- The Washington Times - Monday, September 26, 2011

Talk about adding insult to injury. The campaigns for several Democratic lawmakers reeling from the arrest of their campaign treasurer face the prospect of financial penalties themselves.

Federal prosecutors earlier this month accused Kinde Durkee of siphoning nearly $700,000 from a California assemblyman. She told authorities she had been misappropriating money from her many Democratic clients for years.

Her client list has several hundred names on it, including the California campaigns of Sen. Dianne Feinstein and U.S. Reps. Susan A. Davis, Loretta Sanchez, and Laura Richardson.

The candidates believe they are victims of embezzlement and fear their campaigns could be out substantial sums of money.

But the thefts also could mean they violated federal law by failing to accurately disclose disbursements and cash-on-hand balances.

The Federal Election Commission’s regulations essentially require more than one person to run the finances for political campaigns. For example, two people should sign checks for $1,000 or more. Also, someone other than the person who signs the campaign committee’s checks should review bank statements each month for unauthorized transactions. If the campaigns allowed Ms. Durkee too much free rein, they could face sanctions.

“The underlying issue is: Were there systems in place to prevent this from happening or was this essentially an accident waiting to happen?” said Kenneth Gross, a Washington-based attorney who advises candidates on campaign law compliance. “No one assumes they hire a crook, but it’s a good idea to have procedures in case someone is tempted by having just one person with their hands on the control.”

It has happened previously. In June 2010, the FEC fined the National Republican Congressional Committee $10,000 after the committee’s treasurer had transferred hundreds of thousands of dollars from the NRCC to other accounts for his personal use. The treasurer, Christopher J. Ward, later pleaded guilty to embezzling nearly $850,000 from the NRCC and was sentenced to three years in prison.

The NRCC was a victim in every respect, but it also failed to accurately disclose activity to the FEC.

The FEC’s regulations would be standard protocol in the corporate world, Mr. Gross said. The FEC designed the regulations to protect donors by encouraging good accounting practices. If the campaign committees follow those procedures, then they would not be subject to a fine for filing incorrect reports.

It’s not clear who has lost money or how much in the Durkee case. The bank maintaining the candidates’ campaign accounts won’t release detailed information unless the campaigns sign releases freeing the bank from legal liability.

Mrs. Feinstein’s campaign estimates that she lost millions of dollars, according to a lawsuit filed Friday against First California Bank.

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