FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

MEMORANDUM September 6, 2022 

TO: Patricia C. Orrock 

Chief Compliance Officer 

Dayna C. Brown 

Assistant Staff Director 

Audit Division 

FROM: Neven F. Stipanovic 

Compliance Advice 

Margaret J. Forman 

Attorney 

SUBJECT: Interim Audit Report on Citizens for Waters (LRA 1144) 

The Office of the General Counsel (“OGC”) has reviewed the draft Interim Audit 

Report (“IAR”) on Citizens for Waters (“CFW”). The IAR contains four findings: 

Misstatement of Financial Activity (Finding 1), Receipt of Contributions in Excess of the Limit 

(Finding 2), Cash Disbursements (Finding 3), and Contributions from Unregistered Political 

Organizations (Finding 4).1 OGC concurs with the findings, and comments on Finding 4. If 

you have any questions, please contact Margaret J. Forman, the attorney assigned to this audit. 

Associate General Counsel 

Policy Division 

Jessica Selinkoff 

Assistant General Counsel 

OGC recommends that the Commission consider this document in Executive Session because the 

Commission may eventually decide to pursue an investigation of matters contained in the IAR. 

11 C.F.R. §§ 2.4(a), (b)(6). 

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LRA 1144 

IAR for Citizens for Waters 

Page 2 of 4 

I. CONTRIBUTIONS FROM UNREGISTERED POLITICAL 

ORGANIZATIONS (FINDING 4). 

CFW, an authorized committee and principal campaign committee of congressional 

office holder Maxine Waters, received 47 payments totaling $568,000 from unregistered/nonfederal committees for a brochure mailer program in the 2019-2020 election cycle, for which it 

made an aggregate of $567,230 in disbursements. For the reasons set forth below, OGC 

concurs with the Finding that these receipts and disbursements do not comply with the 

requirements of 52 U.S.C. § 30125(e)(1)(A) and comments to explain the differences between 

this audit and MUR 7522 (Citizens for Waters). 

Funds received or spent by a federal candidate or her committee in connection with an 

election for federal office, including for Federal election activity, must comply with the amount 

limitations, source prohibitions, and reporting requirements of the Act.2 OGC agrees with the 

Audit Division’s conclusion that CFW received and spent funds for its mailers for “Federal 

election activity” because the mailers were public communications (mass mailings) that refer to 

clearly identified candidates for federal office and that promote or support candidates for those 

offices.3 CFW received $568,000 for the mailers from non-federal committees that may receive 

funds from prohibited sources or in amounts exceeding the Act’s limitations.4

 CFW has not 

provided the Audit Division with documentation that these payments were made from 

permissible funds and, in fact, invoices and letters CFW sent to the unregistered non-federal 

committees omitted mention of some prohibited sources, such as federal contractors, and 

incorrectly stated that the non-federal committees could pay for inclusion in the mailer using 

contributions of up to $5,000 from individuals.5

 Moreover, there is not documentation that 

these non-federal committees reported the funds to the Commission.6 We agree, therefore, that 

CFW’s mailer program does not comply with the requirements of 52 U.S.C. § 30125(e)(1)(A).7 

2 52 U.S.C. § 30125(e)(1)(A); 11 C.F.R. § 300.61. 

3 See 52 U.S.C. § 30101(20)(A)(iii) (defining “Federal election activity”); 11 C.F.R. § 100.24(b)(3) (same); 

see also 52 U.S.C. § 30101(22), (23) (defining “public communication” and “mass mailing,” respectively); 

11 C.F.R. §§ 100.26, 100.27 (same). In response to the audit, CFW produced two mailers, which expressly 

advocated the election of clearly identified Federal candidates as well as state and local candidates. 

4 California state law permits corporate contributions to candidates and has higher contribution limits. See 

Cal. Gov’t Code §§ 85300–85321; National Conference of State Legislatures, State Limits on Contributions to 

Candidates, 2019-2020 (June 2019), https://www.ncsl.org/Portals/1/Documents/Elections/Contribution-Limits-toCandidates-2019-2020.pdf?ver=2019-10-02-132802-117. 

5 The individual contribution limitation to candidate committees for the audit period was $2,800 per 

election. 

6 See Factual & Legal Analysis at 8-9, MUR 7337 (Debbie Lesko et al.) (finding reason to believe 

candidate and committee violated 52 U.S.C. § 30125(e)(1)(A) by receiving funds from nonfederal committee that 

had not reported its funds to the Commission) (approved by Commission Jul. 29, 2019) (open MUR). 

7 OGC further concurs with the IAR’s recommendations that CFW: (1) provide evidence that the receipts 

were made from permissible funds; (2) refund the impermissible funds, (3) if unable to process a refund, disgorge 

the impermissible funds to the U.S. Treasury, or (4) if funds are not available for refund or disgorgement, disclose 

the receipts requiring refunds on Schedule D (Debts and Obligations) until funds become available. 

LRA 1144 

IAR for Citizens for Waters 

Page 4 of 4 

The IAR’s recommendations as to Finding 4 – that CFW provide documentation as to the 

permissibility of the receipts from non-federal committees and refund or disgorge 

impermissible funds it received – will further the compliance function of the audit rather than 

impose a civil penalty such as might occur in an enforcement action.