August 7, 2020

MEMORANDUM 

To: The Commission 

Through: Alec Palmer 

Staff Director 

From: Patricia C. Orrock 

Chief Compliance Officer 

Dayna C. Brown 

Acting Assistant Staff Director 

Audit Division 

Nicole Burgess

Audit Manager 

By: Jonathan Fonseca

Lead Auditor 

Subject: Audit Division Recommendation Memorandum on Van Drew for Congress 

(A19-04) 

Pursuant to Commission Directive No. 70 (FEC Directive on Processing Audit Reports), 

the Audit staff presented the Draft Final Audit Report (DFAR) to Van Drew for Congress 

(VDFC) on June 29, 2020 (see attachment). VDFC did not request an audit hearing. 

This memorandum provides the Audit staff’s recommendation for each finding outlined in 

the DFAR. 

In response to the DFAR, VDFC did not provide any additional comments. 

Finding 1. Receipt of Contributions in Excess of the Limit 

The Audit staff recommends that the Commission find that VDFC received 

excessive contributions totaling $45,600. 

 FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 20463
2 

Finding 2. Receipt of Apparent Prohibited Contributions 

The Audit staff recommends that the Commission find that VDFC received 

prohibited contributions totaling $13,255. 

The Office of General Counsel has reviewed this memorandum and concurs with the 

recommendations. 

If this memorandum is approved, the Proposed Final Audit Report will be prepared and 

circulated within 30 days of the Commission’s approval. 

Given the Commission’s lack of quorum to approve this Audit Division 

Recommendation Memorandum on a tally vote, the matter would be placed on an 

open session agenda in accordance with Directive No. 70, once a quorum is 

reestablished. 

Documents related to this audit report can be viewed in the Voting Ballot Matters folder. 

Should you have any questions, please contact Jonathan Fonseca or Nicole Burgess at 694-

1200. 

Attachment: 

- Draft Final Audit Report of the Audit Division on Van Drew for Congress.

cc: Office of General Counsel 
Draft Final Audit Report of the 

Audit Division on Van Drew for 

Congress 

(November 30, 2017 - December 31, 2018) 

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)

Van Drew for Congress is the principal campaign committee for Jeff 

Van Drew, Democratic2

 candidate for the United States House of 

Representatives from the state of New Jersey, 2nd Congressional 

District, and is headquartered in Cape May Court House, New 

Jersey. For more information, see the Campaign Organization chart, 

p. 2.

Financial Activity (p. 3)

x Receipts

o Contributions from Individuals

o Contributions from Political

Committees

o Transfers from Authorized Committees

o Offsets to Operating Expenditures

Total Receipts

$ 1,141,047 

$ 688,876 

$ 63,907

$ 3,479 

$ 1,897,309 

x Disbursements

o Operating Expenditures

o Other Disbursements

o Contribution Refunds

Total Disbursements

$ 1,745,599 

$ 135,410 

$ 12,099 

$ 1,893,108 

Findings and Recommendations (p. 4)

x Receipt of Contributions in Excess of the Limit 

(Finding 1) 

x Receipt of Apparent Prohibited Contributions (Finding 2) 

1

 52 U.S.C. §30111(b). 

2

 On December 19, 2019, Jeff Van Drew filed a FEC Form 2 (Statement of Candidacy) which indicated his party 

affiliation as the Republican Party. 
Draft Final Audit Report of 

the Audit Division on 

Van Drew for Congress 

(November 30, 2017 - December 31, 2018) 
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 3 

Part III. Summaries 

Findings and Recommendations 4 

Part IV. Findings and Recommendations 

Finding 1. Receipt of Contributions in Excess of the Limit 5

Finding 2. Receipt of Apparent Prohibited Contributions 8
1

Part I 

Background 

Authority for Audit 

This report is based on an audit of Van Drew for Congress (VDFC), 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; 

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. 
2

Part II 

Overview of Campaign 

Campaign Organization 

 

3

 VDFC filed a Statement of Organization on November 30, 2017. Jeff Van Drew filed a Statement of Candidacy 

on November 29, 2017. 

4

 The Audit staff provided VDFC an Internal Control Questionnaire to complete, which included this question. To 

date, the questionnaire has not been returned. 

Important Dates 

x Date of Registration November 30, 2017 

x Audit Coverage November 30, 20173

 - December 31, 2018 

Headquarters Cape May Court House, New Jersey 

Bank Information 

x Bank Depositories Two 

x Bank Accounts Two checking accounts 

Treasurer

x Treasurer When Audit Was Conducted Bradley Crate (12/19/19 - Present)

Brendan Sciarra (05/16/18 - 12/18/19) 

Jennifer May (11/29/17 - 05/15/18) 

x Treasurers During Period Covered by Audit Jennifer May and Brendan Sciarra 

Management Information 

x Attended FEC Campaign Finance Seminar4 Not available 

x Who Handled Accounting and 

Recordkeeping Tasks 

Paid staff 
3

Overview of Financial Activity 

(Audited Amounts) 

Cash on hand @ November 30, 2017 $ 0 

Receipts 

o Contributions from Individuals $ 1,141,047 

o Contributions from Political Committees $ 688,876 

o Transfers from Other Authorized Committees $ 63,907 

o Offsets to Operating Expenditures $ 3,479 

Total Receipts $ 1,897,309 

Disbursements

o Operating Expenditures $ 1,745,599 

o Other Disbursements $ 135,410 

o Contribution Refunds $ 12,099 

Total Disbursements $ 1,893,108

Cash on hand @ December 31, 2018 $ 4,201 
4

Part III 

Summaries 

Findings and Recommendations 

Finding 1. 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 VDFC

received apparent excessive contributions totaling $45,600. These errors occurred as a 

result of VDFC not resolving the excessive portions of contributions by forwarding 

presumptive redesignation or reattribution letters to its contributors or issuing refunds of 

the excessive portions of contributions in a timely manner. In response to the exit 

conference, VDFC resolved these excessive contributions, albeit untimely. VDFC did 

not provide any comments in response to the Interim Audit Report recommendation. 

(For more detail, see p. 5.) 

Finding 2. Receipt of Apparent Prohibited Contributions 

During audit fieldwork, a review of contributions revealed that VDFC received 13 

contributions totaling $13,255 from apparent prohibited sources. In response to the 

Interim Audit Report recommendation, VDFC provided copies of the front and back of 

ten negotiated refund checks totaling $11,005. VDFC did not provide copies of the 

negotiated refund checks for three apparent prohibited contributions totaling $2,250, nor 

any comments in response to the Interim Audit Report. (For more detail, see p. 8.) 
5

Part IV 

Findings and Recommendations

Finding 1. 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 VDFC

received apparent excessive contributions totaling $45,600. These errors occurred as a 

result of VDFC not resolving the excessive portions of contributions by forwarding 

presumptive redesignation or reattribution letters to its contributors or issuing refunds of 

the excessive portions of contributions in a timely manner. In response to the exit 

conference, VDFC resolved these excessive contributions, albeit untimely. VDFC did 

not provide any comments in response to the Interim Audit Report recommendation. 

Legal Standard 

A. Authorized Committee Limits. 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; 11 CFR §§110.1(a) and (b) 

and 110.9(a).

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

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

x Return the questionable check to the donor; or 

x Deposit the check into its federal account and: 

 Keep enough money in the account to cover all potential refunds or 

establish a separate account in a campaign depository for such 

contributions;

 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 
6

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: 

x The reattribution must be signed by both contributors; 

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

committee received the original contribution; and 

x 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 

presumptively attributed among the individuals listed unless instructed otherwise by 

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

x How the contribution was attributed; and 

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

§110.1(k)(3)(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: 

x The redesignation must be signed by the contributor; 

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

committee received the original contribution; and 

x 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).
7

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: 

x Is made before that candidate’s primary election; 

x Is not designated in writing for a particular election; 

x Would be excessive if treated as a primary election contribution; and 

x As redesignated, does not cause the contributor to exceed any other contribution 

limit. 11 CFR §110.1(b)(5)(ii)(B)(1)-(4).

The committee is required to notify the contributor by any written method, including 

electronic mail, 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)(5) and (6). 

Facts and Analysis 

A. Facts 

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

apparent excessive contributions from individuals, as noted below. 

Excessive Contributions -Testing Method 

High Dollar/Other Review Contribution Error 

Amount $45,600

Total Amount of Excessive Contributions $45,600 

Reason for Excessive Contributions 

Contributions not resolved via presumptive letter 

or refund $45,600

Total Amount of Excessive Contributions $45,600

B. Additional Information 

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

VDFC did maintain a sufficient balance to make refunds of the excessive contributions. 

C. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with VDFC representatives at the exit conference 

and provided schedules of the apparent excessive contributions. The Audit staff also 

explained that the presumptive letters sent in response to the exit conference would 

untimely resolve the excessive contributions of $45,600. VDFC representatives did not 

provide any comments.
8

In response to the exit conference, VDFC submitted the following documentation: 

Corrective Action Taken by Committee - Excessive Contributions 

Presumptive Letters Sent –Untimely $45,600 

Amount of Excessive Contributions –Not Resolved $0 

The Audit staff concluded that VDFC demonstrated that it resolved excessive 

contributions, totaling $45,600, albeit in an untimely manner. 

The Interim Audit Report recommended that VDFC provide any comments it deemed 

relevant to this matter. 

D. Committee Response to Interim Audit Report 

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

comments.

Finding 2. Receipt of Apparent Prohibited Contributions 

Summary 

During audit fieldwork, a review of contributions revealed that VDFC received 13 

contributions totaling $13,255 from apparent prohibited sources. In response to the 

Interim Audit Report recommendation, VDFC provided copies of the front and back of 

ten negotiated refund checks totaling $11,005. VDFC did not provide copies of the 

negotiated refund checks for three apparent prohibited contributions totaling $2,250, nor 

any comments in response to the Interim Audit Report. 

Legal Standard 

A. Receipt of Prohibited Contributions General Prohibition. Candidates and 

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

or loans): 

1. In the name of another; or 

2. From the treasury funds of the following prohibited sources: 

x Corporations (this means any incorporated organization, including a non-stock 

corporation, an incorporated membership organization, and an incorporated 

cooperative);

x Federal Government Contractors (including partnerships, individuals, and sole 

proprietors who have contracts with the federal government); and 

x Foreign Nationals (including individuals who are not U.S. citizens and not 

lawfully admitted for permanent residence; foreign governments and foreign 
9

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. 

B. 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, as incorporated 

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

C. Definition of Limited Liability Company. A limited liability company (LLC) is a 

business entity recognized as an LLC under the laws of the State in which it was 

established. 11 CFR §110.1(g)(1). 

D. Application of Limits and Prohibition to LLC Contributions. A contribution 

from an LLC is subject to contribution limits and prohibitions, depending on several 

factors, as explained below: 

1. LLC as Partnership. The contribution is considered a contribution from a 

partnership if the LLC chooses to be treated as a partnership under Internal 

Revenue Service (IRS) tax rules, or if it makes no choice at all about its tax status.

A contribution by partnership is attributed to each partner by his or her share of 

the partnership profits. 11 CFR §110.1 (e)(1) and (g)(2). 

2. LLC as Corporation. The contribution is considered a corporate contribution-and 

is barred under the Act-if the LLC chooses to be treated as a corporation under 

IRS rules, or if its shares are traded publicly. 11 CFR § 110.1(g)(3). 

3. LLC with Single Member. The contribution is considered a contribution from a 

single individual if the LLC is a single-member LLC that has not chosen to be 

treated as a corporation under IRS rules. 11 CFR §110.1 (g)(4). 

E. Limited Liability Company’s Responsibility to Notify Recipient Committee. At 

the time it makes a contribution, an LLC must notify the recipient committee: 

x That it is eligible to make the contribution; and 

x In the case of an LLC that considers itself a partnership (for tax purposes), how 

the contribution should be attributed among the LLC’s members. 11 CFR 

§110.1(g)(5).

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: 

1. Within 10 days after the treasurer receives the questionable contribution, the 

committee must either: 

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

x Deposit the contribution (and follow the 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 
10

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: 

x Confirm the legality of the contribution; or 

x 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). 

Facts and Analysis 

A. Facts

During audit fieldwork, the Audit staff identified contributions that appeared to be from 

prohibited sources. The following chart details the source of these receipts. 

Apparent Prohibited Contributions 

Type of Review 100% 

Contributions from Corporations $7,380 

Contributions from Professional Associations $3,700 

Contributions from Limited Liability Companies $1,675 

Contributions from Professional Corporations $500 

Total of Prohibited Contributions $13,255 

B. Additional Information 

For contributions from corporations, professional associations and professional 

corporations, the Audit staff verified the corporate status of the entities, as of the date of 

the contribution, with the applicable Secretary of State offices. For contributions from 

Limited Liability Companies (LLCs), VDFC did not provide tax status information for 

contributions totaling $1,675; however, VDFC did refund these contributions, along with 

all of the apparent prohibited contributions enumerated above. 

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

VDFC did maintain a sufficient balance to make refunds of the apparent prohibited 

contributions.
11

C. Interim Audit Report & Audit Division Recommendation 

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

conference and provided a schedule of the apparent prohibited contributions identified 

above. In response to the exit conference, VDFC provided copies of the front of refund 

checks totaling $13,255.

The Interim Audit Report recommended that VDFC provide copies of the front and back 

of the negotiated refund checks and any comments it deemed relevant to this matter. 

D. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, VDFC provided copies of the 

front and back of ten negotiated refund checks totaling $11,005. VDFC did not provide 

copies of the negotiated refund checks for three apparent prohibited contributions totaling 

$2,250, nor offer any other comments. VDFC materially resolved, albeit untimely, the 

apparent prohibited contributions.