Dianne Feinstein Campaign Asks FEC to Resolicit Donors

Posted April 12, 2012 at 1:38pm

Lawyers for Sen. Dianne Feinstein’s campaign committee asked the Federal Election Commission today to allow the California Democrat to resolicit donors after as much as $4.5 million was siphoned from committee accounts in an embezzlement scheme.

An FEC advisory opinion blocking such appeals to supporters who have already maxed out their allowable contributions would trample on constituents’ First Amendment rights to support candidates of their choosing, said attorney Marc Elias of Perkins Coie.

“Donors have a constitutional right to associate with and support a candidate of their choice … that right has [currently] been extinguished by a criminal act of the treasurer,” Elias told the commissioners.

Commissioners reviewing the case agreed to extend the review and said another draft advisory opinion may be circulated before a public hearing.

Feinstein is one of at least 50 victims who lost money to Kinde S. Durkee, a once-prominent campaign treasurer to California Democrats who pleaded guilty late last month to embezzling at least $7 million from her customers.

Though victims of the decadelong scheme include dozens of nonprofits, local Democratic groups and Reps. Laura Richardson, Susan Davis, Loretta Sanchez and Linda Sánchez, Feinstein’s re-election campaign was likely among the hardest hit, according to campaign finance filings.

Federal investigators have indicated that most of the money might never be recovered, forcing Feinstein to make a recent $5 million loan to her own campaign.

Feinstein’s lawyers question whether having supporters “replace” donations that were later embezzled violates campaign finance statutes limiting the amount an individual can give to any one federal candidate to $2,500 per election. Such a scenario is “not a double dipping, but a single dipping,” Elias said.

The FEC draft advisory opinion this month held that any contribution that actually reached the campaign was donated, regardless whether it was later used for other purposes.

“If a contributor’s previous contributions were either deposited in a bank account or cashed, those contributions count against the contributor’s per-election limit to the Committee … on the other hand, if a contribution was never deposited or cashed, (i.e., the founds never left the account of the contributor), the Commission concludes that the attempted contribution does not count,” the draft advisory opinion read.

The five FEC commissioners hearing the Feinstein matter — one was recused — asked Elias how the commission should handle similar situations in the future if it reverses course and allows the Senator to resolicit donors. Commissioners asked when, for example, should the FEC determine that an embezzlement has taken place and allow a candidate to resolicit — at arrest, indictment or guilty plea? Vice Chairwoman Ellen Weintraub questioned whether candidates might still be “twice as grateful” even if they did not wind up receiving twice the money.

Elias urged the panel to consider the specifics of the case and not engage in hypotheticals. “I think there is a difference between the rulemaking process and the advisory-opinion process,” he said.