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Dianne Feinstein's campaign sues bank and Kinde Durkee, alleging fraud [Updated]

September 23, 2011 | 12:59 pm

Dianne Feinstein
Sen. Dianne Feinstein is suing her former treasurer and her campaign’s bank for fraud and breach of contract, alleging that the bank was complicit in a massive fraud case that has rocked the political world.

The suit was filed in Los Angeles County Superior Court on Friday against First California Bank, Feinstein’s former treasurer Kinde Durkee and her company, Durkee & Associates.

Feinstein complaint Durkee was arrested Sept. 2 on a federal fraud charge after allegedly embezzling possibly millions of dollars from her clients, who include Feinstein and many other prominent California Democrats.

The complaint alleges that First California Bank was "at the heart of the illegal transfer out of plaintiffs' accounts." It quotes a letter from the bank to clients acknowledging that it appears Durkee had commingled funds and made transfers between accounts and that the balances credited to any given account may not accurately reflect the funds belonging to the associated campaigns.

"Despite knowledge of this pervasive pattern of misconduct, First California Bank continued to provide banking services to Durkee and Durkee & Associates, LLC, for many years, happy to collect the fees and interest generated by the scores of accounts Durkee maintained at the bank," the complaint stated, going on to suggest that other banks and professionals may also have been complicit.

The complaint cites multiple instances of checks written without authorization and misreported fund balances, including a balance summary dated July 2 that reported Feinstein’s Senate account had a balance of $2.3 million when, in fact, its balance was about $266,000. Bill Carrick, Feinstein’s longtime campaign consultant, said the full extent of the funds taken from Feinstein’s account is still unknown because the bank has not handed over records.

"We have not gotten any answer from the bank to indicate in any way an explanation for why the bank did not adhere to a number of bank regulations, including reporting suspicious account activities," he said.

An attorney representing First California could not be immediately reached for comment.

State regulators have already launched an inquiry into the bank’s handling of accounts controlled by Durkee.

The complaint also names Durkee's husband, John Forgy, and business associate Matthew Lemcke as defendants.

[Updated at 1:42 p.m., Sept. 23: The complaint was filed by Feinstein's new treasurer, William Wardlaw, and two of her campaign committees, Feinstein for Senate and Fund for the Majority.]

RELATED:

Scholarships held up by Kinde Durkee investigation

Campaign treasurer Kinde Durkee fined by ethics agency

Agency weighs help for politicians affected by Kinde Durkee case

-- Abby Sewell

Photo. Sen. Dianne Feinstein.  Credit: Lauren Victoria Burke / Associated Press

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