RESPONSE

OF

MIKE BRAUN FOR INDIANA 

TO 

THE DRAFT FINAL AUDIT REPORT

Mike Braun for Indiana (“Committee”) is in receipt of the Federal Election 

Commission’s Draft Final Audit Report (“DFAR”) regarding the audit of the Committee’s 

records from August 7, 2017 – December 31, 2019. The Committee, through counsel, hereby 

responds to the findings and recommendations of the Audit Division staff resulting from that 

audit.

Pursuant to Commission procedures, the Committee is requesting a hearing before 

the Commission to respond to the DFAR and present legal arguments concerning the 

findings in the draft report. Specifically, the Committee’s request for a hearing to present 

legal arguments is limited to disputing two conclusions within Finding 4 of the DFAR:

 The conclusion that “the $1,500,000 in corporate checks were not from a 

permissible source”; and 

 The conclusion that “the loans and lines of credit totaling $7,049,405 were not 

made on a basis that assured repayment.”

BACKGROUND

Many of the misstatements of financial activity, failures to file, and other issues 

identified in the Draft Final Audit Report are traceable to the harm suffered by the 

Committee because of its former treasurer’s failure to perform FEC accounting and reporting 

services properly. Therefore, prior to responding to each of Audit Division’s findings and 

recommendations, the Committee first wants to provide some background that not only led 

to the hiring of the Committee’s current treasurer, but also led to many of the findings 

detailed in the Draft Final Audit Report. 

In 2017, the Committee hired the former treasurer to serve as its treasurer because he 

was, at least ostensibly, an experienced FEC compliance professional who had worked for 

many federal candidate committees over many years. This former treasurer had represented 

that he was able and willing to do the accounting and reporting work he was hired and paid 

to do; however, as both the Committee and the Audit Division team are now aware, at some 

point during the 2018 election cycle this individual began making mistakes and failing to 

perform his services as warranted (and for which he was being paid). He ultimately 

vanished, and he has not been able to be located since the end of 2018. 

Following the former treasurer’s disappearance, the Committee quickly retained 

another individual to serve as treasurer. The new treasurer immediately began to uncover 

various accounting and reporting problems while attempting to prepare and file the 

Committee’s 2018 Year-End Report on short notice and with minimal documentation. 
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Notably, the current treasurer began to correct mistakes, errors, and other problems in the 

Committee’s accounts and reports long prior to the commencement of this FEC audit. 

Unfortunately, there are documents that the Committee believes existed at some 

point (such as reattribution and redesignation letters, best efforts letters, etc.), but the 

Committee cannot confirm whether any copies were retained by the former treasurer or 

otherwise exist. For the practical purposes of this audit, the Committee can confirm that no 

such copies were provided to the new treasurer, and the Committee has no choice but to 

proceed with this audit with the limited documentation from the 2018 election cycle that it 

has in its possession. 

RESPONSES TO FINDINGS 

DFAR FINDING 1. MISSTATEMENT OF FINANCIAL ACTIVITY

During audit fieldwork, a comparison of MBFI’s reported financial activity with its bank

records revealed a misstatement of receipts and disbursements in calendar year 2018. MBFI overstated 

receipts by $6,293,350 and disbursements by $6,294,482. In response to the Interim Audit Report 

recommendation, MBFI did not file amendments or a Form 99 (Miscellaneous Electronic 

Submission). MBFI stated, “...the former treasurer did not ultimately report the repayments from 

the Candidate’s personal funds correctly” and that loan repayments should have been reported as inkind contributions instead of as memo entries as recommended by the Audit staff. Absent the filing 

of amended reports or a Form 99, MBFI’s receipts and disbursements remain misstated.

THE COMMITTEE’S RESPONSE TO FINDING 1 

The Committee amended its reports on October 4, 2021, as recommended by the Audit 

Division. 

DFAR FINDING 2. FAILURE TO FILE 48-HOUR NOTICES 

During audit fieldwork, the Audit staff identified that MBFI failed to file or untimely filed 48-

hour notices for ten contributions totaling $262,600. This amount includes sevencontributions 

totaling $9,100 for which MBFI misreported contribution dates. In response to the Interim Audit 

Report recommendation, MBFI did not file amendments or a Form 99 (Miscellaneous Electronic 

Submission). MBFI stated the former treasurer failed to properly file the 48-hour notices and that 

“the Committee will amend the reports to report the correct dates of all contributions.” Absent the 

filing of amended reports or a Form 99, MBFI did not correct the public record for the misreported 

dates of the seven contributions totaling $9,100. 

THE COMMITTEE’S RESPONSE TO FINDING 2

With respect to the 48-hour notices totaling $253,500 that the Commission believes 

were filed “untimely” during the 2018 primary, the Committee has attached a time-stamped 
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report evidencing the fact that the three contributions totaling $253,500 were in fact filed in a 

timely manner. See Exhibit A. Based on a cursory review of this time-stamped report, it 

appears that the Commission’s belief that the 48-hour notice was not filed in a timely manner

may be the result of a faulty scan on the part of the Commission. 

As recommended by the Audit Division, the Committee amended its disclosure 

reports on June 15, 2021, to account for the 48-hour notices for three contributions totaling 

$3,400. The Committee also corrected the public record for the misreported dates of the seven 

contributions totaling $9,100.

DFAR FINDING 3. DISCLOSURE OF OCCUPATION AND/OR NAME OF EMPLOYER

During audit fieldwork, a review of contributions from individuals requiring itemization

indicated that 1,363 contributions totaling $1,464,449 lacked or inadequately disclosed the required

occupation and/or name of employerinformation. MBFI did notsufficiently demonstrate “best efforts” 

to obtain, maintain and submit the required information. In response to the Interim Audit Report 

recommendation, MBFI did not file amendments or a Form 99 (Miscellaneous Electronic 

Submission), but stated it prepared amended reports and obtained the missing information for all but 

387 contributors. Absent the filing of amended reports or a Form 99, MBFI did not correct the public 

record for contributions totaling $1,464,449 that lacked or inadequately disclosed the required 

occupation and/or name of employer information.

THE COMMITTEE’S RESPONSE TO FINDING 3

The Committee has researched all donors whose contributions require “best efforts”

to obtain and report employer/occupation information. 

As recommended by the Audit Division, the Committee has amended its disclosure 

reports to report employer/occupation information for most donors for which the Audit 

Division identified as missing information. As of this writing, there are only 97 remaining 

donors with “Information Requested” for the 2018 election cycle. The Committee has already 

sent “best efforts” letters to the remaining 97 donors from the 2018 election cycle, and it will 

continue its ongoing “best efforts” to obtain and report the employer/occupation information 

for such donors.

DFAR FINDING 4. RECEIPT OF APPARENT PROHIBITED CONTRIBUTIONS –

LOANS

During audit fieldwork, a review of loan documents provided by MBFI, indicated apparent 

prohibited loans and lines of credit totaling $8,549,405. This included five loans and eleven lines of 

credit from financial institutions, totaling $7,049,405, that did not appear to be made in the ordinary 

course of business. These loans were not made on a basis that assured repayment and, therefore, 

appeared to be prohibited contributions from the financial institutions.
MBFI RESPONSE TO THE DRAFT FINAL AUDIT REPORT PAGE 4 OF 11

Additionally, the Audit staff identified two checks from one corporation totaling $1,500,000 

that were reported as loans.

In response to the Interim Audit Report recommendation, MBFI did not provide 

documentation from MBFI’s financial institutions, but stated it “fervently” disagreed that the loans 

and lines of credits were not made in the ordinary course of business and stated that the Audit Division 

had not correctly applied the law or Commission precedents. Additionally, MBFI stated that the Audit 

Division failed “to recognize that unsecured lines of credit are not unique to candidates for public 

office.” MBFI also provided a letter it asserts supports that the two corporate checks were from a 

permissible source. However, no documentation was provided to support the assertions outlined within 

the letter. Absent additional documentation, the Audit staff maintains the loans and lines of credit 

totaling $7,049,405 were not made on a basis that assured repayment and the $1,500,000 in corporate 

checks were not from a permissible source.

THE COMMITTEE’S RESPONSE TO FINDING 4

Regarding the deposit of funds into the campaign account from the Candidate’s 

company, those funds were the personal funds owed by the Company to the Candidate, and 

the Candidate paid taxes on the amount as income to him. On June 16, 2021, the Committee 

submitted additional evidence from Gary Brick, the Candidate’s CPA, to substantiate the fact 

that such funds were the personal funds of the Candidate. This evidence was submitted to 

the Commission with the understanding that, due to privacy concerns, it would not made 

part of the public record. We are that evidence once again as Exhibit B; however, consistent 

with our previous understanding and directives, this document should be excluded from the 

public record. Please note that, as stated above, the Committee has requested a hearing 

before the Commission to present legal arguments to dispute the Audit Division’s finding 

that “the $1,500,000 in corporate checks were not from a permissible source.”

Regarding the Audit Division’s finding that various unsecured lines of credit 

(collectively, the “Loans”) that the Candidate obtained from FDIC-insured commercial 

lending institutions were not made in the ordinary course of business, the Committee 

fervently disagrees with this finding for several reasons: (i) the Audit Division simply fails to 

recognize that unsecured lines of credit are not unique to candidates for public office; (ii) 

under Commission rules, a perfected security is a “safe harbor,” not an essential element, for 

demonstrating assurance of repayment; and (iii) prior Commission advisory opinions and 

enforcement decisions indicate deference to commercial lending institutions in assuring 

repayment, including considerations of the candidate’s creditworthiness.

The Audit Division simply fails to recognize that unsecured lines of credit are not 

unique to candidates for public office. 

As evidenced by Exhibit C, which is a copy of an unsecured line of credit issued by 

BBVA Compass to the undersigned counsel in March 2017, commercial lending institutions 
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provide unsecured lines of credit to creditworthy individuals who, in the bank’s own 

judgment, are very unlikely to default on the loan. And despite being creditworthy in the 

eyes of BBVA Compass, the undersigned counsel can assure the Commission that he was 

able to obtain the unsecured line of credit without a net worth that remotely approaches that 

of the Candidate’s.

Under Commission rules, a perfected security is a “safe harbor,” not an essential 

element, for demonstrating assurance of repayment.

As the Commission is aware, the Federal Election Campaign Act of 1971, as amended, 

prohibits commercial institutions from contributing to a federal candidate’s authorized 

campaign committee. This prohibition includes loans from commercial institutions that are 

not made in the “ordinary course of business” and outside applicable banking practices, laws, 

and regulations.1 The FEC has supplemented this statutory restriction with rules defining the 

relevant terms, including what does and does not constitute a loan made in the “ordinary 

course of business.” According to current FEC regulations, a loan is made in the “ordinary 

course of business” if it: 

(1) bears the usual customary interest rate of the lending institution; 

(2) is made on a basis that assures repayment;

(3) is evidenced by a written instrument; and

(4) is subject to a due date or amortization schedule.2

Satisfaction of the four elements is intended to demonstrate that when commercial 

lending institutions extend credit to federal candidates and political committees, they are 

doing so in their ordinary course of business (i.e., in their own commercial interests) rather 

than for the purpose of influencing the outcome of a federal election. In the instant matter, it 

is the undersigned counsel’s understanding and belief that the commercial lending 

institutions that made the Loans did so in their ordinary course of business (i.e., in their own 

commercial interests), and not for the purpose of influencing the outcome of the Candidate’s

candidacy. 

There should be no dispute that the Loans satisfy three of the four elements 

established by the Commission: (i) the Loans were evidenced by a written instrument; (ii) the 

Loans each bear the customary interest rate of the lending institution; and (iii) the Loans are 

1 See generally 52 USC §30118(a)(1)-(2).

2 11 C.F.R. § 100.82.
MBFI RESPONSE TO THE DRAFT FINAL AUDIT REPORT PAGE 6 OF 11

subject to a due date or amortization schedule. The critical inquiry, therefore, is whether the 

Loans were made on a basis that assures repayment. 

Commission rules provide several express ways for commercial lending institutions 

to satisfy this remaining element, including obtaining a perfected security interest in 

collateral such as real or personal property and certificates of deposit, or a written agreement 

pledging a security in future receipts.3 While candidates, political committees, and the 

commercial lending institutions may rely on these express provisions as a “safe harbor,” the

Commission’s rules also contain a fallback provision that permits the Commission to apply 

a “totality of the circumstances” test to determine whether loans were made on a basis that 

assures repayment.4

Prior Commission advisory opinions and enforcement decisions indicate deference to 

commercial lending institutions in assuring repayment, including considerations of 

the candidate’s creditworthiness.

Since the Commission’s earliest considerations of whether commercial loans were 

made on a basis that assures repayment, the FEC has clearly analyzed such loans in their full 

context. In its own advisory opinions, for example, the Commission has noted that the critical 

inquiry is whether the terms, placed within the larger understanding of the relationship 

between the lending institution and the borrower, evidence an agreement that mitigates the 

risk of the loans to such a degree that repayment is assured.5

To be clear, the deference ordinarily given to a lending institution’s commercial 

judgment (i.e., their own commercial interest) is not eliminated from the analysis simply 

because the loans are unsecured. Rather, the Commission must nonetheless give that 

deference while performing its analysis to determine whether significant risk mitigation still 

exists in the relationship between the parties to the agreement.6

As the Commission highlighted in its Cunningham advisory opinion, unsecured lines 

of credit can be made on a basis that assures repayment. The Commission cited several 

important contextual factors in that opinion, including:

(1) the long-standing relationship between the commercial lender and the 

candidate; 

3 See 11 C.F.R. § 100.82(e)(1)-(2).

4 11 C.F.R. § 100.82(e)(3).

5 FEC Advisory Opinion 1980-108 (Anderson).

6 FEC Advisory Opinion 1994-26 (Cunningham).
MBFI RESPONSE TO THE DRAFT FINAL AUDIT REPORT PAGE 7 OF 11

(2) that the interest rates and additional contractual clauses were standard form 

agreement provisions matching agreements given to other customers; and

(3) the terms were not unduly favorable to the candidate.7

More recently, the Commission has considered the applicability of its “totality of the 

circumstances” analysis in the context of enforcement actions. In the Cantwell enforcement 

matter, the Commission considered the prior existing relationship between the candidate and 

the lending institution. Importantly, the Commission’s analysis emphasized how the 

candidate’s personal net worth far exceeded the actual value of the line of credit, and the 

Commission ultimately concluded that the banking institution validly relied on the very 

favorable ratio between the candidate’s net worth and the value of the line of credit to 

determine that the risk of non-repayment was small. 

The analysis and conclusion reached in the Cantwell enforcement matter is instructive 

in the instant case because it is another clear example of the Commission deferring to the 

lending institution’s commercial judgment (i.e., their own commercial interest) as to whether 

the candidate is creditworthy. Stated differently, in the Cantwell enforcement matter, the 

Commission accepted the lending institution’s conclusion that the loan agreement 

sufficiently mitigated the risk of non-repayment because it bore the signature of a high-networth, creditworthy individual who, in the bank’s own judgment, was very unlikely to 

default on the loan.8

Please note that, as stated above, the Committee has requested a hearing before the 

Commission to present legal arguments to dispute the Audit Division’s finding that “the 

loans and lines of credit totaling $7,049,405 were not made on a basis that assured 

repayment.”

DFAR FINDING 5. RECEIPT OF CONTRIBUTIONS IN EXCESS OF THE LIMIT

During audit fieldwork, the Audit staff reviewed contributions from individuals and political 

committees to determine if any exceeded the contribution limit. Based on these reviews, MBFI received 

apparent excessive contributions totaling $1,173,557. This included apparent excessive contributions 

from individuals totaling $985,345 and from political committees totaling $188,212. These errors 

occurred as a result of MBFI not resolving the excessive portion of contributions in a timely manner 

and by designating contributions for Primary or General debt that had already been extinguished.

In response to the Interim Audit Report recommendation, MBFI did not provide documentation that 

the contributions in question were not excessive. MBFI stated it will provide confirmations from the 

7 Id.

8 FEC Matter Under Review 5198 (Cantwell) (“Bank approved the increase in the line of credit to 

$600,000 as it was partially secured and guaranteed by the candidate’s signature.”).
MBFI RESPONSE TO THE DRAFT FINAL AUDIT REPORT PAGE 8 OF 11

contributors regarding the reattribution and redesignation of contributions, based on the 

reconciliations performed by MBFI’s current treasurer. Absent documentation, the Audit staff 

maintains that MBFI received excessive contributions from individuals totaling $985,345 and from 

political committees totaling $188,212.

THE COMMITTEE’S RESPONSE TO FINDING 5

As with other issues identified in the Draft Final Audit Report, the Committee hired 

and paid an experienced FEC compliance professional to handle the reattribution, 

redesignation, and refund requirements of the campaign. When the current treasurer took 

over the accounting and compliance duties in early 2019, he found a number of refund checks 

that had been prepared but not sent to donors, with some information suggesting that the 

former treasurer had initiated the reattribution and redesignation tasks required of a 

treasurer. It is unknown the extent to which those normal and customary procedures were

completed. All reattributions and redesignations were completed by the current treasurer in 

2019 after he took over the accounting and reporting duties, and refunds were sent to donors 

at that time. The Committee has attached documentation regarding some of its efforts to 

reattribute and redesignate excessive contributions from the 2018 election cycle. See Exhibit 

D. 

Notwithstanding the foregoing, to the extent that the facts and conclusions in Finding 

5 relate to the $250,000 loan repayment limit found in Section 403 of the Bipartisan Campaign 

Reform Act of 2002 (“BCRA”) and 28 U.S.C. § 2284 or the Committee’s acceptance of debt 

retirement contributions, the Audit Division should amend this finding in light of a recent 

decision of the federal court regarding the constitutional validity of the provision of law on 

which the Audit Division is relying on.

Specifically, in Ted Cruz for Senate v. Federal Election Commission, Civil No. 19-cv-908 

(D.C. Dist. Ct., June 3, 2021), a three-judge district court convened pursuant to Section 403 of 

the Bipartisan Campaign Reform Act of 2002 (“BCRA”) and 28 U.S.C. § 2284 and issued an 

opinion on June 3, 2021, striking down the prohibition on federal candidates using postelection contributions to repay personal loans over $250,000 (the “loan repayment limit”). On 

September 30, 2021, the United States Supreme Court agreed to hear the Commission’s 

appeal of the case. Since many of the facts and conclusions of Finding 5 may involve and may 

be impacted by the loan repayment limit, the Commission’s conclusions may rely on an 

unconstitutional provision that renders Finding 5 invalid, or at least a portion of it. 

Given the significant impact that the Ted Cruz for Senate ruling may have on Finding 

5, the Committee believes it is imperative for the Commission’s Audit staff to either postpone 

or reconsider its audit findings, reissue a revised Draft Final Audit Report, and give the 

Committee the opportunity to respond to the revised Draft Final Audit Report. For this 
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reason, the Committee will refrain from providing any additional response to Finding 5 until 

that occurs. 

DFAR FINDING 6. DISCLOSURE OF MEMO ENTRIES AND CANDIDATE LOANS

During audit fieldwork, the Audit staff determined that MBFI failed to properly disclose joint 

fundraising memo entries totaling $933,814 from 13 joint fundraising committees. MBFI also failed 

to properly disclose the correct loan balances and loan terms for 29 transactions totaling $11,569,963. 

In response to the Interim Audit Report recommendation, MBFI did not file amendments or a Form 

99 (Miscellaneous Electronic Submission) and did not provide any documentation. However, 

regarding disclosure of joint fundraising memo entries, MBFI stated “all have been corrected and will 

be included in the amendments that have been prepared to be filed.” Regarding the disclosure of loan 

balances and loan terms, MBFI did not agree with the finding. Absent filing of amendments or a Form 

99, MBFI has not corrected the public record regarding memo entries from joint fundraisers totaling 

$933,814, and loan balances and terms for transactions totaling $11,569,963.

THE COMMITTEE’S RESPONSE TO FINDING 6

Regarding the receipts from joint fundraising committees (“JFCs”), two years ago the 

current treasurer reviewed all receipts from JFC’s and personally contacted all the JFC 

treasurers from whom the Committee did not have memo entries related to the transfers. He 

then added those memo entries to the Committee’s reports as the information was obtained. 

Some of the reported JFC transfers were missing memo entries and others were reported on 

line 11c, not line 12. All have been corrected and included in the amendments that have been

filed with the Commission.

Regarding the candidate loans, it is still unclear to the Committee how the Audit 

Division concluded that the Committee accepted two unreported candidate loans totaling 

$96,520 since this finding does not correspond to any of the Committee’s records. The 

Committee would appreciate the opportunity to respond to this finding; however, at the time 

of this writing, it does not have the necessary information to respond.

Notwithstanding the foregoing, to the extent that the facts and conclusions in Finding 

6 relate to the conclusions of law that the Audit Division makes in Finding 4 (i.e., that various 

lines of credit were not made in the ordinary course of business), the Committee disagrees 

with this finding.

Furthermore, to the extent that the facts and conclusions in Finding 6 relate to the 

$250,000 loan repayment limit found in Section 403 of BCRA or the Committee’s acceptance 

of debt retirement contributions, the Audit Division should amend this finding because of

the recent federal court decision in Ted Cruz for Senate v. Federal Election Commission, Civil No. 

19-cv-908 (D.C. Dist. Ct., June 3, 2021). Since many of the facts and conclusions of Finding 6 

may involve and may be impacted by the loan repayment limit, the Commission’s 
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conclusions may rely on an unconstitutional provision that renders Finding 6 invalid, or at 

least a portion of it. 

Given the significant impact that the Ted Cruz for Senate ruling may have on Finding 

6, the Committee believes it is imperative for the Commission’s Audit staff to either postpone 

or reconsider its audit findings, reissue a revised Draft Final Audit Report, and give the 

Committee the opportunity to respond to the revised Draft Final Audit Report. For this 

reason, the Committee will refrain from providing any additional response to Finding 6 until 

that occurs. 

DFAR FINDING 7. PROHIBITED CANDIDATE PERSONAL LOAN REPAYMENTS

Based on a review of loans, the Audit staff determined that MBFI made excessive Primary 

candidate loan and interest repayments totaling $750,669. This amount is in excess of the $250,000 

limit permitted for repayment to the Candidate within 20 days following the Primary election. In 

response to the Interim Audit Report recommendation, MBFI stated, “...the Audit Division should 

amend this finding because of the recent federal court decision in Ted Cruz for Senate v. Federal 

Election Commission, Civil No. 19-cv-908....” The Audit staff maintains MBFI did not comply with 

11 CFR §116.11 (d).

THE COMMITTEE’S RESPONSE TO FINDING 7

To the extent that the facts and conclusions in Finding 7 relate to the $250,000 loan 

repayment limit found in Section 403 of BCRA or the Committee’s acceptance of debt 

retirement contributions, the Audit Division should amend this finding because of the recent 

federal court decision in Ted Cruz for Senate v. Federal Election Commission, Civil No. 19-cv-908 

(D.C. Dist. Ct., June 3, 2021). Since many of the facts and conclusions of Finding 7 involve and 

are impacted by the loan repayment limit, the Commission’s conclusions rely on an 

unconstitutional provision that renders Finding 7 invalid, or at least a portion of it. 

Given the significant impact that the Ted Cruz for Senate ruling has on Finding 7 and 

others, the Committee believes it is imperative for the Commission’s Audit staff to either 

postpone or reconsider its audit findings, reissue a revised Draft Final Audit Report, and give 

the Committee the opportunity to respond to the revised Draft Final Audit Report. For this 

reason, the Committee will refrain from providing any additional response to Finding 7 until 

that occurs. 

CONCLUSION

Thank you for your consideration of this response. If you require additional 

information, or if we can be of any assistance, then I can be reached at (512) 354-1783.
MBFI RESPONSE TO THE DRAFT FINAL AUDIT REPORT PAGE 11 OF 11

Sincerely,

Chris K. Gober

Counsel, Mike Braun for Indiana