Interim Audit Report of the 

Audit Division on 

Citizens for Waters 

(January 1, 2019 - December 31, 2020) 

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.

About the Campaign (p. 2)

Citizens for Waters is the principal campaign committee for 

Maxine Waters, Democratic candidate for the United States 

House of Representatives from the state of California, 43rd

Congressional District, and is headquartered in Norwalk, 

California.2

 For more information, see the Campaign 

Organization chart, p.2. 

Financial Activity (p. 2)

• Receipts

o Contributions from Individuals 

o Contributions from Political 

Committees

o Offsets to Operating 

Expenditures 

o Other Receipts

Total Receipts

$ 616,178 

918,592 

18,258 

573,000 

$ 2,126,028

• Disbursements

o Operating Expenditures 

o Contribution Refunds 

o Other Disbursements 

Total Disbursements

$ 2,066,627 

8,397 

108,628 

$ 2,183,652 

Findings and Recommendations (p. 3) 

• Misstatement of Financial Activity (Finding 1)

• Receipt of Contributions in Excess of the Limit (Finding 2) 

• Cash Disbursements (Finding 3) 

• Contributions from Unregistered Political Organizations 

(Finding 4) 

1

 52 U.S.C. §30111(b). 2 During the 2019 – 2020 audit period CFW was headquartered in Long Beach, CA. CFW filed an 

amended Statement of Organization on April 1, 2022, changing its address to Norwalk, CA.
Interim Audit Report of 

the Audit Divison on 

Citizens for Waters

(January 1, 2019 - December 31, 2020)
Table of Contents 

Page 

Part I. Background

 Authority for Audit 1 

 Scope of Audit 1 

 

Part II. Overview of Campaign 

Campaign Organization 2 

Overview of Financial Activity 2 

Part III. Summaries 

Findings and Recommendations 3 

Part IV. Findings and Recommendations

Finding 1. Misstatement of Financial Activity 5

Finding 2. Receipt of Contributions in Excess of the Limit 7

Finding 3. Cash Disbursements 10

Finding 4. Contributions from Unregistered Political Organizations 12
1

Part I

Background

Authority for Audit

This report is based on an audit of the Citizens for Waters (CFW), 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 shall 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;

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 evaluation of a daily cash analysis;

6. the review of disbursements for personal use of funds;

7. the review of political party contribution discrepancies;

8. the consistency between reported figures and bank records;

9. the completeness of records; and

10. other committee operations necessary to the review.
2

Part II

Overview of Campaign

Campaign Organization

Overview of Financial Activity

(Audited Amounts)

Important Dates

• Date of Registration May 23, 1983

• Audit Coverage January 1, 2019 - December 31, 2020

Headquarters Norwalk, California

Bank Information

• Bank Depositories One

• Bank Accounts One checking

Treasurer

• Treasurer When Audit Was Conducted David Gould

• Treasurer During Period Covered by Audit David Gould 

Management Information

• Attended FEC Campaign Finance Seminar Yes

• Who Handled Accounting and 

Recordkeeping Tasks

Treasurer

Cash on hand @ January 1, 2019 $ 414,778

Receipts

o Contributions from Individuals 616,178

o Contributions from Political Committees 918,592

o Offsets to Operating Expenditures 18,258

o Other Receipts 573,000

Total Receipts $ 2,126,028

Disbursements

o Operating Expenditures 2,066,627

o Contribution Refunds 8,397

o Other Disbursements 108,628

Total Disbursements $ 2,183,652

Cash on hand @ December 31, 2020 $ 357,154
3

Part III

Summaries

Findings and Recommendations

Finding 1. Misstatement of Financial Activity

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

records revealed a misstatement of the beginning cash on hand, disbursements, and the 

ending cash on hand for calendar year 2019, as well as a misstatement of the beginning 

cash on hand, receipts, disbursements, and the ending cash on hand for calendar year 

2020. Specifically, for 2019, CFW understated the beginning cash on hand by $19,245, 

overstated disbursements by $19,643, and understated the ending cash on hand by 

$19,215. For 2020, CFW understated the beginning cash on hand, receipts, 

disbursements, and the ending cash on hand by $19,215, $262,391, $256,164, and 

$36,287, respectively. The Audit staff recommends that CFW amend its disclosure 

reports or file a Form 99 (Miscellaneous Electronic Submission) to correct the

misstatements.

(For more detail, see p. 5.)

Finding 2. Receipt of Contributions in Excess of the Limit

During audit fieldwork, the Audit staff reviewed contributions from individuals to 

determine if any exceeded the contribution limit. This review indicated that CFW

received apparent excessive contributions totaling $19,000. These errors occurred as a 

result of CFW not resolving the excessive portion of contributions by obtaining signed 

reattribution letters from its contributors or issuing refunds of the excessive portion of 

contributions in a timely manner. The Audit staff recommends that CFW provide 

documentation demonstrating that the contributions were not excessive, or if excessive, 

were resolved in a timely manner. Absent such a demonstration, CFW should resolve the 

excessive contributions by submitting signed reattribution letters, issuing refunds or 

disgorging to the U.S. Treasury any refunds it is unable to process.

(For more detail, see p. 7.)

Finding 3. Cash Disbursements

During audit fieldwork, the Audit staff determined that CFW made three cash 

disbursements and issued one check payable to cash, which exceeded the cash 

disbursement limit by $7,000. The Federal Election Campaign Act (Act) requires 

political committees to make all disbursements, except those from a petty cash fund, by 

check or similar draft drawn on a committee account, not to exceed $100. The Audit 

staff recommends that CFW demonstrate compliance with the Act regarding cash 

disbursements, provide any relevant comments, and submit the missing disbursement 

records.

(For more detail, see p. 10)
4

Finding 4. Contributions from Unregistered Political 

Organizations

During audit fieldwork, the Audit staff identified that CFW accepted 47 payments,

totaling $568,000, from unregistered non-federal committees and made an aggregate of 

$567,230 in disbursements related to the production and distribution of “slate ballot 

mailers.”

The Audit staff recommends that CFW demonstrate that all receipts for the “slate ballot 

mailer” program were made with permissible funds and, if unable to make such a 

demonstration, issue refunds or disgorge the impermissible funds to the U.S. Treasury. 

(For more detail, see p. 12.)
5

Part IV

Findings and Recommendations

Finding 1. Misstatement of Financial Activity 

Summary

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

records revealed a misstatement of the beginning cash on hand, disbursements, and the 

ending cash on hand for calendar year 2019, as well as a misstatement of the beginning 

cash on hand, receipts, disbursements, and the ending cash on hand for calendar year 

2020. Specifically, for 2019, CFW understated the beginning cash on hand by $19,245, 

overstated disbursements by $19,643, and understated the ending cash on hand by 

$19,215. For 2020, CFW understated the beginning cash on hand, receipts, 

disbursements, and the ending cash on hand by $19,215, $262,391, $256,164, and 

$36,287, respectively. The Audit staff recommends that CFW amend its disclosure

reports or file a Form 99 (Miscellaneous Electronic Submission) to correct the 

misstatements.

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

• Certain transactions that require itemization on Schedule A (Itemized Receipts) or 

Schedule B (Itemized Disbursements). 52 U.S.C. §30104(b)(1), (2), (3), (4), and (5).

Facts and Analysis

A. Facts

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

its bank records for calendars years 2019 and 2020. The reconciliation identified that 

CFW misstated the beginning cash on hand, disbursements, and the ending cash on hand 

for 2019, as well as the beginning cash on hand, receipts, disbursements, and the ending 

cash on hand for 2020. The following charts detail the discrepancies between CFW’s 

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

discrepancies occurred. 
6

2019 Campaign Activity

Reported Bank Records Discrepancy

Beginning Cash on hand @ 

January 1, 2019

$395,533 $414,778 $19,245

Understated

Receipts $788,943 $775,747 $13,196

Overstated

Disbursements $585,307 $565,664 $19,643

Overstated

Ending Cash on hand @ $605,6463 $624,861 $19,215

December 31, 2019 Understated

The beginning cash on hand was understated by $19,245 and the reporting discrepancy is 

unexplained, but likely resulted from prior period discrepancies. 

 

 The overstatement of receipts resulted from the following: 

• Receipt reported that did not clear the bank ($13,000) 

• Unexplained differences (196) 

Overstatement of Receipts ($13,196)

The overstatement of disbursements resulted from the following: 

• Disbursements reported that did not clear the bank $19,326 

• Unexplained differences 317 

Overstatement of Disbursements $19,643

The $19,215 understatement of the ending cash on hand was a result of the reporting 

discrepancies described above, as well as overstating the ending cash on hand by $6,477 

on CFW’s 2019 July Quarterly Report. 

2020 Campaign Activity

Reported

Beginning Cash on hand @ 

January 1, 2020

 $605,646

Receipts $1,087,889

Disbursements $1,361,823

4

Bank Records Discrepancy

$624,861 $19,215

Understated

$1,350,280 $262,391

Understated

$1,617,987 $256,164

Understated

Ending Cash on hand @ $320,867 $357,154 $36,287

December 31, 2020 Understated

3

 The reported 2019 ending cash on hand does not equal the 2019 beginning cash on hand plus reported 

receipts minus reported disbursements. This was due to a mathematical discrepancy on the 2019 July 

Quarterly Report in which the ending cash on hand was overstated by $6,477. 4

 The reported 2020 ending cash on hand does not equal the 2020 beginning cash on hand plus reported 

receipts minus reported disbursements. This was due to mathematical discrepancies on several 2020 

reports which understated the ending cash on hand by $10,845. 
7

 

The understatement of receipts resulted from the following: 

• Receipts not reported5 $262,248 

• Unexplained differences 143 

 Understatement of Receipts $262,391 

The net understatement of disbursements resulted from the following: 

• Disbursements not reported6 $275,753 

• Disbursements reported, but not clearing the bank (18,875) 

• Unexplained differences (714) 

Net Understatement of Disbursements $256,164

The $36,287 understatement of the ending cash on hand was a result of the reporting 

discrepancies described above, as well as a math errors of $10,845 relating to CFW’s 

reported ending cash on hand on its 2020 disclosure reports. 

B. Interim Audit Report & Audit Division Recommendation

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

representatives and provided schedules detailing the misstatements of financial activity. 

During the exit conference, the CFW representatives stated that its failure to file activity 

for eight days of the 2020 Post General Report was a simple oversight, and the receipts 

and disbursements not filed during this period represented the majority of the 2020 

misstatement. The CFW representatives stated they may file a Form 99 to correct the 

misstatements.

The CFW representatives did not provide a written exit conference response for this 

finding. 

The Audit staff recommends that, within 30 calendar days of service of this report, CFW 

amend its disclosure reports or file a Form 997 (Miscellaneous Electronic Submission) to 

correct the misstatements noted above. In addition, the Audit staff recommends that 

CFW reconcile the cash on hand balance on its most recently filed report to include these 

adjustments and correct any subsequent discrepancies. 

Finding 2. Receipt of Contributions in Excess of the Limit

Summary 

During audit fieldwork, the Audit staff reviewed contributions from individuals to 

determine if any exceeded the contribution limit. This review indicated that CFW

5

 The majority of receipts and disbursements not reported were during the eight-day period from October 

15, 2020 through October 22, 2020. CFW inadvertently filed its 2020 30-Day Post-Election Report with 

the start date of October 23, 2020 instead of October 15, 2020 and therefore, did not report any receipts 

or disbursements during this period. 6

 See supra footnote 5. 7

 If CFW chooses to file a Form 99, instead of amending its disclosure reports, the form must contain all 

pertinent information that is required on the schedule.
8

received apparent excessive contributions totaling $19,000. These errors occurred as a 

result of CFW not resolving the excessive portion of contributions by obtaining signed 

reattribution letters from its contributors or issuing refunds of the excessive portion of 

contributions in a timely manner. The Audit staff recommends that CFW provide 

documentation demonstrating that the contributions were not excessive, or if excessive, 

were resolved in a timely manner. Absent such a demonstration, CFW should resolve the 

excessive contributions by submitting signed reattribution letters, issuing refunds or 

disgorging to the U.S. Treasury any refunds it is unable to process.

Legal Standard

A. Authorized Committee Limits. For the 2020 election, an authorized committee may 

not receive more than a total of $2,800 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 

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
9

• 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)(B). 

Facts and Analysis 

A. Facts

1. Facts

During audit fieldwork, the Audit staff conducted a review of all contributions to 

identify apparent excessive contributions from individuals, as noted below. 

Excessive Contributions - 100% Review 

Excessive Contribution Amount $19,000

Total Amount of Excessive Contributions $19,000

Reason for Excessive Contributions

Contributions not resolved via signed

reattribution letter or refund $19,000

Total Amount of Excessive Contributions $19,000

2. Additional Information 

CFW did not maintain a separate account for questionable contributions. However, 

CFW did maintain a sufficient balance in its bank account to make refunds of the 

apparent excessive contributions.

B. Interim Audit Report & Audit Division Recommendation

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

conference and provided a schedule of the apparent excessive contributions. During the 

exit conference, the CFW representatives stated that they would provide documentation 

related to these contributions. 
10

The CFW representatives did not provide a written exit conference response for this 

finding.

The Audit staff recommends that, within 30 calendar days of service of this report, CFW:

• Provide evidence demonstrating that the contributions in question were not 

excessive, or if excessive, were resolved in a timely manner. This evidence 

should include documentation that was not made available to the Audit staff 

during the audit, including copies of solicitation cards completed by the 

contributors at the time of their contribution that clearly informed the 

contributors of the limitations or timely refunds (copies of the front and back of 

negotiated refund checks) or reattributions for excessive contributions.

• Absent such demonstration, CFW should review its contributions to determine 

which are excessive and how each can be resolved, and/or offer a refund for any 

remaining excessive amounts. CFW must either provide evidence that the 

excessive contribution amounts were refunded (copies of the front and back of 

negotiated checks) or, for any excessive contributions for which CFW was 

unable to process a refund for any reason, provide evidence that the excessive 

contribution amounts were disgorged to the U.S. Treasury. For a reattribution, 

both the contributor and the individual to whom a contribution was reattributed 

must be notified. 

• If funds are not available to make the necessary refunds, CFW should disclose 

the contributions requiring refunds on Schedule D (Debts and Obligations) until 

funds become available to make such refunds.

Finding 3. Cash Disbursements

Summary

During audit fieldwork, the Audit staff determined that CFW made three cash 

disbursements and issued one check payable to cash, which exceeded the cash 

disbursement limit by $7,000. The Federal Election Campaign Act (Act) requires 

political committees to make all disbursements, except those from a petty cash fund, by 

check or similar draft drawn on a committee account, not to exceed $100. The Audit 

staff recommends that CFW demonstrate compliance with the Act regarding cash 

disbursements, provide any relevant comments, and submit the missing disbursement 

records.

Legal Standard

A. Disbursement by Check. A political committee may only make expenditures in 

cash, not to exceed $100, from a petty cash fund. A written journal for such cash 

expenditures is to be maintained by the treasurer. All other disbursements shall be 

made by check or similar draft drawn on account(s) established at the campaign’s 

depository(ies). 52 U.S.C. §30102(h)(2).
11

B. Petty Cash Fund. A political committee may maintain a petty cash fund out of 

which it may make expenditures not in excess of $100 to any person per purchase per 

transactions. 

It is the duty of the treasurer to keep and maintain a written journal of all petty cash 

disbursements. The written journal shall include:

• Name and address of every person to whom any disbursement is made;

• Date;

• Amount;

• Purpose; and

• If disbursement is made for a candidate, the journal shall include the name 

of that candidate and the office (including State and Congressional district) 

sought by such candidate. 11 CFR §102.11.

C. Required Records for Disbursements. For each disbursement, the treasurer of a 

political committee must keep records on the:

• Amount;

• Date;

• Name and address of the payee;

8

• Purpose (a brief description of why the disbursement was made);

• If the disbursement was made on behalf of a candidate, the candidate’s name 

and office sought by the candidate; and

• If the disbursement was in excess of $200, the records must include a receipt 

or an invoice from payee, or a cancelled check or share draft to the payee. If 

the disbursement was made by credit card, the record must include the 

monthly statement or customer receipt and the cancelled check used to pay 

the credit card bill. 52 U.S.C. §30102(c) and 11 CFR §102.9(b).

D. Preserving Records and Copies of Records. The treasurer of a political committee 

must preserve all records and copies of reports for 3 years after the report is filed. 52 

U.S.C. §30102(d).

Facts and Analysis

A. Facts

During audit fieldwork, the Audit staff examined bank records and the disbursement 

database provided by CFW and identified four transactions, totaling $7,400, involving 

cash disbursements, each of which exceeded the $100 transaction limit for cash 

disbursements. One transaction was a check payable to “Cash” in the amount of $500; 

the remaining three transactions consisted of cash withdrawals from CFW’s bank 

account. 

8 The payee is usually the person providing the goods or services to the committee. In the case of travel 

advances, however, the payee is the person receiving the advance. 11 CFR §102.9(b)(2).
12

CFW provided records for cash disbursements totaling $6,390. Records for cash 

disbursements totaling $1,010 were not provided. The cash disbursements were used to 

pay various individuals for Get Out the Vote (GOTV) activity.

The Audit staff notes that political committees may maintain a petty cash fund out of 

which they may make expenditures not to exceed $100 to any person, per purchase, and 

per transaction. The political committees must maintain a written journal of all petty 

cash disbursements per 11 C.F.R. §102.11. However, CFW did not maintain a petty cash 

fund. CFW confirmed that there was no petty cash fund and a review of CFW’s 

disbursement records did not yield any evidence to demonstrate that CFW established or 

maintained a petty cash fund. The Audit staff concludes that four cash disbursements, in 

excess of $100, totaling $7,000, were excessive cash disbursements.

B. Interim Audit Report & Audit Division Recommendation

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

conference and provided a schedule of the cash disbursements. During the exit 

conference, the CFW representatives stated that in hindsight, CFW should have written 

checks instead of making cash payments but mentioned that, due to the large number of 

individuals participating in the GOTV activity, it was easier to pay cash than to issue 

checks. The CFW representatives stated that they would provide comments related to 

this finding.

The CFW representatives did not provide a written exit conference response for this 

finding.

The Audit staff recommends that, within 30 calendar days of service of this report, CFW

demonstrate its compliance with the Act regarding cash disbursements, submit the 

missing disbursement records, and provide any relevant comments.

Finding 4. Contributions from Unregistered Political 

Organizations

Summary

During audit fieldwork, the Audit staff identified that CFW accepted 47 payments,

totaling $568,000, from unregistered non-federal committees and made an aggregate of 

$567,230 in disbursements related to the production and distribution of “slate ballot 

mailers.”

The Audit staff recommends that CFW demonstrate that all receipts for the “slate ballot 

mailer” program were made with permissible funds and, if unable to make such a 

demonstration, issue refunds or disgorge the impermissible funds to the U.S. Treasury. 

Legal Standard

A. Authorized Committee Limits. An authorized committee may not receive more 

than a total of $2,800 per election from any one person or $5,000 per election from a 

multicandidate political committee. 52 U.S.C §30116 and 11 CFR §110.9. 
13

B. Definition of Election. Each of the following is considered a separate election, with 

a separate limit:

• Primary election or a caucus or convention with authority to nominate the 

candidate for the general election.

• General election.

• Runoff.

• Special election. 52 U.S.C. §30101(1) and 11 CFR §§100.2, 110.1(j)(1), and 

110.2(i)(1).

C. Organizations Not Registered With the Commission. Any organization that makes 

contributions and expenditures, but that does not qualify as a political committee 

under 11 CFR §100.5, must keep records of receipts and disbursements and, upon 

request, must make such records available for examination by the Commission. The 

organization must demonstrate through a reasonable accounting method that, 

whenever such an organization makes a contribution or expenditure, the organization 

has received sufficient funds subject to the limitations and prohibitions of the Act to 

make such contribution or expenditure. 11 CFR §102.5(b).

D. 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:

1. 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 steps below). 11 CFR §103.3(b)(1). 

2. 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). 

3. 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).

4. 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).

5. 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).
14

E. Soft Money – Federal Candidates. A candidate, individual holding Federal office, 

agent of a candidate or an individual holding Federal office, or an entity directly or 

indirectly established, financed, maintained or controlled by or acting on behalf of 

one or more candidates or individuals holding Federal office, shall not solicit, receive, 

direct, transfer, or spend funds in connection with an election for Federal office, 

including funds for any Federal election activity, unless the funds are subject to the 

limitations, prohibitions, and reporting requirements of this Act. 52 U.S.C.

§30125(e)(1)(A).

Facts and Analysis

A. Facts

Based on a review of all receipts and disbursements relating to a slate ballot mailer 

program, the Audit staff identified 47 payments totaling $568,000 received from 

unregistered non-federal committees, for which CFW made an aggregate of $567,230 in 

disbursements related to the production and distribution of these mailers, including 

outstanding debt disclosed by CFW. CFW received these funds from unregistered nonfederal committees that could receive funds from prohibited sources or in amounts 

exceeding the Act’s limitations. 

The mailers were produced and distributed during the 2020 primary and general 

elections. The mailers listed and expressly advocated the election of certain nonfederal candidates and the Candidate.

9

 The mailers featured a prominent picture 

or likeness of the Candidate on the front page and were promoted as the 

Candidate’s official sample ballot, containing brief quotes that conveyed the 

Candidate’s opinions and endorsements of the non-federal candidates listed.

CFW represented to the Audit staff that each candidate would be included in the 

mailers only if their respective committees reimbursed CFW for the full 

production and distribution costs attributed to him or her.

On October 21, 2004, the Federal Election Commission issued an Advisory 

Opinion (AO 2004-37) concerning the application of the Act and Commission 

regulations to the arrangements with, and payments by, any Federal candidates 

who will be included in CFW’s proposed mailers. 

The Commission concluded that reimbursements by the authorized committees of 

the Federal candidates listed in the mailers in amounts equal to the attributable 

costs associated with each candidate’s listing would not constitute support to 

CFW because, in this situation, mere reimbursement of the costs associated with 

the production and distribution of the proposed mailer within a reasonable period 

of time would not constitute “anything of value” to CFW under the Act provision 

now codified at 52 U.S.C. §30101(8)(A)(i)10 and 11 CFR §100.52. See Advisory 

9 The general election period mailer also endorsed Joseph R. Biden and Kamala D. Harris for President 

and Vice President, respectively. 10 On September 1, 2014, the Federal Election Campaign Act of 1971, as amended (“the Act”), was 

transferred from Title 2 of the United States Code to new Title 52 of the United States Code.
15

Opinion 2004-1. Therefore, such reimbursements would not be subject to the 

Act’s limits now codified at 52 U.S.C. §§30102(e)(3) and 30116(a)(2)(A). To the 

extent that any reimbursement by a candidate’s authorized committee exceeded

the costs attributed to that candidate, such excess reimbursement would constitute 

a contribution to CFW and would be subject to the Act’s applicable contribution 

limit. See the Act provisions now codified at 52 U.S.C. §30102(e)(3)(B); 52 

U.S.C. §30116(a)(1)(A); 11 CFR §102.12(c)(2); 11 CFR §110.1(d). The cost for 

the participating candidates and committees would be attributed by the proportion 

of space devoted to each candidate as compared to the total space devoted to all 

candidates, per 11 CFR §106.1(a)(1).

The Audit staff notes that AO 2004-37 did not address non-federal candidate 

involvement.

11 

The Audit staff, upon consultation with the Office of General Counsel, concludes the 

following:

• CFW cannot rely on AO 2004-37 with regard to the non-federal committee 

transactions. AO 2004-37 addressed the question of whether receipts and 

disbursements associated with the production and distribution of a mailer would 

constitute contributions from or to Federal candidates included in the mailer. The 

facts in this audit are materially distinguishable from the facts presented in AO 

2004-37, given that the transactions during the audit period involved non-federal 

candidates and committees.

• For the same reason outlined above, CFW cannot rely on AO 2004-37 with regard 

to reporting these transactions. 

• CFW’s mailer program does not comply with the requirements of 52 U.S.C 

§30125(e)(1)(A). Funds received, spent, or disbursed 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. “Federal Election Activity” includes a public communication that refers 

to a clearly identified candidate for Federal office (regardless of whether a 

candidate for state or local office is also mentioned or identified) and that 

promotes or supports a candidate for that office, or attacks or opposes a candidate 

for that office (regardless of whether the communication expressly advocates a 

vote for or against a candidate). CFW received and spent funds for mailers that

constitute Federal Election Activity. CFW received the funds from unregistered 

non-federal committees, depositing them in its sole campaign depository, and 

made disbursements for the production and distribution of mailers that promote, 

or expressly advocate the election of a clearly identified Federal candidate. CFW 

received these funds from unregistered non-federal committees that could receive 

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

11 CFW stated in its AO request that it was not requesting the Commission’s opinion regarding the 

application of the Act and Commission regulations to any arrangements with, or payments by, nonfederal candidates or their committees.
16

Moreover, these unregistered non-federal committees did not report the funds to 

the Commission.

B. Interim Audit Report & Audit Division Recommendation

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

conference and in subsequent written and oral communications and provided schedules of 

receipts and disbursements relating to the mailers. During the exit conference, the CFW 

representatives stated they would review the schedules.

In response to the exit conference, the CFW representatives provided two sample slate 

ballot mailers to document how the unregistered non-federal committees that made 

payments to CFW appeared on the slate ballot mailers. One slate ballot mailer provided 

was for the 2020 primary election period and the other slate ballot mailer provided was 

for the 2020 general election period. 

In addition, CFW provided copies of invoices and letters sent to 21 unregistered nonfederal committees totaling $221,000. The invoices stated the reimbursements to CFW 

must meet the requirements of federal law, payments from corporations or labor unions 

could not be used to make the reimbursements, referenced the Candidate’s “Sample 

Ballots and Voter Recommendations” and included a line for the unregistered non-federal 

committees to sign and date acknowledging receipt of the invoice and the “requirements 

of federal law.” However, the letters provided to the unregistered non-federal 

committees stated that they could use individual contributions of $5,000 or less to 

reimburse CFW for the slate ballot mailer program costs. $5,000 exceeds the $2,800 

federal limit for contributions from individuals, and therefore the Audit staff did not 

accept the signed invoices as sufficient to determine the permissibility of funds received 

from the unregistered non-federal committees. The Audit staff, in consultation with the 

Office of General Counsel, also considered the following factors:

• The invoices were silent as to the reporting requirements of the unregistered nonfederal committees; 

• The invoices cited some, but not all, prohibited sources;

• Some of the reimbursement checks appear to be from individuals’ checking 

accounts rather than the unregistered non-federal committees’ accounts, and may 

have exceeded the individual contribution limit; and 

• CFW received funds that the unregistered non-federal committees did not report 

to the Commission. 52 U.S.C. § 30125(e)(1)(A).

The Audit staff recommends that, within 30 calendar days of service of this report, CFW:

• Provide evidence that the receipts in question were made from permissible funds; 

or

• Refund the impermissible funds and provide evidence of such refunds (copies of 

front and back of the refund check); or

• Disgorge any impermissible funds, for which CFW is unable to process a refund 

for any reason, to the U.S. Treasury and provide evidence of such disgorgement; 

or
17

• If funds are not available to make the necessary refunds or disgorgement, disclose 

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

become available to make such refunds.