Wed, Aug

How Bad is the Durkee Mess?

WIPED OUT - The Kinde Durkee debacle is widening in scope and depth.  If you are on many Democratic email lists, you may have noticed a slew of emails in your inbox either telling you that their bank account was wiped out or asking for money. 

Last week, we learned that Sen. Feinstein, who is looking at reelection for next year, might have lost millions of dollars:

Sen. Dianne Feinstein (D-Calif.) said her campaign is among those that may have been "wiped out" by a Burbank-based Democratic campaign treasurer who was arrested on federal fraud charges earlier this month.

Kinde Durkee is accused of taking thousands of dollars from the campaigns of several elected officials, including Rep. Loretta Sanchez (D-Garden Grove), Rep. Susan A. Davis (D-San Diego) and Assemblyman Jose Solorio (D-Santa Ana). The Los Angeles County Democratic Party reported that more than $200,000 had been taken from its fund. (LA Times)

First, to clarify, Sen. Feinstein doesn't know if she was really "wiped out," but some money was stolen.  Part of the problem is that the bank that Durkee used is being rather unhelpful.  She kept millions of dollars at the bank, and they are concerned for their own liability.  I have heard that they are now attempting to get campaigns to sign a waiver of legal liability to access their accounts.

I'm not giving the bank, or any of the campaigns, any legal advice, but let me explain a legal concept right quick: promises given in exchange for no consideration are called "illusory" and are thus unenforceable.  

The campaigns should legally have the right to access their accounts.  The money in those accounts belongs to them.  Giving them the access they are legally empowered to have is not consideration. Heck, even giving them the money to transfer out of the account is not consideration.  

It is their money, and they should be able to access it.

That being said, the scope of the mess is growing ever wider.  It appears that Durkee played fast and loose with campaign funds for years.  Much of that time after a San Francisco Chronicle report about a "Californians for Obama" scam that Durkee was a part of.

Of course, there is one more issue here: California campaigns have given far too much power to external campaign treasurers.  They are given sole access to bank accounts, sole authority to write checks, and typically get very little oversight from the campaigns.  

If we are to learn anything from this mess, we should be sure that campaigns are better managed, we have better oversight systems, and campaigns don't allow individuals too much access.  

Campaign treasurers are 99.99 honest, but at the same time we need to ensure that campaigns see actual bank statements once in a while, know how much money is in their account, and can handle their business in case of emergency.

(Brian Leubitz is a former attorney and the founder of Calitics.com where this column was first posted.)

Tags: Durkee, Kinde Durkee, Dianne Feinstein, Loretta Sanchez, Susan Davis, Jose Soloria, Democratic Party

Vol 9 Issue 75
Pub: Sept 20, 2011