California Campaign Treasurer Pleads Guilty to Fraud

(Reuters) - A Democratic campaign treasurer accused of draining up to $20 million from the war chests of Senator Dianne Feinstein and others pleaded guilty on Friday to fraud charges, in a case a prosecutor compared to that of Bernard Madoff.

Kinde Durkee, 59, who was charged with five counts of mail fraud, entered her plea to all counts in federal court in Sacramento. She faces up to 14 years in prison.

Last year's arrest of Durkee, a longtime treasurer for Democratic politicians who lived in the Southern California port city of Long Beach, left the campaigns of a number of elected officials in disarray.

U.S. Attorney Benjamin Wagner told reporters he agreed with previous descriptions of Durkee, including from a congresswoman, that compared her to Bernard Madoff, whose arrest and conviction rocked Wall Street.

"It's the largest embezzlement scheme of a campaign treasurer -- ever," Wagner said, adding his office would seek a sentence of 11 and a half years for Durkee.

Madoff pleaded guilty in 2009 to running a Ponzi scheme estimated at $64.8 billion that prosecutors called the largest on record. He is serving a life sentence of 150 years behind bars.

Prosecutors said in court documents that Durkee used money that belonged to her political campaign clients to pay expenses such as the mortgage on her condominium, visits to Disneyland, charges on her credit cards, medical bills and her own firm's business costs.

Aside from Feinstein, a Democratic senator from California, Durkee was accused of defrauding the campaigns of Representative Loretta Sanchez and her sister Representative Linda Sanchez as well as a number of other office holders, candidates and political groups.

'VERY REMORSEFUL'

Feinstein has said in documents filed with the Federal Election Commission that she lost at least $4.5 million to Durkee, who is currently free on bail.

Durkee was dressed in a black pant suit and spoke softly as she pleaded guilty. In response to a question from the judge about whether she was entering the plea while of sound mind and body, Durkee also said she has high-blood pressure and cholesterol problems.

"She's very remorseful," Daniel Nixon, Durkee's attorney, told reporters.

Nixon said he would seek a significantly lower sentence for Durkee than the maximum of 14 years behind bars. "She's taken full responsibility," he said.

Durkee's written plea agreement with prosecutors said she defrauded clients of at least $7 million and as much as $20 million, and that her victims numbered between 10 and 50 clients.

Wagner said he did not believe Durkee would be able to come up with enough money in restitution to completely refund her victims. "You don't have to live like Donald Trump to burn through that kind of money," he said.

Under the terms of the plea agreement, to help make restitution Durkee must sell a property in Burbank, California, that had housed the offices of her now defunct business, Durkee & Associates. She is scheduled to be sentenced on June 20.

In a related case, Feinstein's campaign last year sued Durkee for fraud and breach of contract in a lawsuit that also accused First California Bank of aiding Durkee.

The bank previously said in a statement that it had transferred $2.5 million from various accounts it held for Durkee & Associates to Los Angeles Superior Court, which is hearing the Feinstein lawsuit.

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