Feinstein Calls Her Treasurer's Actions 'Big Betrayal'

SACRAMENTO (AP) — Democratic U.S. Sen. Dianne Feinstein said Tuesday there was never any indication that her former campaign treasurer was mismanaging her re-election account before the treasurer's arrest last year in a widespread embezzlement case.

"It was a big betrayal," Feinstein told reporters after addressing Sacramento area government officials. "Oh yeah, you can imagine how you'd feel."

Feinstein made her first public remarks on the topic after her former campaign treasurer, Kinde Durkee, entered guilty pleas March 30 to five counts of mail fraud in a case that prosecutors said involved looting at least $7 million from about 50 clients.

It is believed to be the largest embezzlement case involving political campaign funds in the nation's history.

Feinstein lost an estimated $4.5 million from her re-election account, while other Democratic members of Congress, the state Legislature and political organizations lost millions more. Durkee could face as long as 14 years in prison when she is sentenced in June.

Feinstein said it's been a difficult experience but she is not worried that the loss will hinder her re-election campaign. Feinstein replaced the campaign money with a $5 million loan from her personal fortune.

"This is a very hard thing because I had used Mrs. Durkee in two prior campaigns and there never was a problem," Feinstein said. "And we lost a lot of money that donors had given."

She described Durkee as the "go-to Democratic fiduciary" in California but said she did not have a personal relationship with Durkee.

Last week, a draft opinion from the Federal Election Commission indicated that it probably will reject Feinstein's request to allow her to replace the lost money with new contributions from the original donors. The senator had hoped that her largest supporters could contribute again without the original donation being counted against federal caps of $2,500 per election cycle from individuals and $5,000 per election from political action committees.

"It would have been easier if I could have gone back and re-solicited," Feinstein, 78, said Tuesday. "But even if I can't, it doesn't stop anything."

She said she is not worried about her ability to finance an effective re-election campaign, adding "I don't have a major opponent."

Republican newcomer Elizabeth Emken, a mother of three who has lobbied for an autism advocacy group, spoke to reporters ahead of Feinstein's address and said it's time to retire such career politicians who have contributed to the national debt.

"We have to start with retiring Washington insiders like Dianne Feinstein, who's simply out of touch with the reality of what we're facing in California," Emken said.

Emken, 49, lobbied Congress during the debate over the health care bill to require insurance companies to cover autism. She said the health care reform law has failed to improve the delivery of medical services and vowed to repeal the federal law.

During her address, Feinstein said the economy is on the mend but government can do more to help homeowners who are upside down on their mortgages and to encourage businesses to manufacture in the U.S.

She announced that she would sponsor a bill to lower corporate taxes, from 35 percent to 15 percent, for companies that make patented products in the U.S.

The senator also said she supports Gov. Jerry Brown's push for a bullet train in California despite the project's high cost.

The California High-Speed Rail Authority recently released an updated business plan that lowered the price from $98 billion to $68.4 billion, but the price tag remains far higher than the $43 billion promised in a ballot initiative voters approved four years ago.

"Do I think it's doable? Yes. Do I think it's doable with all the bells and whistles? No. And that's a decision that has to be made," Feinstein said.

Emken said she opposed the rail project because she didn't see it as a prudent investment.

(Copyright 2012 The Associated Press.)