RESPONSE

OF

MIKE BRAUN FOR INDIANA 

TO 

THE INTERIM AUDIT REPORT

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

Commission’s Interim Audit Report regarding the audit of the Committee’s records from

August 7, 2017 – December 31, 2019. The Committee, through counsel, hereby responds to 

the preliminary findings and recommendations of the Audit Division staff resulting from that 

audit.

BACKGROUND

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

identified in the Interim Audit Report are traceable to the harm suffered by the Committee 

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

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

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

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

detailed in the Interim Audit Report. 

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

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

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

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

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

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

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

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

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

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

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

Committee’s 2018 Year-End Report on short notice and with minimal documentation.

Notably, the current treasurer began to correct mistakes, errors, and other problems in the 

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

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

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

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

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

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

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

has in its possession. 
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RESPONSES TO FINDINGS

IAR 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. The Audit staff 

recommends that MBFI amend its disclosure reports or file a Form 99 (Miscellaneous Electronic

Submission) to correct the misstatement. 

THE COMMITTEE’S RESPONSE TO FINDING 1

The transactions described here were misreported by the former treasurer, but not in 

the manner described in the Interim Audit Report. The Candidate’s lines of credit were in the 

name of the Candidate, and they were repaid by the Candidate from his personal funds at 

the end of 2018, but without first being deposited into the Committee’s bank account(s). 

Accordingly, the repayments from the Candidate’s personal funds should have been 

reported as in-kind contributions from the Candidate to the Committee, as the funds were 

paid out of the Candidate’s personal funds from his personal account(s).

It is also worth noting that the Commission has a record indicating that the former 

treasurer proactively contacted the Committee’s analyst in the Commission’s Reports and 

Analysis Division about how to disclose the repayments, and the former treasurer was 

apparently advised to contact their software provider for guidance on the issue. Of course, 

per the explanation above, the former treasurer did not ultimately report the repayments 

from the Candidate’s personal funds correctly. 

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 inkind contribution. The Committee has prepared amendments to the report(s) to more clearly 

disclose the source(s) of the funds. 

Finally, it should be noted that, while the transaction(s) were not reported on the 

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

IAR FINDING 2. FAILURE TO FILE 48-HOUR NOTICES 

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

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

totaling $9,100 for which MBFI misreported contribution dates. The Audit staff recommends that 

MBFI submit documentation demonstrating that the notices for thecontributions in question were

filed timely, that the contributions were received outside of the 48-hour notice reporting period or 

provide any additional comments it deems necessary with respect to this matter. The Audit staff also
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recommends that MBFI amend its disclosure reports or file a Form 99 (Miscellaneous Electronic 

Submission) to correct the misreported contribution dates.

THE COMMITTEE’S RESPONSE TO FINDING 2

As mentioned above, at some point in 2018 the former treasurer stopped performing 

the Committee’s accounting and compliance services properly, unbeknownst to anyone 

involved with the Committee. The Committee’s current treasurer has performed an in-depth 

review of the dates of contributions and the dates of filing of required notices. The Committee 

requests that the Audit Division team provide the complete list of the contributions believed 

to have been mis-dated for purposes of the 48-hour notices, as the Committee believes that it 

has corrected the dates of all contributions and has correctly reported in the amendments the 

correct dates of all contributions. 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.

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

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

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

occupation and/or name ofemployerinformation. MBFI did not sufficiently demonstrate “best efforts” 

to obtain, maintain and submit the required information. In response to audit fieldwork, MBFI 

provided some documentation of “best efforts,” however, MBFI has not filed amendments to disclose 

and report the missing informationand establish “best efforts.” The Audit staff recommends that MBFI 

amend its reports or file a Form 99 (Miscellaneous Electronic Submission) to disclose the missing

information.

THE COMMITTEE’S RESPONSE TO FINDING 3

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

to obtain and report employer/occupation information. 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. 

IAR 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 
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credit from banks, totaling $7,049,405, that do not appearto bemade in the ordinary course of business.

These loans were not made on a basis that assured repayment and, therefore, appear to be prohibited 

contributions from the banks. Additionally, the Audit staff identified two checks from one corporation

totaling $1,500,000 that were reported as loans.

The Audit staff recommends that MBFI demonstrate the loans and lines of credit were made 

in the ordinary course of business and were made on a basis that assured repayment. Also, MBFI 

should submit documentation demonstrating that the contributions in question, reported as loans,

were not made from a prohibited source or, if prohibited, were resolved through the timely issuance of 

refunds. Absent evidence that these contributions were made with permissible funds, MBFI should 

refund these contributions to the contributor or disgorge the contributions to a government agency or

eligible charitable organization.

THE COMMITTEE’S RESPONSE TO FINDING 4

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

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

the Candidate paid taxes on the amount as income to him. Please note that the Committee is 

willing to submit additional evidence from Gary Brick, the Candidate’s CPA, to substantiate

the fact that such funds were the personal funds of the Candidate; however, since this 

evidence may contain sensitive financial information, the Committee’s submission may be 

dependent on the Audit Division’s ability to exclude the document(s) from the public record. 

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

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

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

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

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

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

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

enforcement decisions indicate deference to commercial lending institutions in assuring 

repayment, including considerations of the candidate’s creditworthiness.

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

unique to candidates for public office. 

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

BBVA Compass to the undersigned counsel in March 2017, commercial lending institutions 

provide unsecured lines of credit to creditworthy individuals who, in the bank’s own 

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

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

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

of the Candidate’s.
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Under Commission rules, a perfected security is a “safe harbor,” not an essential 

element, for demonstrating assurance of repayment.

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

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

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

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

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

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

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

course of business” if it: 

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

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

(3) is evidenced by a written instrument; and

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

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

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

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

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

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

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

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

candidacy. 

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

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

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

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

Loans were made on a basis that assures repayment. 

Commission rules provide several express ways for commercial lending institutions 

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

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

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

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

2 11 C.F.R. § 100.82.

3 See 11 C.F.R. § 100.82(e)(1)-(2).
MBFI RESPONSE TO THE INTERIM AUDIT REPORT PAGE 6 OF 10

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

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

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

assures repayment.4

Prior Commission advisory opinions and enforcement decisions indicate deference to 

commercial lending institutions in assuring repayment, including considerations of 

the candidate’s creditworthiness.

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

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

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

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

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

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

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

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

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

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

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

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

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

important contextual factors in that opinion, including:

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

candidate; 

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

agreement provisions matching agreements given to other customers; and

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

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

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

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

4 11 C.F.R. § 100.82(e)(3).

5 FEC Advisory Opinion 1980-108 (Anderson).

6 FEC Advisory Opinion 1994-26 (Cunningham).

7 Id.
MBFI RESPONSE TO THE INTERIM AUDIT REPORT PAGE 7 OF 10

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

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

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

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

determine that the risk of non-repayment was small. 

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

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

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

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

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

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

default on the loan.8

In summary, it is the Committee’s position that the Audit Division has not correctly 

applied the law or Commission precedents with respect to Finding 4.

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

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

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

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

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

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

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

Auditstaff recommends that MBFI provide documentation demonstrating that the contributions were 

not excessive, or if excessive, were resolved in a timely manner. Absent such a demonstration, MBFI 

should send letters to those contributors whose contributions are eligible for presumptive redesignation 

and/or reattribution, obtain a signed authorization letter from the contributor, or refund any

remaining excessive amounts.

THE COMMITTEE’S RESPONSE TO FINDING 5

As with other issues identified in the Interim Audit Report, the Committee hired and 

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

and refund requirements of the campaign. When the current treasurer took over the 

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

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

treasurer had initiated the reattribution and redesignation tasks required of a treasurer. It is 

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

$600,000 as it was partially secured and guaranteed by the candidate’s signature.”).
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unknown the extent to which those normal and customary procedures were completed. All 

reattributions and redesignations were completed by the current treasurer in 2019 after he 

took over the accounting and reporting duties, and refunds were sent to donors at that time.

The Committee will, within thirty days, provide to the Commission donor confirmations

regarding the reattribution and redesignation of their contributions per the reconciliations 

performed by the current treasurer two years ago.

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

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

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

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

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

which the Audit Division is relying on.

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

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

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

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

Since many of the facts and conclusions of Finding 5 may involve and may be impacted by 

the loan repayment limit, the Commission’s conclusions may rely on an unconstitutional 

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

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

5, the Committee believes it is imperative for the Commission’s Audit staff to 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 additionalresponse to Finding 5 until that occurs. 

IAR FINDING 6. DISCLOSURE OF MEMO ENTRIES AND CANDIDATE LOANS

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

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

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

The Audit staff recommends that MBFI provide documentation demonstrating that the joint 

fundraising memo entries totaling $933,814 were disclosed correctly and that MBFI properly disclosed 

the correct loan balance and loan terms for transactions totaling $11,569,963. Absent such 

documentation, MBFI should amend its disclosure reports or file a Form 99 (Miscellaneous Electronic

Submission) to correct the disclosure errors for the joint fundraising memo entries and the loans and 

lines of credit.
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THE COMMITTEE’S RESPONSE TO FINDING 6

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

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

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

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

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

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

have been prepared to be filed.

Regarding the candidate loans, 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. The 

Committee requests the opportunity to respond to this finding; however, at the time of this 

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

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

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

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

with this finding. 

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

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

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

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

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

may involve and may be impacted by the loan repayment limit, the Commission’s 

conclusions may rely on an unconstitutional provision that renders Finding 6 invalid, or at 

least a portion of it. 

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

6, the Committee believes it is imperative for the Commission’s Audit staff to 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 Finding 6 until that occurs. 

IAR FINDING 7. PROHIBITED CANDIDATE PERSONAL LOAN REPAYMENTS

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

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

limit permitted for repayment to the Candidate within 20 daysfollowing the Primary election. The 

Audit staff recommends that MBFI provide additional documentation to demonstrate the Primary 
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candidate loan and interest repayments were not excessive and/or provide any relevant comments on 

the matter.

THE COMMITTEE’S RESPONSE TO FINDING 7

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

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

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

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

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

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

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

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

others, the Committee believes it is imperative for the Commission’s Audit staff to 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 Finding 7 until that 

occurs. 

CONCLUSION

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

information, or if we can be of any assistance, then I can be reached at (512) 354-1783.

Sincerely,

Chris K. Gober

Counsel, Mike Braun for Indiana