Nonprofit group names key strategist for Greuel, Feuer in lawsuit

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The legacy of the infamous Kinde Durkee, the convicted campaign treasurer who mishandled funds for many prominent California Democratic candidates and causes, continues to reverberate in Los Angeles political circles.

A group that lost $1.5 million in the statewide political embezzlement scandal filed a lawsuit against a high-level strategist for mayoral candidate Wendy Greuel last week, alleging the campaign consultant was “unjustly enriched” even as other victims failed to recoup their money.


The Mountain View, Calif.-based National Popular Vote Institute, which wants to end the presidential electoral college system, went to court demanding reimbursement from Greuel campaign consultant John Shallman, Durkee and First California Bank, which handled Durkee’s funds. The suit does not allege wrongdoing by Shallman.

Shallman’s lawyer, Andrew Cowan, sharply disputed the lawsuit’s portrayal of his client, saying Shallman was a victim of Durkee who lost out on $1 million. Since the lawsuit was filed, Cowan offered to provide the National Popular Vote Institute with information showing that Shallman did not benefit financially from Durkee’s actions.

‘We have agreed to hold off on serving [Shallman] with the complaint to allow time for review of that information,’ Berger said in an email. Berger said he had done so to as a ‘professional courtesy.’ ‘It doesn’t mean that we’re not moving forward with any part of the lawsuit,’ he said.

Durkee was sentenced last year to eight years in prison after admitting she took $7 million from more than 50 victims, including U.S. Sen. Dianne Feinstein and Democratic Reps. Loretta Sanchez of Garden Grove and Susan A. Davis of San Diego. Greuel’s funds were ‘present and accounted for’ following Durkee’s arrest, said Greuel campaign spokeswoman Courtney Torres.

The National Popular Vote Institute wants to replace the electoral college with a popular vote system. Its lawsuit alleges that Shallman is “wrongfully in possession” of at least $129,000 in funds that were embezzled from the Institute and its political affiliate.

Berger said the group had Durkee as its treasurer but had no business relationship with Shallman.


Shallman Communications represents Greuel and a handful of other candidates in the March 5 election, including city attorney candidate Mike Feuer and council hopefuls Mike Bonin and Gil Cedillo. Shallman said through his lawyer that he ‘deeply sympathizes’ with the National Popular Vote Institute, saying he too is owed restitution. Durkee misfiled Shallman’s tax returns from 2001 to 2009, Cowan said.

‘Victims suing victims will not resolve anything,’ Cowan said in a statement. ‘Durkee commingled her clients’ funds and moved them from account to account in an endless shell game, to the point where it may be impossible to trace the funds and determine their ownership.’

Shallman has filed his own lawsuit against First California Bank, accusing it of aiding and abetting Durkee’s actions, Cowan said. ‘Mr. Shallman hopes that he and the other victims will eventually be made whole by the bank, and will work jointly toward that common goal instead of turning on each other,’ Cowan said.

When Durkee pleaded guilty last year, Shallman confirmed that he had relied on her for his tax preparation, mortgage payments and investment decisions. In 2010, a default notice was entered on Shallman’s sprawling Encino home stating he owed more than $333,000 on the property, records show. A trustee’s sale was scheduled and later canceled in 2011.

By 2012, state and federal officials had filed liens stating that Shallman had $1.5 million in unpaid taxes. Since then, Shallman has repaid more than $500,000 of his outstanding tax debt and is awaiting approval from the IRS on a final settlement, Cowan said.



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