Why the Audit 

Was Done 

Federal law permits the 

Commission to conduct 

audits and field 

investigations of any 

political committee that is 

required to file reports 

under the Federal 

Election Campaign Act 

(the Act). The 

Commission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold 

requirements for 

substantial compliance 

with the Act.1 The audit 

determines whether the 

committee complied with 

the limitations, 

prohibitions and 

disclosure requirements 

of the Act. 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any of the 

matters discussed in this 

report. 

1

 52 U.S.C. §30111(b). 

Final Audit Report of the 

Commission on 

Mike Braun for Indiana 

(August 7, 2017 - December 31, 2018) 

About the Campaign (p. 2) 

Mike Braun for Indiana is the principal campaign committee for 

Michael K. Braun, Republican candidate for the United States 

Senate from the state of Indiana, and is headquartered in Zionsville, 

Indiana. For more information, see the Campaign Organization 

Chart, p. 2. 

Financial Activity (p. 2) 

 Receipts 

o Contributions from Individuals 

o Contributions from the Candidate 

o Contributions from Other Political 

Committees 

o Transfers from Other Authorized 

Committees 

o Candidate Loans 

o Offsets to Operating Expenditures 

Total Receipts 

 Disbursements 

o Operating Expenditures 

o Candidate Loan Repayments 

o Contribution Refunds 

o Other Disbursements 

Total Disbursements 

Commission Findings (p. 3) 

 Misstatement of Financial Activity (Finding 1) 

 Failure to File 48-Hour Notices (Finding 2) 

$ 6,336,454 

13,938 

833,940 

802,946 

11,666,483 

3,097 

$ 19,656,858 

$ 18,016,343 

1,148,925 

76,875 

342,000 

$ 19,584,143 

 Disclosure of Occupation and/or Name of Employer (Finding 3) 

 Receipt of Apparent Prohibited Contributions-Loans (Finding 4) 

 Disclosure of Memo Entries and Candidate Loans (Finding 5) 

Additional Issues (p.5) 

 Receipt of Contributions in Excess of the Limit (Issue 1) 

 Prohibited Candidate Personal Loan Repayments (Issue 2) 
Final Audit Report of the 

Commission on 

Mike Braun for Indiana 

(August 7, 2017 - December 31, 2018) 
Table of Contents 

Page 

Part I. Background 

 Authority for Audit 1 

Scope of Audit 1 

 Audit Hearing 1 

Part II. Overview of Campaign 

Campaign Organization 2 

Overview of Financial Activity 2 

Part III. Summaries 

Commission Findings 3 

 Additional Issues 5 

Part IV. Commission Findings 

Finding 1. Misstatement of Financial Activity 8 

Finding 2. Failure to File 48-Hour Notices 11 

Finding 3. Disclosure of Occupation and/or Name of Employer 14 

Finding 4. Receipt of Apparent Prohibited Contributions – Loans 17 

Finding 5. Disclosure of Memo Entries and Candidate Loans 28 

Part V. Additional Issues 

Issue 1. Receipt of Contributions in Excess of the Limit 34 

Issue 2. Prohibited Candidate Personal Loan Repayments 43 
 1 

Part I 

Background 

Authority for Audit

This report is based on an audit of Mike Braun for Indiana (MBFI), undertaken by the 

Audit Division of the Federal Election Commission (the Commission) in accordance with 

the Federal Election Campaign Act of 1971, as amended (the Act). The Audit Division 

conducted the audit pursuant to 52 U.S.C. §30111(b), which permits the Commission to 

conduct audits and field investigations of any political committee that is required to file a 

report under 52 U.S.C. §30104. Prior to conducting any audit under this subsection, the 

Commission must perform an internal review of reports filed by selected committees to 

determine if the reports filed by a particular committee meet the threshold requirements 

for substantial compliance with the Act. 52 U.S.C. §30111(b). 

Scope of Audit 

Following Commission-approved procedures, the Audit staff evaluated various risk 

factors and as a result, this audit examined: 

1. the receipt of excessive contributions and loans; 

2. the receipt of contributions from prohibited sources; 

3. the disclosure of contributions received; 

4. the disclosure of individual contributors’ occupation and name of employer; 

5. the consistency between reported figures and bank records; 

6. the completeness of records; and 

7. other committee operations necessary to the review. 

Audit Hearing 

MBFI requested a hearing before the Commission. The request was granted and the 

hearing was held on November 10, 2021. At the hearing, MBFI stated that it requested 

the hearing on Finding 4. Receipt of Apparent Prohibited Contributions – Loans because 

the “Audit Division’s two conclusions in this finding are clearly erroneous and 

unsupported by the facts and the law.” (For more detail, see Audit Hearing at Finding 4, 

pp. 24 and 28.) 
 

 

 

 

Important Dates 

 Date of Registration August 10, 20172 

 Audit Coverage August 7, 2017 3

 - December 31, 2018 

Headquarters Zionsville, Indiana 

Bank Information 

 Bank Depositories One 

 Bank Accounts One checking account 

Treasurer 

 Treasurer When Audit Was Conducted Thomas Datwyler (1/1/2019 – Present) 

 Treasurer During Period Covered by Audit Travis Kabrick (8/7/2017 – 12/31/2018) 

Management Information 

 Attended FEC Campaign Finance Seminar Yes 

 Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 

2 

Part II 

Overview of Campaign 

Campaign Organization 

Overview of Financial Activity

(Audited Amounts) 

Cash on hand @ August 7, 2017 $ 0 

Receipts 

o Contributions from Individuals 6,336,454 

o Contributions from the Candidate 13,938 

o Contributions from Other Political 

Committees 

833,940 

o Transfers from Other Authorized 

Committees 

802,946 

o Candidate Loans 11,666,483 

o Offsets to Operating Expenditures 3,097 

Total Receipts $ 19,656,858 

Disbursements 

o Operating Expenditures 18,016,343 

o Candidate Loan Repayments 1,148,925 

o Contribution Refunds 76,875 

o Other Disbursements 342,000 

Total Disbursements $ 19,584,143 

Cash on hand @ December 31, 2018 $ 72,715 

2

 MBFI filed a Statement of Organization on August 10, 2017. Mike Braun filed a Statement of Candidacy on 

August 9, 2017. 3

 MBFI opened its bank account on August 7, 2017. 
 3 

Part III 

Summaries 

Commission Findings 

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 in-kind contributions instead of as memo 

entries as recommended by the Audit staff. In response to the Draft Final Audit Report, 

MBFI filed amended disclosure reports that corrected the public record. 

The Commission approved a finding that MBFI overstated its reported receipts and 

disbursements by $6,293,350 and $6,294,482, respectively, in calendar year 2018. 

(For more detail, see p. 8.) 

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 included 

seven contributions 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.” In June 2021, MBFI filed, albeit 

untimely, three 48-Hour Notices totaling $3,400, and in response to the Draft Final Audit 

Report, amended its disclosure reports to correct the receipt date for these contributions 

and four additional contributions totaling $5,700, thereby correcting the misreported 

contribution dates for seven contributions totaling $9,100. Additionally, as part of its 

Draft Final Audit Report response, MBFI provided a time-stamped FEC Form 6 (48-

Hour Notice) to demonstrate that contributions totaling $253,500 were previously 

disclosed; however, the original Form 6, timely filed in April 2018, was illegible due to a 

fax transmission issue. 

The Commission approved a finding that MBFI materially complied with the requirement 

to timely file 48-Hour Notices. 

(For more detail, see p. 11.) 

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 
 4 

the required occupation and/or name of employer information. MBFI did not sufficiently 

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. In response to 

the Draft Final Audit Report, MBFI filed amended disclosure reports that materially 

corrected the public record. 

The Commission approved a finding that MBFI failed to disclose or inadequately 

disclosed occupation and name of employer information for contributions from 1,363 

individuals, totaling $1,464,449. 

(For more detail, see p. 14.) 

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. 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 asserted supported that the two corporate checks were from a permissible source. 

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

letter. 

In response to the Draft Final Audit Report, MBFI objected to the assertion that it 

received apparent prohibited loans and lines of credit totaling $7,049,405 because they 

were not made on a basis that assured repayment and restated the response it provided to 

the Interim Audit Report. MBFI also objected to the assertion that it received $1,500,000 

in corporate checks from an impermissible source. MBFI provided a letter from the 

Candidate's CPA confirming that the funds were the Candidate's personal funds obtained 

from proceeds from selling his shares of stock and not from a corporate impermissible 

source. The same letter was also provided in response to the Interim Audit Report. 

MBFI requested a hearing before the Commission to discuss the matter. MBFI also 

provided additional documents after the Draft Final Audit Report response and hearing 

request, but prior to the audit hearing being held. Based on the documents provided, the 

Audit staff concluded that the bank loans and lines of credit were made on a basis that 

assured repayment and were not unduly favorable to the Candidate and the $1,500,000 

was not from an impermissible source. 
 5 

The Commission approved a finding that MBFI received loans and lines of credit totaling 

$7,049,405 that were made in the ordinary course of business and that the $1,500,000 

was received from a permissible source. 

(For more detail, see p. 17.) 

Finding 5. 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. 

In response to the Draft Final Audit Report, MBFI filed amended disclosure reports that 

materially corrected disclosure of the joint fundraising memo entries. MBFI did not 

correct the disclosure of loan terms and dates, repayment amounts, loan forgiveness, and 

outstanding balances on Schedule C (Loans) and Schedule C-1 (Loans and Lines of 

Credit from Lending Institutions). 

The Commission approved a finding that MBFI failed to correctly disclose joint 

fundraising memo entries totaling $933,814 and failed to correctly disclose loan balances 

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

(For more detail, see p. 28.) 

Additional Issues 

Issue 1. 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 

would provide confirmations from the contributors regarding the reattribution and 

redesignation of contributions, based on the reconciliations performed by MBFI’s current 

treasurer. 

In response to the Draft Final Audit Report, MBFI provided copies of reattribution and 

redesignation letters which did not materially resolve excessive contributions from 

individuals. However, some of the reattribution and redesignation letters were timely, 
 

 

 

6 

which reduced the finding total from $985,345 to $898,166. MBFI did not provide 

documentation demonstrating the contributions were not excessive from political 

committees totaling $188,212. Additionally, MBFI stated the Audit Division should 

amend this finding since the district court decision in Ted Cruz for Senate v. Federal 

Election Commission, Civil No. 19-cv-908 (D.C. Dist. Ct., June 3, 2021) held 

unconstitutional the candidate loan repayment provision at 52 U.S.C. § 30116(j). 

The Audit staff acknowledged the potential impact that the Supreme Court’s decision 

may have on this portion of the proposed finding. The Audit staff, therefore, 

recommended the Commission refrain from making a finding on whether MBFI received 

excessive contributions from individuals totaling $898,166 and from political committees 

totaling $188,212 until the Court issues its decision. Thereafter, the Audit staff would 

recommend disposition of this finding in a Final Addendum Audit Report for the 

Commission’s consideration. 

The Commission did not approve, by the required four votes, the Audit staff’s 

recommendation for disposition of this finding in a Final Addendum Audit Report for the 

Commission’s consideration. Pursuant to Commission Directive 704

, this matter is 

discussed in the “Additional Issues” section of this report. 

(For more detail, see p. 34.) 

Issue 2. 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...” 

In response to the Draft Final Audit Report, MBFI stated, “To the extent that the facts 

and conclusions in [the proposed finding] 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-cv908 (D.C. Dist. Ct., June 3, 2021). Since many of the facts and conclusions of [the 

proposed finding] involve and are impacted by the loan repayment limit, the 

Commission’s conclusions rely on an unconstitutional provision that renders the finding 

invalid, or at least a portion of it.” 

The Audit staff acknowledged the potential impact that the Supreme Court’s decision 

may have on this proposed finding. The Audit staff, therefore, recommended that the 

Commission refrain from making a finding on whether MBFI made excessive Primary 

candidate loan and interest repayments totaling $750,669 until the Court issued its 

decision. Thereafter, the Audit staff would recommend disposition of this finding in a 

Final Addendum Audit Report for the Commission’s consideration. 

4

 Available at https://www.fec.gov/resources/cms-content/documents/directive_70.pdf 
 

 

7 

The Commission did not approve, by the required four votes, the Audit staff’s 

recommendation for disposition of this finding in a Final Addendum Audit Report for the 

Commission’s consideration. Pursuant to Commission Directive 704, this matter is 

discussed in the “Additional Issues” section of this report. 

(For more detail, see p. 43.) 
 8 

Part IV 

Commission Findings 

Finding 1. Misstatement of Financial Activity 

Summary 

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 in-kind contributions instead of as memo 

entries as recommended by the Audit staff. In response to the Draft Final Audit Report, 

MBFI filed amended disclosure reports that corrected the public record. 

The Commission approved a finding that MBFI overstated its reported receipts and 

disbursements by $6,293,350 and $6,294,482, respectively, in calendar year 2018. 

Legal Standard 

Contents of Reports. Each report must disclose: 

• The amount of cash on hand at the beginning and end of the reporting period; 

• The total amount of receipts for the reporting period and for the election cycle; 

• The total amount of disbursements for the reporting period and for the election cycle; 

and 

• Transactions that require itemization on Schedule A (Itemized Receipts) or Schedule B 

(Itemized Disbursements). 52 U.S.C. §30104(b)(l), (2), (3), (4), and (5). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reconciled MBFI’s reported financial activity with 

its bank records for calendar years 2017 and 2018. In addition to the bank records 

provided by MBFI, on May 9, 2019, the Commission issued subpoenas to one vendor and 

its financial institution to obtain documentation necessary to complete the comparison of 

MBFI’s financial activity to the information contained in the disclosure reports filed with 

the Commission. 5 The reconciliation determined that MBFI misstated receipts and 

disbursements for 2018. The following chart details the discrepancies between MBFI’s 

disclosure reports and bank activity. The succeeding paragraphs explain why the 

discrepancies occurred. 

5

 MBFI was cooperative and attempted to comply with the Audit staff’s request for documentation but was 

unable to obtain the requested information from the associated vendors, resulting in the issuance of 

subpoenas. 
 

 

 

 

 

 

 

 

 

 

 

 

9 

2018 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash on hand @ 

January 1, 2018 

$2,313,439 $2,313,439 $0 

Receipts $22,376,798 $16,083,448 $6,293,350 

Overstated 

Disbursements $24,618,654 $18,324,172 $6,294,482 

Overstated 

Ending Cash on hand @ 

December 31, 2018 

$71,583 $72,715 $1,132 

Understated 

The overstatement of receipts resulted from the following: 

 Two unreported Candidate loans + 96,520 

 Candidate loans incorrectly reported - 6,388,558 

 Unexplained differences - 1,312 

Net Overstatement of Receipts $ 6,293,350 

The overstatement of disbursements resulted from the following: 

 Disbursements not reported or reported incorrectly + 2,736 

 Credit card fees over-reported - 4,472 

 Candidate loan repayments not reported + 96,520 

 Candidate loans incorrectly reported - 6,388,558 

 Unexplained differences - 708 

Net Overstatement of Disbursements $ 6,294,482 

The $1,132 understatement of the ending cash on hand was a result of the reporting 

discrepancies described above. 

The Candidate loan and loan repayments totaling $6,388,558 were the result of MBFI 

misreporting the conversion of Candidate loans to contributions. The converted loan 

amounts should have been disclosed as memo entries on Schedule A (Itemized Receipts) 

and Schedule B (Itemized Disbursements), given the campaign finance software used by 

MBFI. 6 Instead, MBFI reported the loan amounts as transactions on Schedules A and B, 

which overstated receipts and disbursements, respectively. 

The credit card fees totaling $4,472 were the net result of some fees being over-reported 

and some fees being under-reported. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter during the exit conference with MBFI 

representatives and provided schedules detailing the misstatement of financial activity. 

In response to the exit conference, MBFI submitted a written response as follows: 

6

 Various campaign finance software handle the conversion of a candidate loan to a contribution differently, 

but in no case should this conversion be reported as an in-kind contribution. The software used by MBFI 

treats the conversion of a candidate loan to a contribution as memo entries on Schedules A and B. 

Regardless of which campaign finance software a committee chooses to use, the amounts in the disclosure 

reports must match the bank statement activities. 
 

 

10 

“The Committee provided documentation related to this finding during the audit 

process, including access to all banking records, electronic transaction processors, 

and the Committee’s electronic information database. The Committee has no new 

materials to provide with this response, but it is the Committee’s belief that the 

FEC’s preliminary finding mischaracterizes certain transactions. The Committee 

will likely be requesting Commission guidance on legal questions related to this 

finding7, and the Committee intends to take further corrective action as may be 

required at the conclusion of this matter.” 

The Interim Audit Report recommended that MBFI amend its disclosure reports or file a 

Form 998 to correct the misstatements noted above and reconcile the cash balance on its 

most recently filed report to correct any subsequent discrepancies. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, MBFI stated, “...the former 

treasurer did not ultimately report the repayments from the Candidate’s personal funds 

correctly” and “The current treasurer has since conferred with the software provider and 

legal counsel, and they are all in agreement that the proper reporting of the payments is as 

an in-kind contribution.” MBFI stated that the lines of credit were in the name of the 

Candidate and repaid from his personal funds, without first being deposited into MBFI’s 

bank account, and it prepared amended reports to “more clearly disclose the source(s) of 

the funds.” MBFI also stated that “...while the transaction(s) were not reported on the 

correct lines of the FEC report, all the transactions were publicly disclosed.” 

The Audit staff noted the Candidate loans and lines of credit were not taken out in the 

name of MBFI, as such, the repayments were not made on behalf of MBFI and should not 

be reported as in-kind contributions. The transactions were between the Candidate and 

the financial institution. As a result, and in consultation with the Reports Analysis 

Division, the Audit staff maintains that the converted loans should have been disclosed as 

memo entries on Schedule A and Schedule B, given the campaign finance software used 

by MBFI6

, rather than in-kind contributions. The Audit staff further noted that MBFI had 

not filed amendments or a Form 99 as of this report. 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that MBFI did not file amended reports or a 

Form 99 and MBFI’s 2018 receipts and disbursements remained overstated by 

$6,293,350 and $6,294,482, respectively. 

E. Committee Response to the Draft Final Audit Report 

In response to the Draft Final Audit Report, MBFI filed amended disclosure reports that 

corrected the public record. 

F. Audit Hearing 

MBFI did not address this finding during the Audit Hearing. 

7

 MBFI did not submit a Request for Consideration of a Legal Question by the Commission with respect to 

this finding. 

8

 MBFI was advised by the Audit staff that if it chose to file a Form 99, instead of amending its disclosure 

reports, the form must contain all pertinent information that is required on each schedule. 
 11 

Commission Conclusion 

On March 10, 2022, the Commission considered the Audit Division Recommendation 

Memorandum, in which the Audit staff recommended that the Commission find that 

MBFI overstated its reported receipts and disbursements by $6,293,350 and $6,294,482, 

respectively, in calendar year 2018. 

The Commission approved the Audit staff’s recommendation. 

Finding 2. Failure to File 48-Hour Notices 

Summary 

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 included 

seven contributions 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.” In June 2021, MBFI filed, albeit 

untimely, three 48-Hour Notices totaling $3,400, and in response to the Draft Final Audit 

Report, amended its disclosure reports to correct the receipt date for these contributions 

and four additional contributions totaling $5,700, thereby correcting the misreported 

contribution dates for seven contributions totaling $9,100. Additionally, as part of its 

Draft Final Audit Report response, MBFI provided a time-stamped FEC Form 6 (48-

Hour Notice) to demonstrate that contributions totaling $253,500 were previously 

disclosed; however, the original Form 6, timely filed in April 2018, was illegible due to a 

fax transmission issue. 

The Commission approved a finding that MBFI materially complied with the requirement 

to timely file 48-Hour Notices. 

Legal Standard 

Last-Minute Contributions (48-Hour Notice). Campaign committees must file special 

notices regarding contributions of $1,000 or more received less than 20 days but more 

than 48-hours before any election in which the candidate is running. This rule applies to 

all types of contributions to any authorized committee of the candidate, including: 

• Contributions from the candidate; 

• Loans from the candidate and other non-bank sources; and 

• Endorsements or guarantees of loans from the banks. 11 CFR §104.5(f). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff identified 302 contributions totaling $2,345,363 

that equaled or exceeded $1,000 and were received during the 48-hour notice reporting 

period for the Primary and General elections. A review of these contributions indicated 

that MBFI did not file 48-hour notices for three contributions totaling $3,400 and 
 

 

12 

untimely filed 48-hour notices for seven contributions totaling $259,200. These 

contributions are summarized below. 

Primary General Total 

48-Hour Notices Not Filed $0 $3,400 $3,400 

48-Hour Notices Filed Untimely $253,500 $5,700 $259,200 

TOTAL $253,500 $9,100 $262,600 

In addition, seven contributions totaling $9,100 for the General election, noted above, 

were disclosed with the incorrect receipt dates. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter during the exit conference with MBFI 

representatives and provided a schedule of the contributions for which 48-hour notices 

were not filed or were filed in an untimely manner, as well as contributions with 

misreported dates. 

In response to the exit conference, MBFI submitted a written response as follows: 

“The Committee provided documentation related to this finding during the audit 

process, including providing the FEC with access to the Committee’s accounts 

and electronic information database. The Committee has no new materials to 

provide with this response, and the Committee intends to take any such corrective 

action as may be required at the conclusion of this matter.” 

The Interim Audit Report recommended that MBFI provide any additional comments it 

deemed necessary and submit documentation demonstrating that: 

 The 48-hour notices for the contributions in question were timely filed; 

 The contributions were received outside of the 48-hour notice reporting period; 

and 

 Amend its disclosure reports or file a Form 998

 to correct the misreported dates 

for the seven contributions totaling $9,100. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, MBFI stated, “Although the 

former treasurer’s failure to file 48-hour notices is uncorrectable at this point, the 

Committee will amend the reports to report the correct dates of all contributions if the 

Audit Division’s team will provide to the Committee a list of 48-hour notices that were 

either not timely filed or not filed at all.” 

The Audit staff noted, as stated in Section B of this finding, MBFI was provided with a 

schedule of the contributions for which 48-hour notices were not filed or were filed in an 

untimely manner, as well as contributions with misreported dates at the exit conference. 

In addition, the Audit staff offered to send the schedule again with the issuance of the 

Interim Audit Report if MBFI requested it; however, MBFI did not make the request at 
 

 

 

13 

that time. The Audit staff again provided the relevant information upon receipt of 

MBFI’s response to the Interim Audit Report. 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged MBFI’s statement that the “...former 

treasurer’s failure to file 48-hour notices is uncorrectable at this point...” as the response 

to why there were untimely and unfiled 48-hour notices totaling $262,600. However, 

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. 

E. Committee Response to the Draft Final Audit Report 

In June 2021, MBFI filed, albeit untimely, three 48-Hour Notices totaling $3,400, and in 

response to the Draft Final Audit Report, amended its disclosure reports to correct the 

receipt date for these contributions. Also, in response to the Draft Final Audit Report, 

MBFI amended its disclosure reports to correct the receipt date for four additional 

contributions totaling $5,700. Additionally, MBFI provided a time-stamped FEC Form 6 

(48-Hour Notice) to demonstrate that contributions totaling $253,500 were previously 

disclosed; however, the original Form 6, timely filed in April 2018 was illegible due to a 

fax transmission issue.9

 The Audit staff notes the illegible fax transmission resulted in 

Matters Under Review (MUR) 7490.10 On April 7, 2019, the Commission used its 

prosecutorial discretion to dismiss MUR 7490. Given the Commission’s dismissal of the 

MUR, the fact that MBFI provided a legible copy of the FEC Form 6 in August 2018, 

and after consultation with the Office of General Counsel and the Reports Analysis 

Division, the Audit staff accepts the explanation and documentation provided by MBFI. 

Given the resolution of the 48-Hour Notices totaling $253,500 related to the fax 

transmission issue, the remaining errors for seven untimely filed 48-Hour Notices totaling 

$9,100 ($3,400 + $5,700 noted above) are no longer material. 

F. Audit Hearing 

MBFI did not address this finding during the Audit Hearing. 

Commission Conclusion 

On March 10, 2022, the Commission considered the Audit Division Recommendation 

Memorandum, in which the Audit staff recommended that the Commission find that 

MBFI materially complied with the requirement to timely file 48-Hour Notices. 

The Commission approved the Audit staff’s recommendation. 

9

On April 25, 2018, MBFI filed a 48-Hour Notice (FEC Form 6) via fax with the Secretary of the Senate 

for contributions received on April 23, 2018. On April 26, 2018, the Reports Processing Branch of the 

Commission’s Reports Analysis Division contacted the Secretary of the Senate’s office concerning the 

illegible FEC Form 6. The Secretary of the Senate’s office confirmed the FEC Form 6 provided to the 

Commission was exactly what it received, and that it was unable to reach MBFI when it attempted to 

contact the Committee regarding the illegible FEC Form 6. On August 22, 2018, MBFI re-transmitted a 

fully legible FEC Form 6 for the contributions received on April 23, 2018. 10 MUR 7490 was based on an external complaint related to MBFI appearing to have failed to file a 48-

Hour Notice. 
 14 

Finding 3. Disclosure of Occupation and/or Name of 

Employer 

Summary 

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 employer information. MBFI did not sufficiently 

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. In response to 

the Draft Final Audit Report, MBFI filed amended disclosure reports that materially 

corrected the public record. 

The Commission approved a finding that MBFI failed to disclose or inadequately 

disclosed occupation and name of employer information for contributions from 1,363 

individuals, totaling $1,464,449. 

Legal Standard 

A. Itemization Required for Contributions from Individuals. An authorized 

candidate committee must itemize any contribution from an individual if it exceeds 

$200 per election cycle, either by itself or when combined with other contributions 

from the same contributor. 52 U.S.C. §30104(b)(3)(A). 

B. Required Information for Contributions from Individuals. For each itemized 

contribution from an individual, the committee must provide the following 

information: 

 The contributor’s full name and address (including zip code); 

 The contributor’s occupation and the name of his or her employer; 

 The date of receipt (the date the committee received the contribution); 

 The amount of the contribution; and 

 The election cycle year-to-date total of all contributions from the same individual. 

52 U.S.C. §30104(b)(3)(A) and 11 CFR §§100.12 and 104.3(a)(4)(i). 

C. Best Efforts Ensure Compliance. When the treasurer of a political committee 

shows that the committee used best efforts (see below) to obtain, maintain, and 

submit the information required by the Act, the committee’s reports and records will 

be considered in compliance with the Act. 52 U.S.C. §30102(i) and 11 CFR 

§104.7(a). 

D. Definition of Best Efforts. The treasurer and the committee will only be deemed to 

have exercised “best efforts” if the committee satisfied all of the following criteria. 

 All written solicitations for contributions included: 

 A clear request for the contributor's full name, mailing address, occupation, 

and name of employer; and 

 The statement that such reporting is required by Federal law. 
 15 

 Within 30 days of receipt of the contribution, the treasurer made at least one effort 

to obtain the missing information, in either a written request or a documented oral 

request. 

 The treasurer reported any contributor information that, although not initially 

provided by the contributor, was obtained in a follow-up communication or was 

contained in the committee’s records or in prior reports that the committee filed 

during the same two-year election cycle. 11 CFR §104.7(b). 

Facts and Analysis 

A. Facts 

MBFI did not disclose or inadequately disclosed the required occupation and/or name of 

employer information for contributions requiring itemization on its FEC reports, as of the 

date of the audit notification letter. 

Contribution Lacking or Inadequate Occupation and/or Name of Employer Disclosure 

Number of Contributions 1,363 

Dollar Value of Contributions $1,464,449 

Percent of Contributions 26% 

1. Contributor Information Provided but Amendments Not Filed: 

During audit fieldwork, MBFI provided the Audit staff with the required contributor 

occupation and/or name of employer information; however, MBFI did not report the 

required amendments for the following: 

Contributor Information Provided but Amendments Not Filed 

Number of Contributions 8811 

Dollar Value of Contributions $73,622 

2. Best Efforts Documentation Not Provided: 

MBFI did not provide the Audit staff records to document “best efforts” for the 

following: 

Best Efforts Documentation Not Provided by Committee 

Number of Contributions 1,275 

Dollar Value of Contributions $1,390,827 

11 MBFI’s database for the audit period, provided to the Audit staff during fieldwork, contained the 

occupation and name of employer information. 
 16 

3. Additional Information: 

MBFI disclosed the following unacceptable entries on Schedule A: 

 “Information Requested” for 1,125 contributions totaling $1,340,623, and 

 Inadequate occupation and/or name of employer for 238 contributions totaling 

$123,826. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff provided schedules and discussed the disclosure of the contributors’ 

occupation and/or name of employer information with MBFI representatives during audit 

fieldwork and at the exit conference. MBFI representatives did not provide any 

comments during audit fieldwork. In response to the exit conference, MBFI submitted a 

written response as follows: 

“The Committee provided documentation related to this finding during the audit 

process and has no new materials to provide with this response. To date, the 

Committee has made additional preemptive adjustments to its contributor 

information and intends to take any such corrective action as may be required at 

the conclusion of this matter.” 

The Interim Audit Report recommended that MBFI amend its reports or file a Form 99 8 

to report and submit the occupation and/or name of employer information for the 1,363 

contributions. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, MBFI submitted a written 

response as follows: 

“The Committee has researched all donors whose contributions require ‘best 

efforts’ to obtain and report employer/occupation information. Amended reports 

have been prepared and the Committee has obtained and will report 

employer/occupation information for most donors for which the Audit Division 

identified as missing information. As of this writing, there are only 387 

remaining donors with ‘Information Requested’ for the 2018 election cycle. The 

Committee will continue its ongoing ‘best efforts’ to obtain and report the 

employer/occupation information for the remaining 387 donors from the 2018 

election cycle.” 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that MBFI did not file amended reports or a 

Form 99 and that MBFI intended to but had not corrected the public record for 

contributions totaling $1,464,449. These contributions lacked or inadequately disclosed 

the required occupation and/or name of employer information. 

E. Committee Response to the Draft Final Audit Report 

In response to the Draft Final Audit Report, MBFI filed amended disclosure reports that 

materially corrected the public record. 

F. Audit Hearing 

MBFI did not address this finding during the Audit Hearing. 
 17 

Commission Conclusion 

On March 10, 2022, the Commission considered the Audit Division Recommendation 

Memorandum, in which the Audit staff recommended that the Commission find that 

MBFI failed to disclose or inadequately disclosed occupation and/or name of employer 

information for contributions from 1,363 individuals, totaling $1,464,449. 

The Commission approved the Audit staff’s recommendation. 

Finding 4. Receipt of Apparent Prohibited Contributions – 

Loans 

Summary 

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. 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 asserted supported that the two corporate checks were from a permissible source. 

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

letter. 

In response to the Draft Final Audit Report, MBFI objected to the assertion that it 

received apparent prohibited loans and lines of credit totaling $7,049,405 because they 

were not made on a basis that assured repayment and restated the response it provided to 

the Interim Audit Report. MBFI also objected to the assertion that it received $1,500,000 

in corporate checks from an impermissible source. MBFI provided a letter from the 

Candidate's CPA confirming that the funds were the Candidate's personal funds obtained 

from proceeds from selling his shares of stock and not from a corporate impermissible 

source. The same letter was also provided in response to the Interim Audit Report. 

MBFI requested a hearing before the Commission to discuss the matter. MBFI also 

provided additional documents after the Draft Final Audit Report response and hearing 

request, but prior to the audit hearing being held. Based on the documents provided, the 

Audit staff concluded that the bank loans and lines of credit were made on a basis that 

assured repayment and were not unduly favorable to the Candidate and the $1,500,000 

was not from an impermissible source. 
 18 

The Commission approved a finding that MBFI received loans and lines of credit totaling 

$7,049,405 that were made in the ordinary course of business and that the $1,500,000 

was received from a permissible source. 

Legal Standard 

A. Loans Excluded from the Definition of Contribution. A loan of money to a 

political committee by a state bank, a federally chartered depository institution 

(including national bank) or a depository institution whose deposits and accounts are 

insured by the Federal Deposit Insurance Corporation or the National Credit Union 

Administration is not a contribution by the lending institution if such loan is made in 

accordance with applicable banking laws and regulations and is made in the ordinary 

course of business. 

A loan will be deemed to be made in the ordinary course of business if it bears the 

usual and customary interest rate of the lending institution for the category of loan 

involved; is made on a basis which assures repayment; is evidenced by a written 

instrument and is subject to a due date or amortization schedule. 11 CFR §100.82(a). 

B. Assurance of Repayment. Commission regulations state a loan is considered made 

on a basis which assures repayment if: 

 The lending institution making the loan has perfected a security interest in 

collateral owned by the candidate or political committee receiving the loan; 

 Amounts guaranteed by secondary sources of repayment, such as guarantors and 

cosigners, do not exceed the contribution limits of 11 CFR part 110; 

 The lending institution making the loan has obtained a written agreement whereby 

the candidate or political committee receiving the loan has pledged future 

receipts, such as public financing payments; and 

 If these requirements are not met, the Commission will consider the totality of 

circumstances on a case by case basis in determining whether the loan was made 

on a basis which assured repayment. 11 CFR §100.82(e). 

C. Gift, subscription, loan, advance or deposit of money. A loan is a contribution at 

the time it is made and is a contribution to the extent that it remains unpaid. The 

aggregate amount loaned to a candidate or committee by a contributor, when added to 

other contributions from that individual to that candidate or committee, shall not 

exceed the contribution limits set forth at CFR § 110. A loan, to the extent it is 

repaid, is no longer a contribution. 11 CFR §100.52(b)(2). 

D. Receipt of Prohibited Contributions General Prohibition. Candidates and 

committees may not accept contributions (in the form of money, in-kind contributions 

or loans): 

 In the name of another; or 

 From the treasury funds of the following prohibited sources: 

 Corporations (this means any incorporated organization, including a nonstock corporation, an incorporated membership organization, and an 

incorporated cooperative); 

 Federal government contractors (including partnerships, individuals, and 

sole proprietors who have contracts with the federal government); and 
 19 

 Foreign nationals (including individuals who are not U.S. citizens and not 

lawfully admitted for permanent residence; foreign governments and 

foreign political parties; and groups organized under the laws of a foreign 

country or groups whose principal place of business is in a foreign 

country, as defined in 22 U.S.C. §611(b). 52 U.S.C. §§30118, 30119, 

30121, and 30122. 

E. Receipt of Prohibited Corporate Contributions. Political committees may not 

accept contributions from the general treasury funds of corporations. This prohibition 

applies to any type of corporation including a non-stock corporation, an incorporated 

membership organization, and an incorporated cooperative. 52 U.S.C. §30118. 

F. Questionable Contributions. It is the Treasurer’s responsibility to ensure that all 

contributions are lawful. 11 CFR §103.3(b). If a committee receives a contribution 

that appears to be prohibited (a questionable contribution), it must follow the 

procedures below: 

 Within 10 days after the treasurer receives the questionable contribution, the 

committee must either: 

 Return the contribution to the contributor without depositing it; or 

 Deposit the contribution (and follow the steps below). 11 CFR 

§103.3(b)(1). 

 If the committee deposits the questionable contribution, it may not spend the 

funds and must be prepared to refund them. It must therefore maintain sufficient 

funds to make the refunds or establish a separate account in a campaign 

depository for possibly illegal contributions. 11 CFR §103.3(b)(4). 

 The committee must keep a written record explaining why the contribution may 

be prohibited and must include this information when reporting the receipt of the 

contribution. 11 CFR §103.3(b)(5). 

 Within 30 days of the treasurer’s receipt of the questionable contribution, the 

committee must make at least one written or oral request for evidence that the 

contribution is legal. Evidence of legality includes, for example, a written 

statement from the contributor explaining why the contribution is legal or an oral 

explanation that is recorded by the committee in a memorandum. 11 CFR 

§103.3(b)(1). 

 Within these 30 days, the committee must either: 

 Confirm the legality of the contribution; or 

 Refund the contribution to the contributor and note the refund on the report 

covering the period in which the refund was made. 11 CFR §103.3(b)(1) 

and (5). 

G. Reporting Bank Loans, Home Equity Loans and Other Lines of Credit. When a 

political committee obtains a loan from, or establishes a line of credit at, a lending 

institution as described in 11 CFR §100.82(a) through (d) and 100.142(a) through (d), 

it shall disclose in the report covering the period when the loan was obtained, the 

following information on Schedules C-1: 

 The types and value of the collateral or other sources of repayment that secure the 

loan or line of credit, and whether that security interest is perfected; 
 

 

20 

 An explanation of the basis upon which the loan was made or the line of credit 

established, if not made on the basis of either traditional collateral or the other 

sources of repayment described in 11 CFR §§100.82(e)(1) and (2) and 

100.142(e)(1) and (2); and 

 A certification from the lending institution that the borrower’s responses to 11 

CFR §104.3(d)(1)(i)-(iv) are accurate, to the best of the lending institution’s 

knowledge; that the loan was made or the line of credit established on terms and 

conditions (including interest rate) no more favorable at the time than those 

imposed for similar extensions of credit to other borrowers of comparable credit 

worthiness; and that the lending institution is aware of the requirement that a loan 

or a line of credit must be made on a basis which assures repayment and that the 

lending institution has complied with Commission regulations at 11 CFR 

§100.82(a) through (d) and 100.142(a) through (d). 11 CFR §104.3(d)(1)(iii)-(v). 

H. Income. Income received during the current election cycle, of the candidate, 

including: 

 A salary and other earned income that the candidate earns from bona fide 

employment; 

 Income from the candidate's stocks or other investments including interest, 

dividends, or proceeds from the sale or liquidation of such stocks or investments; 

 Bequests to the candidate; 

 Income from trusts established before the beginning of the election cycle; 

 Income from trusts established by bequest after the beginning of the election cycle 

of which the candidate is the beneficiary; 

 Gifts of a personal nature that had been customarily received by the candidate 

prior to the beginning of the election cycle; and 

 Proceeds from lotteries and similar legal games of chance. 11 CFR 

§100.33(b)(1)-(7). 

Facts and Analysis 

A. Assurance of Repayment - Bank Loans 

1. Facts 

MBFI received five loans and eleven lines of credit totaling $7,049,405. These loans 

consisted of promissory/consumer bank notes and open-ended lines of credit in the 

name of the Candidate, Mike Braun (‘Candidate’), supported with agreements from 

five lending institutions. 

Information About the Bank Loans 

 None of the five lending institution agreements provided to the Audit staff 

indicated collateral12 or guarantors were used to secure the loans and lines of 

credit. 

12 The Audit staff reviewed the Candidate’s financial forms filed with the Senate. Based on these 

documents, the Candidate appeared to have enough personal equity to cover the loans obtained. 

However, no property or assets were listed as collateral on the financial institution documents, provided 

to the Audit staff, to secure the loans and lines of credit. 
 

 

 

21 

 MBFI reported $2,856,163 in loans and lines of credit as secured with 

collateral on Schedule C-1 (Loans and Lines of Credit from Lending 

Institutions). The remaining $4,193,242 in loans were not reported as 

secured. 

Based upon the documents provided by MBFI, it did not appear that the loans were 

made in the ordinary course of business because, per 11 CFR §100.82(e), they were 

not made on a basis that assured repayment based on either of the following: 

 A loan may be considered made on a basis that assures repayment if the 

lending institution making the loan perfects a security interest in collateral 

owned by the candidate or political committee receiving the loan. Documents 

supplied by MBFI showed no guarantor nor collateral offered to the financial 

institutions making the loans. 

 A loan may be considered made on a basis that assures repayment if the 

lending institution has obtained a written agreement whereby the candidate or 

political committee receiving the loan has pledged future receipts. MBFI did 

not provide documentation to support that it or the Candidate gave the 

financial institutions a pledge of future receipts or other method of assuring 

repayment. 

2. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with MBFI representatives during audit 

fieldwork and at the exit conference and provided a schedule of the loans. During 

audit fieldwork, MBFI verified loan receipt and repayment amounts and provided 

additional loan documentation. 

In response to the exit conference, MBFI submitted a written response as follows: 

“As requested by the FEC, the Committee provided extensive documentation for 

the loan agreements considered by the FEC in this preliminary finding. The 

Committee has no new materials to provide with this response, but it is the 

Committee’s belief that the documentation already provided establishes that the 

loans in question were provided by commercial lenders on terms customary in the 

ordinary course of business. The Committee will likely be requesting 

Commission guidance on legal questions related to this finding, and the 

Committee intends to take further corrective action as may be required at the 

conclusion of this matter.” 13 

The Interim Audit Report recommended that MBFI demonstrate the loans and lines of 

credit totaling $7,049,405 were made in the ordinary course of business and were 

made on a basis that assured repayment. Documentation could have included, but 

was not limited to submission of: 

 Fully signed copy of the loan agreement. 

 Required lending institution certifications. 

13 On April 8, 2020, counsel for MBFI submitted a Request for Consideration of a Legal Question by the 

Commission (Request). MBFI asked whether an unsecured line of credit issued by a commercial lending 

institution to a “high-net-worth, creditworthy” candidate may be deemed to be made within the ordinary 

course of business under 11 C.F.R. §100.82. Two or more Commissioners did not agree to consider the 

Request. MBFI was informed of this outcome on April 21, 2020. 
 

 

22 

 Amended disclosure reports, consistent with 11 C.F.R. §104.3(d)(1), to 

support its contention that the loans and lines of credit were made on a basis 

that assured repayment. 

 Other information to demonstrate that the loans and lines of credit were based 

on the assurance of repayment to include the following information from each 

of the lending institutions at issue: (1) the length of time of the Candidate’s 

relationship with the bank; (2) the Candidate’s creditworthiness, net worth, 

assets and repayment history; (3) the bank’s underwriting criteria for 

unsecured loans of the type made to the Candidate; and (4) information 

demonstrating that the loan terms were not unduly favorable to the candidate. 

3. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, MBFI stated it “fervently 

disagrees with this finding” for the following reasons: 

(i) “The Audit Division simply fails to recognize that unsecured lines of credit 

are not unique to candidates for public office.” 

MBFI provided a redacted copy of an unsecured line of credit issued to the 

MBFI counsel in March 2017. MBFI asserted that commercial lending 

institutions provide unsecured lines of credit to “creditworthy” individuals 

who are unlikely to default on the loan. MBFI counsel stated he was able to 

obtain the unsecured line of credit “without a net worth that remotely 

approaches that of the Candidate’s.” 

(ii) “Under Commission rules, a perfected security is a “safe harbor,” not an 

essential element, for demonstrating assurance of repayment.” 

“...it is the undersigned counsel’s understanding and belief that the 

commercial lending institutions that made the [l]oans 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.” 

According to MBFI, “There should be no dispute” that the loans satisfy three 

of the four components necessary for a loan to be deemed made in the 

ordinary course of business per 11 CFR §100.82 and §104.3(d)(1)(iii)-(v). 

Regarding the fourth component, MBFI stated, “The critical inquiry, 

therefore, is whether the [l]oans were made on a basis that assures 

repayment.” MBFI further stated, “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. 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.” 
 23 

(iii) “Prior Commission advisory opinions and enforcement decisions indicate 

deference to commercial lending institutions in assuring repayment, including 

considerations of the candidate’s creditworthiness.” 

MBFI stated, “In its own advisory opinions..., 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.” 

MBFI further stated, “...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.” 

MBFI noted that in the Cunningham Advisory Opinion (AO 1994-26), the 

Commission highlighted that “unsecured lines of credit can be made on a 

basis that assures repayment” and that the AO “citied several important 

contextual factors, including: the long-standing relationship between the 

commercial lender and the candidate; that the interest rates and additional 

contractual clauses were standard form agreement provisions matching 

agreements given to other customers; and the terms were not unduly favorable 

to the candidate.” 

MBFI further noted that in the Matter Under Review (MUR) 5198 (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.” 

MBFI concluded that, “the Commission accepted the lending institution’s 

conclusion that the loan agreement sufficiently mitigated the risk of nonrepayment because it bore the signature of a high-net-worth, creditworthy 

individual who, in the bank’s own judgment, was very unlikely to default on 

the loan.” 

4. Draft Final Audit Report 

The Draft Final Audit Report reiterated that MBFI did not demonstrate the loans and 

lines of credit totaling $7,049,405 were made in the ordinary course of business and 

were made on a basis that assured repayment. The Audit staff specifically noted the 

following: 

(i) The redacted bank documentation provided by MBFI demonstrated that no 

collateral was provided for the MBFI counsel’s line of credit. However, MBFI did 
 24 

not provide the fully signed copy of a loan agreement, lending institution certificates 

or any other documentation from its financial institutions demonstrating that MBFI’s 

loans were not unduly favorable to the Candidate, as required by 11 C.F.R. 

§104.3(d)(1). 

(ii) The Audit staff agreed this finding was about MBFI receiving loans and lines of 

credit that were not made on the basis of assured repayment, irrespective of the 

totality of circumstances because: (1) documentation provided by MBFI showed no 

guarantor nor collateral offered to the financial institutions making the loans and (2) 

MBFI did not provide documentation to support that it or the Candidate gave the 

financial institutions a pledge of future receipts or other method of assuring 

repayment. The Audit staff noted that the Commission could make a determination 

based on the totality of circumstances on a case-by-case basis in determining whether 

the loans were made on a basis which assured repayment. However, based upon the 

submitted documentation, as of the Interim Audit Report, the Audit staff believed 

MBFI did not demonstrate the loans and lines of credit were made on a basis that 

assured repayment due to the reasons listed above, irrespective of the totality of 

circumstances. 

(iii) MBFI’s reference to Advisory Opinion 1994-26 and MUR 5198 was applicable. 

However, MBFI failed to provide documentation to demonstrate that the loans and 

lines of credit were based on the assurance of repayment to include the following 

information from each of the lending institutions at issue: (1) the length of time of the 

Candidate’s relationship with the bank; (2) the Candidate’s creditworthiness, net 

worth, assets and repayment history; (3) the bank’s underwriting criteria for 

unsecured loans of the type made to the Candidate; and (4) information demonstrating 

that the loan terms were not unduly favorable to the Candidate. 

5. Committee Response to the Draft Final Audit Report 

In response to the Draft Final Audit Report, MBFI provided a response consistent 

with the response it provided to the Interim Audit Report concerning the loans and 

lines of credit totaling $7,049,405 not being made in the ordinary course of business. 

MBFI stated, in part: 

“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: 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.” 

6. Audit Hearing 

During the Audit Hearing, MBFI stated that it wanted to request the hearing on the 

finding because the “Audit Division’s two conclusions in this finding are clearly 

erroneous and unsupported by the facts and the law.” MBFI stated that the 
 25 

commercial bank loans and lines of credit, totaling $7,049,405, were expressly 

permitted under regulations and precedents, and were not prohibited contributions as 

the Audit staff contends. 

MBFI also stated that its previous treasurer left and, as a result of his departure, it was 

unable to obtain all the documents needed to address the findings. MBFI included a 

similar statement in its written Draft Final Audit Report response. The Audit staff 

notes that it did correspond with the former treasurer during the audit process, with 

the written permission of MBFI. The former treasurer stated all records, paper and 

electronic, were provided to the current treasurer upon his departure. 

Additional documentation provided by MBFI after the Draft Final Audit Report 

response and hearing request, but prior to the audit hearing being held, included 

letters from bank vice presidents and previous years loan documentation addressing 

the following issues: (1) the length of the Candidate’s relationship with the bank; (2) 

the Candidate’s creditworthiness, net worth, assets and repayment history; (3) the 

bank’s underwriting criteria for unsecured loans of the type made to the Candidate; 

and (4) information demonstrating that the loan terms were not unduly favorable to 

the Candidate. Based on the documents provided, the Audit staff concludes that the 

bank loans and lines of credit were made on a basis that assured repayment and were 

not unduly favorable to the Candidate. 

Commission Conclusion 

On March 10, 2022, the Commission considered the Audit Division Recommendation 

Memorandum, in which the Audit staff recommended that the Commission find that 

MBFI received loans and lines of credit totaling $7,049,405 that were made in the 

ordinary course of business. 

The Commission approved the Audit staff’s recommendation. 

B. Corporate Contributions Reported as Candidate Loans 

1. Facts 

During audit fieldwork, the Audit staff identified two checks received by MBFI 

totaling $1,500,000 that appeared to be from a corporation, which is a prohibited 

source. These checks, dated October 17, 2018 and October 25, 2018, were from 

Meyer Distributing, and were reported as loans on Schedule C (Loans), and memo 

text identified these transactions as ‘Personal Funds’. The Audit staff verified the 

corporate status of Meyer Distributing, as of the date of the contribution, with the 

applicable Secretary of State office. Based on the Indiana Secretary of State website, 

this business entity is a for-profit corporation. The Candidate was President of Meyer 

Distributing during the audit period. Loans other than from lending institutions are 

considered contributions to the extent of the outstanding balance of the loan. MBFI 

did not repay the $1,500,000; rather MBFI reported $1,250,000 as a contribution from 

the Candidate on the disclosure reports and reported the remaining $250,000 as an 

outstanding loan balance on the disclosure reports. 

However, MBFI did not correctly report the $1,250,000 contribution from the 

Candidate as a memo entry (see Finding 1. Misstatement of Financial Activity). 
 

 

 

26 

MBFI did not maintain a separate account for questionable contributions. 

Additionally, MBFI did not maintain a sufficient balance in its bank account to refund 

the apparent prohibited contributions. 

2. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with MBFI representatives during audit 

fieldwork as well as at the exit conference and provided a schedule of the apparent 

prohibited contributions. MBFI representatives did not provide any comments during 

audit fieldwork. In response to the exit conference, MBFI submitted a written 

response as follows: 

“To support this preliminary finding, the FEC identified two checks paid from 

Meyer Distributing to Mike Braun. Despite the FEC’s mischaracterization of 

these checks, the Committee properly reported the associated value of these 

checks as loans to the Committee. The Committee intends to provide additional 

documentation demonstrating that the checks in question were initially issued to 

Mr. Braun, pursuant to his employment agreement, as compensation for services 

that he provided to Meyer Distributing; however, the Committee has been unable 

to obtain the relevant documentation because of the ongoing COVID-19 crisis, 

and the information will be provided to the FEC upon its receipt. Furthermore, 

Mr. Braun then endorsed these payments to the Committee directly as a loan to 

the Committee without first depositing and re-issuing payment, an option 

permitted by FEC rules.” 

“The Committee’s compliance with the FEC’s recommendation regarding this 

preliminary finding would cause the Committee to knowingly misrepresent the 

transactions in question and incorrectly disclose prohibited corporate 

contributions that did not take place. Therefore, the Committee declines to take 

the FEC’s recommended remedial action at this time.” 

MBFI contended that the $1,500,000 represented compensation paid to the Candidate 

from Meyer Distributing for services rendered pursuant to his employment 

agreement. MBFI did not provide the employment agreement or any additional 

documentation regarding the checks in question. 

The Interim Audit Report recommended that MBFI: 

 Submit documentation demonstrating that the funds represented salary or 

other income the Candidate earned from bona fide employment and thus were 

the personal funds of the Candidate. Or that the contributions in question 

totaling $1,500,000 were not from a prohibited source or, if prohibited, were 

resolved through the timely issuance of refunds. 

 Absent documentation that the funds were from a permissible source or were 

timely resolved, MBFI should have refunded these apparent prohibited 

contributions to the corporation or disgorged them to a governmental entity or 

to a qualified charitable organization.14 

14 See 26 U.S.C. §170(c). 
 

 

27 

 If funds were not available to make the necessary refunds or disgorgement, 

MBFI should have disclosed the contributions requiring refunds on Schedule 

D (Debts and Obligations) until funds became available to make such refunds. 

3. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, MBFI stated these funds 

were “...the personal funds owed by Meyer Distributing to the Candidate, and the 

Candidate paid taxes on the amount as income to him.” To support this statement, 

MBFI provided a letter from the Candidate’s Certified Public Accountant (CPA). 

The Audit staff noted that MBFI’s exit conference response indicated that the funds 

in question were compensation for services the Candidate provided Meyer 

Distributing; however, the letter from the CPA, in response to the Interim Audit 

Report, states the funds were for stock sale. The Audit staff further noted MBFI did 

not provide any documentation the CPA indicates he reviewed to make the 

determination the funds were from the sale of stock and the CPA appeared to not 

have first-hand knowledge of the transactions. Additional documentation was needed 

to assist the Commission in determining whether the $1,500,000 was from the sale of 

stock, as political committees must maintain records which provide in sufficient detail 

the necessary information and data from which filed reports and statements may be 

verified. 

4. Draft Final Audit Report 

The Draft Final Audit Report reiterated that the two corporate checks reported as 

loans, totaling $1,500,000, were from a prohibited source, absent records such as a 

stock purchase agreement between the Candidate and Meyer Distributing or the 

financial documents that the CPA reviewed to determine the stock sale. 

The Draft Final Audit Report also noted that MBFI’s exit conference response 

indicated that the funds in question were compensation for services the Candidate 

provided Meyer Distributing; however, the letter from the CPA, in response to the 

Interim Audit Report, indicated the funds were for a stock sale. 

5. Committee Response to the Draft Final Audit Report 

In response to the Draft Final Audit Report, MBFI stated the following: 

“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 ... the 

Candidate’s CPA, to substantiate the fact that such funds were the personal funds 

of the Candidate.” 

MBFI also provided the same letter from the Candidate's CPA it previously provided 

in the response to the Interim Audit Report, confirming that the funds were the 

Candidate's personal funds obtained from proceeds from selling his shares of stock 

and not from a corporate impermissible source. 
 28 

6. Audit Hearing 

During the audit hearing, MBFI stated that the Candidate personally contributed 

$1,500,000 in stock proceeds to the campaign and acknowledged that it would have 

been advisable to have first deposited these funds into his personal account prior to 

the campaign account. MBFI also stated that these were not prohibited corporate 

contributions as the Audit Division contends. 

Additional documents provided after the Draft Final Audit Report response and 

hearing request, but prior to the audit hearing being held, included the stock valuation 

and stock redemption agreement demonstrating the stock sale supported by the CPA’s 

letter. The Audit staff notes that income from the Candidate's stocks or other 

investments including interest, dividends or proceeds from the sale or liquidation of 

such stocks or investments fall under income, per 11 CFR§100.33(b)(2) and 

therefore, would not be corporate checks from an impermissible source. 

Commission Conclusion 

On March 10, 2022, the Commission considered the Audit Division Recommendation 

Memorandum, in which the Audit staff recommended that the Commission find that 

the $1,500,000 was received from a permissible source. 

The Commission approved the Audit staff’s recommendation. 

Finding 5. Disclosure of Memo Entries and Candidate 

Loans 

Summary 

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. 

In response to the Draft Final Audit Report, MBFI filed amended disclosure reports that 

materially corrected disclosure of the joint fundraising memo entries. MBFI did not 

correct the disclosure of loan terms and dates, repayment amounts, loan forgiveness, and 

outstanding balances on Schedule C (Loans) and Schedule C-1 (Loans and Lines of 

Credit from Lending Institutions). 

The Commission approved a finding that MBFI failed to correctly disclose joint 

fundraising memo entries totaling $933,814 and failed to correctly disclose loan balances 

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

 

 

29 

Legal Standard 

A. Contents of Reports. Each report must disclose for the reporting period and for the 

election cycle, the total amount of: 

 Contributions from persons other than political committees; 

 Contributions from authorized committees which makes a transfer to the reporting 

committee; 

 Loans made by or guaranteed by the candidate and the identification of each 

person who makes, endorses or guarantees a loan to the committee. 

52 U.S.C. §30104(b)(2)(G), (3)(E) and 4(D). 

B. Contents Required - Information for Contributions. For each itemized 

contribution, the committee must provide the following information: 

 The contributor’s full name and address (including zip code); 

 The contributor’s occupation and the name of his or her employer (for individual 

contributors); 

 The date of receipt (the date the committee received the contribution); 

 The amount of the contribution; and 

 The aggregate year-to-date total of all contributions from the same individual. 11 

CFR §§100.12 and 104.3(a)(4) and 52 U.S.C. §30104(b)(3)(A). 

C. Itemization of Contributions from Joint Fundraising Efforts. Participating 

political committees shall report joint fundraising proceeds in accordance with 11 

CFR §102.17(c) (8) when such funds are received from the fundraising 

representative. 11 CFR §102.17(c)(3)(iii). 

Each participating political committee reports its share of the net proceeds as a 

transfer-in from the fundraising representative and shall also file a memo Schedule A 

itemizing its share of gross receipts as contributions from the original contributors to 

the extent required under 11 CFR §104.3(a). 11 CFR §102.17(c)(8)(i)(B). 

D. Itemization required. Political committees must itemize: 

 Any contributions from an individual if it exceeds $200 per calendar year (or per 

election cycle in the case of an authorized committee) either by itself or when 

aggregated with other contributions from the same contributor. 11 CFR 

§104.3(a)(4)(i); and 

 Every contribution from any political committee, regardless of the amount. 

52 U.S.C. §30104(b)(3)(A) and (B). 

E. Itemizing Loans. Each person who makes a loan to the political committee during 

the reporting period must be disclosed with the following information: 

 Identification of any endorser or guarantor of the loan; 

 The date the loan was made; 

 The amount of the loan. 11 CFR §104.3(a)(4)(iv). 

F. Schedule C. On a Schedule C, both the original loan and payments to reduce 

principal must be reported each reporting period until the loan is repaid. The 

committee need only list the candidate as the source of the loan. Also, the type of 

loan the candidate receives (i.e., bank loan, brokerage account, credit card, home 
 

 

30 

equity line of credit) must be disclosed in either the first box for endorsers and 

guarantors with a notation for loan type or in the box for “Loan Source” after the 

candidate’s name. 11 CFR §104.3(d) and §104.11. 

G. Reporting Bank Loans, Home Equity Loans and Other Lines of Credit. A 

political committee must disclose in the report covering the period when the loan was 

obtained on Schedules C-1: 

 The date, amount, and interest rate of the loan; 

 The name and address of the lending institution; and 

 The types and value of the collateral or other sources of repayment that secure the 

loan, if any. 11 CFR §104.3(d)(4). 

Facts and Analysis 

A. Transfers from Joint Fundraising Committees 

1. Facts 

The Audit staff’s review of all joint fundraising transfers identified that MBFI failed 

to properly disclose joint fundraising memo entries totaling $933,814 from 13 joint 

fundraising committees. 

The chart below details the $933,814 as follows: 

Disclosure Errors 

Type of Review 100% 

Memo Entries Not Itemized $29,785 

Memo Entries Disclosed on Schedule A - Incorrect Receipt Date $904,029 

Total Amount $933,814 

2. Additional Information 

For the contributions that were disclosed on Schedule A, totaling $904,029, MBFI 

reported the date of the transfer from the joint fundraising committee rather than the 

date the contribution was reported received by the joint fundraising committee. 

3. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with MBFI representatives during the exit 

conference and provided schedules of the incorrectly disclosed joint fundraising 

memo entries. 

In response to the exit conference, MBFI submitted the written response as follows: 

“The Committee provided documentation related to this preliminary finding 

during the audit process and has no new materials to provide with this response. 

To date, the Committee has made additional preemptive adjustments to its 
 

 

 

31 

contributor information, including identifying memo entries to be added to 

contribution entries. The Committee intends to take further corrective action as 

may be required at the conclusion of this matter.” 

The Interim Audit Report recommended that MBFI provide additional documentation 

demonstrating that the joint fundraising memo entries were correctly disclosed on 

Schedule A. Absent such documentation, it was further recommended that MBFI 

amend its disclosure reports or file a Form 99 8 to correct the memo entries totaling 

$904,029 and itemize the missing memo entries on Schedule A totaling $29,785. 

4. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, MBFI submitted a written 

statement as follows: 

“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 will be included in the amendments that 

have been prepared to be filed.” 

The Audit staff noted that MBFI had not filed amendments or a Form 99 as of this 

report. 

5. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that MBFI did not file amended reports 

or a Form 99 and that MBFI intended to but had not corrected the public record 

regarding the disclosure of memo entries from joint fundraisers totaling $933,814. 

6. Committee Response to the Draft Final Audit Report 

In response to the Draft Final Audit Report, MBFI filed amended disclosure reports 

that materially corrected the public record. 

7. Audit Hearing 

MBFI did not address this finding during the Audit Hearing. 

Commission Conclusion 

On March 10, 2022, the Commission considered the Audit Division Recommendation 

Memorandum, in which the Audit staff recommended that the Commission find that 

MBFI failed to correctly disclose joint fundraising memo entries totaling $933,814. 

The Commission approved the Audit staff’s recommendation. 
 

 

 

32 

B. Disclosure of Loans 

1. Facts 

During audit fieldwork, the Audit staff reviewed 31 bank loans, lines of credit and 

candidate loans to MBFI totaling $11,666,483. Of this amount: 

 Three bank loans, 13 lines of credit and 13 candidate loans, for 29 transactions 

totaling $11,569,963 were disclosed incorrectly on Schedules C and C-1; and 

 Loans and lines of credit for two transactions, totaling $96,520, were not 

reported (see Finding 1. Misstatement of Financial Activity). 

Disclosure errors consisted of disclosing incorrect or missing information including: 

loan terms and dates, repayment amounts, loan forgiveness, outstanding balances, as 

well as disclosing the Candidate’s spouse as a guarantor for a loan. The loan 

documentation did not support the information that was reported on the disclosure 

reports. 

2. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with MBFI representatives during the exit 

conference and provided a schedule of the loans and lines of credit disclosed 

incorrectly. In response to the exit conference, MBFI submitted a written response as 

follows: 

“The Committee provided documentation related to this preliminary finding 

during the audit process and has no new materials to provide with this response. 

The Committee intends to take further corrective action as may be required at the 

conclusion of this matter.” 

The Interim Audit Report recommended that MBFI provide additional documentation 

demonstrating that the identified loans and lines of credit were correctly disclosed. 

Absent such documentation, it was further recommended that MBFI amend its reports 

or file a Form 998

 to correct the disclosure errors. 

3. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, MBFI stated, “...it is 

currently 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.” There was no 

specific comment regarding the disclosure of the 29 transactions totaling 

$11,569,963. Additionally, MBFI further stated: 

“Furthermore, to the extent that the facts and conclusions in [the proposed 

finding] 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 [the proposed 

finding] may involve and may be impacted by the loan repayment limit, the 

Commission’s conclusions may rely on an unconstitutional provision that renders 

[the proposed finding] invalid, or at least a portion of it. 
 33 

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

proposed finding], the Committee believes it is imperative for the Commission’s 

Audit staff to reconsider its preliminary audit findings, reissue a revised Interim 

Audit Report, and give the Committee the opportunity to respond to the revised 

Interim Audit Report. For this reason, the Committee will refrain from providing 

any additional response to [the proposed finding] until that occurs.” 

The Audit staff noted that MBFI was provided the schedule for the unreported loans 

and lines of credit totaling $96,520 at the exit conference, as it relates to the 

unreported loans outlined in Finding 1, Misstatement of Financial Activity. In 

addition, the Audit staff offered to send the schedule again with the issuance of the 

Interim Audit Report if MBFI requested it; however, MBFI did not make the request 

at that time. The Audit staff again provided the relevant information upon receipt of 

MBFI’s response to the Interim Audit Report. 

The Audit staff further noted that this finding was not related to MBFI making 

Candidate loan and interest repayments in excess of the $250,000 limit permitted for 

repayment to the Candidate, as discussed in what is now Issue 2, and therefore is not 

impacted by the ruling cited by MBFI. MBFI had not filed amendments or a Form 99 

as of this report. 

4. Draft Final Audit Report 

The Draft Final Audit Report acknowledged the MBFI narrative response and 

maintained that absent filing of amendments or a Form 99, MBFI had not corrected 

the public record. The disclosure errors included loan balance and loan terms, and 

incorrectly disclosing the Candidate’s spouse as a guarantor for transactions totaling 

$11,569,963. 

5. Committee Response to the Draft Final Audit Report 

In response to the Draft Final Audit Report, MBFI did not correct the disclosure of 

loan terms and dates, repayment amounts, loan forgiveness, and outstanding balances 

on Schedule C and Schedule C-1. MBFI reiterated the statement it provided in 

response to the Interim Audit Report, “...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.” Furthermore, MBFI believed the Supreme Court’s pending 

ruling in Ted Cruz for Senate v. Federal Election Commission will impact the facts 

and conclusions of this finding. MBFI believed “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.” 

The Audit staff noted that this finding was not related to MBFI making Candidate 

loan and interest repayments in excess of the $250,000 limit permitted for repayment 

to the Candidate, as discussed in what is now Issue 2. The Disclosure of Loans 

finding is based on whether or not the reporting of the loan terms is supported by the 

loan documentation provided by MBFI, and not based on the Candidate loan 

repayment limitation amount. Pursuant to 11 C.F.R. §§ 104.3(d) and 104.11, the 
 34 

Schedule C must disclose the date of the loan, original loan amount and payments to 

reduce the principal on each report until the loan is repaid. The Schedule C-1 must 

disclose the date, amount and interest rate of the loan, as well as the name and address 

of the lending institution. MBFI incorrectly disclosed loan terms and dates, 

repayment amounts, loan forgiveness, and outstanding balances on Schedules C and 

C-1, disclosure requirements which exists irrespective of the Cruz litigation cited by 

MBFI. 

The Audit staff further noted that MBFI was provided the schedule of the unreported 

loans and lines of credit totaling $96,520 at the exit conference and again upon 

receipt of MBFI’s response to the Interim Audit Report. Also, the converted 

candidate loans should have been disclosed as memo entries on Schedule A (Itemized 

Receipts) and Schedule B (Itemized Disbursements) or MBFI could have filed a Form 

99 (Miscellaneous Electronic Submission) in lieu of filing amendments with memo 

entries for Schedules A and B. 

6. Audit Hearing 

MBFI did not address this finding during the Audit Hearing. 

Commission Conclusion 

On March 10, 2022, the Commission considered the Audit Division Recommendation 

Memorandum, in which the Audit staff recommended that the Commission find that 

MBFI failed to correctly disclose loan balances and loan terms for transactions 

totaling $11,569,963. 

The Commission approved the Audit staff’s recommendation. 

Part V 

Additional Issues 

Issue 1. Receipt of Contributions in Excess of the Limit 

Summary 

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 

would provide confirmations from the contributors regarding the reattribution and 

redesignation of contributions, based on the reconciliations performed by MBFI’s current 

treasurer. 
 35 

In response to the Draft Final Audit Report, MBFI provided copies of reattribution and 

redesignation letters which did not materially resolve excessive contributions from 

individuals. However, some of the reattribution and redesignation letters were timely, 

which reduced the finding total from $985,345 to $898,166. MBFI did not provide 

documentation demonstrating the contributions were not excessive from political 

committees totaling $188,212. Additionally, MBFI stated the Audit Division should 

amend this finding since the district court decision in Ted Cruz for Senate v. Federal 

Election Commission, Civil No. 19-cv-908 (D.C. Dist. Ct., June 3, 2021) held 

unconstitutional the candidate loan repayment provision at 52 U.S.C. § 30116(j). 

The Audit staff acknowledged the potential impact that the Supreme Court’s decision 

may have on this portion of the proposed finding. The Audit staff, therefore, 

recommended the Commission refrain from making a finding on whether MBFI received 

excessive contributions from individuals totaling $898,166 and from political committees 

totaling $188,212 until the Court issues its decision. Thereafter, the Audit staff would 

recommend disposition of this finding in a Final Addendum Audit Report for the 

Commission’s consideration. 

The Commission did not approve, by the required four votes, the Audit staff’s 

recommendation for disposition of this finding in a Final Addendum Audit Report for the 

Commission’s consideration. Pursuant to Commission Directive 704

, this matter is 

discussed in the “Additional Issues” section of this report. 

Legal Standard 

A. Authorized Committee Limits. For the 2018 election, an authorized committee may 

not receive more than a total of $2,700 per election from any one person or $5,000 

per election from a multicandidate political committee. 52 U.S.C. §§30116(a)(1)(A) 

and (a)(2)(A); 11 CFR §§110.1(a) and (b) and 110.9. 

B. Handling Contributions That Appear Excessive. If a committee receives a 

contribution that appears to be excessive, the committee must either: 

 Return the questionable check to the donor; or 

 Deposit the check into its federal account and: 

 Keep enough money in the account to cover all potential refunds; 

 Keep a written record explaining why the contribution may be illegal; 

 Include this explanation on Schedule A if the contribution has to be itemized 

before its legality is established; 

 Seek a reattribution or a redesignation of the excessive portion, following the 

instructions provided in the Commission regulations (see below for 

explanations of reattribution and redesignation); and 

 If the committee does not receive a proper reattribution or redesignation 

within 60 days after receiving the excessive contribution, refund the excessive 

portion to the donor. 11 CFR §§103.3(b)(3), (4) and (5) and 110.1(k)(3)(ii) 

(B). 

C. Joint Contributions. Any contribution made by more than one person (except for a 

contribution made by a partnership) must include the signature of each contributor on 

the check, money order, or other negotiable instrument or in a separate writing. A 
 36 

joint contribution is attributed equally to each donor unless a statement indicates that 

the funds should be divided differently. 11 CFR §110.1(k)(1) and (2). 

D. Reattribution of Excessive Contributions. The Commission regulations permit 

committees to ask donors of excessive contributions (or contributions that exceed the 

committee’s net debts outstanding) whether they had intended their contribution to be 

a joint contribution from more than one person and whether they would like to 

reattribute the excess amount to the other contributor. The committee must inform 

the contributor that: 

 The reattribution must be signed by both contributors; 

 The reattribution must be received by the committee within 60 days after the 

committee received the original contribution; and 

 The contributor may instead request a refund of the excessive amount. 11 CFR 

§110.1(k)(3). 

Within 60 days after receiving the excessive contribution, the committee must either 

receive the proper reattribution or refund the excessive portion to the donor. 11 CFR 

§§103.3(b) (3) and 110.1(k)(3)(ii)(B). Further, a political committee must retain 

written records concerning the reattribution in order for it to be effective. 11 CFR 

§110.1(l)(5). 

Notwithstanding the above, any excessive contribution that was made on a written 

instrument that is imprinted with the names of more than one individual may be 

attributed among the individuals listed unless instructed otherwise by the 

contributor(s). The committee must inform each contributor: 

 How the contribution was attributed; and 

 The contributor may instead request a refund of the excessive amount. 11 CFR 

§110.1(k)(3)(ii)(B). 

E. Redesignation of Excessive Contributions. When an authorized candidate 

committee receives an excessive contribution (or a contribution that exceeds the 

committee’s net debts outstanding), the committee may ask the contributor to 

redesignate the excess portion of the contribution for use in another election. The 

committee must inform the contributor that: 

 The redesignation must be signed by the contributor; 

 The redesignation must be received by the committee within 60 days after the 

committee received the original contribution; and 

 The contributor may instead request a refund of the excessive amount. 11 CFR 

§110.1(b)(5). 

Within 60 days after receiving the excessive contribution, the committee must either 

receive the proper redesignation or refund the excessive portion to the donor. 11 CFR 

§§103.3(b) (3) and 110.1(b) (5) (ii) (A). Further, a political committee must retain 

written records concerning the redesignation in order for it to be effective. 11 CFR 

§110.1(l)(5). 
 

 

37 

Presumptive Redesignation- When an individual makes an excessive contribution to a 

candidate’s authorized committee, the campaign may presumptively redesignate the 

excessive portion to the general election if the contribution: 

 Is made before that candidate’s primary election; 

 Is not designated in writing for a particular election; 

 Would be excessive if treated as a primary election contribution; and 

 As redesignated, does not cause the contributor to exceed any other contribution 

limit. 

The committee is required to notify the contributor of the redesignation within 60 

days of the treasurer’s receipt of the contribution and must offer the contributor the 

option to receive a refund instead. 11 CFR §110.1(b)(5)(ii)(B)(1), (2), (3), (4), (5), 

and (6). 

F. Contributions by Multi-candidate Committees. A contribution designated in 

writing for a particular election, but made after that election, shall be made only to the 

extent that the contribution does not exceed net debts outstanding from such election. 

To the extent that such contribution exceeds net debts outstanding, the candidate or 

the candidate’s authorized political committee shall return or deposit the contributions 

within ten days from the date of the treasurer’s receipt of the contribution and if 

deposited, then within sixty days from the date of the treasurer’s receipt the treasurer 

shall take that the following action, as appropriate: 

 Refund the contribution using a committee check or draft; or 

 Obtain a written redesignation by the contributor for another election in 

accordance with 11 CFR §110.2(b)(5). 11 CFR §110.2(b)(3)(i). 

Facts and Analysis 

A. Contributions from Individuals 

1. Facts 

The Audit staff utilized sample testing and a review of high dollar contributions not 

included in the sample population to identify apparent excessive contributions from 

individuals, as noted below. 

Excessive Contributions - Testing Method 

Sample Projection Amount15 $568,545 

High Dollar Review Contribution Error 

Amount $416,800 

15 The sample error amount ($568,545) was projected using a Monetary Unit Sample with a 95 percent 

confidence level. The sample estimate could be as low as $378,477 or as high as $947,020. 
 38 

Total Amount of Excessive Contributions $985,345 

Reason for Excessive Contributions 

Contributions not resolved via presumptive 

letter or refund $327,710 

Contributions not resolved via signed 

reattribution letter or refund $642,935 

Contributions refunded untimely $14,700 

Total Amount of Excessive Contributions $985,345 

2. Additional Information 

Contributions, totaling $642,935, could not be presumptively reattributed or 

redesignated by MBFI. These contributions were either made with a single account 

holder check, joint account holder checks that exceeded the per election limit for both 

individuals or credit cards which required signed authorization from its contributors 

or a refund. 

MBFI did not maintain a separate account for questionable contributions. 

Additionally, based on its cash on hand at the end of the audit period ($72,715), it 

appears that MBFI did not maintain sufficient funds to refund the apparent excessive 

contributions. 

3. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with MBFI representatives during audit 

fieldwork as well as at the exit conference and provided a schedule of the apparent 

excessive contributions. MBFI representatives did not provide any comments during 

audit fieldwork. 

In response to the exit conference MBFI submitted a written response as follows: 

“The Committee provided documentation related to these findings during the 

audit process and has no new materials to provide with this response. To date, the 

Committee has made additional preemptive adjustments to its contributor 

information and intends to take any such corrective action as may be required at 

the conclusion of this matter.” 

The Interim Audit Report recommended that MBFI: 

 Provide evidence demonstrating that the contributions totaling $985,345 were 

not excessive or were timely resolved. 

 Absent evidence that the contributions were not excessive or were timely 

resolved, MBFI should have reviewed its contributions to determine which 

were excessive and how each should be resolved. For any excessive 

contributions that MBFI could have resolved by sending a presumptive 
 39 

redesignation and/or reattribution letter, it could now send letters to inform the 

contributors how the committee designated and/or reattributed the 

contribution and offer a refund. Absent the contributor’s request for a refund, 

these letters would obviate the need to refund the contributions or 

disgorgement to a governmental entity or to a qualified charitable 

organization.14 

 For any excessive contributions that were not resolved through the timely 

receipt of a signed authorization letter from the contributor or by refund, 

MBFI should have obtained signed authorization notification from the 

contributor or make refunds in response to the audit. 

 If funds were not available to make such refunds, MBFI should have reported 

the excessive contributions as debts owed on Schedule D (Debts and 

Obligations) until funds became available to make the refunds. 

4. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, MBFI submitted a written 

response as follows: 

“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.” 

MBFI indicated it would provide confirmation from the contributors regarding the 

reattribution and redesignation of contributions, based on the reconciliations 

performed by MBFI’s current treasurer. MBFI also stated “...to the extent that the 

facts and conclusions in [Issue 1] 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. § 2884 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.” MBFI further stated that the Audit staff should reconsider its 

findings, reissue the Interim Audit Report and give MBFI the opportunity to respond 

to the revised report, in light of the decision in Ted Cruz for Senate v. Federal 

Election Commission, Civil No. 19-cv-908. 

5. Draft Final Audit Report 

The Draft Final Audit Report acknowledged the MBFI statements regarding the 

decision in the District of Columbia (D.C.) District Court. However, although there 

was a decision in the D.C. District Court, the Commission is appealing the decision. 

Therefore, the Audit staff maintained that MBFI did not provide any documentation 

demonstrating the contributions from individuals totaling $985,345 were not 

excessive or were timely resolved. 
 

 

 

 

 

40 

6. Committee Response to the Draft Final Audit Report 

In response to the Draft Final Audit Report, MBFI provided copies of reattribution 

and redesignation letters which did not materially resolve excessive contributions 

from individuals. However, some of the reattribution and redesignation letters were 

timely, which reduced the finding total from $985,345 to $898,166.16 

Corrective Action Taken by Committee – Excessive Contributions 

Reattribution and redesignation letters sent - 

Timely $87,179 

MBFI stated the current treasurer found some refund checks that had been prepared 

by the former treasurer but not sent to the contributors, and further stated that it is 

unknown the extent to which “normal and customary procedures” of preparing 

reattribution and redesignation tasks were completed by the former treasurer. 

Additionally, MBFI stated the Audit Division should amend this finding since the 

District Court decision in Ted Cruz for Senate v. Federal Election Commission, Civil 

No. 19-cv-908 (D.C. Dist. Ct., June 3, 2021) held unconstitutional the candidate loan 

repayment provision at 52 U.S.C. § 30116(j). The District Court decision is on 

appeal before the Supreme Court, which heard oral argument in the case in January 

2022. Considering the potential impact the Court’s decision may have on this 

finding, MBFI 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.” 

7. Audit Hearing 

MBFI did not address this finding during the Audit Hearing. 

Commission Conclusion 

On March 10, 2022, the Commission considered the Audit Division Recommendation 

Memorandum, in which the Audit staff recommended the Commission refrain from 

making a finding on whether MBFI received excessive contributions from individuals 

totaling $898,166 until the Court issues its decision. Thereafter, the Audit staff would 

recommend disposition of this finding in a Final Addendum Audit Report for the 

Commission’s consideration. 

The Commission did not approve, by the required four votes, the Audit staff’s 

recommendation for disposition of this finding in a Final Addendum Audit Report for 

the Commission’s consideration. Some Commissioners voted to approve the Audit 

staff’s recommendation. Other Commissioners did not vote to approve the 

recommendation due to the pending Supreme Court decision and its potential impact 

on FEC regulations, and because there is not a stay of the underlying District Court 

16 This amount is based on sample testing and high dollar contributions not included in the sample 

population. The $898,166 consists of contributions not resolved via presumptive letter or refund totaling 

$271,010; contributions not resolved via signed reattribution letter or refund totaling $566,556; and 

untimely resolved or refunded contributions totaling $60,600. 
 

 

 

41 

opinion. Pursuant to Commission Directive 704

, this matter is discussed in the 

“Additional Issues” section of this report. 

B. Contributions From Political Committees 

1. Facts 

Contributions Received in Excess of Primary Debt 

As of May 8, 2018, the date of the Primary election, the Audit staff calculated that 

MBFI had net debt outstanding of $191,951. The review determined that there was 

no Primary debt, as of June 30, 2018. A review of all contributions from political 

committees received after May 8, 2018 and designated by the political committees for 

primary debt, determined that MBFI received 2217 apparent excessive contributions 

totaling $78,000 which exceeded the amount needed to retire the net debt outstanding 

for the Primary election. 

Contributions Received in Excess of General Debt 

As of November 6, 2018, the date of the General election, the Audit staff calculated 

that MBFI had net debt outstanding of $101,066. The review determined that there 

was no General debt as of December 18, 2018. A review of all contributions received 

from political committees after November 6, 2018 and designated by the political 

committees for general debt, identified that MBFI received 3417 apparent excessive 

contributions totaling $110,212 which exceeded the amount needed to retire the net 

debt outstanding for the General election. 

MBFI did not maintain a separate account for questionable contributions. 

Additionally, MBFI did not maintain a sufficient balance in its bank account to refund 

the apparent excessive contributions. 

2. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with MBFI representatives at the exit conference 

and provided schedules of the apparent excessive contributions. 

In response to the exit conference, MBFI submitted a written statement as follows: 

“The Committee provided documentation related to these findings during the 

audit process and has no new materials to provide with this response. To date, the 

Committee has made additional preemptive adjustments to its contributor 

information and intends to take any such corrective action as may be required at 

the conclusion of this matter.”18 

17 Two contributions totaling $4,500 moved from the General to Primary election after issuance of the 

Interim Audit Report due to the designation on the contributors’ check memo line. The total excessive 

contributions from political committees remains $188,212. 18 On April 23, 2019, counsel for MBFI submitted a Request for Consideration of a Legal Question by the 

Commission. MBFI asked whether the proceeds from the Candidate’s personal lines of credit were 

“personal loans” per 11 C.F.R. §116.11(a); and whether the $250,000 post-election loan-repayment 

limitation was a constitutional and enforceable limitation. On June 20, 2019, the Commission concluded 

that MBFI may not repay the Candidate in excess of $250,000 more than 20 days after the Primary 

election and rejected MBFI’s argument that the candidate loan repayment requirements are 

unconstitutional. 
 42 

The Interim Audit Report recommended that MBFI provide documentation 

demonstrating that the contributions in question were not excessive, or if excessive, 

were resolved by refund. 

3. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, MBFI submitted a written 

response as follows: 

 “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.” 

MBFI indicated it would provide confirmations from the contributors regarding the 

reattribution and redesignation of contributions, based on the reconciliations 

performed by MBFI’s current treasurer. MBFI also stated “...to the extent that the 

facts and conclusions in [Issue 1] 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. § 2884 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.” MBFI further stated that the Audit staff should reconsider its 

findings, reissue the Interim Audit Report and give MBFI the opportunity to respond 

to the revised report, in light of the decision in Ted Cruz for Senate v. Federal 

Election Commission, Civil No. 19-cv-908. 

4. Draft Final Audit Report 

The Draft Final Audit Report acknowledged the MBFI statements regarding the 

decision in the D.C. District Court. However, although there was a decision in the 

D.C. District Court, the Commission is appealing the decision. Therefore, the Audit 

staff maintained that MBFI did not provide any documentation demonstrating the 

contributions from political committees totaling $188,212 were not excessive or were 

timely resolved. 

5. Committee Response to the Draft Final Audit Report 

In response to the Draft Final Audit Report, MBFI did not provide documentation 

demonstrating the political committees’ contributions were not excessive. MBFI 

stated the current treasurer found some refund checks that had been prepared by the 

former treasurer but not sent to the contributors, and further stated that it is unknown 

the extent to which “normal and customary procedures” of preparing reattribution and 

redesignation tasks were completed by the former treasurer. 

Additionally, MBFI stated the Audit Division should amend this finding since the 

District Court decision in Ted Cruz for Senate v. Federal Election Commission, Civil 

No. 19-cv-908 (D.C. Dist. Ct., June 3, 2021) held unconstitutional the candidate loan 
 

 

43 

repayment provision at 52 U.S.C. § 30116(j). The District Court’s decision is on 

appeal before the Supreme Court, which heard oral argument in the case in January 

2022. Considering the potential impact the Court’s decision may have on this 

finding, MBFI believed “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.” 

6. Audit Hearing 

MBFI did not address this finding during the Audit Hearing. 

Commission Conclusion 

On March 10, 2022, the Commission considered the Audit Division Recommendation 

Memorandum, in which the Audit staff recommended the Commission refrain from 

making a finding on whether MBFI received excessive contributions from political 

committees, totaling $188,212, until the Court issues its decision. Thereafter, the 

Audit staff would recommend disposition of this finding in a Final Addendum Audit 

Report for the Commission’s consideration. 

The Commission did not approve, by the required four votes, the Audit staff’s 

recommendation for disposition of this finding in a Final Addendum Audit Report for 

the Commission’s consideration. Some Commissioners voted to approve the Audit 

staff’s recommendation. Other Commissioners did not vote to approve the 

recommendation due to the pending Supreme Court decision and its potential impact 

on FEC regulations, and because there is not a stay of the underlying District Court 

opinion. Pursuant to Commission Directive 704

, this matter is discussed in the 

“Additional Issues” section of this report. 

Issue 2. Prohibited Candidate Personal Loan Repayments 

Summary 

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...” 

In response to the Draft Final Audit Report, MBFI stated, “To the extent that the facts 

and conclusions in [the proposed finding] 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-cv908 (D.C. Dist. Ct., June 3, 2021). Since many of the facts and conclusions of [the 

proposed finding] involve and are impacted by the loan repayment limit, the 

Commission’s conclusions rely on an unconstitutional provision that renders the finding 

invalid, or at least a portion of it.” 
 44 

The Audit staff acknowledged the potential impact that the Supreme Court’s decision 

may have on this proposed finding. The Audit staff, therefore, recommended that the 

Commission refrain from making a finding on whether MBFI made excessive Primary 

candidate loan and interest repayments totaling $750,669 until the Court issued its 

decision. Thereafter, the Audit staff would recommend disposition of this finding in a 

Final Addendum Audit Report for the Commission’s consideration. 

The Commission did not approve, by the required four votes, the Audit staff’s 

recommendation for disposition of this finding in a Final Addendum Audit Report for the 

Commission’s consideration. Pursuant to Commission Directive 704

, this matter is 

discussed in the “Additional Issues” section of this report. 

Legal Standard 

A. Limitation on Repayment of Personal Loans. Any candidate who incurs personal 

loans made after the effective date of the Bipartisan Campaign Reform Act of 2002 in 

connection with the candidate’s campaign for election shall not repay (directly or 

indirectly), to the extent such loans exceed $250,000, such loans from any 

contributions made to such candidate or any authorized committee of such candidate 

after the date of such election. 52 U.S.C. §30116(j). 

B. Restriction on an Authorized Committee’s Repayment of Personal Loans 

Exceeding $250,000 Made by the Candidate to the Authorized Committee. 

Specific to this finding, personal loans mean a loan or loans, including advances, 

made by a candidate, using personal funds, as defined in 11 CFR §100.33, to his or 

her authorized committee where the proceeds of the loan were used in connection 

with the candidate's campaign for election. Personal loans also include loans made to 

a candidate's authorized committee that are endorsed or guaranteed by the candidate 

or that are secured by the candidate's personal funds. 11 CFR §116.11(1)(a). 

For personal loans that, in the aggregate, exceed $250,000 in connection with an 

election, the authorized committee: 

 May repay the entire amount of the personal loans using contributions to the 

candidate or the candidate's authorized committee provided that those 

contributions were made on the day of the election or before; 

 May repay up to $250,000 of the personal loans from contributions made to the 

candidate or the candidate's authorized committee after the date of the election; 

and 

 Must not repay, directly or indirectly, the aggregate amount of the personal 

loans that exceeds $250,000, from contributions to the candidate or the 

candidate's authorized committee if those contributions were made after the date 

of the election. 11 CFR §116.11(1)(b)(1),(2) and (3). 

If the aggregate outstanding balance of the personal loans exceeds $250,000 after the 

elections, the authorized political committees must comply with the following 

conditions: 

 If the authorized committee uses the amount of cash-on-hand as of the day after 

the election to repay all or part of the personal loans, it must do so within 20 

days of the election. 
 

 

 

 

45 

 Within 20 days of the election date, the authorized committee must treat the 

portion of the aggregate outstanding balance of the personal loans that exceeds 

$250,000 minus the amount of cash-on-hand as of the day after the election 

used to repay the loan as a contribution by the candidate. 

 The candidate’s principal campaign committee must report the transactions in 

paragraphs (c) (1) and (c) (2) of this section in the first report scheduled to be 

filed after the election pursuant to 11 CFR §104.5(a) or (b) and 11 CFR 

§116.11(1)(c)(1),(2) and (3) 

 This section applies separately to each election. 11 CFR §116.11 (d). 

Facts and Analysis 

A. Facts 

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

candidate loan and interest repayments totaling $1,000,669 after the May 8, 2018 Primary 

election. MBFI could have repaid up to $250,000 of the personal loans for the Primary 

election from contributions made to the Candidate after the date of the election. Also, 

after 20 days following the Primary election, MBFI was required to treat as a contribution 

the amount which was equal to the outstanding balance of the candidate Primary loans 

less the repayment limit. 18 Therefore, the Audit staff identified that MBFI made 

excessive Primary candidate loan and interest repayments totaling $750,669. 

 Primary candidate loan and interest repayments + $1,000,669 

 Allowable repayment amount of candidate loans 

from contributions limit - 250,000 

Excessive Primary Candidate Loan and Interest Repayments $750,669 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with MBFI representatives at the exit conference 

and provided schedules of the apparent excessive contributions. 

In response to the exit conference MBFI submitted a written response as follows: 

“The FEC’s preliminary finding shows no apparent “mis-disclosure” of the 

transactions in question. The Committee has no new materials to provide with 

this response, but it is the Committee’s belief that the FEC’s preliminary finding 

is based on the FEC’s mischaracterization of certain loans (which, in turn, would 

require the loans to be converted to personal contributions and not repayable). 

The Committee will likely be requesting Commission guidance on legal questions 

related to this finding.”7 

The Interim Audit Report recommended that MBFI provide additional documentation to 

demonstrate the Primary candidate loan and interest repayments were not excessive and 

provide any relevant comments on the matter. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, MBFI stated: 
 46 

“To the extent that the facts and conclusions in [Issue 2] 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 [Issue 2] involve and are impacted by 

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

unconstitutional provision that renders [Issue 2] invalid, or at least a portion of it. 

Given the significant impact that the Ted Cruz for Senate ruling has on [Issue 2] 

and others, the Committee believes it is imperative for the Commission’s Audit 

staff to reconsider its preliminary audit findings, reissue a revised Interim Audit 

Report, and give the Committee the opportunity to respond to the revised Interim 

Audit Report. For this reason, the Committee will refrain from providing any 

additional response to [Issue 2] until that occurs.” 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged the MBFI statements regarding the decision 

in the D.C. District Court. However, although there was a decision in the D.C. District 

Court, the Commission is appealing the decision. Therefore, the Audit staff maintained 

that MBFI made excessive Primary candidate loan and interest repayments totaling 

$750,669. 

E. Committee Response to the Draft Final Audit Report 

In response to the Draft Final Audit Report, MBFI stated, “To the extent that the facts 

and conclusions in [Issue 2] 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 [Issue 2] involve and are 

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

unconstitutional provision that renders [Issue 2] invalid, or at least a portion of it.” 

The District Court found the loan repayment provision at 52 U.S.C. § 30116(j) 

unconstitutional. Ted Cruz for Senate v. Federal Election Commission, Civil No. 

19-cv-908 (D.C. Dist. Ct., June 3, 2021). The decision is now on appeal before the 

Supreme Court, which heard oral arguments in the case in January 2022. 

F. Audit Hearing 

MBFI did not address this finding during the Audit Hearing. 

Commission Conclusion 

On March 10, 2022, the Commission considered the Audit Division Recommendation 

Memorandum, in which the Audit staff recommended the Commission refrain from 

making a finding on whether MBFI made excessive Primary candidate loan and interest 

repayments, totaling $750,669 until the Court issues its decision. Thereafter, the Audit 

staff would recommend disposition of this finding in a Final Addendum Audit Report for 

the Commission’s consideration. 
 

 

47 

The Commission did not approve, by the required four votes, the Audit staff’s 

recommendation for disposition of this finding in a Final Addendum Audit Report for the 

Commission’s consideration. Some Commissioners voted to approve the Audit staff’s 

recommendation. Other Commissioners did not vote to approve the recommendation due 

to the pending Supreme Court decision and its potential impact on FEC regulations, and 

because there is not a stay of the underlying District Court opinion. Pursuant to 

Commission Directive 704, this matter is discussed in the “Additional Issues” section of 

this report.