California regulators Tuesday ordered a company tied to hundreds of thousands of dollars in missing political funds to stop providing accounting services, after authorities discovered the firm is not licensed and has no certified accountants on staff.
Burbank, Calif.-based Durkee & Associates managed the books for scores of Democratic candidates and political committees, and its website advertised "expert'' accounting for campaigns. But the state Board of Accountancy warned in a letter that the company could face fines unless it stops claiming to provide professional accounting work, because the company and its employees are not licensed to do so.
"We request that you cease such activities immediately,'' the board said.
Kinde Durkee who runs the firm was arrested earlier this month on suspicion of fraud after federal prosecutors said she looted nearly $700,000 from a state Assembly campaign.
Other Democratic officials including U.S. Sen. Dianne Feinstein suspect they are victims. Eric Bauman, who heads the Los Angeles County Democratic Party, said at least $200,000 is
missing, and U.S. Rep. Susan Davis, D-Calif., told her contributors in a letter released Monday that her campaign was looted of about $250,000.
Durkee's company assured its clients their money would be protected. ``With operational accounting and reporting so very important, our independent preparation and review of your
organization's financial situation assure compliance with every financial regulation,'' the company website says.
Prosecutors say Durkee engaged in an elaborate shell game in which she furtively shifted money out of state Assemblyman Jose Solorio's 2010 campaign to pay for an array of debts, including shopping trips to Costco and her mother's care at an assisted-living facility. She routinely moved money out of campaign committees under her control, then placed it into her company
accounts or channeled funds to other campaigns, apparently when suspicions were raised about misplaced money.
The complaint said Durkee acknowledged misusing clients' money for years and filing bogus records, and that Durkee told investigators she was dealing with "personal and business tax
Feinstein's campaign had a cash balance of about $5 million on June 30, but it could take weeks before investigators track a web of transactions Durkee had authority over more than 400 bank accounts, including political campaigns.
Durkee ``has admitted comingling accounts, misappropriating funds and paying her personal expenses and bills with client funds.
That leads to this incredible confusion: Whose money is in what account?'' said Bill Carrick, a longtime Feinstein consultant. "I don't think anybody has sorted it out yet.''
Durkee's attorney, Daniel Nixon, didn't immediately respond to a phone message seeking comment.
Davis told supporters that reports to the Federal Election Commission accurately reflected her contributions and spending, but Durkee falsely reported account balances to the campaign.
Lauren Horwood, a spokeswoman for the U.S. attorney's office in Sacramento, said more charges are likely.