Sen. Feinstein suffers donation setback in fraud case

Sen. Dianne Feinstein got some mixed news this week from the Federal Election Commission. The California Democrat had asked the FEC whether she could collect “replacement contributions” from her donors after losing millions in campaign funds to embezzlement. 

The commission ruled May 15 that if the contributor’s donation had been “either deposited into one of the Committee’s accounts, cashed, or otherwise used by the Committee, that contribution counts against the contributor’s per-election limit to the Committee.” But if an attempted contribution was never deposited or cashed, it doesn’t count against the person’s per-election limited and Feinstein’s campaign may accept funds from that contributor “in place of his or her original attempted contribution.”

Feinstein sought the advisory opinion after her former treasurer, Kinde Durkee, was caught embezzling from her and other clients. Durkee was arrested last September and subsequently charged with five counts of mail fraud, one of which related to her work for Feinstein. In the ensuing investigation authorities determined she defrauded at least 50 clients of more than $7 million. Durkee’s since pled guilty and now faces sentencing. 

Feinstein’s loses accounted for more than half of Durkee’s theft. In the nine years she worked for Feinstein, Durkee and her firm embezzled some $4.5 million, records show. Feinstein is running for reelection in 2012 and wanted to be able to replace the stolen funds with new campaign contributions, even from donors who had maxed out giving to her committee. The FEC’s decision could prompt campaigns to place greater oversight over their financial staffers. 

In its latest FEC report, Feinstein’s committee reported $7.2 million in cash on hand but almost $5.3 million in debt.