Durkee’s lifestyle didn’t square with the allegations against her

She is described by people who hired her as modest, generous, pleasant and so ordinary they struggle to recall anything about her. Her lifestyle showed no sign of extravagance. Quite the opposite.

The politicians and consultants who trusted Kinde Durkee with millions of dollars saw little to hint that she might become vilified as “the Bernie Madoff of campaign finance treasurers.”

The 1950-vintage house she owns with her husband on a tidy street in Long Beach’s Bixby Knolls is distinguished by its neglect. The lawn is sparse and browning, the house is a weathered yellow, the paint on the door is alligatored, the lock is rusty, and the doorbell button is missing. The squat brick office they bought for Durkee & Associates in an industrial area of Burbank has an unfinished particleboard back wall and sits between a body shop and a used-boat emporium.

Before being arrested last month for allegedly filing false reports to cloak an embezzlement scheme, Durkee drove an 11-year-old Dodge pickup to work. Recently, the heavyset, tousle-haired 58-year-old clambered into a 13-year-old Chevy Blazer to escape from a television crew — but was trapped on camera while the engine strained to catch. The other car in her driveway that day was a 16-year-old Audi.

As the treasurer considered the “platinum standard” in California, Durkee oversaw at least 360 bank accounts for almost 100 candidates, six dozen political action committees, about 60 Democratic clubs and committees and a handful of nonprofits. The ongoing federal investigation has triggered turmoil in state Democratic circles, with politicians, including members of the Los Angeles City Council and Congress, locked out of their accounts and worried that millions of dollars may be lost. U.S. Sen. Dianne Feinstein had $5.2 million, according to Durkee’s last report, but the bank can find just $662,101.

“I never saw her driving a Ferrari. She lived a very non-pretentious life,” said state Sen. Louis Correa (D-Santa Ana), who met her when he first ran for office 17 years ago. “You see a persona and then you see this, and the picture doesn’t fit.”

The image that emerges from Durkee’s political world is of an intentionally low-profile player who rarely discussed her personal life. She had a sweet voice and a pedigree that inspired trust. She was the protege of a Los Angeles accountant who had a national reputation for his ethical standards and the daughter of a beloved Lutheran minister memorialized as “gracious, warm, caring and ever-present.”

But records show that Durkee appears to have had trouble managing her own money. Chase Manhattan Bank filed two lawsuits to recover $26,414 that she charged on four credit cards. She settled in 2003. Four liens were filed against her between 2003 and 2008 for $22,604 in taxes, but they have been lifted.

Durkee — who is not a licensed accountant — ran Durkee & Associates in a highly unorthodox manner, according to bank officials, state and federal audits and the affidavit that lays out the case against her.

She commingled cash between clients’ accounts and her firm’s without authorization, transferred enormous sums to Durkee & Associates accounts to pay for business and personal expenses, and accepted credit-card donations intended for different candidates into a single account, sometimes failing to distribute the money to campaigns for hundreds of days.

Feinstein’s campaign, which sued Durkee and First California Bank, alleges she used the Century City branch where she was well-known to shift money in and out of the Democratic senator’s accounts, as much as $100,000 in a day, “with only one apparent — and illegal — reason: to cover overdrafts.”

Federal officials are probing whether this was a variation on a Ponzi scheme to steal millions of dollars. Records, however, show Durkee may have been losing money. Durkee made loans to campaigns that were sometimes never repaid and has been accused of covering up for a former employee who embezzled. If magnified over a decade, that could have left Durkee in a deep hole.

The state Fair Political Practices Commission has repeatedly investigated Durkee and has issued $171,362 in fines for campaign finance violations in which it concluded she had some responsibility. Durkee paid some of that amount, adding to her woes. Compared with those of other treasurers, her record was described by the commission’s chairwoman as “an anomaly.”

“The woman had a record that would tell you she was being sloppy,” said state Democratic Party Chairman John Burton, who refused to work with her. “I think what she was doing was taking the money from Peter and covering up what she did to Paul.”

Durkee has not spoken publicly about her case. She did not respond to calls or notes left at her home. Last week, her home phone was disconnected. Her lawyer, Daniel V. Nixon, did not respond to calls or emails. Employees, friends, neighbors and relatives did not reply to messages or tersely declined to talk.

Many politicians and consultants whose business made Durkee the state’s preeminent campaign treasurer also declined to discuss her. Those who did seemed to know one crucial fact: Jules Glazer gave Durkee her start when she was very young, and she took over after he died in 1999.

Glazer ran a legendary accounting firm that catered to high-wattage Democrats, including Jerry Brown and his father; John and Robert Kennedy; and former L.A. Mayor Tom Bradley. “My dad was very respected, and if she said she was associated with him, that would be powerful,” said his son, Michael Alan Glazer.

Bill McNally, a Venice Beach social activist who hired Glazer and became a close friend, said Durkee was his “right arm.” While Glazer was still alive, he recalled that Durkee was loyal, competent and “very jolly.” She worked long hours, he said, and “knew the business inside and out.”

Some Durkee clients also know she is one of three daughters of the Rev. Harry Durkee, who was the pastor of Hollywood Lutheran Church from 1960 to 1991. The parish hall in the basement is named for the preacher and Durkee’s mother. One obituary reported that Durkee had a quote on his bathroom mirror that read: “Good morning Lord! What do you have going today? I want to be a part of it.”

Beyond that, her political clients profess to know almost nothing except that she was “very friendly, very vivacious,” as Eric Hacopian, a campaign consultant, put it. “She was the treasurer that everybody liked — that’s why she had the client list that she had.”

Said Eric Bauman, chairman of the Los Angeles County Democratic Party: “This is somebody who, if I called and said there’s a kid who wants to start a Democratic club, by the end of the day she’d have it all set up, and she didn’t charge them, she just did it.”

Durkee registered Durkee & Associates as a limited liability corporation four years after Glazer’s death. She lists herself as the owner and her husband and her two sisters as members. The firm’s website said it had been in business since 1972. Her rates were cheap and politicians found her responsive.

“Everybody knew Kinde Durkee was the person to go to,” said state Sen. Gloria Negrete McLeod (D-Chino). “She was just the nicest person you could ever talk to.”

Federal investigators say Durkee admitted she had misappropriated money for years and filed false campaign finance reports. A Times review of those campaign records for about 180 state and federal committees found that she reported they had $9.8 million in cash on June 30. But First California Bank put the value of all Durkee-controlled accounts it could identify on Sept. 21 at $2.5 million. Durkee also had at least one account at City National Bank.

Durkee’s arrest on suspicion of mail fraud stemmed from the allegation that she drained $677,181 from an assemblyman’s account and, making about 30 complicated transfers, used it to pay business and personal expenses. But none appear to reflect lavish tastes. They are for such routine items as employee paychecks, taxes, her mother’s care at an assisted living center, gas, Crocs shoes and a veterinarian bill. Federal prosecutors say she also used $11,751 to make payments on her office, house and a condo in a charmless Long Beach building. She and her husband, John G. Forgy Jr., have $1.6 million in mortgages, which is also the assessed value of the properties.

Forgy describes himself as a technology consultant. He has been involved with Quail Unlimited and been the contact for the hunting group’s rattlesnake avoidance clinics for dogs.

For years, Durkee was able to keep her more questionable practices largely hidden.

She has lent tens of thousands of dollars to campaigns, sometimes with no expectation that she would be repaid and sometimes because her bank demanded she cover a client’s overdrawn account.

Explaining an $11,200 loan she made in 2002, she told Long Beach city attorneys in a deposition: “In order to maintain my good relationship with my bank and with the other clients I have at that bank, I had to cover the overdraft.” She also said she never tried to get her money back and was not paid for some of her work. Durkee said she did not ask the campaign to raise the money to pay her. “It’s not my style,” she said.

Durkee also told state officials that she made an $18,000 loan in 2008 because her bank threatened to close all her company and client accounts.

Durkee has been accused of covering up for an employee who embezzled. Two years ago, state Sen. Christine Kehoe (D-San Diego) learned from state auditors that a Durkee employee had embezzled $57,166 from her campaign. She called for a criminal investigation in a six-page letter that detailed how Durkee failed to tell her of the theft and filed reports that did not disclose it. A state audit concluded that the same employee siphoned $8,244 from state Board of Equalization member Jerome Horton, but again Durkee’s firm did not report it. Durkee paid at least some of the money back.

The treasurer rarely drew much media attention. But in 2007, the San Francisco Chronicle reported that Durkee was the treasurer of Californians for Obama, which raised more than $10,000 but spent much of it on expenses, including payments to Durkee’s firm. Asked to explain her involvement, a Durkee representative said: “She does not talk to reporters.” In 2009, the news broke that Kehoe had fired Durkee.

Durkee did have a public record that her loyal clients simply brushed aside. Since 2002, the state Fair Political Practices Commission has assessed fines 11 times against committees that used Durkee as treasurer. Durkee typically cooperated with these investigations, sometimes accepting blame and paying the fine. Earlier this year, she did just that, agreeing to pay $13,000. But that case became her firm’s undoing.

A commission investigator noticed that Durkee appeared to shift money from client accounts to her firm’s without permission and shuttle some back when needed to cover checks. The FBI was alerted.

Durkee is free on a $200,000 bond, but she was ordered to have nothing to do with the business that was her life’s work. It has essentially ceased to exist. Her website, which once boasted “the friendly ‘Durkee & Associates’ Spirit’ shines through in all that we do,” has been reduced to an email contact.

john.hoeffel@latimes.com

patrick.mcgreevy@latimes.com

jean.merl@latimes.com

Times staff writers Abby Sewell and Richard Simon contributed to this report.