Kinde Durkee, treasurer for well over one hundred Democratic politicians in California, was recently arrested on federal charges for misappropriating funds from state assembly member Jose Solorio.  Other Democratic politicians, who were her clients, quickly checked their bank accounts and discovered that major sums appeared to be missing.

Most prominently, Sen. Dianne Feinstein says her $5.2 million campaign treasury may be "wiped out."   Other Democrats with depleted accounts include Reps. Loretta Sanchez and Susan Davis. Kindee managed 87 federal campaigns and more than 100 state campaigns. She had access to over 400 bank accounts. The FBI says she has admitted to misappropriating money. Rep. Davis says "we have been robbed" and that Durkee "may well become known as the Bernie Madoff of campaign finance treasurers."

This could make things problematic for Democrats running for election in 2012. First off, the money might not be easy to replace.  Campaign donor limits prohibit individuals from giving more than $2500 in a federal election and $3,900 in a state election. So, if big donors have already hit that limit, they can't give more, even if the money was stolen.  Second,   accounts have been frozen, certainly by law enforcement but also by at least some banks.  For example, First California Bank says that it will not allow access to such accounts without a signed release indemnifying them from lawsuits. This shows how convoluted and murky things are getting (It also seems a bit silly for the bank to do this since the FBI can simply demand access).

There were warning signs.  Durkee has been fined a total of $185,860 by the California Fair Political Practices Committee (FPPC). FPPC chair Ann Ravel says this points to "quite serious" issues and that no other treasurers have such a history of violations. The FPPC is (probably deliberately) underfunded and understaffed, so it can basically only go after the big cases. It thought Durkee was problematic and notified the FBI. Yet, apparently few if any of her clients deemed the FPPC fines to be important. 

The California Board of Accountancy just discovered that Durkee's company is not licensed and in fact has no CPAs on staff. They ordered it to stop providing accounting services, adding they'd never even heard of Durkee until her arrest.   Thus they appear to have galloped to the rescue after the battle was lost.

What is most astonishing about this sad affair is that politicians gave Durkee complete power over the bank accounts and apparently didn't ask for online access or monthly statements, or seem to be paying much attention to what she was doing. Certainly Durkee was completely trusted. Her arrest and the missing money must be devastating to those politicians, who probably considered her a friend. But still, they don't seem to have done any routine due diligence.