the first detailed account of the affair from Durkee's point of view. In it, Nixon states that the difficulties began when Durkee worked for Jules Glazer, a legendary political treasurer who handled the books for the state's top Democrats.
As Durkee took on greater responsibilities, she found it difficult to collect fees from some clients. She also began a habit of covering for other employees when they made mistakes, and paying regulatory fines out of her own pocket. Nixon said that Durkee twice considered quitting, but changed her mind because she did not want to leave the firm in a bad position.
When Glazer died, in 1999, Durkee took over. She continued to have difficulty confronting clients who did not pay their bills. She also could not confront or fire employees who made costly mistakes, Nixon wrote.
"All of these issues led to serious cash flow issues at Durkee and Associates," Nixon wrote. "To cover shortfalls in one client account, Ms. Durkee started 'borrowing' funds from another account."
She also started to use client funds for personal purposes, such as food and clothing, and to pay her employees. This required engaging in tremendous deception, both of her clients and of state regulators. Nixon said that Durkee initially intended to pay back the money, but that the embezzlement spiraled out of her control.
Durkee was finally caught in September 2011. When confronted by the FBI, she confessed. She pleaded guilty in March to five counts of fraud. Most of the embezzled funds -- almost $5 million -- belonged to Sen. Dianne Feinstein's re-election campaign. In an effort to make restitution, Durkee has offered up her 401(k) -- which has a six-figure balance -- and the equity in her Burbank office building.
Durkee is scheduled to be sentenced on Wednesday. Prosecutors sought a term of eight years and one month in federal prison. In his memo, Nixon states that that term is "a just and appropriate sentence."
Update, 12:30 p.m. Wednesday:
According to reporters
in the Sacramento federal courthouse
, Durkee has indeed been sentenced to 8 years and 1 month in federal prison. She was also ordered to pay $10.5 million in restitution -- though it's clear she will not be able to pay.
First posted 5:26 p.m. Tuesday.