FEC to deny California senior senator's proposal

Published April 7, 2012 12:54AM (EDT)

WASHINGTON (AP) — A draft opinion that the Federal Election Commission issued Friday indicates that it probably will reject a request from Democratic Sen. Dianne Feinstein's re-election campaign to allow her to replace millions of dollars in contributions embezzled by her treasurer with new donations from the original donors.

The FEC is likely to take a final vote on her request Thursday, but the issuance of just one draft advisory opinion is a signal of some consensus among commissioners.

Feinstein's campaign treasurer, Kinde Durkee, pleaded guilty last week to defrauding numerous California politicians of at least $7 million. Feinstein was the hardest hit, losing an estimated $4.5 million.

The senator had hoped that her largest supporters could contribute again without the original donation being counted against federal caps of $2,500 per election from individuals and $5,000 per election from political action committees. But the draft advisory said that any contributions deposited in a bank account or cashed must be counted against the cap.

Feinstein's campaign is unlikely to be significantly harmed if the final decision doesn't go her way. She lent the campaign $5 million soon after Durkee's arrest became public, and she's still considered a heavy favorite to win re-election. Still, the opinion is significant for those lawmakers who likely would have gone back to some of their biggest donors if Feinstein had been successful in her quest. Reps. Loretta Sanchez, Linda Sanchez and Susan Davis have reported that their campaigns are also out hundreds of thousands of dollars.

During a hearing last week, Durkee's attorney, Daniel Nixon, agreed that her victims lost more than $7 million but disagreed with prosecutors' claim that there were at least 50 victims. Prosecutors say Durkee controlled some 700 bank accounts and that she mingled the funds in those accounts without her client's knowledge or authorization. She used some of the money to pay mortgages on her home and business, various business expenses and her mother's care in a home for seniors.

She also used the money to cover an array of personal expenses, involving Disneyland, Costco, Amazon.com, Ulta cosmetics and the Los Angeles Dodgers.

She is schedule for sentencing on June 20.

Feinstein's re-election campaign proposed that it be allowed to obtain "replacement contributions" from those who contributed up to the day of Durkee's arrest on Sept. 2 and had their contributions subsequently embezzled from the committee. It would then make refunds if it later obtained restitution through a criminal or civil court.

But the advisory opinion indicates the commission will reject that request. "No, the committee may not accept additional contributions from contributors whose funds were embezzled without those additional contributions counting against" the per-election limits, the draft statement said. The only exception to that would be if the donations never left the account of the contributor, which would only affect a small number of cases, if any.

Feinstein's campaign manager, Bill Carrick, said he was disappointed with the commission's likely action.

"We had hoped there would be a recognition of the incredibly unusual circumstances involved. It's the biggest political theft in American history."

Carrick said although Durkee admitted taking the money, the campaign has little recourse to recovering the money before the election. "Obviously no one gave with the intention of Kinde Durkee stealing it," he added.

By Salon Staff

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