Brian G. Svoboda July 20, 2020 

F. +1.202.654.9150 

BY EMAIL AND U.S. MAIL 

Federal Election Commission 

Audit Division 

Mr. Kendrick Smith 

1050 First Street, NE 

Washington, DC 20002 

Email: audit@fec.gov; 

Re: Response to the Interim Audit Report on Dr. Raul Ruiz for Congress 

Dear Mr. Smith: 

On behalf of our client, Dr. Raul Ruiz for Congress ("the Committee''), we write in response to 

the Interim Audit Report (the “Report”) of the Audit Division. We appreciate the additional time 

provided to respond to the Report in light of the COVID-19 Pandemic.1 

INTRODUCTION 

This audit covered the Committee's activities for the 2017-2018 election cycle. At that time, the 

Committee engaged a professional political accounting firm based in Washington, DC to handle 

its accounting, obtain and keep the records required by Commission regulations, and prepare its 

reports. Before the Commission initiated the audit, to bolster its compliance, the Committee 

ended its relationship with its previous firm, and engaged a different firm to perform these same 

duties. Since then, the Committee, consulting with its counsel and the professionals at the current 

firm, has taken steps to improve and strengthen its compliance practices. 

1

 The Audit Division sent the Interim Audit Report to the Committee on May 1, 2020, with a due date for response 

on June 3, 2020—while both the Committee’s home state of California and the District of Columbia were under 

shelter-in-place orders because of the COVID-19 pandemic. See Letter from Dayna C. Brown to John Pinkney (May 

1, 2020). The Committee requested a 90-day extension because of the pandemic, while asking in the alternative for a 

45-day extension that could be extended for cause. See Letter from Brian G. Svoboda and Varoon Modak to Dayna 

C. Brown (May 11, 2020). Initially, the Audit Division told the Committee that it would have to toll the statute of 

limitations to obtain even a 45-day extension, even though there was no pending enforcement action, nor any 

Commission finding of any potential violation. See Email from William Antosz to Brian G. Svoboda (May 12, 

2020); Letter from Brian G. Svoboda and Varoon Modak to Dayna C. Brown (May 15, 2020). After the 

Committee’s representatives and the auditors spoke on May 19, the auditors agreed to grant the requested 90-day 

extension unconditionally. See Email from Kendrick Smith to Varoon Modak (May 19, 2020). 
 

 

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Moreover, since the audit began, the Committee has consistently responded to and cooperated 

with the auditors’ requests for information, despite the limited information available because of 

the change in political accounting firms and the prior firm’s practices. Through its diligence, 

persistence and cooperation, the Committee was able to resolve all potential issues presented 

during the audit, except for the two findings presented in the Report. 

The Committee respectfully submits that these two remaining findings are not supported by fact 

or law: 

 First, the finding of a $16,794 misstatement of financial activity, while scant when 

compared to Committee’s $5,716,370 in overall activity over the two-year period, is the 

result of inconsistent and confusing guidance provided by the auditors. 

 Second, the finding of potential personal use, based almost entirely on $5,860.78 in 

disbursements to gas stations by a campaign in a district spanning nearly 6,000 square 

miles, misreads and misapplies the recordkeeping requirements that apply to these 

disbursements. 

We respectfully request that the Audit Division vacate the findings and issue a draft final audit 

report that makes clear that the Committee substantially complied with the relevant provisions of 

the Federal Election Campaign Act of 1971, as amended, 52 U.S.C. § 30101 et seq. (“the Act”). 

DISCUSSION 

A. Alleged Misstatement of Financial Activity 

The Report’s misstatement finding claims that the Committee “understated its disbursements by 

$16,794” in 2017, 2 against $2,538,316 in disbursements over the course of the election cycle and 

$5,716,370 in total overall activity.3

 Specifically, the Report claims that: 

The understatement of disbursements resulted from the following: 

• Disbursements not reported or reported incorrectly + 13,500 

• Contribution refunds reported but did not clear bank - 586 

• Unexplained differences + 3,880 

2

 Report at 3. 

3 Id. at 2. 
 

 

 

 

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Net Understatement of Disbursements $16,7944 

The information provided by the auditors regarding the nature and extent of the asserted 

misstatement has been inconsistent and unclear. On December 2, 2020, the auditors provided the 

Committee with a document alleging $37,740.54 in reporting errors related to the Committee’s 

disbursements, including a partial list of disbursements that were supposed to have contributed to 

the finding. Three days later, on December 5, 2020, the Audit staff provided a revised document 

that reduced this alleged total to $20,107.41. After months of discussion and correspondence, the 

Committee still has not been presented with a comprehensive, consistent list of the corrections 

that must be made to its reported disbursements. 

The Committee has cooperated with the auditors throughout the process and is prepared to make 

any necessary corrections to its reports. Having changed compliance personnel and bolstered its 

practices even before the audit began, the Committee recognizes that some corrections need to be 

made. Still, these changes should correspond to clear, consistent and accurate direction from the 

auditors. The Committee respectfully requests the Audit Division to vacate the finding—which 

involves only a small portion of the Committee’s overall activity—and provide a corrected 

enumeration of the needed changes, upon which the Committee will promptly amend its reports 

to comply with a correct recommendation. 

B. Alleged Personal Use of Campaign Funds 

The Report claims to have “identified disbursements totaling $5,899 as potential personal use of 

campaign funds. The disbursements included purchases for vehicle-related expenditures such as 

parking, gasoline, and insurance payments. The Audit staff recommends that RRFC provide 

documentation demonstrating that these expenditures are related to the campaign or seek 

reimbursement.” The auditors made this recommendation while citing 11 CFR § 113.1(g)(8), 

which requires committees making mixed-purpose expenditures to keep a contemporaneous log 

to document dates and expenses related to personal use. 

However, virtually all of the expenses involved—$5,860.78—were to gas stations,5

 made by a 

campaign for office in a district that spans nearly 6,000 square miles.6 The auditors assert that 

these gas expenses, which are commonly incurred by campaigns with multiple staff and 

substantial terrain, qualify as “vehicle expenses” to which the recordkeeping and reimbursement 

provisions of 11 CFR §113.1(g)(1)(ii)(D) apply.7 Thus, with no notice, the Report would 

4 Id. at 5. 5 See Email from William A. Antosz to Marty Kuest (May 4, 2020). 6 See https://www2.census.gov/geo/maps/cong dist/cd113/cd based/ST06/CD113 CA36.pdf. The remainder were a 

$22.11 disbursement identified as for parking, and two $7.95 disbursements identified as made to Anchor General 

Insurance. See Email from William A. Antosz to Marty Kuest (May 4, 2020). 7 See Report at 6. 
 

 

 

 

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retroactively impose a log requirement on every committee that makes a disbursement for gas, 

which is a common, legitimate campaign expense. 

The Report badly misreads the personal use rules in this regard: 

First, campaigns at all levels—whether for President, U.S. Senate or U.S. House—commonly 

incur expenses for fuel, whether directly or by reimbursing their personnel. They do so in order 

to travel between events, undertake field operations, and otherwise engage in political activity, 

especially in large states or sprawling districts like the Committee’s. These disbursements 

present no special issue of personal use. To the contrary, Commission rules expressly provide 

that neither “[t]ravel expenses” nor “[v]ehicle expenses” are per se personal use, but instead are 

evaluated on a case-by-case basis, like all other expenses.8 

Second, there is no general Commission requirement that campaigns must keep records to 

support individual fuel expenses. Rather, the additional requirements cited by the auditors apply 

only when a campaign uses funds for both personal use and either campaign or officeholder use.9 

These additional requirements arose from Advisory Opinion 2001-03, which involved a special 

set of facts not present here: a candidate sought permission to use campaign funds to purchase

an automobile “that would be used primarily to transport you and members of your campaign 

staff to political and campaign related events in the Washington DC metropolitan area.”10 The 

Commission has given no notice that these augmented recordkeeping requirements apply every 

time a campaign committee pays for gas, also. 

Third, the Report flips the regulations’ treatment of fuel expenses. The rules take gas expenses 

out of the category of per se personal use and treat them like any other expense. But the Report 

takes the exact opposite approach. It presumes the expenses to be personal use and requires the 

Committee to prove otherwise. Here, the auditors have rewritten the regulation by creating a new 

presumption of personal use. Because the Committee could not overcome the conjectured 

presumption to the auditors’ satisfaction, they concluded that the expenditures must have been 

for personal use. Such “reasoning” turns the rule on its head. 

Fourth, to reach a personal use finding based on no evidence, the Report rejects the actual 

evidence that the Committee’s campaign manager provided in response to the Exit Conference. 

As the Report acknowledges, the Committee “provided a declaration from the Campaign 

Manager attesting that the disbursements for gasoline were for campaign-related travel. The 

Campaign Manager further stated that because the congressional district is 6,000 square miles in 

8 See 11 C.F.R. § 113.1(g)(1)(ii)(C), (D). 9 See id. §§ 113.1(g)(1)(ii) (D), (g)(8). 10 See FEC Advisory Op. 2001-03 (Meeks) (internal quotations omitted). See also Disclaimers, Fraudulent 

Solicitation, Civil Penalties, and Personal Use of Campaign Funds 67 Fed. Reg. 76,962, 76,974 (2003) (saying that 

section 113.1(g)(8)’s augmented recordkeeping requirement “is based on the analysis in AO 2001–3”). 
 

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area, extensive vehicle travel was necessary in connection with the campaign.”11 This should 

have resolved the finding, but because the evidence was not in the form of a contemporaneous 

log or record, and so did not meet the auditors’ erroneous understanding of the rules, the auditors 

persisted with the finding. 

In the end, the Report would have the Commission set a new precedent, and presume that fuel 

expenses—which are a common category of campaign expenditure, especially in national 

campaigns, statewide elections, and geographically large districts like the Committee’s—are 

inherently suspect, subject to augmented reporting requirements, and treated no differently than 

when the campaign buys the candidate a car. This approach is wholly inconsistent with the law 

and common sense. 

CONCLUSION 

The Committee is committed to continued compliance with the Federal Election Campaign Act 

and all relevant Commission regulations. However, for the reasons described above, the findings 

in the Interim Audit Report are not adequately supported. The Committee respectfully requests 

that the Audit Division vacate the findings, provide the Committee with a revised misstatement 

analysis that permits it to amend its reports accurately, and issue a draft final audit report that 

reflects the Committee’s material compliance with the Act. 

We appreciate the Commission's consideration of this response. 

Very truly yours, 

Brian G. Svoboda 

Varoon Modak 

Counsel to Dr. Raul Ruiz for Congress 

11 Report at 7.