Colleague says Durkee stole $1 million in personal funds

Convicted campaign treasurer Kinde Durkee cut a destructive path across California’s political landscape, allegedly pilfering millions in political funds from Democrats in Los Angeles, Sacramento and Washington, D.C.

And on Friday, a high-profile Los Angeles-based political consultant publicly leveled his own accusation against Durkee, saying she stole more than $1 million of his family’s personal money.

The consultant, John Shallman, was one of Durkee’s closest colleagues and is currently advising candidates for Los Angeles mayor, city attorney and district attorney.

Although politicians relied on Durkee to manage political cash raised from supporters and special interests, Shallman said he entrusted her with something considerably more dear: much of his family’s personal finances and investments.

Shallman’s attorney, Scott Brown, said in a statement that Durkee handled Shallman’s personal and business bookkeeping. “After her arrest, a forensic accountant determined that Ms. Durkee stole at least $1 million from Mr. Shallman and misfiled his tax returns,” Brown said.

Durkee’s lawyer, Daniel V. Nixon, could not be reached for a response. Lauren Horwood, a spokeswoman for the U.S. attorney’s office, could not immediately confirm that Shallman was a victim but said not all of Durkee’s victims were named in the case.

In 2010, Shallman received a notice of default on his sprawling family home in Encino, according to documents obtained by The Times. A trustee’s sale was scheduled and later canceled last year. By January, state and federal officials had filed liens stating that Shallman owed $1.5 million in taxes and penalties, public records obtained by The Times show.

Brown said his client has begun to put his house in order, by making “substantial payments” to the IRS and making his taxes current for 2010 and 2011.

Shallman’s efforts to resolve his financial woes come as he advises an array of candidates, including Assemblyman Mike Feuer in his run for Los Angeles city attorney, City Controller Wendy Greuel’s bid for mayor and City Atty. Carmen Trutanich’s run for district attorney. Unlike politicians identified as Durkee victims, Shallman can’t turn to campaign contributors to replenish his funds.

Shallman declined to be interviewed, but provided email correspondence from federal prosecutors identifying him as a victim in the Durkee case. He also issued a statement spelling out what he described as victimization at the hands of the Burbank-based campaign treasurer.

“With four kids and the demands of running a small business full time, it seemed like such a relief to have someone we thought we could trust handling all of our business affairs. Instead it turned into a nightmare,” he said.

Ironically, a series of Shallman-run campaigns have used tax liens — and unpaid taxes — as a cudgel to attack their opponents.

The most recent example was Greuel’s successful 2009 race for city controller, which portrayed opponent Nick Patsaouras as a tax scofflaw. A 30-second television spot released in the final weeks of the campaign showed tax bills flying out of a mailbox and past Patsaouras’ face and into a trash can.

Asked about those ads, Shallman issued a statement saying he would “never advise a client” to attack an opponent who was “a victim of a crime.”

Shallman’s financial problems drew sympathy from Trutanich, who said his campaign consultant had experienced a “perfect storm” of financial fraud.

“He had all his eggs in one basket,” he said. “And when you do that, you put yourself in a very vulnerable position.”

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