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Saturday, July 19, 2014

Bank in Hot Water for Allegedly Taking Part in Embezzling Scheme

A California bank is in hot water for allegedly taking part in an embezzlement scheme.

The First California Bank handled accounts of Kinde Durkee, a former campaign treasurer for several high-profile Democratic politicians.

Authorities say Durkee had been at the center of an elaborate shell game, regularly shifting money between her clients' accounts while pocketing a few million dollars.

Durkee pleaded guilty to five counts of mail fraud last year and was sentenced to more than eight years in federal prison.

Officially, the bank acknowledges no wrongdoing, while agreeing to the settlement.

According to reports, that settlement is $4 million with $2 million going to the campaign account of U.S. Senator Dianne Feinstein.

 A California bank that handled the accounts of a former campaign treasurer for several high-profile Democratic politicians has agreed to pay $4 million to settle a lawsuit alleging the bank should have known the treasurer was embezzling money, attorneys for the politicians and the bank said Thursday.

The agreement reached with First California Bank includes $2 million for the campaign account of U.S. Sen. Dianne Feinstein. She estimated that she had lost $4.5 million when it was revealed that her longtime treasurer, Kinde Durkee, had been carrying on an elaborate shell game in which she regularly shifted money between her clients’ accounts while she siphoned off millions of dollars.

Durkee pleaded guilty to five counts of mail fraud last year and was sentenced to more than eight years in prison. She was ordered to pay $10.5 million in restitution, even though she had few assets.

Feinstein and several other lawmakers and political committees sued First California Bank, alleging there was a “pervasive pattern of misconduct” and that the bank was at the heart of Durkee’s illegal transfers.

Joe Cotchett, who represented Feinstein, said the attorneys had evidence that bank employees knew about the fraud based on emails and other correspondence they were able to obtain.

“We finally got the hard drive from the FBI. We were able to look at that and get emails that certainly tracked the allegations we made,” he said.

Thomas Nolan, an attorney who represented First California Bank, said the bank does not acknowledge any wrongdoing but said it agreed to the settlement to avoid a costly and time-consuming lawsuit.

“The bank certainly does not admit that they were culpable, engaged in any wrongdoing, or had any knowledge of fraudulent wrongdoing,” he said in an interview.

The settlement has not yet been filed in Los Angeles County Superior Court but was presented to a judge this week, the attorney said.

Attorney Wylie Aitken, who represented clients that include Rep. Susan Davis, D-San Diego, and Reps. Linda and Loretta Sanchez, who are sisters, said bank officials overlooked several red flags because they didn’t want to lose Durkee’s business. That included illegal transfers between federal and state campaign accounts.

“She was one of their personal customers; they were giving her favors for being one of their better depositors of monies,” he said.

Aitken said the bank continued to pay funds even when Durkee’s checks bounced.

The $4 million settlement is being distributed to candidates based on their losses. Other recipients include campaign committees for:

• State Sen. Lou Correa, $378,000.

• Former state Assemblyman Jose Solorio, who is running for state Senate, $330,000.

• Rep. Loretta Sanchez, $175,000.

• Rep. Linda Sanchez, $150,000.

• National Popular Vote, $600,000.

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