FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 20463

In the Matter of )

) MUR5937

Romney for President, Inc., et aL )

SUPPLEMENTAL STATEMENT OF REASONS OF VICE CHAIRMAN

MATTHEW S. PETERSEN AND COMMISSIONERS CAROLINE C. HUNTER

AND DONALD F. McGAHN II

On March 10,2009, we released a statement of reasons explaining our rationale

for voting against the recommendations of the Office of General Counsel ("OGC") in

MUR 5937, which involved an individual (hereafter, "the respondent") who chartered a

plane to fly him, friends, and family members to a Romney fundraising event. Shortly

thereafter, Commissioners Bauerly and Weintraub issued a statement expressing their

views on the matter. With this Supplemental Statement, we address the issues raised by

Commissioners Bauerly and Weintraub and, furthermore, clarify the public record with

respect to this matter.

I. Statement of Commissioners Bauerly and Weintraub

The statement of Commissioners Bauerly and Weintraub makes a number of

contentions but never addresses either our legal arguments or policy concerns. Instead, it

primarily responds to arguments mistakenly attributed to us but which we never made.

Our colleagues contend that the Federal Election Campaign Act of 1971, as

amended ("the Act"), prohibits an invited volunteer from organizing and flying other

volunteers to a fundraising event, insisting that "the Romney campaign requested thai

Mr. Gardner travel to Boston, sit in a chair on the floor of the TD Banknorth Garden, and

spend an entire day making phone calls on behalf of the campaign"1

A. Requesting Attendance Is Not the Same as Requesting Travel.

Our colleagues first attack a straw-man—our supposed "claim that an 'invitation'

is not a 'request." They rebut this with the dictionary definition of "invitation" to

1

 MUR 5937, Statement of Reasons of Commissioners Cynthia L. Bauerly and Ellen L. Weintraub,

("Bauerly and Weintraub Statement") at S (emphasis in original).

2

 Id at 4 n. 17 (emphasis in original).
Page 2 of6

establish their assertion that "[w]e think it would surprise most recipients of invitations to

discover that their presence was not requested."3 Of course, we do not disagree with our

colleagues on this point. But that is because we never made an argument to the contrary

in the first place. Rather, we made two points. First, an individual's travel expenses may

be subject to the Act's limits, prohibitions, and reporting requirements only if a campaign

specifically requests or authorizes the travel. This reading of the Act is mandated by the

Supreme Court, which in Buckley v. Valeo held that "only travel that is "authorized or

requested* by the candidate or his agents would involve incidental expenses chargeable

against the volunteer's contribution limit."4 Thus, it is not enough for a campaign to

merely invite an individual to attend an event; instead, the travel must be undertaken "at

the direction of the candidate" before the travel expenses "may be properly viewed as a

contribution." Here, the Romney campaign invited the respondent to attend, but there is

no evidence that the campaign requested or authorized the respondent to pay travel

expenses for the family and friends who attended the event with him. Without such a

specific request from the Romney campaign, we could not, consistent with Supreme

Court precedent, conclude that the respondent's travel expenses came within the scope of

the Act.

And second, the Commission, in its entire history, has never held that merely

receiving an invitation to a campaign fundraising event subjects any resulting travel

expenses to the Act's limits, prohibitions, or reporting requirements. At a time when a

single keystroke can instantly send e-mail invitations to thousands (and perhaps millions)

of political supporters, if we were to determine (contrary to the instructions of the

Supreme Court) that simply receiving an invitation to attend a campaign event could

convert an individual's travel expenses above $1,000 into contributions, we would be

dramatically expanding the number of persons in violation of the Act. We refuse to take

that extreme step.

B. " 'On Behalf of Means Exactly What it Says."

We explained in our original statement that unreimbursed travel expenses made

independently of a campaign are not contributions because they are not "on behalf of the

candidate or his campaign committee. Our colleagues do not quarrel with this premise,

but they interpret the phrase "on behalf of' differently than we do. In fact, their

interpretation of this phrase became the centerpiece of their philippic against departing

from the "letter of the law." In a footnote, they contend (i) that the Act was never limited

to travelers "acting as agents" of a campaign, and (ii) that when it amended the Act's

travel exception, Congress did not intend to narrow what "on behalf of means.6 They

proceed to state: "We cannot and will not follow the letter of the law only when it is

3

 id

4

 424 U.S. 1,37 n. 43 (internal citations omitted) (emphasis added).

3

 Id. at 37 (emphasis added).

6

 Bauerly and Weintraub Statement at 5 n.21.
Page 3 of6

convenient and reject it when it is not. 'On behalf of the candidate' means exactly what it

says."7

Again, we agree that the Act only reaches travel expenses incurred "on behalf of'

a campaign. Moreover, our colleagues are certainly right that "on behalf of' means

exactly what it says. But that only begs the question as to what "on behalf of' actually

means. By using "on behalf of' synonymously with "for the benefit of," our colleagues

have failed to identify a distinction that, as noted by the American Heritage Collegiate

Dictionary, often gets confused. That dictionary offers a helpful primer on idiomatic

usage of the word "behalf:"

Traditionally, in behalf of and on behalf of have distinct senses. In behalf of

means "for the benefit of," as in We raised money in behalf of earthquake

victims. On behalf of means "as an agent of, on the part of," as in The guardian

signed the contract on behalf of the minor child. The two senses are often

confused even by reputable writers.8

Therefore, in this matter, while the respondent's travel expenses may accurately be said

to have been in behalf of ihe Romney campaign since the expenses benefited the

campaign, the travel expenses at issue cannot be deemed to have been on behalf of ihe

Romney campaign because there is no evidence that the campaign specifically requested

or authorized the travel. Again, as the Buckley Court held, travel must be "at the

direction of the candidate" before the related expenses will be considered a contribution.9

As our colleagues put it, "nothing in the legislative history of the 1979

amendments suggests that the drafters put the words 'on behalf of on paper but intended

something entirely different."10 We agree. When enforcing the letter of the law as

Commissioners, we must presume that Congress understood the significance of its choice

of prepositions.11

7

 Id

* American Heritage Collegiate Dictionary 123 (3d ed. 1993) (emphasis in original). Cf., Bauerly

and Weintraub Statement at 5-6 (e.g., because "Kem Gardner ensured that a substantial portion of the

participants did show up and thereby contributed significantly to the success of the campaign1* his efforts

were "on the campaign's behalf1).

9

 B«dUey,424U.S.at37.

10

 Bauerly and Weintraub Statement at 5 n.21.

11

 We must also presume same with respect to the Commission regulations. For example, these

regulations define "Agent" in terms of what a person is authorized to do "on behalf of the principal. See

11C.F.R.§§ 109.3,300.2(b).
Page 4 of6

C. Case Law and Legislative History Support This Position

A couple of other points raised by our colleagues are also worth mentioning

briefly. First, while they acknowledge that Buckley stands for the principle that the Act

reaches "only travel that is 'authorized or requested1 by the candidate or his agents,"12

and that the Court was concerned about "the administrative chaos that would be produced

if each volunteer and candidate had to keep track of amounts spent on unsolicited

travel,"13 they never address how the Commission could adopt their interpretation of "on

behalf of without causing the very administrative chaos that the Court requires us to

avoid.

Second, our colleagues argue that "[t]he legislative history of the travel exception

provides some important context in this matter."14 Specifically, they claim that "the 1979

amendments to the Act following Buckley reflect the Court's 'authorized or requested'

instruction."15 However, they do not cite to (nor can we find) any statements in the

legislative history that mention Buckley. As we noted in our original statement, the 1979

legislative history demonstrates that the amendment of the travel exception was designed

to expand the exception to volunteer travel on behalf of political parties as well as to

travel by "individuals who are being paid by a candidate or party committee."16

Nevertheless, to the extent it intended the 1979 amendments to "reflect the Court's

'authorized or requested' instruction," Congress's use of the phrase "on behalf of' only

reinforces our argument (as we explained above).

Finally, our colleagues puzzlingly argue that we wish to limit the travel exception

to "volunteers." They state, "Notably, the 1979 amendment removed the term

'volunteers' from the exception, however, it appears that our colleagues ... have chosen

to read the term 'volunteers' back into this section of the Act."17 Nothing could be

further from the truth. In fact, as we just showed, the amendments extended the travel

exception to cover paid employees of authorized campaigns and political parties.18 That

Congress stripped the word "volunteers" from the exception supports our view that the

exception in question only applies to authorized travel undertaken on behalf of- that is

"as an agent of, or on the part of - a campaign.

12

 Bauerly and Weintraub Statement at 3-4 (quoting Buckley v. Valeo, 424 U.S. 1,37 n.43 (1976)).

13

 Id at 4.

14

 /dat3.

15

 7<iat4.

16

 MUR 5937, Statement of Reasons of Vice Chairman Matthew S. Petersen and Commissioners

Caroline C. Hunter and Donald F. McGahn II, at 2-3 n. 9 (citing H.R. Doc. No. 96-422, Comm. on House

Admin., at 8 (1979)).

17

 Bauerly and Weintraub Statement at 4.

18

 See supra note 16.
Page 5 of6

II. Public Disclosure

Recently, there has been public interest expressed in seeing OGC's analysis in

this and other matters.19 Although the Commission ultimately rejected OGC's

recommendations in this MUR, OGC's analysis did inform our decision. For this reason,

and to better supplement the public record and to provide additional context to the areas

of disagreement with our colleagues discussed above, we are attaching the General

Counsel's Report and Factual and Legal Analysis that OGC provided to the Commission

in this matter.

Since joining the Commission, we have had concerns about Commission

information being withheld from the public. Disclosure of General Counsel Reports is

pj just one example. Except for two years between 2001 and 2003, from the inception of

cvj the Commission through January 2007, the Commission released these reports as a matter

W of course. Commission practice had been that OGC submitted a First General Counsel's

^ Report ("FGCR") to the Commission containing a recommendation regarding whether or

_ not to find reason to believe ("RTB") that a respondent violated the law. In matters

*j where the Commission voted to find RTB, the respondent was notified of the finding in a

O Factual and Legal Analysis ("F&LA"), which is based on the FCGR and sets forth the

°* Commission's factual and legal basis for the RTB finding. When the matter was

TM eventually closed, both the FGCR and the F&LA were made public.

Before we were confirmed to the Commission, though, a new practice was

adopted under which only the F&LA - and not the FGCR - is placed on the public record

after the matter is closed. Moreover, if four Commissioners do not vote to approve

OGC's RTB recommendations, then neither the proposed F&LA nor the FGCR is made

public. Instead, the Commissioners who voted against finding RTB explain the factual

and legal basis for their decision in a statement of reasons that becomes the public basis

of the Commission's action. Commissioners that voted to find RTB may also write

statements. These are included as part of the public record, even though they do not

constitute the reasoning of the Commission.

Furthermore, subsequent General Counsel Reports (i.e., those other than the

FCGR) sometimes are made "public" as well. But the versions that are publicly

disclosed often have significant portions redacted. This has hampered our ability to fully

explain our votes and has made it difficult for the public to follow the actions of the

Commission. For example, in MUR 5541 (November Fund), we voted against OGC's

recommendations and thus wrote a statement of reasons to explain why. But, on OGC's

strong advice, we revised the statement to avoid revealing information that was a basis of

19

 See, e.g., Paul S. Ryan, Why Is the FEC Withholding Documents From the Public in Violation of

Its Own Regulations and Policy Statement?', Campaign Legal Center Blog (May 29,2009), available at

http://wwwxlcblog.org/blog_item-287.html. We were not aware that this FOIA request had been denied or

was on appeal until we received notice from the Campaign Legal Center.
Page 6 of 6

our decision which had been redacted from the publicly disclosed Third General

Counsel's Report.20

HI. Conclusion

For these reasons and to clarify the public record, we submit this statement with

the attached FGCR and F&LA.

ate MATTHEW S. PETERSEN

Vice Chairman

Date CAROLINE C. HUNTE1

Commissioner

DONALD F. MCGAHNII

Commissioner

20

 In the Third General Counsel's Report (at 5) for MUR 5541, in an effort to support its

recommendation to "[a]ccept the attached conciliation agreement with the November Fund and Bill

Sittman, in his official capacity as treasurer,*' OGC stated that the Commission ought to accept that

agreement, inter alia:

Because this matter arose from the 2004 election cycle when the political committee status of 527

organizations was still being debated and there was some confusion among the regulated

community about the applicable law, there is a certain amount of litigation risk involved in

pursuing the November Fund and the Chamber in district court litigation. This risk is particularly

enhanced in this case, where the political committee status threshold was reached solely as a result

of contributions received in response to solicitations, and not as a result of The November Fund

making expenditures. The fact that the Chamber is the only donor to a 527 organization thus far

that the Commission has found reason to believe violated the law in connection with its

contributions further adds to the litigation risk with regard to the Chamber.
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FEDERAL ELECTION COMMISSION

999 E Street, N.W.

Washington, D.C. 20463

FIRST GENERAL COUNSEL'S REPORT

FEB 2 9 2008

RECESSED

FEDERAL ELECTION

COMMISSION

SECRETARIAT

FE3 21 P 2'- 51

SENSITIVE

COMPLAINANT:

RESPONDENTS:

RELEVANT STATUTES

AND REGULATIONS:

MUR: 5937

DATE COMPLAINT FILED: September 4, 2007

DATE OF NOTIFICATION: September 11,2007

LAST RESPONSE RECEIVED: November 2,2007

DATE ACTIVATED: December 4,2007

I

EXPIRATION OF STATUTE OF

LIMITATIONS: June 24,2012

Greg Sabine

Romney for President, Inc. and

Darrell Crate, in his official capacity

as treasurer

Kern Gardner

2U.S.C§431(8)(A)

2 U.S.C. §§ 431(8)(B)(i) and (iv)

2U.S.C§434(b)

2U.S.C.§441a(a)

2U.S.C.§441a(I)

11 C.F.R. § 100.74

11C.F.R. §100.79

INTERNAL REPORTS CHECKED: None

FEDERAL AGENCIES CHECKED: None

I. INTRODUCTION

The complaint in this matter alleges that Kem Gardner made, and Romney for President,

Inc. and Danrell Crate, in his official capacity as treasurer ("RFP") accepted, an excessive in-kind

contribution when Gardner paid $150,000 to charter an airline plane to fly himself and a large

number of other persons from Utah to Boston to work as volunteers at an RFP fundraising event.
MUR 5937 2

First General Counsel's Report

1 Complaint at 1. In their responses, both RFP and Gardner contend that travel expenses incurred

2 to attend Fundraisers are not contributions. As discussed in more detail below, however, Gardner

3 and the attendees accompanying him on his chartered flight were volunteers providing services

4 on behalf of the candidate, and any unreimbursed volunteer travel payment exceeding $1,000

5 constitutes a contribution. See 2 U.S.C. § 431(8)(B)(iv), 11 C.F.R. § 100.79. Accordingly, given

6 that the volunteers onboard the chartered flight did not reimburse Gardner for any travel

7 expenses, his reported payment of 5150,000 for the flight constitutes an in-kind contribution

8 exceeding the maximum allowable limit pursuant to 2 U.S.C. § 431(8)(B)(iv) and 11 C.F.R.

9 § 100.79. Thus, Kern Gardner made, and RFP received, an excessive in-kind contribution. RFP

10 also failed to report the receipt of the in-kind contribution. Therefore, we recommend that the

11 Commission find reason to believe that Kern Gardner violated 2 U.S.C. § 441a(a) and that

12 Romney for President, Inc. and Darrell Crate, in his official capacity as treasurer, violated

13 2 U.S.C. §§ 434(b) and 441a(i)- We also recommend that the Commission enter into pre14 probable conciliation with both Mr. Gardner and RFP.

15 II. FACTUAL SUMMARY

16 The event in issue, which RFP dubbed "America's Calling," took place on June 25,2007.

17 RFP's June 25,2007 press release following the event states "Mitt Romney, family, friends and

18 supporters gathered at the TD Banknorth Garden to reach across the country and raise the

19 resources necessary for a national campaign" and notes that the participants made more than

20 20,000 telephone calls. The press release also states that the calling arena, which was more than

21 17,000 square feet, housed more than 600 volunteer fundraisers who used 400 landline phones.

22 The calling event raised approximately $2 million. RFP Response at 2. The press was invited to
MUR 5937 3 '

First General Counsel's Report I

I

1 cover the cveni and il received extensive press coverage.1 See. e.g., Romney raises campaign \

2 cash at Boston sports venues. June 25, 2007; Michael Luo, Romney Campaign Reaches Back |

3 fnto His Deep Pockets, New York Times, June 26, 2007.

4 In a video posted on the campaign's website, RFP national finance director Spencer

5 Zwick, shown speaking the evening before the calling event, stated: '

6 Well, we've got a great group of supporters from around the '

7 country... .we have close to a thousand people that have '

8 traveled at their own expense coming to Boston with the idea !

9 that they are going to raise money to help us push toward the I

10 end of the quarter. So tonight [a Fenway Park barbecue on I

11 July 24] is a thank you for their support, but by and large we I

12 are here to raise money. So starting tomorrow, we'll go to the I

13 Boston Garden and they will call their personal rolodex. They1 II I

14 call their friends. They'll call their family. They'll call people I

15 that maybe contributed a little bit but need to contribute some .

16 more. So our goal is to raise money and expand our base of

17 support.

18

19 Available at http://mittromney.permissiontv.com/index.html.

20

The June 25, 2007 event followed an extremely successful similar event sponsored by the Romney

campaign in January 2007, called "National Calling Day." According to a press account concerning the earlier '

event. Spencer Zwick, RFP's fundraising director, reportedly wanted Romney, a multimillionaire, to avoid the fates I

of other wealthy candidates, like Steve Forbes and Ross Perot, who provided considerable self-financing. Zwick is |

quoted as saying, "By Mitt or anyone else self-funding, you don't have a lot of people making investments in you.....

To be credible, you have to show that you have raised resources from around the country." See David D.

Kirkpatrick. Romney Used His Wealth to Enlist Richest Donors. The New York Times. April 6, 2007. Thus. I

according to the article, I

[i]nstead of tapping his own money directly, Mr. Romney embarked on an effort to

leverage his personal fortune into donations to his Republican primary campaign.... '

At the start of the first quarter of this year, for example, Mr. Romney lent his campaign 1

S2.3S million to pay for an elaborate demonstration of just how fast he could raise money |

from others. He rented the Boston convention center, furnished it with more than 400

laptop computers, loaded each with custom software and had more than 400 telephone

lines installed. He invited 400 wealthy supporters, including dozens of chief executives

he knew through business connections, to a reception at an adjacent hotel. The next day

each sat down before a personal-contact list loaded into an assigned laptop, with dozens of

technical support staff and campaign finance advisers standing by to assist. Reporters

watched from the sidelines for hours as Mr. Romney's supporters raised S6.3 million.

Id. .
MUR5937 4

First General Counsel's Repon

1 Kern Gardner, a resident of Utah, states in his response to the complaint that at the

2 invitation of RFP, he traveled to Boston to raise funds for RFP and to attend a Fenway Park

3 dinner, and chartered a plane at his own expense for his travel to and from Boston. He also states

4 that he invited a large group of friends and families who were planning to attend the events to

5 accompany him on the plane.2 Gardner Response at 1 -2. His response does not address the

6 alleged $150,000 cost of the plane, which was based on a press article attached to the complaint.

7 See Thomas Burr, Did Uiahn violate contribution laws by paying for Romney volunteers 'flight

8/0 Boston?. The Salt Lake Tribune, June 29, 2007 (reporting that Gardner told The Salt Lake

9 Tribune thai he paid SI 50,000 to charter a Jet Blue plane to fly Utahns to Boston).3 At the time

10 of the event, Gardner had already contributed $2,300 to RFP, the maximum for the primary; he

11 never made a monetary contribution to Romney for the general election.

12 HI. ANALYSIS

13 The Federal Election Campaign Act of 1971, as amended ("the Act") provides that no

14 person shall make contributions to any candidate and his authorized political committee with

15 respect to any election for Federal office that, in the aggregate, exceed 52,300. 2 U.S.C.

16 § 441 a(a)( 1). The Act also provides that no candidate or political committee shall knowingly

2

 Kem Gardner is the founder of the Gardner Company, a commercial and real estate development firm.

Known for being active in Utah affairs, Gardner was instrumental in persuading Romney to serve as the CEO of the

organizing committee for the 2002 Winter Olympic Games, which at the time were embroiled in numerous financial

scandals. See David Lightman, Candidate known as turnaround artist, lslandpacket.com (January 12,2008)

available at http://www.islandpacket.com/news/local/story/128897.hnnl. Romney's subsequent actions as CEO have

been credited with "rescuing" these Olympic Games. See Kirk Johnson, The Long Run: In Olympics Success.

Romney Found New Edge. The New York Times, September 19.2007. In a July 31,2007 RFP press release,

Romney named Gardner one of the RFP's National Finance Co-Chairs for the State of Utah.

1

 Gardner's Response also does not address how many people he transported. On his website, blogger Eli

Eyre, who attended the *'America's Calling" event, apparently traveling on Gardner's plane, states "Kem Gardner

chartered the whole flight, and between the ISO people on the plane, about $700,000 was raised. Not bad."

htrpLVeliiahscsevi-c.bloBspot.com. The press account attached to the complaint account also reports that 150 people

were onboard the chartered flight.
MUR 5937

First General Counsel's Report

1 accept any contribuiion in violation of the prescribed limits, 2 U.S.C. § 44la(Q, and that political

2 committees must report all contributions. 2 U.S.C. § 434(b). The Act defines the term

3 "contribution" as (1) "any gift, subscription, loan, advance, or deposit of money or anything of

4 value made by any person for the purpose of influencing any election for Federal office."

5 2U.S.C.§431(8)(A)(i);*re«/50 11 C.F.R. § 100.52. ("anything of value" includes all in-kind

6 contributions).

7 The Act exempts from the definition of contribuiion "the value of services provided

8 without compensation by any individual who volunteers on behalf of a candidate or political

9 committee," 2 U.S.C.§431(8XB)(i), .1 C.F.R. § 100.74 (the "volunteer exception"), as well as,

10 in pertinent part, any unreimbursed payment for travel expenses made by any individual on

11 behalf of a candidate to the extent that the cumulative value of such activity by such individual

12 does not exceed $ 1,000 with respect to any one election. 2 U.S.C. § 43 l(8)(B)(iv), 11 C.F.R.

13 § 100.79.

14 In Advisory Opinion (" AO") 2007-8. the Commission stated that the volunteer exception

15 "is restricted to donations of the volunteer's own time and services and does not generally

16 exempt actual costs incurred on behalf of a Federal candidate or political party." Asan

17 illustration of that restriction, the Commission advised that if the AO requester traveled across

18 the country at the request of a Federal candidate to arrange for an entertainer to perform at the

19 candidate's campaign event, then the unreimbursed payment for that travel would be a

20 contribution to that candidate's committee to the extent that it exceeded $ 1,000. Id.

21 In its Response, RFP appears to suggest that if attendees travel to an event that is

22 nominally a "fundraiser"—that is, an event at which funds arc raised—the travel expenses are not

23 subject to the restrictions on the volunteer exception. According to the RFP, the complaint
MUR 5937 6

First General Counsel's Report

1 apparently contends that outside the volunteer exception, "federal committees must pay for the

2 travel of all fundraising event attendees/or every type of fundraising event." RFP Response at 1

3 (emphasis in original). But the complaint does not say this and it is not the case.

4 There is a distinction between typical fundraising events at which attendees eat lunch or

5 dinner, dance, play golf, view performances, and/or listen to speakers, and other such events

6 where the attendees provide uncompensated services to the campaign. As to the former, where

7 individuals do not provide services on behalf of the candidate, but merely make or deliver

8 contributions, their travel costs over SI ,000 are not in-kind contributions. See MUR 5020

9 (Trump Hotels and Casinos et al.) (a supporter's payment of his plane ticket and a friend's plane

10 ticket to a candidate's fundraiser was not an in-kind contribution, given that neither did any work

11 on behalf of the candidate at the fundraiser). On the other hand, where the event involves

12 volunteers, at the invitation of the campaign, expending their time and services on behalf of the

13 candidate, the Act and the regulations provide that their unreimbursed travel expenses exceeding

14 SI,000 are contributions. 2U.S.C §431(8)(B)(iv), 11 C.F.R. § 100.79.

15 Kern Gardner and his fellow attendees, at the invitation of RFP, participated as volunteer

16 fundraisers for Mitt Romney in the "America's Calling" event. A January 9,2008 press release,

17 in which RFP announced the results of another volunteer phone-a-thon in Boston on that date,

18 states that "[t]oday marks the first Romney for President finance event in which general election

19 dollars were raised." Since the June 25,2007 event was therefore geared to raising funds for the

20 primary, for which Gardner had already "maxed-out," it appears that Gardner's participation in

21 that event was solely devoted to raising money from others on Romney's behalf. That would

22 have been true for the other participants who had already made the maximum contribution to

23 Romney for the primary by June 25,2007.
MUR 5937 7

First General Counsel's Report

1 RFP attempts to downplay the use of the volunteer services by describing the event as one

2 "where donors were invited 10 bring check contributions, solicit friends and personal contacts,

3 and socialize with other donors.. ..a large fundraiser where donors—some 'maxed out/ and some

4 noi —also solicited contributions." RFP Response at 2. (Emphasis in the original). Bui RFP's

5 own press releases and website videos show otherwise, as they reveal a meticulously staged

6 phone-a-thon thai reflected a massive volunteer effort.

7 Far from the volunteer activity being incidental to the fundraising event, it was, in fact,

8 the event itself. In effect, "America's Calling" constituted a human telephone bank staffed by

9 Romney supporters, which, over the course of several hours, made thousands of similar phone

10 calls touting Mitt Romney and soliciting contributions. Cf. 11 C.F.R. §§ 100.26-28.

11 Accordingly, the participants' donations of their time and service, and their unreimbursed travel

12 expenses not in excess of SI ,000, were not contributions. However, as an unreimbursed travel

13 expense exceeding $1,000, the reported Si 50,000 cost Gardner incurred in chartering a plane to

14 travel to and from the event, constituted an excessive in-kind contribution. See 2 U.S.C.

15 § 431(8)(BXiv), 11 C.F.R. § 100.79.

16 Based on the above, we recommend that the Commission find reason to believe that Kem

17 Gardner violated 2 U.S.C. § 44la(a) by making an excessive in-kind contribution to Romney for

18 President, Inc. consisting of unreimbursed travel expenses exceeding $1,000 paid on behalf of

19 the candidate.4 RFP has long known that Gardner paid for these travel expenses on behalf of the

20 candidate/campaign and did not reimburse him. Therefore, we also recommend that the

4

 The complaint references the aforementioned January 2007 calling event, supra footnote 1, and suggests

that the Commission should also investigate whether there were excessive in-kind contributions for travel in

connection with that event. Complaint at 1. The complaint contains no specific allegations concerning the January

2007 event, and we have found no information suggesting thai any volunteers (or others) chartered a plane or

otherwise incurred considerable travel expenses to participate in that event.
MCR 5937 8

First General Counsel's Report

1 Commission find reason to believe that Romney for President, Inc. and Darrell Crate, in his

2 official capacity as treasurer violated 2 U.S.C. § 441 a(f) by knowingly accepting an excessive in3 kind contribution. Finally, because RFP did not report Gardner's in-kind contribution, we

4 recommend that the Commission find reason to believe that Romney for President, Inc. and

5 Darrell Crate, in his official capacity as ireasurer, violated 2 U.S.C. § 434(b).

6 IV. DISCUSSION OF CONCILIATION AND CIVIL PENALTY

7 We recommend that the Commission authorize conciliation prior to a finding of probable

8 cause to believe. |

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MUR 5937

First General Counsel's Report

RECOMMENDATIONS

1. Find reason to believe that Romney for President, Inc. and Darrell Crate, in his

official capacity as treasurer violated 2 U.S.C. § 441a(f) by knowingly accepting an

excessive in-kind contribution;

2. Find reason to believe that Romney for President, Inc. and Darrell Crate, in his

official capacity as treasurer violated 2 U.S.C. § 434(b) by failing to disclose an

excessive in-kind contribution;

3. Find reason to believe that Kem Gardner violated 2 U.S.C. § 441 a(a) by making an

excessive in-kind contribution to Romney for President Inc;

4. Enter into pre-probable cause conciliation with Romney for President, Inc. and

Darrell Crate, in his official capacity as treasurer, and Kem Gardner, prior to a finding

of probable cause to believe;

5. Approve the attached Conciliation Agreements;

6. Approve the attached Factual and Legal Analyses; and
MUR 5937

First General Counsel's Report

10

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 16

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 17

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7. Approve the appropriate letters.

Thomasenia P. Duncan

General Counsel

/I/) / U /) 0 nI./**'* u<do*

* 'n/ BY: /%X^V/~1/X___ j ///'vs .

Date Mark D. Shonkwiler

Acting Deputy Associate General Counsel

for Enforcement

d *f *<-f

\^j i / / /ff-f /

'Susan L. Lebeaux ""

Assistant General Counsel

— J^^ // "— ^ S S/*^ CX Zfa+jf^

RQ^ (J Luckett

Attorney

Attachments

l i i n i

3. Factual and Legal Analysis for Romney for President, Inc. and Danel) Crate,

in his official capacity as treasurer

4. Factual and Legal Analysis for Kern Gardner
1 FEDERAL ELECTION COMMISSION

2 FACTUAL AND LEGAL ANALYSIS

3

4 RESPONDENT: Romney for President, Inc. and Darrell Crate, MUR 5937

5 in his official capacity as treasurer

6

7 I. INTRODUCTION

8

9 The complaint in this matter alleges that Kern Gardner made, and Romney for President, Inc.

10 and Darrell Crate, in his official capacity as treasurer ("RFP") accepted, an excessive in-kind

11 contribution when Gardner paid $150,000 to charter an airline plane to fly himself and a large

12 number of other persons from Utah to Boston to work as volunteers at an RFP fundraising event.

13 Complaint at 1. In response, RFP contends that travel expenses incurred to attend fundraisers are

14 not contributions. As discussed in more detail below, however, Gardner and the attendees

15 accompanying him on his chartered flight were volunteers providing services on behalf of the

16 candidate, and any unreimbursed volunteer travel payment exceeding S1.000 constitutes a

17 contribution. See 2 U.S.C. § 431 (8)(B)(iv), 11 C.F.R. § 100.79. Accordingly, given that the

18 volunteers onboard the chartered flight did not reimburse Gardner for any travel expenses, his

19 reported payment of Si 50.000 for the flight constitutes an in-kind contribution exceeding ihe

20 maximum allowable limit pursuant to 2 U.S.C. § 431(8)(B)(iv) and 11 C.F.R. § 100.79. Thus, Kem

21 Gardner made, and RFP received, an excessive in-kind contribution. The RFP also failed to report

22 the receipt of the in-kind contribution. Therefore, the Commission has found reason to believe that

23 Romney for President, Inc. and Darrell Crate, in his official capacity as treasurer, violated 2 U.S.C.

24 §§434(b)and441a(f).

ATTACHMEKT.

Page
MUR 5937 2

Factual and Legal Analysis

Roinney for President. Inc. and Darrell Crate, in his official capacity as treasurer

1 II. FACTUAL AND LEGAL ANALYSIS

2 A. Facts

3

A The event in issue, which RFP dubbed "America's Calling," took place on June 25,2007.

5 RFP's June 25, 2007 press release following the event states "Milt Romney, family, friends and

6 supporters gathered at the TD Banknonh Garden to reach across the country and raise the resources

7 necessary for a national campaign" and notes that the participants made more than 20,000 telephone

8 calls. The press release also slates that ihe calling arena, which was more than 17,000 square feet,

9 housed more than 600 volunteer fundraisers who used 400 landiine phones. The calling event raised

10 approximately S2 million. RFP Response at 2. The press was invited to cover the event and it

11 received extensive press coverage.1 See. e.g.. Romney raises campaign cash at Boston sports

12 venues. June 25,2007; Michael Luo, Romney Campaign Reaches Back Into His Deep Pockets. New

13 York Times, June 26, 2007.

The June 25,2007 event followed an extremely successful similar event sponsored by the Romney campaign in

January 2007, called "National Calling Day." According to a press account concerning the earlier event. Spencer

Zwick. RFP's fundraising director, reportedly wanted Romney, a multimillionaire, to avoid the fates of other wealthy

candidates, like Sieve Forbes and Ross Perot, who provided considerable self-financing. Zwick is quoted as saying, "By

Min or anyone else self-funding, you don't have a lot of people making investments in you.... To be credible, you have

10 show that you have raised resources from around the country." See David D. Kirkpathck, Romney Used His Wealth

10 Enlisi Richest /Donors. The Sew York Times, April 6,2007. Thus, according to the article,

[i]nstead of tapping his own money directly, Mr. Romney embarked on an effort to

leverage his personal fortune into donations 10 his Republican primary campaign....

At the stan of the first quarter of this year, for example, Mr. Romney lent his campaign

S2.3S million to pay for an elaborate demonstration of just how fast he could raise money

from others. He rented the Boston convention center, furnished it with more than 400

laptop computers, loaded each with custom software and had more than 400 telephone

lines installed. He invited 400 wealthy supporters, including dozens of chief executives

he knew through business connections, to a reception at an adjacent hotel. The next day

each sat down before a personal-contact list loaded into an assigned laptop, with dozens of

teclinical support staff and campaign finance advisers standing by to assist. Reporters

watched from the sidelines for hours as Mr. Romney's supporters raised S6.S million.

ld

 ATTACHMENT-_=

Page of
MUR 5937 3

Factual and Legal Analysis

Romney Tor President. Inc. and Darrell Crate, in his official capacity as treasurer

1 In a video posted on the campaign's website, RFP national finance director Spencer Zwick,

2 shown speaking the evening before the calling event, stated:

3 Well, we've got a great group of supporters from around the

4 country... .we have close to a thousand people that have

5 traveled at their own expense coming to Boston with the idea

6 that they are going to raise money to help us push toward the

7 end of the quarter. So tonight [a Fenway Park barbecue on

^ 8 July 24] is a thank you for their support, but by and large we

«q- 9 are here to raise money. So starting tomorrow, we'll go to ihe Boston

<N 10 Garden and they will call their personal rolodex. They'll call their

W 11 friends. They'll call their family. They'll call people

^ 12 that maybe contributed a little bit but need to contribute some more.

„ 13 So our goal is to raise money and expand our base of support.

«T 14

O 15 Available at http://mittromney.permissiontv.com/index.htmL

CD 16

<M I/ The available information indicates that Utah resident Kem Gardner, at the invitation of

18 RFP, traveled to Boston to raise funds for RFP and to attend a Fenway Park dinner, and chartered a

19 plane at his own expense for his travel to and from Boston. He also apparently invited a large group

20 of friends and families who were planning to attend the events to accompany him on the plane.:

21 RFP's response does not address the alleged S150,000 cost of the plane, which was based on a press

22 article attached 10 the complaint. See Thomas Burr, Did Uiahn violate contribution laws by paying

23 for Romney volunteers 'flight to Boston?. The Salt Lake Tribune, June 29,2007 (reporting that

24 Gardner told The Salt Lake Tribune that he paid SI 50,000 to charter a Jet Blue plane to fly Utahns

:

 Kem Gardner is the founder of the Gardner Company, a commercial and real estate development firm. Known

for being active in Utah affairs, Gardner was instrumental in persuading Romney to serve as the CEO of the organizing

committee for the 2002 Winter Olympic Games, which at the time were embroiled in numerous financial scandals. See

David Lightman, Candidate known as turnaround anal, lslandpacket.com (January 12, 2008) available al

hitp.v www.islandpacket.com'newsflocal/siory.'128897.html. Romney's subsequent actions as CEO have been credited

\viih "rescuing" these Olympic Games. See Kirk Johnson. The Long Run: In Olympics Success. Romney Found New

Edge. The New York Times. September 19,2007. In a July 31, 2007 RFP press release. Romney named Gardner one of

the RFP's National Finance Co-Chairs for the State of Utah.

ATTACHMENT. 3

Page 3 of _IL
MUR 593? 4

Factual and Legal Analysis

Romney for President. Inc. and Darrel) Craie. in his official capacity as treasurer

1 lo Bosion).3 At ihe lime of the event. Gardner had already contributed S2.300 lo RFP, the

2 maximum for the primary; he never made a monetary contribution to Romney for the general

3 election.

4 B. Analysis

5 The Federal Election Campaign Act of 1971, as amended ("the Act") provides that no

6 person shall make contributions to any candidate and his authorized political committee with respect

7 to any election for Federal office that, in the aggregate, exceed 52,300. 2 U.S.C. § 441 a(a)( 1). The

8 Act also provides that no candidate or political committee shall knowingly accept any contribution

9 in violation of the prescribed limits, 2 U.S.C. § 441a(f). and that political committees must report all

10 contributions. 2 U.S.C. § 434(b). The Act defines the lerm "contribution" as (1) "any gift,

11 subscription, loan, advance, or deposit of money or anything of value made by any person for the

12 purpose of influencing any election for Federal office." 2 U.S.C. § 431 (8)(A)(i); see also \ 1 C.F.R.

13 § 100.52. ("anything of value" includes all in-kind contributions).

14 The Act exempts from the definition of contribution "the value of services provided without

15 compensation by any individual who volunteers on behalf of a candidate or political committee,"

16 2 U.S.C. § 431(8XB)(i), 11 C.F.R. § 100.74 (the "volunteer exception"), as well as, in pertinent pan,

i 7 any unreimbursed payment for travel expenses made by any individual on behalf of a candidate to

IS the extent that the cumulative value of such activity by such individual does not exceed 51,000 with

1<5 respect to any one election. 2 U.S.C. § 431(8)(BXiv), 11 C.F.R. § 100.79.

20

3

 RFP's Response also does not address how many people he transported. On his website, blogger Eli Eyre, who

attended the "America's Calling" event, apparently tiaveling on Gardner's plane, states "Kern Gardner chartered the

whole flight, and between the I SO people on the plane, about $700,000 was raised. Not bad."

hup:-'elijahscsf vrg.blogsnot.com. The press account attached to the complaint account also rcpons that ISO people

were onboard the chartered flight.

ATTACHMENT *

Page I of
MUR 5937 .

Factual and Legal Analysis

Rcmroy for P,«s,den.. Inc. ir* Da«ll Crae. m his offic.,1 capacuy as «as«er

' In Advisory Opinion ("AO") 2007-8, the Commission stated ,ha, ,he volunteer exception "is

2 restricted ,o donations of the volunteer's own time and services and does no, general., exempt

> ac,ua. costs incurred on beha.f of a Federal candidate or po.i.ica. party." As an illus.ra.ion of «ha.

< res.ric.ion, ,he Commission advised tha. if ,he AO reques,er .raveled across the country a, the

5 reques. of a Federai candidate ,o arrange for an entertainer to perform a, the candidate's campaign

6 even,, then .he unreimbursed payment for ,ha, .rave, would be a comribu.ion .o ,ha, candidate's

7 commitiee 10 the cxlem that it exceeded S1,000. Id.

I In its Response. RFP appears to suggest ,hat if at.endees travel ,o an even, ,ha, is nominally

9 a "fundraiser"-.!*,, is, an even, a, which funds are raised-me travel expenses are no, subject ,o

•0 ,he resmc,ions on ,he volumeer excep,ion. According ,o the RFP, .he contain, apparent.y

I - comends ,ha, ou.side .he volunteer exception, "federal committees must pay for the trave. ofoH

.: fundraising even, auendees/o, evefy type of fundraising even," RFP Response a, . (emphasis in

13 original). But the complaint does not say (his and it is no. .he case.

" There is a distinction between typical fundraising events a. which attendees eat lunch or

'* dinner, dance, play golf, view performances, and/or listen .0 speakers, and o,her such events where

.6 .he attendees provide uncompensated services ,o ,he campaign. As to the former, where individuals

n do no, provide services on behalf of the candidate, bu, merely make or deliver contributions, their

.8 travel cos.s overSl.OOO are no, in-kind comribu.ions. See MUR 5020 (Trump Hotels and Casinos

19 ei a/.) (a supporter's payment of his plane .icket and a friend's plane ticke, ,o a candida.e's

20 fundraiser was no, an in-kind con.ribution, given tha, neither did any work on behalf of the

21 candidate a. .he fundraiser). On .he other hand, where .he even, involves volunteers, at the

22 invitatton of the campaign, expending their time and services on behalf of the candidate. ,he Act and

ATTACHMENT

Of
MUR 5937 6

Factual and Legal Analysis

Romney for President. Inc. and Darrell Crate, in his official capacity as treasurer

1 the regulations provide that their unreimbursed travel expenses exceeding S1.000 are contributions.

2 2 U.S.C. § 431(8XB)(iv), 11 C.F.R. § 100.79.

3 Kern Gardner and his fellow attendees, at the invitation of RFP, participated as volunteer

4 fundraisers for Mitt Romney in the "America's Calling" event. A January 9,2008 press release, in

5 which RFP announced the results of another volunteer phone-a-thon in Boston on that date, states

6 that "[tjoday marks the first Romney for President finance event in which general election dollars

7 were raised." Since the June 25, 2007 event was therefore geared to raising funds for the primary,

8 for which Gardner had already "maxed-oul," it appears that Gardner's participation in that event

9 was solely devoted to raising money from others on Romney's behalf. That would have been true

10 for the other participants who had already made the maximum contribution to Romney for the

11 primary by June 25,2007.

12 RFP attempts to downplay the use of the volunteer services by describing the event as one

13 "where donors were invited to bring check contributions, solicit friends and personal contacts, and

14 socialize with other donors.. ..a large fundraiser where donors—some 'maxed out/ and some not—

15 also solicited contributions.11 RFP Response at 2. (Emphasis in the original). But RFP*s own press

16 releases and website videos show otherwise, as they reveal a meticulously staged phone-a-thon that

17 reflected a massive volunteer effort.

18 Far from the volunteer activity being incidental to the fundraising event, it was, in fact, the

19 event itself. In effect, "America's Calling" constituted a human telephone bank staffed by Romney

20 supporters, which, over the course of several hours, made thousands of similar phone calls touting

21 Mitt Romney and soliciting contributions. Cf. 11 C.F.R. §§ 100.26-28. Accordingly, the

22 participants' donations of their time and service, and their unreimbursed travel expenses not in

ATTACHMENT—^-_

Page & of _JL
MUR 5937 7

Factual and Legal Analysis

Romney for President. Inc. and Darrell Crate, in his official capacity as treasurer

1 excess of SI .000. were not contributions. However, as an unreimbursed travel expense exceeding

2 S1,000, the reported SI50,000 cost Gardner incurred in chartering a plane to travel to and from the

3 event, constituted an excessive in-kind contribution. See 2 U.S.C. § 431 (8)(B)(iv), 11 C.F.R.

4 § 100.79.

5 Therefore, since RFP has long known that Gardner paid in excess of SI ,000 in travel

6 expenses on behalf of the candidate and did noi reimburse him, there is reason to believe that

7 Romney for President, Inc. and Darrell Crate, in his official capacity as treasurer violated 2 U.S.C.

8 § 441 a(f) by knowingly accepting an excessive in-kind contribution.4 Additionally, because RFP

9 did not report Gardner's in-kind contribution, there is reason to believe that Romney for President,

10 Inc. and Darrell Crate, in his official capacity as treasurer, violated 2 U.S.C. § 434(b).

4

 The complaint references the aforementioned January 2007 calling event, supra footnote 1, and suggests that

the Commission should also investigate whether (here were excessive in-kind contributions for travel in connection with

thai event. Complaint at I. The complaint contains no specific allegations concerning the January 2007 event, and there

is no available information suggesting that any volunteers (or others) chartered a plane or otherwise incurred

considerable travel expenses to panicipate in that event.

ATTACHMENT. 3

Page ' of
1 FEDERAL ELECTION COMMISSION

i

2 FACTUAL AND LEGAL ANALYSIS

3

4 RESPONDENT: Kern Gardner MUR 5937

5

6

7 1. INTRODUCTION

r\i

 8

Lrt 9 The complaint in this matter alleges that Kern Gardner made, and Romney for President, Inc.

rsi

*J 10 and Dairell Crate, in his official capacity as treasurer ("RFP") accepted, an excessive in-kind

fN

«j 11 contribution when Gardner paid S150,000 to charter an airline plane to fly himsel f and a large

<T

O 12 number of other persons from Utah to Boston to work as volunteers at an RFP fundraising event.

13 Complaint at 1. In response, Gardner contends that travel expenses incurred to attend fundraisers

u are not contributions. As discussed in more detail below, however, Gardner and the attendees

15 accompanying him on his chartered flight were volunteers providing services on behalf of the

16 candidate, and any unreimbursed volunteer travel payment exceeding Si ,000 constitutes a

17 contribution. See 2 U.S.C. § 431(8)(B)(iv), 11 CF.R. § 100.79. Accordingly, given that the

18 volunteers onboard the chartered flight did not reimburse Gardner for any travel expenses, his

19 reported payment of SI 50,000 for the flight constitutes an in-kind contribution exceeding the

20 maximum allowable limit pursuant to 2 U.S.C. § 431(8XB)(iv) and 11 C.F.R. § 100.79. Thus, Kern

21 Gardner made, and RFP received, an excessive in-kind contribution. Therefore, the Commission

22 has found reason to believe that Kern Gardner violated 2 U.S.C. § 441 a(a).

23 11. FACTUAL AND LEGAL ANALYSIS

24 A. Facts

25

26 The event in issue, which RFP dubbed "America's Calling," took place on June 25,2007.

27 RFP's June 25.2007 press release following the event stales "Mitt Romney, family, friends and

ATTACHMENT.

Page
MUR 5937 2

Factual and Legal Analysis

Kern Gardner

1 supporters gathered at the TD Banknonh Garden to reach across ihe country and raise the resources

2 necessary for a national campaign" and notes that the participants made more than 20,000 telephone

3 calls. The press release also states that the calling arena, which xvas more than 17,000 square feet,

4 housed more than 600 volunteer fundraisers who used 400 landline phones. The calling event raised

5 approximately 52 million. RFP Response at 2. The press was invited to cover the event and it

6 received extensive press coverage.1 See. e.g.. Romney raises campaign cash at Boston sports

7 venues, June 25,2007; Michael Luof Romney Campaign Reaches Back Into His Deep Pockets, New

8 York Times, June 26, 2007.

9 In a video posted on the campaign's website, RFP national finance director Spencer Zwick,

Io shown speaking the evening before the calling event, stated:

11

The June 25.2007 event followed an extremely successful similar event sponsored by the Romney campaign in

January 2007. called "National Calling Day." According to a press account concerning the earlier event. Spencer

Zwick. RFP's fundraising director, reportedly wanted Romney, a multimillionaire, to avoid the fates of other wealthy

candidates, like Sieve Forbes and Ross Perot, who provided considerable self-financing. Zwick is quoted as saying, "By

Mm or anyone else self-funding, you don't have a lot of people making investments in you.... To be credible, you have

to show that you have raised resources from around the country." See David D. Kirkpa trick, Romney Used His Wealth

10 Enlisi'Richcsi Donors. The New York Times, April 6. 2007. Thus, according to the article,

[iInstead of tapping his own money directly, Mr. Romney embarked on an effort to

leverage his personal fortune into donations to his Republican primary campaign. ...

At the stan of the first quarter of this year, for example, Mr. Romney lent his campaign

S2.3S million to pay for an elaborate demonstration of just how fast he could raise money

from others. He rented (he Boston convention center, furnished it with more than 400

laptop computers, loaded each with custom software and had more than 400 telephone

lines installed. He invited 400 wealthy supporters, including dozens of chief executives

he knew through business connections, to a reception at an adjacent hotel. The next day

each sat down before a personal-contact list loaded into an assigned laptop, with dozens of

technical support staff and campaign finance advisers standing by to assist. Reporters

watched from the sidelines for hours as Mr. Romney's supporters raised $6.3 million.

Id. (

ATTACHMENTPage
MUR 5937 3

Factual and Legal Analysis

Kern Gardner

1 Well, we've got a great group of supporters from around \he

2 country... .we have close to a thousand people that have

3 traveled at their own expense corning to Boston with the idea

4 that they are going to raise money to help us push toward the

5 end of the quarter. So tonight [a Fenway Park barbecue on

6 July 24] is a thank you for their support, but by and large we

7 are here to raise money. So starting tomorrow, we'll go to the Boston

8 Garden and they will call their personal rolodex. They'll call their

9 friends. They'll call their family. They'll call people

10 that maybe contributed a little bit but need to contribute some more.

11 So our goal is to raise money and expand our base of support.

12

13 Available ai http://mittromney.pennissioniv.com/indcx.html.

14

12 Kern Gardner, a resident of Utah, states in his response to the complain! that at the invitation

16 of RFP, he traveled to Boston to raise funds for RFP and to attend a Fenway Park dinner, and

n chartered a plane at his own expense for his travel to and from Boston. He also states that he invited

18 a large group of friends and families who were planning to attend the events to accompany him on

19 the plane.2 Gardner Response at 1 -2. His response does not address the alleged SI 50,000 cost of

20 the plane, which was based on a press article attached to the complaint. See Thomas Burr, Did

21 Utahn violate contribution laws by paying for Romney volunteers '/light to Boston?. The Salt Lake

22 Tribune. June 29,2007 (reporting that Gardner told The Salt Lake Tribune that he paid SI 50,000 to

23 charter a Jet Blue plane to fly Utahns to Boston).3 At the time of the event, Gardner had already

* Kem Gardner is the founder of the Gardner Company, a commercial and real estate development firm. Known

for being active in Utah affairs. Gardner was instrumental in persuading Romney lo serve as the CEO of the organizing

comminee for the 2002 Winter Olympic Games, which at the time were embroiled in numerous financial scandals. See

David Lightman. Candidate known as turnaround artist, lslandpacket.com (January 12, 2008) available ai

http://w\\>w.islandpackei.com/new5/local/siory/128S97.htm]. Romney's subsequent actions as CEO have been credited

with "rescuing" these Olympic Games. Set Kirk Johnson, The Long Run: In Olympics Success. Romney Found New

Edge. The New York Times, September 19,2007. In a July 31.2007 RFP press release. Romney named Gardner one of

the RFP's National Finance Co-Chairs for the Slate of Utah.

3

 Gardner's Response also does not address how many people he transported. On his website, blogger Eli Eyre,

who attended the "America's Calling" event, apparently traveling on Gardner's plane, states "Kem Gardner chartered

the whole flight, and between the 150 people on the plane, about 5700,000 was raised. Not bad."

hun: •eliiahscsevrc.bloesi3ot.com. The press account attached lo the complaint account also reports that 150 people

were onboard the chartered flight. n

ATOCHMENT L

Page $— of
MUR 5937 4

Factual and Legal Analysis

Kern Gardner

1 contributed S2.300 to RFP. the maximum for the primary; he never made a monetary contribution 10

2 Romney for the general election.

3 B. Analysis

4 The Federal Election Campaign Act of 1971, as amended ("the Act") provides that no

5 person shall make contributions to any candidate and his authorized political commiltee with respect

6 to any election for Federal office that, in the aggregate, exceed 52,300. 2 U.S.C. § 441a(a)(l). The

7 Act also provides ihat no candidate or political committee shall knowingly accept any contribution

8 in violation of the prescribed limits, 2 U.S.C. § 441a(f), and that political committees musl report all

9 contributions. 2 U.S.C. § 434(b). The Act defines the term "contribution" as (1) "any gift,

10 subscription, loan, advance, or deposit of money or anything of value made by any person for the

11 purpose of influencing any election for Federal office." 2 U.S.C. § 431 (8)( A)(i); see also \ 1 C.F.R.

12 § 100.52. ("anything of value" includes all in-kind contributions).

11 The Act exempts from the definition of contribution "the value of sen-ices provided without

14 compensation by any individual who volunteers on behalf of a candidate or political committee,"

15 2 U.S.C. § 431(8)(B)(i), 11 C.F.R. § 100.74 (the "volunteer exception"), as well as, in pertinent part,

16 any unreimbursed payment for travel expenses made by any individual on behalf of a candidate to

17 the extent that the cumulative value of such activity by such individual does not exceed SI ,000 with

18 respect to any one election. 2 U.S.C. § 431 (8)(B)(iv), 11 C.F.R. § 100.79.

19 In Advisory Opinion ("AO") 2007-8, the Commission stated that the volunteer exception "is

20 restricted to donations of the volunteer's own time and services and does not generally exempt

21 actual costs incurred on behalf of a Federal candidate or political party." As an illustration of that

22 restriction, the Commission advised that if the AO requester traveled across the country at the

ATTACHMENT.

of
MUR 5937 5

Factual and Legal Analysis

Kern Gardner

1 request of a Federal candidate to arrange for an entertainer to perform at the candidate's campaign

2 event, then the unreimbursed payment for that travel would be a contribution to that candidate's

3 committee to the extent that it exceeded SI,000. Id.

4 Gardner's response to the complaint appears to suggest that if attendees travel to an event

5 that is nominally a "fundraiser"—that is, an event at which funds are raised—the travel expenses are

0)

6 not subject to (he restrictions on the volunteer exception. There is a distinction between typical

Ml

oj 7 fundraising events at which attendees eat lunch or dinner, dance, play golf, view performances,

rvj

^ 3 and/or listen to speakers, and other such events where the attendees provide uncompensated services

*T

gp 9 to the campaign. As to the former, where individuals do not provide services on behalf of the

rsi

10 candidate, but merely make or deliver contributions, their travel costs over SI .000 are not in-kind

11 contributions. See MUR 5020 (Trump Hotels and Casinos et al.) (a supporter's payment of his

12 plane ticket and a friend's plane ticket to a candidate's fundraiser was not an in-kind contribution,

13 given that neither did any work on behalf of the candidate at the fundraiser). On the other hand,

14 where the event involves volunteers, at the invitation of the campaign, expending their time and

15 sen-ices on behalf of the candidate, the Act and the regulations provide that their unreimbursed

16 travel expenses exceeding SI ,000 are contributions. 2 U.S.C. § 43 l(8)(BXiv), 11 C.F.R. § 100.79.

17 Kem Gardner and his fellow attendees, at the invitation of RFP, participated as volunteer

18 fundraisers for Mitt Romney in the "America's Calling" event. A January 9,2008 press release, in

19 which RFP announced the results of another volunteer phone-a-thon in Boston on that date, states

20 that "[t]oday marks the first Romney for President finance event in which general election dollars

21 were raised." Since the June 25,2007 event was therefore geared to raising funds for the primary,

22 for which Gardner had already "maxed-out," it appears that Gardner's participation in that event

ATTACHMENT

Page ^J of
MUR 5937 6

, Factual and Legal Analysis

Kem Gardner

1 was solely devoted to raising money from others on Romney's behalf. That would have been true

2 for the other participants who had already made the maximum contribution to Romney for the

3 primary by June 25, 2007. Accordingly, the participants1 donations of their time and service, and

4 their unreimbursed travel expenses not in excess of SI ,000, were not contributions. However, as an

5 unreimbursed travel expense exceeding 51,000, the reported Si 50,000 cost Gardner incurred in

^ 6 chartering a plane to travel to and from the event, constituted an excessive in-kind contribution. See

Lft

M 7 2 U.S.C. § 431 (8XB)(iv), 11 C.F.R. § 100.79.

ST

(N 8 Therefore, there is reason to believe Kem Gardner violated 2 U.S.C. § 441 a(a) by making an

<5T

j[ 9 excessive in-kind contribution to Romney for President, Inc. consisting of unreimbursed travel

0>

(-xj 10 expenses exceeding $1,000 paid on behalf of the candidate.

4

 The complaint references the aforementioned January 2007 calling event, supra footnote 1, and suggests that

the Commission should also investigate whether there were excessive in-kind contributions for navel in connection with

that event. Complaint at 1. The complaint contains no specific allegations concerning the January 2007 event, and there

is no available information suggesting that Kem Gardner chartered a plane or otherwise incurred considerable travel

expenses to participate in that event.

ATT

Page
1 FEDERAL ELECTION COMMISSION

•

2 FACTUAL AND LEGAL ANALYSIS

3

4 RESPONDENT: Romney for President, Inc. and Darrell Crate, MUR 5937

5 in his official capacity as treasurer

6

7 1. INTRODUCTION

8

9 The complaint in this matter alleges that Kern Gardner made, and Romney for President, Inc.

00

i/i

^ 10 and Darrell Crate, in his official capacity as treasurer ("RFP") accepted, an excessive in-kind

Nil

^ 11 contribution when Gardner paid S150,000 to charter an airline plane to fly himself and a large

r^j

<q-

*j 12 number of other persons from Utah to Boston to work as volunteers at an RFP fundraising event.

O

0* 13 Complaint at 1. In response, REP contends that travel expenses incurred to attend fundraisers are

<N

14 not contributions. As discussed in more detail below, however, Gardner and the attendees

15 accompanying him on his chartered flight were volunteers providing services on behalf of the

16 candidate, and any unreimbursed volunteer travel payment exceeding $ 1,000 constitutes a

17 contribution. See 2 U.S.C. § 431(8)(B)(iv), 11 C.F.R. § 100.79. Accordingly, given that the

18 volunteers onboard the chartered flight did not reimburse Gardner for any travel expenses, his

19 reported payment of SI 50,000 for the flight constitutes an in-kind contribution exceeding the

20 maximum allowable limit pursuant to 2 U.S.C. § 431(8)(B)(iv) and 11 C.F.R. § 100.79. Thus, Kem

21 Gardner made, and RFP received, an excessive in-kind contribution. The RFP also failed to report

22 the receipt of the in-kind contribution. Therefore, the Commission has found reason to believe that

23 Romney for President, Inc. and Darrell Crate, in his official capacity as treasurer, violated 2 U.S.C.

24 §§434(b)and441a(f).

ATTACHMENT.

Page _J of
MUR 5937 2

Factual and Legal Analysis

Romncy for President, Inc. and Darrell Crate, in his official capacity as treasurer

1 II. FACTUAL AND LEGAL ANALYSIS

2 A. Facts

3

4 The even! in issue, which RFP dubbed "America's Calling," took place on June 25,2007.

5 RFP's June 25, 2007 press release following the event slates "Mitt Romney, family, friends and

6 supporters gathered at the TD Banknorth Garden to reach across the country and raise the resources

0) 7 necessary for a national campaign" and notes that the participants made more than 20,000 telephone

Lfl

TM 8 calls. The press release also states that the calling arena, which was more than 17,000 square feet,

Nl

<T

(N 9 housed more than 600 volunteer fundraisers who used 400 landline phones. The calling event raised

*T

^ 10 approximately $2 million. RFP Response at 2. The press was invited to cover the event and it

O

<J» I

^ 11 received extensive press coverage. See, e.g.. Romney raises campaign cash at Boston sports

\ 2 venues, June 25, 2007; Michael Luo, Romney Campaign Reaches Back Into His Deep Pockets, New

13 York Times, June 26, 2007.

The June 25,2007 event followed an extremely successful similar event sponsored by the Romney campaign in

January 2007, called "National Calling Day." According to a press account concerning the earlier event, Spencer

Zwick, RFP's fundraising director, reportedly wanted Romney, a multimillionaire, to avoid the fates of other wealthy

candidates, like Steve Forbes and Ross Perot, who provided considerable self-financing. Zwick is quoted as saying, "By

Min or anyone else self-funding, you don't have a lot of people making investments in you.... To be credible, you have

to show that you have raised resources from around the country." See David D. Kirkpatrick, Romney Used His Wealth

10 Enlist Richest Donors. The New York Times, April 6,2007. Thus, according to the article,

[i]nstead of tapping his own money directly, Mr. Romney embarked on an effort to

leverage his personal fortune into donations to his Republican primary campaign. ...

At the stan of the first quarter of this year, for example, Mr. Romney lent his campaign

52.35 million to pay for an elaborate demonstration of just how fast he could raise money

from others. He rented the Boston convention center, furnished it with more than 400

laptop computers, loaded each with custom software and had more than 400 telephone

lines installed. He invited 400 wealthy supporters, including dozens of chief executives

he knew through business connections, to a reception at an adjacent hotel. The next day

each sat down before a personal-contact list loaded into an assigned laptop, with dozens of

technical support staff and campaign finance advisers standing by to assist. Reporters

watched from the sidelines for hours as Mr. Romney's supporters raised S6.5 million.

ATTA

Page & of
MUR5937 3

Factual and Legal Analysis

Romney for President, Inc. and Darrell Crate, in his official capacity as treasurer

1 In a video posted on the campaign's website, RFP national finance director Spencer Zwick,

2 shown speaking the evening before the calling event, stated:

3 Well, we've got a great group of supporters from around the

A country... .we have close to a thousand people that have

5 traveled at their own expense coming to Boston with the idea

6 that they are going to raise money to help us push toward the

7 end of the quarter. So tonight [a Fenway Park barbecue on

8 July 24] is a thank you for their support, but by and large we

Q 9 are here to raise money. So starting tomorrow, we'll go to the Boston

CD 10 Garden and they will call their personal rolodex. They'll call their

II friends. They'll call their family. They'll call people

that maybe contributed a little bit but need to contribute some more.

13 So our goal is to raise money and expand our base of support.

*J 14

^ 15 Available at http://mittromney.permissiontv.com/index.html.

S

 I6

T! 17 The available information indicates that Utah resident Kem Gardner, at the invitation of

18 RFP, traveled to Boston to raise funds for RFP and to attend a Fenway Park dinner, and chartered a

19 plane at his own expense for his travel to and from Boston. He also apparently invited a large group

20 of friends and families who were planning to attend the events to accompany him on the plane.2

21 RFP's response does not address the alleged $150,000 cost of the plane, which was based on a press

22 article attached to the complaint. See Thomas Burr, Did Utahn violate contribution laws by paying

23 for Romney volunteers 'flight to Boston?. The Salt Lake Tribune, June 29,2007 (reporting that

24 Gardner told The Salt Lake Tribune that he paid SI 50,000 to charter a Jet Blue plane to fly Utahns

2

 Kem Gardner is the rounder of the Gardner Company, a commercial and real estate development firm. Known

for being active in Utah affairs, Gardner was instrumental in persuading Romney to serve as the CEO of the organizing

committee for the 2002 Winter Olympic Games, which at the time were embroiled in numerous financial scandals. See

David Lightman, Candidate known as turnaround artist, Islandpacket.com (January 12, 2008) available at

http://www.islandpacket.com/news/local/story/128897.html. Romney's subsequent actions as CEO have been credited

with "rescuing" these Olympic Games. See Kirk Johnson, The Long Run: In Olympics Success, Romney Found New

Edge. The New York Times, September 19,2007. In a July 31, 2007 RFP press release, Romney named Gardner one of

the RFP's National Finance Co-Chairs for the State of Utah.

ATTACHMENT. 3

Page 3 of J2.
MUR 5937 4

Factual and Legal Analysis

Romney for President, Inc. and Darrell Crate, in his official capacity as treasurer

1 to Boston).3 At the time of the event, Gardner had already contributed S2,300 to RFP, the

2 maximum for the primary; he never made a monetary contribution to Romney for the genera!

3 election.

4 B. Analysis

5 The Federal Election Campaign Act of 1971, as amended ("the Act") provides that no

I-H 6 person shall make contributions to any candidate and his authorized political committee with respect

(JO

£] 7 to any election for Federal office that, in the aggregate, exceed $2,300. 2 U.S.C. § 441 a(a)( 1). The

*T

(N 8 Act also provides that no candidate or political committee shall knowingly accept any contribution

<!T

Q 9 in violation of the prescribed limits, 2 U.S.C. § 441a(f), and that political committees must report all

cn

rsi 10 contributions. 2 U.S.C. § 434(b). The Act defines the term "contribution" as (1) "any gift,

11 subscription, loan, advance, or deposit of money or anything of value made by any person for the

12 purpose of influencing any election for Federal office." 2 U.S.C. § 431 (8)(A)(i); see also 11 C.F.R.

13 § 100.52. ("anything of value" includes all in-kind contributions).

14 The Act exempts from the definition of contribution "the value of services provided without

5S compensation by any individual who volunteers on behalf of a candidate or political committee,"

16 2 U.S.C. § 431(8)(B)(i), 11 C.F.R. § 100.74 (the "volunteer exception"), as well as, in pertinent part,

17 any unreimbursed payment for travel expenses made by any individual on behalf of a candidate to

18 the extent that the cumulative value of such activity by such individual does not exceed $ 1,000 with

19 respect to any one election. 2 U.S.C. § 431(8)(B)(iv), 11 C.F.R. § 100.79.

20

3

 RFP's Response also does not address how many people he transported. On his website, blogger Eli Eyre, who

attended the "America's Calling'1 event, apparently traveling on Gardner's plane, states "Kern Gardner chartered the

whole flight, and between the 1 SO people on the plane, about $700,000 was raised. Not bad."

http:/-'eliiah.scsevre.bloesDOt.com. The press account attached to the complaint account also reports that 1 SO people

were onboard the chartered flight.

ATTA

Page ^ of

CHMENT

'
MUR 5937 5

Factual and Legal Analysis

Romney for President, Inc. and Darrell Crate, in his official capacity as treasurer

J In Advisory Opinion ("AO") 2007-8, the Commission stated that the volunteer exception "is

2 restricted to donations of the volunteer's own time and services and does not generally exempt

3 actual costs incurred on behalf of a Federal candidate or political party." As an illustration of that

A restriction, the Commission advised that if the AO requester traveled across the country at the

5 request of a Federal candidate to arrange for an entertainer to perform at the candidate's campaign

6 event, then the unreimbursed payment for that travel would be a contribution to that candidate's

7 committee to the extent that it exceeded $1,000. Id.

8 In its Response, RFP appears to suggest that if attendees travel to an event that is nominally

9 a "fundraiser"—that is, an event at which funds are raised—the travel expenses are not subject to

10 the restrictions on the volunteer exception. According to the RFP, the complaint apparently

11 contends that outside the volunteer exception, "federal committees must pay for the travel of all

12 fundraising event attendees/or every type of fundraising event." RFP Response at 1 (emphasis in

13 original). But the complaint does not say this and it is not the case.

14 There is a distinction between typical fundraising events at which attendees eat lunch or

15 dinner, dance, play golf, view performances, and/or listen to speakers, and other such events where

16 the attendees provide uncompensated services to the campaign. As to the former, where individuals

17 do not provide services on behalf of the candidate, but merely make or deliver contributions, their

18 travel costs over $1,000 are not in-kind contributions. See MUR 5020 (Trump Hotels and Casinos

19 et a/.) (a supporter's payment of his plane ticket and a friend's plane ticket to a candidate's

20 fundraiser was not an in-kind contribution, given that neither did any work on behalf of the

21 candidate at the fundraiser). On the other hand, where the event involves volunteers, at the

i

22 invitation of the campaign, expending their time and services on behalf of the candidate, the Act and

ATTACHMENT 3

Page $ of
MUR 5937 6

Factual and Legal Analysis

Romney for President, Inc. and Darrell Crate, in his official capacity as treasurer

' ] the regulations provide that their unreimbursed travel expenses exceeding $1.000 are contributions.

2 2 U.S.C. § 431(8)(B)(iv), 11 C.F.R. § 100.79.

3 Kern Gardner and his fellow attendees, at the invitation of RFP, participated as volunteer

4 fundraisers for Mitt Romney in the "America's Calling" event. A January 9,2008 press release, in

5 which RFP announced the results of another volunteer phone-a-thon in Boston on that date, states

tfi

._ 6 that "[t]oday marks the first Romney for President finance event in which general election dollars

rsi

w 7 were raised." Since the June 25, 2007 event was therefore geared to raising funds for the primary,

<T

CT 8 for which Gardner had already "maxed-out," it appears that Gardner's participation in that event

•sr

O 9 was solely devoted to raising money from others on Romney's behalf. That would have been true

cr>

^ 10 for the other participants who had already made the maximum contribution to Romney for the

11 primary by June 25,2007.

12 RFP attempts to downplay the use of the volunteer services by describing the event as one

13 "where donors were invited to bring check contributions, solicit friends and personal contacts, and

14 socialize with other donors.. ..a large fundraiser where donors—some 'maxed out,' and some not—

15 also solicited contributions." RFP Response at 2. (Emphasis in the original). But RFP's own press

16 releases and website videos show otherwise, as they reveal a meticulously staged phone-a-thon that

17 reflected a massive volunteer effort.

18 Far from the volunteer activity being incidental to the fundraising event, it was, in fact, the

19 event itself. In effect, "America's Calling" constituted a human telephone bank staffed by Romney

20 supporters, which, over the course of several hours, made thousands of similar phone calls touting

21 Mitt Romney and soliciting contributions. Cf. 11 C.F.R. §§ 100.26-28. Accordingly, the

22 participants' donations of their time and service, and their unreimbursed travel expenses not in

ATTACHMENT—£-—

Page & of _L
MUR 5937 7

Factual and Legal Analysis

Romney for President, Inc. and Darrell Crate, in his official capacity as treasurer

I l excess of $1,000, were not contributions. However, as an unreimbursed travel expense exceeding

2 SI ,000, the reported $150,000 cost Gardner incurred in chartering a plane to travel to and from the

3 event, constituted an excessive in-kind contribution. See 2 U.S.C. § 431(8)(B)(iv), 11 C.F.R.

4 § 100.79.

5 Therefore, since RFP has long known that Gardner paid in excess of SI ,000 in travel

*? 6 expenses on behalf of the candidate and did not reimburse him, there is reason to believe that

(N

hO 7 Romney for President, Inc. and Darrell Crate, in his official capacity as treasurer violated 2 U.S.C.

QJ 8 § 441 a(f) by knowingly accepting an excessive in-kind contribution.4 Additionally, because RFP

O 9 did not report Gardner's in-kind contribution, there is reason to believe that Romney for President,

O*

^ 10 Inc. and Darrell Crate, in his official capacity as treasurer, violated 2 U.S.C. § 434(b).

* The complaint references the aforementioned January 2007 calling event, supra footnote 1 , and suggests that

the Commission should also investigate whether there were excessive in-kind contributions for travel in connection with

that event. Complaint at 1. The complaint contains no specific allegations concerning the January 2007 event, and there

is no available information suggesting that any volunteers (or others) chartered a plane or otherwise incurred

considerable travel expenses to participate in that event.

ATTACHMENT

Page "7 of 7
1 FEDERAL ELECTION COMMISSION

i

2 FACTUAL AND LEGAL ANALYSIS

3

4 RESPONDENT: Kern Gardner MUR5937

5

6

7 I. INTRODUCTION

8

If* 9 The complaint in this matter alleges that Kern Gardner made, and Romney for President, Inc.

CO

TM 10 and Darrell Crate, in his official capacity as treasurer ("RFP") accepted, an excessive in-kind

<qr

rsi 11 contribution when Gardner paid $ 150,000 to charter an airline plane to fly himself and a large

T

J? 12 number of other persons from Utah to Boston to work as volunteers at an RFP fundraising event.

0>

rsi 13 Complaint at 1. In response, Gardner contends that travel expenses incurred to attend fundraisers

14 are not contributions. As discussed in more detail below, however, Gardner and the attendees

15 accompanying him on his chartered flight were volunteers providing services on behalf of the

16 candidate, and any unreimbursed volunteer travel payment exceeding SI ,000 constitutes a

17 contribution. See 2 U.S.C. § 431(8)(B)(iv), 11 C.F.R. § 100.79. Accordingly, given that the

18 volunteers onboard the chartered flight did not reimburse Gardner for any travel expenses, his

19 reported payment of SI 50,000 for the flight constitutes an in-kind contribution exceeding the

20 maximum allowable limit pursuant to 2 U.S.C. § 431(8)(B)(iv) and 11 C.F.R. § 100.79. Thus, Kern

21 Gardner made, and RFP received, an excessive in-kind contribution. Therefore, the Commission

22 has found reason to believe that Kern Gardner violated 2 U.S.C. § 441a(a).

23 II. FACTUAL AND LEGAL ANALYSIS

24 A. Facts

25

26 The event in issue, which RFP dubbed "America's Calling," took place on June 25,2007.

27 RFP's June 25,2007 press release following the event slates "Mitt Romney, family, friends and

ATTACHMENTPage
MUR 5937 2

Factual and Legal Analysis

Kern Gardner

1 supponers gathered at the TD Banknorth Garden to reach across the country and raise the resources

2 necessary for a national campaign" and notes that the participants made more than 20,000 telephone

3 calls. The press release also slates that the calling arena, which was more than 17,000 square feet,

4 housed more than 600 volunteer fundraisers who used 400 landline phones. The calling event raised

5 approximately $2 million. RFP Response at 2. The press was invited to cover the event and it

received extensive press coverage.1 See, e.g.t Romney raises campaign cash at Boston sports

venues. June 25,2007; Michael Luo, Romney Campaign Reaches Back Into His Deep Pockets, New

York Times, June 26, 2007.

In a video posted on the campaign's website, RKP national finance director Spencer Zwick,

10 shown speaking the evening before the calling event, stated:

11

The June 25,2007 event followed an extremely successful similar event sponsored by the Romney campaign in

January 2007, called "National Calling Day." According to a press account concerning the earlier event, Spencer

Zwick, RFP's fundraising director, reportedly wanted Romney, a multimillionaire, to avoid the fates of other wealthy

candidates, like Steve Forbes and Ross Perot, who provided considerable self-financing. Zwick is quoted as saying, "By

Mitt or anyone else self-funding, you don't have a lot of people making investments in you.... To be credible, you have

to show that you have raised resources from around the country." See David D. Kirkpatrick, Romney Used His Wealth

to Enlist Richest Donors, The New York Times, April 6, 2007. Thus, according to the article,

[ijnstead of tapping his own money directly, Mr. Romney embarked on an effort to

leverage his personal fortune into donations to his Republican primary campaign....

At the start of the first quarter of this year, for example, Mr. Romney lent his campaign

S2.35 million to pay for an elaborate demonstration of just how fast he could raise money

from others. He rented the Boston convention center, furnished it with more than 400

laptop computers, loaded each with custom software and had more than 400 telephone

lines installed. He invited 400 wealthy supporters, including dozens of chief executives

he knew through business connections, to a reception at an adjacent hotel. The next day

each sat down before a personal-contact list loaded into an assigned laptop, with dozens of

technical support staff and campaign finance advisers standing by to assist. Reporters

watched from the sidelines for hours as Mr. Romney's supporters raised $6.5 million.

Id. (

ATTACHMEKTPage
MUR 5937 3

Factual and Legal Analysis

Kern Gardner

1 Well, we've got a great group of supporters from around the

2 country. •. .we have close to a thousand people that have

3 traveled at their own expense coming to Boston with the idea

4 that they are going to raise money to help us push toward the

5 end of the quarter. So tonight [a Fenway Park barbecue on

6 July 24] is a thank you for their support, but by and large we

7 are here to raise money. So starting tomorrow, we'll go to the Boston

8 Garden and they will call their personal rolodex. They'll call their

9 friends. They'll call their family. They'll call people

10 that maybe contributed a little bit but need to contribute some more.

11 So our goal is to raise money and expand our base of support.

13 Available at http://miuromney.permissiontv.com/index.html.

14

Kem Gardner, a resident of Utah, states in his response to the complaint that at the invitation

16 of RFP, he traveled to Boston to raise funds for RFP and to attend a Fenway Park dinner, and

chartered a plane at his own expense for his travel to and from Boston. He also states that he invited

18 a large group of friends and families who were planning to attend the events to accompany him on

19 the plane.2 Gardner Response at 1-2. His response does not address the alleged $150,000 cost of

20 the plane, which was based on a press article attached to the complaint. See Thomas Burr, Did

21 Utahn violate contribution laws by paying for Romney volunteers 'flight to Boston?, The Salt Lake

22 Tribune, June 29,2007 (reporting that Gardner told The Salt Lake Tribune that he paid $150,000 to

23 charter a Jet Blue plane to fly Utahns to Boston).3 At the time of the event, Gardner had already

2

 Kem Gardner is the founder of the Gardner Company, a commercial and real estate development firm. Known

for being active in Utah affairs, Gardner was instrumental in persuading Romney to serve as the CEO of the organizing

committee for the 2002 Winter Olympic Games, which at the time were embroiled in numerous financial scandals. See

David Lightrnan, Candidate known as turnaround artisi, lslandpacket.com (January 12, 2008) available at

http://www.islandpacket.eom/news/local/story/l 28897.html. Romney's subsequent actions as CEO have been credited

with "rescuing" these Olympic Games. See Kirk Johnson, The Long Run: In Olympics Success. Romney Found New

Edge. The New York Times, September 19,2007. In a July 31,2007 RFP press release, Romney named Gardner one of

the RFP's National Finance Co-Chairs for the State of Utah.

3

 Gardner's Response also does not address how many people he transported. On his website, blogger Eli Eyre,

who attended the "America's Calling" event, apparently traveling on Gardner's plane, states "Kem Gardner chartered

the whole flight, and between the 150 people on the plane, about $700,000 was raised. Not bad."

htro-./'cliiahscscvrc.blopspot.corn. The press account attached to the complaint account also reports that ISO people

were onboard the chartered flight.

ATTACHMENT

 L

Page —5 of
MUR 5937 4

Factual and Legal Analysis

Kern Gardner

1 contributed $2,300 to RJFP, the maximum for the primary; he never made a monetary contribution to

2 Romney for the general election.

3 B. Analysis

4 The Federal Election Campaign Act of 1971 , as amended ("the Act") provides that no

5 person shall make contributions to any candidate and his authorized political committee with respect

oo 6 to any election for Federal office that, in the aggregate, exceed $2,300. 2 U.S.C. § 441a(a)(l). The

CO

7 Act also provides that no candidate or political committee shall knowingly accept any contribution

8 in violation of the prescribed limits, 2 U.S.C. § 441a(f), and that political committees must report all

9 contributions. 2 U.S.C. § 434(b). The Act defines the term "contribution" as (1) "any gift,

CT>

rsi 10 subscription, loan, advance, or deposit of money or anything of value made by any person for the

1 1 purpose of influencing any election for Federal office." 2 U.S.C. § 43 1 (8)(A)(i); see also \ 1 C.F.R.

12 § 100.52. ("anything of value" includes all in-kind contributions).

13 The Act exempts from the definition of contribution "the value of services provided without

14 compensation by any individual who volunteers on behalf of a candidate or political committee,"

15 2 U.S.C. § 431(8)(B)(i), 1 1 C.F.R. § 100.74 (the "volunteer exception"), as well as, in pertinent part,

16 any unreimbursed payment for travel expenses made by any individual on behalf of a candidate to

17 the extent that the cumulative value of such activity by such individual does not exceed $1 ,000 with

18 respect to any one election. 2 U.S.C. § 431(8)(B)(iv), 1 1 C.F.R. § 100.79.

19 In Advisory Opinion ("AO") 2007-8, the Commission stated that the volunteer exception "is

20 restricted to donations of the volunteer's own time and services and does not generally exempt

21 actual costs incurred on behalf of a Federal candidate or political party." As an illustration of that

22 restriction, the Commission advised that if the AO requester traveled across the country at the

ATTACHMENT V

Page of
MUR 5937 5

Factual and Legal Analysis

Kern Gardner

•

t I request of a Federal candidate to arrange for an entertainer to perform at the candidate's campaign

2 event, then the unreimbursed payment for that travel would be a contribution to that candidate's

3 committee to the extent that it exceeded $ 1,000. Id.

A Gardner's response to the complaint appears to suggest that if attendees travel to an event

5 that is nominally a "fundraiser"—that is, an event at which funds are raised—the travel expenses are

O* 6 not subject to the restrictions on the volunteer exception. There is a distinction between typical

0)

rsi

^ 7 fundraising events at which attendees eat lunch or dinner, dance, play golf, view performances,

*T

<M 8 and/or listen to speakers, and other such events where the attendees provide uncompensated services

vf

Q 9 to the campaign. As to the former, where individuals do not provide services on behalf of the

O>

<N jo candidate, but merely make or deliver contributions, their travel costs over $ 1,000 are not in-kind

] l contributions. See MUR 5020 (Trump Hotels and Casinos el al.) (a supporter's payment of his

12 plane ticket and a friend's plane ticket to a candidate's fundraiser was not an in-kind contribution,

13 given that neither did any work on behalf of the candidate at the fundraiser). On the other hand,

14 where the event involves volunteers, at the invitation of the campaign, expending their time and

15 services on behalf of the candidate, the Act and the regulations provide that their unreimbursed

16 travel expenses exceeding $1,000 are contributions. 2 U.S.C. § 431(8)(B)(iv), 11 C.F.R. § 100.79.

n Kem Gardner and his fellow attendees, at the invitation of RFP, participated as volunteer

18 fundraisers for Mitt Romney in the "America's Calling" event. A January 9,2008 press release, in

19 which RFP announced the results of another volunteer phone-a-thon in Boston on that date, states

20 that "[tjoday marks the first Romney for President finance event in which general election dollars

21 were raised." Since the June 25,2007 event was therefore geared to raising funds for the primary,

22 for which Gardner had already "maxed-out," it appears that Gardner's participation in that event

ATTACHMENT. '

Page ^J of
MUR 5937 6

. Factual and Legal Analysis

Kent Gardner

1 was solely devoted to raising money from others on Romney's behalf. That would have been true

2 for the other participants who had already made the maximum contribution to Romney for the

3 primary by June 25, 2007. Accordingly, the participants' donations of their time and service, and

4 their unreimbursed travel expenses not in excess of $1,000, were not contributions. However, as an

5 unreimbursed travel expense exceeding $1,000. the reported $150,000 cost Gardner incurred in

6 chartering a plane to travel to and from the event, constituted an excessive in-kind contribution. See

O

7 2 U.S.C. § 431 (8)(B)(iv), 11 C.F.R. § 100.79.

Therefore, there is reason to believe Kern Gardner violated 2 U.S.C. § 441 a(a) by making an

<N

^ 9 excessive in-kind contribution to Romney for President, Inc. consisting of unreimbursed travel

<T

0) 10 expenses exceeding $1,000 paid on behalf of the candidate.4

(N

4

 The complaint references the aforementioned January 2007 calling event, supra footnote 1, and suggests that

the Commission should also investigate whether there were excessive in-kind contributions for travel in connection with

that event. Complaint at 1. The complaint contains no specific allegations concerning the January 2007 event, and there

is no available information suggesting that Kem Gardner chartered a plane or otherwise incurred considerable travel

expenses to participate in that event.

ATTM

Pagcjfl of