Attachment as stated

" .:. \

November 8, 1979

PUBLIC ISSUANCE OF AUDIT REPORT -

RO~~ FAUCHEUX FOR Cm~GRESS (LA/Ol)

FRED EILl\.ND

PRESS OFFICZ

£~..?I.'rJ_. BOB COSTA , '1 '---

JUDY mWllZPJS

FEDERAL ELECTION COMMISSION

RAD

,Publ ic Record / ",

\vith t:1is release, the Louisiana 1st nistrict is now

complete.

Inforrn3tional copies of this report have been received

hi all parties involved and this report may be released to

the public.

At.tached please find a copy of the final audit report

of the Ron F3uc~eux for Congress Conmittee (LA/Ol) ~hich

was approved b~ the Commission on October 18, 1979.

SUBJECT:

F':{OM:

THROUGH:

'ro:
/CO'~~>:, ", :: .~:. "-

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'l'his aucli t reDort is bL.ls(!c1 on documents ilnd workinq

papcrs which support ea~h of tile factual statements. 'l'hcv f~)I":::

part of the record upon which the CO!~ission based i ts c1e~ j s iO:l~;

on th':l matters in this report and were available to Commissionv;'!;

and appropriate staff for review.

REPOR'l' OF THE AUD!'!' DIVISION

ON TIlE

RON F:\UClIBUX FOR CONGRESS COJloUU'l"I'EE

1'•.", t. ',11-:11 I '\, \\'

\\ \',111"',( •It 1'.,111 .'1 "It, \

FEDIR:\1 U I (',liON COMl\\ISSION

Overvie\v

Background

A.

'l'his report is based on an audit of the Ron Faucl1eu:·:

for Congress Committee (" the Committee") underta}:en by the

Audit Division of the Federal Election Commission in accordnncc

with the Commission's audit policy to determine whether there'

has been compliance with the provisions of the Fcderal Eloction

Campaign Act of 1971, as amended (lithe Act"). The audit was

conducted pursuant to Scction 438 (a) (a) of Title 2 of the uni t,,:'.1

States Code which directs the Con~ission to make from time to

time audits and fiehi investigations \.,rith respect to rcports

and statements filed under the provisions of the Act.

'l'he Commi t tc:e regis t:~red \.,ri th the Federal Election

Conmlission on Nay 17, 1977, as the principal car.lpaign conuni t tC(~

designated by r1r. Ron F'::lUcheux, a candidate in the 1977 SpecjaJ

Election held to fill a vacancy in the Office of United Statc~

Hepresentative from the First District of Louisiana. 'rho.

Con~ittee maintains its headqu.:lrters in New Orleans, LOL:isian,l.

'1'he auc1i t covered the period H.1Y 6, 1977, the

beginning cover.:lge date of the first report filed, throuqh

September 30, 1977, the endinq coverage date of the last

report filed by the Cornmittee at the time of the audit. 1"0"

this puriod, the Conmlittcc re~)orted a beginning c.:lsh bal.::mc:c

of $-0-, total receipts of $314,610.47, total expenditures

of $311,710.09, and a closing cas~ balance of $900.38.

1.

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II. t\uditor's StatemL'nt and Description of Findings

:\ . Supportin'.! Docun~~~.!lt.:ltion for Expenditures

Section 432(<.1) of Title 2, United States Code,

reyuires a political committa~ to obtain and keep a receipted

bill, stating the pdrticulars, fOI~ every e:-:penditure .made b'l

or on behalf of a politica 1 cOi::::l.i t tec .:1q<Jre~;uting in excess

of $100 to the sume person liut-int; a calendar year.

Section 102.9 (c) (3) an,; (.1) of 'ritle II, Code of

FCller.::.l Regul.:l tions, provides t:l~\ t when a receipted bill is

not a'.-.:lilablc, the treasure I" la:1Y kcep the c.:lncelled check (s)

s:lOwL:-:: pa1'ment (s) of the !Jill ~lI1d tho bill, invoice, or other

conte::".?oraneous memorandum 0: tilL' tran~;action provided 01' the

P~l';'ce a::c: cont.:lining the it1e:-:::'i:~ic~lti.on 0: the person to \.;hom

the c:':~:0nc1iture \Vas made and t::.c amoun t, c!.:l to <111<.1 purpose 0 [

the e:·:~,,:mditure.

13. ~~'-":'_ "e rsonne 1

C. Scope_

I t is the opinion 0 f L111~ i\udi t staff, based upon

e:·:'::lInin.:1tion· of the rt'pOrU5 and st<ltements filed and the records

presented, th.:1 t, .e:-:co!Jt fo\- tlw de ficiencies noted belo\'l, the

reports and statement:.; of Ll\l~ Pon Faucheu:': for Congress Committee

f.:1irl::· present the ri.llllIlC.i.:l1 activities of the Committee for the

period covered by the aucl it. FU1-tllCr, excG?t as notel1 below, no

material problems ill comp.1 y i.n,-: with the Feeleral Election Campai']n

:\ct were discovered dllri.IIIJ tho course of the audit. .

'L'he aucli t i.IH~ I Udl~d such tests as verification of.

total reported rece i pt~; and e:-:penditures and individual

transactions; revil.'w of n!quired supporting documentation;

analysis of Committee dehL:> and obligations; and, such other

audit procedures .:lS dcwmed n(;CeS~3ary under. the circumstances.

'l'he principal officers of the Committee during the

period covered by the iludi t \'lere Mr. ~1.i.ke. Early, Chairman,

r-1r. Donald E. 'l'heriot, 'l'rea5urer from ~"ay 6, 1977 through

Septerober 20, 1lJ77, and r-1r.· \viley G. l.llstrapes, Jr., 'l'reasurer

from September 20, 1~J77 until the present.

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Our1ng the Cllurse 0 f the .:lUdi t, we found that:

(I) Receipt t~d bills, invoicen, vouchers or

contemporaneous memo.-i1Ilc!a were not av.:1 Utll) I c to suppor.t 50

Q:·:pendi tures totalin\1 :;:30,701. 55 (rept-e~;\~lll:ing 14. 9!?i 0 f

the number of e:-:pendi I.u res requirlnq such documentation .-mel

10.2';', of thc dol'lar vOl1.ue of such expenditures which tol.lled

$300,784.96) •

(2) 'l'hirty-:>.L:·: (36) expenditures (l0. SZ; of tht.~

number of e:·:pendi tur<~:; '-lCJlJrceJCl tin<] in e:·:cess of $100 to a

given payee) totaling ~1,505.25 (1.2~ of the dollar value

of such e:·:pendi tures) \'I(~ re supported only by a cancelled

check and a contcmpol-;IIIeOUS memorandum generated by the

Conmlittee rather than the p.:1yee. 'rhese expenditures consisted primarily of disbursements to individuals involved

with the Committee's phone bank.

(3) A cancelled check and a contemporaneous

i:·,OI;;OI: ..mdulil W.:lS provided to support 41 other expenditures

(12.2~ of the number of expenditur.es .:199regating in excess

(1:' ~~lOO) to::.:11ing $28,S4S.00 (9.5·~ of the dollar value of

such l~:·:pencliturcs) to payees who apparently mac.1e disbursements

to other p.:1~·ees, both Llldividtwls and orqanL:iltions, 011 behal f

of the Committee. I1o\,/\Jver, the idcmt.Lfication and the amount

.:1nd dilte of disbursen~nts to the ultimate pilyees for canvilSSin(l,

ulection da~ work, poll watchers, otc., was not maintained.

Co:m:littee orricials \-:ere advised of the inadequab.)

documentation for the:·je cxpendi tures. The former 'l'reasurer

s tated tha t the Conmli t tee attemp ted to obt.:1in documen t.:1 tion

from persons '..:ho received payments fro!:\ the Committee, althouyh

many did not p~ovide it. The Con~itt0c officials were provided

a listing of tile inadequately Jocumcm ted expenditures by the

t\udit staff.

\';0 reconm\Cnd(~d that the Coramittce obt.:1in and provide

lo the Audit staff copies of adequate documcnt~l\".ion to support

t:1C cxpendi turcs discussed in (l) and (2) above, or provide

c:ocu!:lC'ntation of its efforts to obtain such rt."!ceipted bills,

invoices, bills or contemporaneous memoranda \\1i th regard to

t:1e expenditures discussed in (3) above, the COl1trni ttee \'I1as

a~~iscd that the information contained in the contemporaneous

1:".0:::0 t'andil Si..:~)portin~J those expendi tures VIas being forwarded to

th0 Office of General Counsel for a determination as to their

<lri':(lUac~'. '1':10 Conuni t tee was fu rthe t- advised to provide an~l

:7'.:rthor tlOC:'li::c:1t:ation which miqht be obtuined in support of t~~()S~ (~:·~!Je!l(~itu~~cs.
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In,1-1ette;"-ddt:l~d I\pril 11, 1!J7B,thcCOllunitlec

submitted copies of lt~LLl~n; which it sent to ench of the

pnyees in (I.) and (2) illJo\'l~ rcquestinq ('onfinnntion of' thl~

I"cceipt ot: funds from the Committee rot" dw (.loads and ::wrviccs "

provided. On i-l'l? 2, 1')78, U1C! Cornmittc!/' prov.id(~d si.qlwd responses

f."om .the p'l'lUCS 'in suppol"t. of 25 of the 'jO expendit\lre~; discussed'

,in (1). rl'h~~Sl~2S ndditional e:,:pendiLun~:; totalc'd :H9.,OB~).46, "

Lherc!by reducinq tile number' alld amount of e:-:pcndituresrol~'which

there was no r.eceipted bi 1 1, invoice, voucher, or contemporaneous'::

IIIemornnclum to2S items Lot::llin~1 $11,612.09 (or 7.5':. of the total

nUlllber of e:,:pcnditures relJll.i 1~ ing such documentation and 3. 9!?' "of

the total dol Llr value!).-

. :; Lmilcll.-ly, Lhol'lJllllni ttee provided siuned res!JOlH5es

[rom the i).l';:c:es in 'support of 24 of the 36 e:·:pcmcliturcs clescrilJed in (2) • '1'hes(! 2·l ,lllditional1y supportede:·:penclitures

totaled$~, ~G·L 2S nnd !'c,duced the number and anloun t of e:-:pend-

.i. lures" for. v:h.i.ch'there· \':a~3 no' contel1lj)or<l'rleous nir~r.!or.,mdull\

\wncratcd 1"1'(?::1 the' pG~'0(!tO 12 itC!:l~; totnlinq $1,1,n.00 ·(or 3.G.·

.of thl~ tot.,1.! ntl:;lb(~]~· 0:: C·XPl:lll..li tllrc~i.;- rClluirill'(J .stich documentation

.. 'lnd .,\':,' 01' Lh,.: tot~lL doll'll' :vi'lltH:). "i1owevel-, no. f.urther

docul1\cintation \,:,:1<5' pro\'.ldcc1 'to SUPl.»j-t the 41 c:,:pc:nditut'CS

dosc d.bed. in: (3 i "bc)\"~" . ,.

The; mat.tc:r of th(~ j"C'liiGin Lnq c:,:pcnditul'i.i::;lU~;cussed·

in '(3),\';,15 cef(!~i.-cd .l:.o Lhl.~ Ofl'iccof~Gon\:'l:Gl Coun~e10n ~Junn G~ l~J78' fOl~ .i detenninaL.Lol'l nsto \·:hOtl1L:!~ the u(~Ul.i1 l)l'ovidcd

by the can tC~;:1:)Oraneous I1\l:1110 !;,1l1,1~ (u rnislwd by theCo::,;:1i. t toe

. \\'<lsadcquatc '.·.:H.h r0lJi'lrd to thL' \.lltil:1~lte p~lydcs and j)UrpOslls.

i.1Gtter Unu0r:\c'.'ie\V GEi(78) wils initi<lted by tl1at ofiiceon

,Jun0.7,·l978~ ,"'..clctl:r:ainition \~as niade.by theO:'.ficc·of Gener,tl

CouI1~;cl that, .0:0 the rc:::(:n~cd 41 c:,:pen\lftur~~s, 23 c:'::)l;IH:li.turc::~ .

. tot.:t.linq $8,·l~~~ (G.9~, of. the total nUl:lbl:[ 'lnd :~.8'~ 0:: the.totill

,ciol l'a.r mr.ou~1 t c: expend i tu res n:~qu i.l~ i:l'J docIIr. h.:: n t a ti():l ).~ rellui ro':':

"deli tianG1 .de t.J.i 1 req,lnlinq the even tual dii~b\l n;(:1:10n ts made lJ·,r

tile iric:.i,.'i.c:''..l::iJs/Gqe::L~;·t~)\~I1'om .t11e :);t',:i:\orits\':L'rc m<:H.lL·~ .
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[n rcspons(' II) further inquiries from thl; Conmlission ,

I"()~liln.ling the rCllIilinill'l 23 unsupported expenditun-;s, the Committc'l:-

~:l~IlL certified luttc)I";; 1.0 the indivi<1u~ls/~gent.sreqtlesting~n

it<.!IIlization of till! al1lc lIlIlt(S) and purpose'(s) for which th(~ funds

were expended.I{'·:;I'0'II:;c,'s from six, (6): of the aql~nts'~ documented

si:·: (6) additional l~:-:IH'nditures totalinq'$2,425, thereby reducin~l

Llle number 'of und(l<.:tlll\c·IIl<~d expenditures' to 17 items, (5'7, of the

LoUd,' number of expend it.llLl"lS requiring ~~uch documentation)

. toLaling '$6,060 (2':, (>1 Lile 'total dollar value) • Because the

Conmlittee llIu.de LJJ:ollli'L :;(~cond attempt to obtain the required

documentation; oriOcLol>c-r' 18, '1978, the Commissiondctermine<1

that the COllunittce lwd ~n ..de its best, efforts toco:~lply. wi'ththc

l\ct and f-latter Under Rl'\~ i.ew 615 (78) was closed \-1i th rc'spect to

the CO!ll::li t tee.

B. ~21~parcntColT()I~~lte Contributions

Sl~ctii.)I) A·llb(:I) of 'l'itle 2, United ,Sti:ltcs COdl~,

stu.t.,:s, in part, th~t it. is unlawful for corporation to

make ~l con tribution in connection \",i th Federal election,'

o;~ for any c:mdidatc, !'oliU,cillconind:ttce, or other pCl~son

knowintj1i' t.o accept 01' n~ceive such contributions. Section

103.3 (b) (1) of 'l'itle II, Code of FedL~ral H.(!gul~tio:1s, requires

con trib:.; tions, wh.i.cll;li)j1l~ar to be prohibited to be :r'c t urnec1

t.o the contrilJutol" wiLhin 10 d~ys.

OUI: I"L'V.ll!W or Committee reconls revca1e('l th'::lt 22

conlt~ibutions \'_il~I-L! n'cl'ived by check dr~\'m on t1ll~, accounts

of 19 business ol:~I.::mi:·::i1-.ion:J an(i enterpris(~:;. The l:ol~iJOrate

Division, of f.Lcl.~ of Lbc.! :3ecretary of State, lI'::lton Houlje,

l,oui~,ii:in~, con·finned LIl;1 t b/o (2) businesses on which three

,(3') con::t~ibution chc.~d:s totaling $2,000 (.06·~, of total receipts)'

.wcn-e mal'le to the Commi ttcc were incorporated at th·:: tinK~ the

con tributions \':c're made.

\.~(! l-eL:ol~lIlICnlk'd th~t the Committee n'fund t:1.:) corpOl-atc

contribt:..... iolls and providl.~ copies of e~ch side of t;H: cancelled

I-c.~ fum: ciwcks to the ,....ud itsta f f for revio\·... 011 :':<1',' 27, 197 B

.:me! ~lso on June 13, 1978, the ,Committoe [urnislwci c2ocumentation

l-,~tja:::-cii:'(j tho refunded ,contributions. In consonance: \·lith COlllniiss ion

polic":', th0 mattC:l: \Vas n,rc~rn~d to the Office of G·::nc~l~al Coun~)e1

un J~ne 6, 1978 where ~atter Under Review ~615(78) ~as initiated

pn June 7, 1978 with n!::;pect to these contributions. FollO\vin~1

a deter::",inl.ltion that the Cornmittec did not knowin~:l·:.:·l.lccept these

cor:)Or'::l::'2 con trUJU lion::, to~;ethcr \\'i th their p I~om:;:: rc funds by

the Co::~:~~i t tee, t:ll' Conn:l i ~; sian vo tC!U on Oc to!;..-~ I" 18, 1978 to t~ko

no En 1.- ::';1<-; r '::IC tj 011 \';.i t 11 n:':;: ;,:~c L Lo th(~ m.::ll: t(~ r .
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D. J)1_sclo:-;~1l:C ()f Committoe

Section 433(b) (9) of 'l'itle 2, Cn.itl'd Sl:utes Code,

cClluirt.:s a politicLll committee to list on it:; St.:ll:e::1Gnt of

(J1-'JanL:,ltion fill~.:..l wi til thL' Comrnis~;ion all b.:ll1j~s, sa:cty

c!(:posit bo:"~cs, 01: oUW!' J:L'positorics m-;(;d. S"CtiO!1433(c)

n.·'i ui l:es i1 C01U:1.i. t t'..:c tL1 repor t any chan'.!',: j n in ro~r:'"ation

!\j-\.>\-iou:-; L"" SUbl:·.it::"-~c1 in a Statement of (Jrq:ln.i ::lltion to the

Commission \vi thin 10 days f0110\"lin':1 tl1'~ cil.:tn<Jl;.

Sinel; tlw Co::',~itt.('u filed the requested Llmcnc1!:~cnt, th(~

;,udi t :; ta f f. n~co!;:!;;cnd~~ that the Commission take no .:lction

-"j.L Lh r<.:~; pc'C t to Ll1 is 1lI,1 t te r •

'\'h(' :\thl i t f~ Ll f r r('c()I1I11\(~nd(~c! th':l t the Committee f.i Ie a

C0i11PI·1.~:1cnsivl~ ':1:::t.'I1(_1I:1l~llL [or l~)77 il:c~Il1.izinlj th(~ JS eXl)cnditures.

On t-ian:il :~8, l'l'i~), tilL' appropl"iate aIiJ(mdml~nt \vilB filed.

'rhe Co:::::;i t b.'l~ I s BookkC'cpc 1- c:-:p 1a i III 'd thLl t she was no l:

':lWi1I"': that expcnditun::~, o[ $100 OJ: lo:;s mu~·;t. tll..' iter:;ized, \I/hen

a'JtJJ-l":'ltc e:,:pl'~ndit:ul:CS to a ~l.ivcn payec excc.~L~d :;;100.

C. Itemization of Expenditures

Our review of Committee reconls showed that the

C()lllmitb.~t.J incun:ed 35 v:-:penditures (10.<1')". of itemizable

(~:-:penditun's), euch less than, but aggreqatinlj in excess

of $100 to ouch payee during 1977. The expenditures totaled

$l,857.9S or .6~ of the total dollar value of itemizable

expenditures of $300,78<1.96.

Section 434(b) (9) of 'l'itlc~ 2, United States Code,

requires a political conuni ttee to di~jCloHe in its reports

the id(~ntificution of each person to whom expenditures have

been l\I.:ld(~ by such commi t tee or on bellal f of such conuni t tce

or cundidab} \vithin the calenuilr ycal" in an uqcJrclj':lte amount

or valu(~ in cXC(~SS of $1.00, the amount, d':lte and purpose of

\.~uch such expendi ture.

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(1111 l'cvil~\oJ of the Committee':·; n.'corUB di:ll.:l.oso<\ thuL

tho CO\llmitt,·" muinLailwd an a~count which W<I:: OIJl'lll'd on ,July

18,11)77, <It. t.ho Fil':;L ~~iltion':ll Bi1Il}~ whidl WitH not. dcsilJnatell

by thu C,mdidaLl' Oil his Statt.~m(~nl: of a ('.lIldidatu (FEC Fonn 2)

fileu 011 r·lay 1.7, IIJTI, nor W,I:: i.t d.i.BC}O::I.!d as a n..'::po~;i Lory on

th<.~ Conlllli.tt.... 1... 0'~; ::;I:,II"\II('nt of ()1'(.FlI1i;~'ltiCJIl or nllY ,111ll'nd\llents then:Lo.

'l'ho COllulli.LLee 'j'!"l.!<t::llrc.'r slal.l'd that Llle.' account wa:; ll!'l'ncd

by an ill.:! ividu.l1 wi 1I1lmt tilt: I;llowlt.'dqe of COlllmi Ltl'!' officials:

ho\·:cver, wlwn till..' l"lIl1lllittoc lJVC,lIl1C a\oJ.:lrl... of" i.t:: 0:·:Lil.L'nce, the

Llccount wa:.; clmwd dlld the COll\mittc.'c' ropol:ll'd d 1.1 fJnall~ia1

.:lcti.vity )"c1at(~d to til..... LlCCCllll1l'.. OUl" rc~Vi.l·'W di:;clo~h..'d th.:lt

the COlllIlI.i.t-tce t'cporll·d $1,099 cLlch in l"l:ccil":; ,111d disbursements

thl"OU\lh tho ':lCCOUIlI. dllll thilt the account act j'/il·',' tc'nllinatec1 on

f\u<Just 31, 1977, \oJil.h the e:-:~(.'ption of the el""I"in'J of a minor

OVI.' rdJ:a ft.

\\.... roc()j:ual.'lld(~t.l th':ll: the Comm.i tte!) 'llll<.md ih; Slatom(!nt

of ()l:lj"nL;~~lt.ion to <.Ii::c10S0 the ~lc<':Ol1nl: at thu Firsl· ;..l'll:i.ona1

B~lllk ,1S ,I Connnitl·.'!l.' (k'posito!·y. On ~1ar.<.:h 2B, 1978, t!h~ n ... quc:stl..'d

':lllll:'ndl:\L~:lt ·.·.'ll~; filL'd t.o d.i.SC.ll)~;l..· tho t1cpu:>.i.l U!-,!.

Sinl:L: LhL~ u!)!l)-("!Jl·l.ltc ':lInl~!Idm..~nL hoI:; !J(!I'1l f.ilc!d, the Audit

f3taCf l-,.'l:OIillill..~nd~; t11dL the COl11m.i.nsioll Llkt~ nu action \.;ith respect

to tl1.i.:; 1ll'll.LL!l~.