Feinstein campaign sues bank, ex-treasurer over missing funds

LOS ANGELES Fri Sep 23, 2011 9:59pm EDT

Senate Intelligence Committee Chairman Senator Dianne Feinstein (D-CA) speaks about START Treaty on Capitol Hill in Washington, December 15, 2010. REUTERS/Hyungwon Kang

Senate Intelligence Committee Chairman Senator Dianne Feinstein (D-CA) speaks about START Treaty on Capitol Hill in Washington, December 15, 2010.

Credit: Reuters/Hyungwon Kang

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LOS ANGELES (Reuters) - Senator Dianne Feinstein's campaign sued its former treasurer and the First California Bank on Friday, seeking the return of millions of dollars in missing funds the campaign believes were embezzled.

Campaign officials said the action came after the bank failed to provide the campaign access to its own account records when a tangle of unauthorized money transfers and co-mingling of funds was unearthed.

The irregularities were spread across 400 bank accounts and dozens of organizations over a period of years, they said.

"You work very hard and diligently to build up a treasury of $5.2 million, and something like this happens," said Bill Carrick, a longtime political strategist and consultant to Feinstein. "It's very, very disconcerting. You have to go back to square one to start raising money."

He also criticized the bank, saying: "You can't have all these accounts transferring unauthorized from one to the other without the bank noticing that."

The extent of the losses was still unknown, but the campaign said it believed it was in the millions of dollars.

The lawsuit accuses former campaign treasurer Kinde Durkee of civil fraud and breach of contract, and comes three weeks after Durkee was arrested by federal agents on suspicion of criminal mail fraud. The suit accuses the bank of aiding that fraud.

"The fraud alleged herein constitutes not only the personal betrayal of Senator Feinstein, but also an unforgivable crime against the public trust and the millions of California citizens who have long supported Senator Feinstein and other public officials and nonprofits in this state," the lawsuit said.

Feinstein, a Democrat, so far lacks "a really serious opponent on the Republican side" of her 2012 reelection bid for a fourth six-year term as a U.S. senator from California, Carrick said.

He said Feinstein planned to start donating $5 million of her own money to her 2012 campaign before the end of the next filing period on September 30.

A recent Field Research poll showed the former San Francisco mayor with the lowest approval ratings of her career in Washington. The survey estimated 44 percent of California voters did not want her to win reelection, compared to 41 percent who supported her. That marks the first time the Field Poll has found fewer voters in favor of Feinstein than against.

Feinstein "feels very strongly that we should do everything we can to recover the money that people gave to her reelection campaign," Carrick said. "She's very much on board."

The First California Bank has not yet seen or been served with the lawsuit, according to chief marketing director Diane Dickerson, who declined to comment.

(Editing by Steve Gorman and Cynthia Johnston)

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