Los Angeles (CNN) -- A prominent California Democrat campaign fund manager charged with defrauding a state legislator of $677,181 is in settlement negotiations with federal prosecutors, a law enforcement source said Tuesday.
Kinde Durkee, whose Durkee & Associates firm is based in Burbank, California, has been charged with two counts of mail fraud regarding the alleged misappropriation of $677,181 in campaign funds belonging to California Assemblyman Jose Solorio, a Democrat whose office is based in Anaheim, authorities said.
The law enforcement source asked for anonymity because the source wasn't authorized to speak publicly about the negotiations.
Durkee is accused of filing false disclosure reports to hide the misappropriations, according to an affidavit by FBI Agent Reginald Coleman.
Durkee, who appears to have signature authority over more than 400 bank accounts, including those for political campaigns, allegedly moved "substantial" sums of money from client campaign committees to her firm's accounts or other campaign accounts, Coleman said in the affidavit.
Durkee also allegedly spent funds from clients' accounts to make her firm's payroll and to pay for her mortgage, her American Express bill, her mother's assisted living facility expenses and other personal expenses, Coleman's affidavit said.
In an interview with the FBI on September 1, "Ms. Durkee admitted that she had been misappropriating her clients' money for years, and that forms she filed with the state were false," Coleman wrote.
Durkee and her attorney could not be reached by CNN for comment on Tuesday.
In the wake of the charges, U.S. Rep. Susan Davis, D-California, has accused Durkee of stealing "upwards of $250,000 in campaign funds," according to a letter that Davis sent to her supporters on Saturday. Durkee was also Davis' campaign fund manager, a Davis spokeswoman said.
"As this scandal emerges, she may well become known as the Bernie Madoff of campaign finance treasurers," Davis said about Durkee in the letter to supporters.
Lauren Horwood, spokeswoman for the U.S. Attorney's office in Sacramento, California, said prosecutors are looking at Davis' accusations and the campaign accounts of other Democrats that Durkee was managing.
"The investigation is looking at all of the accounts of clients of Kinde Durkee," including those of elected Democrats, Horwood said.
On her firm's website, Durkee states: "We have performed accounting and reporting for political campaigns day-in and day-out since 1972. Accounting, reporting and compliance management for political campaigns and nonprofits is quite different from standard business accounting; we understand the differences because we've specialized in political campaigns."
Durkee, who was arrested earlier this month and released on $200,000 bond, will return to federal court for a preliminary hearing on October 19 in Sacramento, Horwood said.
CNN's Casey Wian and Sara Weisfeldt contributed to this report.