SACRAMENTO, Calif. — The head of a good government group on Thursday told California campaign finance regulators to avoid creating an exemption for candidates and committees whose accounts may have been drained by a Democratic campaign treasurer.

Candidates who were victims of the alleged embezzlement scheme, which includes Santa Monica City Councilman Terry O’Day and Rent Control Board member Chris Braun, generally should not be allowed to bypass contribution limits and receive money from donors who already gave the maximum amount, said Bob Stern, president of the Center for Governmental Studies in Los Angeles.

“If you let them give again, you double their access and you double the appearance of corruption, which is of course the main reason for contribution limits,” Stern said. “Most of these candidates are incumbents. You’d be mainly helping incumbents running against challengers.”

Attorneys for the clients of treasurer Kinde Durkee told the Fair Political Practices Commission in Los Angeles that donation limits should be waived if candidates can show they never actually received the money. It was the second hearing on the topic after the FPPC took comments last month in Sacramento.

Stephen Kaufman, an attorney representing the Los Angeles County Democratic Party and several other Durkee clients, urged the FPPC to devise a narrow process in which candidates and committees are allowed to raise replacement contributions if they can show they never received the campaign contributions.

As lawyers start reviewing bank records to find out what’s left in the accounts, Kaufman said he is finding that many contributions were never deposited into the accounts.

“There are a couple of examples where either a contribution was received or money was transferred … that never even got deposited into a committee’s bank account,” Kaufman said. “The treasurer just deposited the money in some other account.”

That’s a case in which money was never really received by a candidate or committee, he said.

Stern said the commission should be lenient with victims on reporting and the only exception where a candidate or committee should be allowed to return to a donor is if the treasurer never reported the contribution.

Durkee is charged with mail fraud and accused by federal prosecutors of siphoning $700,000 from the account of state Assemblyman Jose Solorio and targeting others, including U.S. Sen. Dianne Feinstein, who estimates she may be missing as much as $5 million.

Investigators are trying to sort out who lost how much after entrusting their campaign cash to Durkee & Associates.

O’Day said he lost over $16,000 in contributions he planned to use for his re-election campaign for the City Council.

The Committee to Protect Community and Schools, which backed the recent half-cent sales tax increase in Santa Monica, lost $14,498.46, according to their most recent campaign filing, although a representative said it was more like $10,000.

Two other funds, Braun 2010 Rent Control Board and Santa Monicans for Quality Government, were significantly less impacted.

Braun’s account dropped by $30.77, while the Quality Government account increased by $1,557.33, according to the last filings compared to the remainder in the accounts.

Durkee controlled as many as 400 accounts, including some for nonprofits. A criminal complaint says she acknowledged misappropriating her clients’ money for years, using it to pay her credit cards, a mortgage, business bills and her mother’s care at an assisted-living facility.

She then shifted money from other candidates’ accounts to cover up the wrongdoing, federal prosecutors allege. Durkee, whose firm is based in Burbank, used First California Bank.

Commission Chairwoman Ann Ravel said the agency is hoping to take action or issue guidance to candidates and committees soon. The commission is studying state law and could determine that legislative action is necessary before it can act.

The next statewide filing deadline is Jan. 31, although federal candidates whose campaigns are regulated by the Federal Election Commission must file quarterly reports this week.

“The commission will be very conscious of the reporting difficulties faced by campaigns and candidates,” Ravel said.

Durkee is scheduled for her first court appearance Oct. 19 in Sacramento.

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