Claim of Fraud as Votes Are Counted in Brooklyn Special Election

Ángel Franco/The New York TimesThe city’s Board of Elections on Wednesday began counting absentee ballots in a special election to fill a vacant State Senate seat in Brooklyn.

What began as a pleasant day of official vote-counting in the undecided special election for state senator in south Brooklyn devolved into claims of fraud and disenfranchisement from both campaigns on Wednesday afternoon.

In other words: nothing new.

On Wednesday morning, at the city’s Board of Election’s headquarters in Brooklyn, the Republican candidate, David Storobin, 33, a lawyer, led the Democratic candidate, Councilman Lewis A. Fidler, by 119 votes.

By the end of the day, when about a third of the roughly 1,500 absentee ballots and affidavits were counted, Mr. Storobin’s lead was down to 37.

The counting will continue on Thursday, and most likely on Friday, when lawyers for both campaigns are expected to appear in State Supreme Court in Brooklyn so that a judge can review the ballots in dispute, including 151 from Wednesday.

The candidates had already taken a contentious, if not ugly, approach in the campaign for the 27th District. Now, their representatives are continuing the trend.

“We have identified significant patterns of fraud, including a good number of people who sent in absentee-ballot applications who stated they were permanently disabled but then showed up to vote,” Kalman Yeger, Mr. Fidler’s campaign manager, said.

Lawyers for Mr. Fidler’s campaign said they had identified 177 people who had filled out applications for absentee ballots claiming permanent disability, ballots that were collected by the same woman.

“These votes are being targeted ethnically for exclusion so it can go to court,” David Simpson, a spokesman for Mr. Storobin, said. “We believe every vote should be counted the same way.”

The machine totals last week showed that Mr. Storobin, who was born in the Soviet Union, had a slight edge in primarily Russian-American neighborhoods like Brighton Beach and Gravesend. His campaign considered that a moral victory, considering that Gregory Davidzon, a power broker with a popular Russian radio show, had endorsed Mr. Fidler, originally considered the front runner.

“It’s the height of ridiculousness to say that there’s any effort to disenfranchise anybody,” Mr. Yeger said.

Proving a voter’s disability before a judge could be a difficult task, however, and it is possible that testimony from private investigators hired by Mr. Fidler’s campaign will seek to determine the authenticity of the absentee ballots.

“It is shocking that the lies from the Storobin campaign continue a week after the election,” Mr. Yeger said.

Mr. Storobin’s campaign was just as outraged. “David Storobin made a concerted effort in this historic election to empower Russian-American voters and better include them in the democratic process,” Mr. Simpson said in a statement. “It is wrong for the Fidler campaign, now that they are losing an election, to try and subvert the democratic process by specifically excluding voters from the Russian areas of the district, many of whom are participating for the first time.”

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Kinde Durkee to Enter a Plea on Fraud

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Fraud case leaves California Democrats scrambling (Reuters)

LOS ANGELES (Reuters) – Stunning accusations that a top California Democratic campaign treasurer looted the war chests of her big-name clients have left candidates across the state scrambling to raise more money as election season looms.

Kinde Durkee, who controlled the funds of roughly 400 candidates and groups, ranging from Senator Dianne Feinstein to local Democratic youth clubs, was arrested in September and charged with fraud.

While the extent of the losses isn't yet clear, the coffers of dozens of Democratic politicians have been frozen, prompting the crippled campaigns to ask the California Fair Political Practices Commission to permit further donations from contributors who have already given the maximum.

Feinstein, seeking re-election in 2012, has been forced to start from "square one" to raise campaign money, said Bill Carrick, political strategist and consultant to the Senator.

But a commission official said it wasn't that simple.

"It's quite clear that we can't just say 'the contribution limit is set aside'," California Fair Political Practices Commission chair Ann Ravel said, adding that the commission's legal team was researching what options were permissible by law.

Feinstein donated $5 million of her own money to her re-election bid after the campaign lost access to an estimated $5.2 million, Carrick said. The senator has sued Durkee for fraud and breach of contract in a lawsuit that also accused First California Bank of aiding that fraud.

Durkee, the 58-year-old daughter of a Hollywood pastor, is accused of co-mingling money in the roughly 400 accounts she controlled at the bank, making it unclear to whom any recovered money actually belongs.

The bank reported $2.5 million in Durkee-controlled accounts, according to court documents, far less than the at least $9.8 million that her clients had raised, according to the Los Angeles County Democratic Party.

"We lost at least $200,000 and the impact of that, for us, is much more immediate than it is for most candidates," Los Angeles County Democratic Party Chair Eric Bauman said.

"We've got more than 50 races on the November 11 ballot. Our ability to support our endorsed candidates in these local elections is significantly affected," Bauman said, adding that the loss represents 90 percent of the party's total funds.

'GOING TO BE TOUGH'

If a donor's campaign contributions were never received, Ravel said, there is a possibility that they could donate again. The commission hopes to decide if and how donors could contribute again by its next hearing on November 10.

That deadline, however, would be too late for local elections slated for the following day, and the sudden loss of funds will be most acutely felt in grass-roots operations.

"It's definitely going to be tough," Carrick said. "It's going to be very difficult for them to replenish that kind of money."

Not everybody is as sympathetic to the sudden fund-raising challenges facing the California Democratic campaigns.

"Most of these Democrats are very influential, powerful incumbents, and the political parties are able to contribute as much as they want to the candidates," said Allan Hoffenblum, a former Republican political consultant.

"I don't think any client of (Durkee's) will lose because of this. There's plenty of money out there," he said

Durkee, who has been called the "Bernie Madoff of campaign finance treasurers" by one former client, Representative Susan Davis of San Diego, admitted to using campaign funds for her own personal expenses, according to court documents.

The mail fraud case against her in federal court alleges that Durkee used campaign donations to make mortgage payments and pay her American Express bills.

"Durkee admitted that she had been misappropriating her clients' money for years and that forms she filed with the state were false," according to an account of an interview by Federal Bureau of Investigations agents in September, according to the federal complaint.

The bank angered clients when it handed over control of the 398 bank accounts associated with Durkee to a California state court on September 23, recusing itself from sorting out how much of the recovered money should be doled out to whom.

"In yet another attempt to escape liability for the fiasco that they helped create, First California Bank has turned most of the accounts that Durkee controlled over to the courts," the Los Angeles County Democratic Party said.

It added that smaller parties who lost funds lack the financial resources to fight in court to get their money back.

First California Bank marketing director Diane Dickerson told Reuters: "It will all come out in time, I promise." She declined further comment.

Durkee is next expected to appear in court in December. Her attorney could not be reached for comment and a phone number listed in court documents as belonging to her appeared to have been disconnected.

(Editing by Dan Whitcomb and Cynthia Johnston)

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Feinstein sues treasurer, bank over campaign fraud (AP)

LOS ANGELES – Sen. Dianne Feinstein's campaign filed a lawsuit Friday against a bank that handled accounts for a prominent Democratic campaign treasurer accused of looting millions of dollars from the war chests of local, state and federal politicians.

The lawsuit, filed in Los Angeles Superior Court, names First California Bank, treasurer Kinde Durkee, Durkee's firm and two business associates, including her husband, who is a partner in her business. The filing comes two days after state financial regulators launched an investigation into how the bank managed the dozens of accounts Durkee maintained at First California, based near Los Angeles in Westlake Village.

"A fraud of the scale alleged herein could not have occurred, and did not occur, without the knowing involvement of First California Bank," the lawsuit reads. "In exchange for fees and profits, First California Bank intentionally ignored dozens of red flags, ignored its duties and obligations under state and federal law and allowed Durkee to perpetuate the scheme."

The bank's chief marketing officer, Diane Dickerson, said the company had not been served with the lawsuit and could not comment. Durkee's attorney, Daniel Nixon, also did not return a call.

The longtime treasurer, who controlled more than 400 accounts, was charged earlier this month with mail fraud by federal prosecutors who alleged she siphoned nearly $700,000 from a state candidate's campaign to pay her credit cards, a mortgage, business bills and her mother's care at an assisted-living facility. She then shifted funds from other candidates' accounts in an elaborate shell game to cover up the wrongdoing, prosecutors allege.

She admitted to authorities that she had been misappropriating her clients' money for years, according to the criminal complaint.

The scope of the scandal remains unclear even weeks after Durkee's arrest, but Feinstein estimates in the court papers filed Friday that she lost "millions of dollars" from at least two campaign committees, Feinstein for Senate and Fund for the Majority.

The complaint spells out several examples of alleged wrongdoing, including two instances of illicit transfers from Feinstein's campaign accounts this summer.

In the first, Durkee transferred $80,000 from one of the senator's accounts in two transactions and then re-deposited the same amount in the account three weeks later, the lawsuit alleges.

In the second, she took $100,000 from another Feinstein account and re-deposited it the same day, the court papers allege.

She has not been able to determine her exact losses because First California has refused to give her access to her accounts without a letter absolving the bank of any responsibility — which Feinstein won't sign, said Bill Carrick, her lead strategist.

The bank announced last week that it was seeking to have a judge sort out who owns the money in dozens of hopelessly co-mingled Durkee-controlled accounts — essentially putting a freeze on the money.

"I think our point of view is we want a full accounting of all these bank accounts so we know what happened and then we want to be reimbursed for everything that was wrongfully taken," Carrick said. "All of this happened inside that bank so they had full knowledge .... of this whole scheme."

The growing implications of Durkee's arrest have put the spotlight on an insular political culture that allowed one person to hold the purse strings for a clientele that left no levels of the party unscathed, from local mayoral candidates and small Democratic clubs to state politicians to federal lawmakers such as Feinstein.

Dozens of small Democratic clubs and medium-sized political action committees also may have been wiped out.

Durkee got most of her clients through word-of-mouth within the party. Smaller clubs were often steered toward her independent firm, Durkee & Associates, by local party bosses because she offered grass-roots groups her services at free or dramatically reduced rates.

She has been released on bond and is scheduled to make a court appearance Oct. 19 in Sacramento.

More charges are possible, authorities have said.

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