FEDERAL ELECTION COMMISSION

WASHINGTON. DC. 20463

February 1, 2001

MEMORANDUM

•

TO:

FROM:

SUBJECT:

RON M. HARRIS

PRESS OFFICER

PRESS OFFICE

ROBERT J. COSTA

ASSISTANT STAFF DIRECTOR

AUDIT DIVISION

PUBLIC ISSUANCE OF THE FINAL AUDIT REPORT ON

THE NORTH CAROLINA REPUBLICAN EXECUTIVE COMMITTEE

Attached please find a copy ofthe final audit report and related documents on the

North Carolina Republican Executive Committee which was approved by the

Commission on January 19,2001.

Informational copies of the report have been received by all parties involved and

the report may be released to the public on February 1, 2001.

Attachment as stated

cc: Office of General Counsel

Office ofPublic Disclosure

Reports Analysis Division

FEC Library
REPORT OF THE AUDIT DIVISION

DNTHE

NORTH CAROLINA REPUBLICAN

EXECUTIVE COMMITTEE

Approved January 19, 2001

FEDERAL ELECTION COMMISSION

999 E STREI<:T, N.W.

WASHINGTON, D.C.
TABLE OF CONTENTS

NORTH CAROLINA REPUBLICAN EXECUTIVE COMMITTEE

Page

~~

Ul Executive Summary

to.,,\

nj Final Audit Report 3

•

111 Background 3

lU

0 Finding 5

l'\ Transmittal to Committee 13 U

ru Chronology 15

,\I.
FEDERAL ELECTION COMMISSION

WASHINGTON. D.C. 20463

•

REPORT OF THE AUDIT DIVISION

ON THE

NORTH CAROLINA REPUBLICAN EXECUTIVE COMMITTEE

EXECUTIVE SUMMARY

The North Carolina Executive Committee (NCREC) registered with the Federal

Election Commission (the Commission) on March 16, 1976, and maintains its

headquarters in Raleigh, North Carolina. The Treasurers during the period covered by the

audit were John Ruocchio, who served from January 1, 1997 through October 31, 1997,

and Scott Lampe, who served from November 1, 1997 through July 14, 1999. The

current Treasurer, Steven B. Long, began his tenure on July 15, 1999.

The audit was conducted pursuant to 2 U.S.C. §438(b), which states that the

Commission may conduct audits of any political committee whose reports fail to meet the

threshold level of compliance set by the Commission.

The finding arising from the audit was presented to representatives ofNCREC at

the completion offieldwork on March 15,2000 and later in the interim audit report.

NCREC's response to the finding is contained in the audit report.

The following is an overview ofthe finding contained in the audit report.

RECEIPT OF CONTRIBUTIONS IN EXCESS OF THE LIMITATION - 2 U.S.c. Section

441a(a)(I)(c) and (2)(c). Funds received from two separate joint fundraising activities

caused a total of$133,166 in excessive contributions. In response to a inquiry by the

Commission's Reports Analysis Division (RAD), NCREC acknowledged that $104,250

ofthe funds from joint fundraising activities were in excess ofthe limit for the related

contributors and transferred $104,250 from its federal account to its non-federal account.

The Commission's regulations at 11 CFR 103.3 specify that contributions deposited in

the federal account that exceed the contribution limitations, and that are not otherwise

resolved within 60 days must be returned to the contributor. At the time ofNCREC's

response to the RAD inquiry the 60 day period to resolve excessive contributions had

passed. Notwithstanding the manner in which $104,250 ofthe total excessive amount

was resolved, there remained $28,916 ($133,166 - $104,250) in unresolved excessive

contributions. In response to the interim audit report, NCREC provided evidence that

refunds ofal! but one ($5,000) ofthe remaining, unresolved excessive contributions have

been made.

Page 1 ofl5

Approved 1119/2001
1',

o

•

Page 2 of15

Approved 1/19/2001
A99-56

FEDERAL ELECTION COMMISSION

WASHINGTON. D.C. 20463

REPORT OF THE AUDITDIVISION

ON THE

NORTH CAROLINA REPUBLICANEXECUTIVE COMMITTEE

I. BACKGROUND

A. AUDIT AUTHORITY

iU

This report is based on an audit ofthe North Carolina Republican

Executive Committee (NCREC), undertaken by the Audit Division ofthe Federal

Election Commission in accordance with the provisions ofthe Federal Election

Campaign Act of 1971, as amended (the Act). The audit was conducted pursuant to

Section 438(b) ofTitle 2 ofthe United States Code which states, in part, that the

Commission may conduct audits and field investigations of any political committee

required to file a report under section 434 ofthis title. Prior to conducting any audit

under this subsection, the Commission shall perform an internal review ofreports filed by

selected committees to determine ifthe reports filed by a particular committee meet the

threshold requirements for substantial compliance with the Act.

B. AUDIT COVERAGE

The audit covered the period from January 1, 1997, through December 31,

1998. During this period, NCREC reported a beginning cash balance of$243; total

receipts of$2,498,634; total disbursements of$2,490,231; and a closing cash balance of

$10,8991

•

C. COMMITTEE ORGANIZATION

NCREC registered with the Commission on March 16,1976 and

maintains its headquarters in Raleigh, North Carolina. The Treasurers during the period

covered by the audit were John Ruocchio, who served from January 1,1997 through

October 31,1997, and Scott Lampe, who served from November 1, 1997 through July 14,

1999. The current Treasurer, Steven B. Long, began his tenure on July 15, 1999.

All figures in this report have been rounded to the nearest dollar. The amounts do not foot due to

errors made when carrying forward ending cash on hand balances to subsequent reports.

Page 3 ofl5

Approved 1/19/2001
2

To manage its federal financial activity, NCREC used 12 bank accounts.

From these accounts NCREC made approximately 2800 disbursements. Receipts were

composed of contributions from individuals ($1,386,655); contributions from other

political committees and transfers from affiliated and other party committees ($550,253);

loans received ($33,500); offsets to operating expenditures received ($28,503); interest

income of $72 and transfers from its non-federal accounts totaling $495,071. 2

During the audit period there were also eight non-federal accounts with

total receipts of$816,222 and disbursements that totaled $821,863, and two building fund

accounts which expended $19,919.

D. AUDIT SCOPE AND PROCEDURES

The audit included testing ofthe following general categories:

1. The receipt of contributions or loans in excess ofthe statutory limitations

(See Audit Finding and Recommendation);

2. the receipt of contributions from prohibited sources, such as those from

corporations or labor organizations;

3. proper disclosure of contributions from individuals, political committees

and other entities, to include the itemization of contributions when

required, as well as, the completeness and accuracy ofthe infonnation

disclosed;

4. proper disclosure of disbursements including the itemization of

disbursements when required, as well as, the completeness and accuracy of

the infonnation disclosed;

5. proper disclosure ofdebts and obligations;

6. the accuracy of total reported receipts, disbursements and cash balances as

compared to bank records;

7. adequate recordkeeping for transactions;

8. proper disclosure of the allocation of costs associated with administrative

expenses and activities conducted jointly on behalf of federal and nonfederal elections and candidates; and

9. other audit procedures that were deemed necessary in the

situation.

These categories ofreceipts total $2,494,054 or about $4,580 less than reported receipts ($2,498,634).

Page 4 of 15

Approved 1/19/2001
3

Unless specifically discussed below, no material non-compliance with

statutory or regulatory requirements was detected. Although it met the recordkeeping

requirements under Section 432(c) ofTitle 2 ofthe United States Code, NCREC did not

maintain documentation for expenditures ($73,255) made to Campaign Tel, Ltd. for

"advocacy calls", which would allow the Audit staff to determine ifthese services

benefited any federal candidate(s). Documentation provided by NCREC indicated

Campaign Tel is no longer in business. It should be noted that the Commission may

pursue further any ofthe matters discussed in this report in an enforcement action.

II. AUDIT FINDING AND RECOMMENDATION

RECEIPT OF CONTRIBUTIONS IN EXCESS OF THE LIMITATION

Sections 441a(a)(I)(C) and (2)(C) ofTitle 2 ofthe United States Code

state, that no person or multicandidate political committee shall make contributions to

any other political committee in any calendar year which, in the aggregate, exceed $5,000.

Sections /03.3(b)(3),(4), and (5) ofTitle 11 ofthe Code ofFederal

Regulations states, in part, that contributions which on their face exceed the contribution

limitations set forth in 11 CFR §11 0.1 or 11 CFR §110.2, and contributions which do not

appear to be excessive on their face, but which exceed the contribution limits set forth in

II CFR §11 0.1 or 11 CFR §11 0.2 when aggregated with other contributions from the

same contributor may be either deposited into a campaign depository under 11 CFR

§103.3(a) or returned to the contributor. If any such contribution is deposited, it shall not

be used for any disbursements by the political committee until the contribution has been

determined to be legal. The political committee must either establish a separate account

in a campaign depository for such contributions or maintain sufficient funds to make all

such refunds. The treasurer may request redesignation or reattribution in accordance with

11 CFR §110.1(b), §110.1(k), or §J 10.2(b). If a redesignation or reattribution is not

obtained, the treasurer shall within 60 days ofthe treasurer's receipt ofthe contribution,

refund the contribution to the contributor. Any contribution which appears to be illegal

under 11 CFR §103.3(b)(3) and which is deposited in a campaign depository, the

treasurer shall make and retain a written record noting the basis for the appearance of

illegality. A statement noting that the legality ofthe contribution is in question shall be

included in the report noting the receipt ofthe contribution. If a contribution is refunded

to the contributor because it cannot be determined to be legal, the treasurer shall note the

refund on the report covering the reporting period in which the refund is made.

Section 110.1(1)(5) ofTitle 11 ofthe Code ofFederal Regulations states

that if a political committee does not retain the written records concerning reattribution,

the reattribution shall not be effective, and the original attribution shall control.

Section 110.9(a) ofTitle 11 of the Code ofFederal Regulations states that

no political committee shall accept any contribution or make any expenditure in violation

ofthe provisions ofpart I/O.

Page 5 of 15

Approved 11 19/2001
4

Section 102.S(a)(l) of the Code of Federal Regulations states, in part, that

organizations, including party committees, that finance political activity in connection

with both federal and non-federal elections and which qualify as political committees

shall either: establish a political committee that receives only contributions subject to the

prohibitions and limitations ofthe Act regardless ifsuch contributions are used in

connection with federal or non-federal elections; or, as was done by NCREC, establish a

separate federal account which shall be treated as a separate federal political committee.

Such federal accounts shall comply with the requirements of the Act and only funds

subject to the Act's prohibitions and limitations shall be deposited in the separate federal

account.

Section I02.17(b)(S) ofTitle 11 ofthe Code ofFederal Regulations

explains that, except to the extent that the contributor has previously contributed to any of

the participants to the joint fundraising effort, a contributor may make a contribution to

the joint fundraising effort which contribution represents the total amount that the

contributor could contribute to all ofthe participants.

Section I02.l7(c)(l) ofTitle II ofthe Code ofFederal Regulations states,

in part, that the participants in a joint fundraising activity shall enter into a written

agreement. The written agreement shall identify the fundraising representative and shall

state a fonnula for the allocation offundraising proceeds. The fundraising representative

shall retain the written agreement for a period of three years and shall make it available

to the Commission on request.

Section I02.17(c)(4) ofTitle 11 of the Code ofFederal Regulations

establishes that both the fundraising representative and the participating committee are

responsible for screening contributions received through ajoint fundraising effort to

insure that prohibitions and limitations of 11 CFR Parts 110 and 114 are followed.

Section 102.l7(c)(6) ofTitle II ofthe Code ofFederal Regulations states,

in part, that the fundraising representative shall allocate proceeds according to the

fonnula stated in the fundraising agreement. Ifthe distribution according to the

allocation fonnula results in a violation ofthe contribution limits of 11 CFR §110.1(a),

the fundraising representative may reallocate the excess funds. Reallocation shall be

based upon the remaining participants' proportionate shares under the allocation fonnula.

Ifreallocation results in a violation of a contributor's limit under II CFR §110.1, the

fundraising representative shall return to the contributor the amount ofthe contribution

that exceeds the limit. Designated contributions that exceed the contributor's limit to the

designated participant under 11 CFR part 110 may not be reallocated by the fundraising

representative absent the prior written pennission ofthe contributor.

NCREC received funds from two separate joint fundraising activities,

Business Leaders Salute Faircloth (BLSF) and North Carolina Victory Fund (NCVF).

Page 6 of 15

Approved 1/19/200 I
5

The NCREC Treasurer acknowledged that there were no written joint fundraising

agreements for either activity. In the case ofBLSF, the Treasurer believes that "funds

were allocated to the NCREC after the (Lauch) Faircloth campaign had reached an

individual's contribution limit". The associated fundraising expense allocation was based

on the percentage offunds received by each participant. The Audit staffreceived a letter

from Mr. Charles F. Fuller who was in charge ofthe BLSF joint fundraiser. That letter

stated "there was no written agreement regarding the allocation offunds received by the

joint committee", but that there was an oral agreement related to allocation of "donations"

and that each committee was "responsible for ensuring that any donations received by

them from the BLSF committee complied with the applicable limitations on campaign

contributions." The NCREC provided the Audit staffwith copies of the response cards

that were returned with contributions to BLSF. The disclaimer notice states that the

fundraising dinner is authorized by Lauch Faircloth for Senate, North Carolina Victory

'98, and the North Carolina Republican Party and that the contributions are limited to

"$1,000 per person for the general election." The method of allocating contributions

among the participants was not specified.

As for the NCVF activity, the NCREC treasurer offered no explanation of

the allocation method for the funds received or fundraising expenses. The contribution

response device used by NCVF states; "authorized by Faircloth for Senate, Victory '98,

and the North Carolina Republican Party". The allocation fonnula is stated as follows:

"The first $1,000 of each contribution from an individual and the first

$5,000 of any contribution from a qualified multicandidate committee

PAC will be allocated to Faircloth for Senate and designated for the

general election. Any portion of any contribution in excess of these

amounts or that would cause a contributor to exceed applicable

contribution limits to Faircloth for Senate will be allocated to the federal

account of Victory '98. All other contributions, such as individual

contributions in excess of the federal limits or contributions not lawful

under federal law, will be allocated to Victory '98 for use under North

Carolina election laws."

NCREC received net proceeds fi'om the BLSF joint fundraiser of

$128,227, supported by Memo Schedules A detailing the receipt of$251,776 from 87

contributors. These contributions were disclosed on NCREC's reports that covered the

period July 1,1998 through November 11,1998. Similarly, net proceeds of$50,000 were

received from the NCVF, arising from 44 contributions totaling $81,665 received by

NCVF between July 31,1998, and November 5,1998.

For all contributors who made contributions to the joint fundraisers, the

Audit staffreviewed NCREC receipt records to detennine if any ofthe contributors had

also contributed directly to NCREC. As a result ofthis analysis, fifteen excessive

contributions totaling $115,416 were identified among the contributions resulting from

the BLSF. The review also determined that there were 6 excessive contributions received

Page 7 of15

Approved 1/19/2001
6

ltv NCREC i"r\llli ihe NCVF activity totaling $17,750. Therefore, NCREC received a total

\)f~J 3:'.) ClI,' II 5.416 + 17,750) in excessive contributions resulting from joint

fI.llhlraising ~:nl\'ili~s.

On May 10, 1999, NCREC responded to a March 24, 1999 inquiry by the

COllllliissioil'S Reports Analysis Division (RAD) regarding possible excessive

,;ontrllmtic'lh as ,j result of proceeds from the BSLF joint fund raising. The response

slated, in part. "Of the $128,227.25 we (NCREC) received from the joint fund raising

commi\lce, 't i 114,250 should have been deposited into our non-federal account for

conlribuliuns !Ii 'eXcess ofthe $5,000 limit per calendar year... We have booked a payable

from our feder,ll account to our non-federal account for the $104,250 transfer." At the

lime ofNeR FC'~, response to the RAD inquiry the 60-day period provided to resolve

exc<.:ssivc c0nlril.llllions had passed. Further, other than the language noted above from

the NCVr- solicit,ltion, no notice ofthe transfer of all or a portion ofthe contributions was

given to Ihe cllnt nbutors] NCREC also explained that there were not sufficient funds in

ils kderal ;;,-,,,,)unl wilh which to make the entire transfer. On May 5, 1999, NCREC

Irallskrn:d $3U,f)OO to ils non-federal account and filed Schedules D showing the

remaining excessive amount as a debt owed by the federal account to the non-federal

accouill. Paymcill of this debt was completed by July 28, 1999. The $50,000 received

1'1'0111 !'JCVF joint activity was not considered in the NCREC calculation of excessive

c\I\llributioll:;. ;-Clot wlthstanding the manner in which the BLSF excessive contributions

(S I U4,250) were resolved, they were not resolved timely.

l'hc Audit determined that excessive contributions of$28,916 ($133,166-

$\ 04.250'l rcmaincdunresolved. Prior to the end of fieldwork, the Audit staff provided

thc NCREC Accounling Director with schedules detailing how the unresolved excessive

amoullt was determined.

Atthc Exit Conference, the NCREC Chairman stated that they became

aware ofthe cxccssive contribution problem when RAD's letter requesting additional

information was reccived. The NCREC Accounting Director stated that BLSF was in

total control 0 t Ihe funclraising activity and operated without NCREC input. BLSF sent

"NCGOP" the information (Schedules A) that needed to be reported. The Accounting

Director acknowledged that the joint fundraising contributions should have been

reviewed to determine if the contributors had made other contributions to NCREC and if

any were excessive. The NCREC representatives concurred that there is an additional

$28,IJ 16 in excessive contributions in need ofresolution. The Chairman stated that they

wislwd to handle this matter in the same manner that resolved the previously determined

$ I04.250 in cxc"ssivc contributions, by making a transfer to the non-federal account.

Subsequent to the exit conference, NCREC provided a copy of a $12,000

check, dated ~Lm.:h 22, 2000, made payable to the NCGOP-STATE Committee to

transl~rp:lr( (lfthe $28,916 in excessive contributions noted above. NCREC also sent a

ii\<, 1'~"'lliest for Additionallnfonnation states that it is in the NCREC's best interest to advise the

",,""'Il'c:krs oflhe transfer, but does not state that it is required.

Page 8 ofI5

Approved 1/1912001
7

letter, dated March 29,2000, that points out that during the period when the joint

fundraisers were taking place, administrative expenses (payroll, utilities, office supplies)

were paid by the federal account that could have been allocated between its federal and

non-federal accounts. These expenses were not allocated because the non-federal account

did not have "enough money". This resulted in the federal account paying a

disproportionate share ofthese expenses. NCREC states, "The total is $29,694.59 which

exceeds the $28,916.00 in excessive contributions from BLSF not deposited to our nonfederal account." The suggestion appears to be that an offset should be allowed between

funds that could have been transferred to the federal account within the 70 day time

period provided for the reimbursement ofshared expenses, and funds that could have

been transferred to the non-federal account within 60 days ofthe receipt ofthe

contribution ifthe contributors had been notified ofthe transfer and given an opportunity

to request a refund. No such notice to the contributors was made.

NCREC is correct that there are administrative expenses paid by the

federal account that could have been reimbursed by the non-federal. The time allowed

for such transfers is long past. However, those facts are not relevant to the central

question at hand. The NCREC received excessive contributions in the amount of$28,916

which were yet to be resolved. The time allowed by regulation to resolve those

contributions in any fashion other than a refund to the contributor has expired.

In the Interim Audit Report it was recommended that the NCREC provide

evidence demonstrating that the contributions in question are not excessive. Absent the

presentation ofsuch evidence, it was recommended that NCREC refund excessive

contributions totaling $28,916 and provide evidence of the refunds in the form of copies

ofthe front and back ofthe negotiated refund checks. The Interim Audit Report also

explained that the NCREC was permitted to reverse the March 22, 2000 transfer to the

non-federal account to assist in making the necessary refunds. Further, it was noted that

if after reversing the earlier transfer, sufficient funds were not available to make the

necessary refunds, the excessive contribution amounts should be disclosed as debts owed

to the contributors on Schedule D (Debts and Obligations) until such time that funds

become available.

Finally, in light ofthe fact that its prior communications with RAD 4 may

have resulted in the NCREC's decision to transfer excessive contributions of $1 04,250 to

the non-federal account without any notice to the contributors, the Interim Audit Report

did not recommend those contributions be refunded. The NCREC was given the

opportunity to provide any additional comments or explanations it felt necessary with

respect to these excessive contributions having been resolved untimely.

Based upon a discussion with the RAD analyst, it appears that RAD advised NCREC to transfer

the excessive contributions ($104,250) out of the federal account and presented refunding the excessive

contributions as an option. However, RAD did not explain that the Commission has required committees to

refi.md excessive contributions that were not transferred within 60 days and where the contTibutors were not

infonned of the transfer and given an opportunity to request a refund.

Page 9 ofl5

Approved 1/19/2001
8

In its response to the Interim Audit Report, the NCREC explains that:

"In March 1999, NCGOP transferred $104,250 ofthe

$133,166 BLSF donations at issue to the NCGOP's nonfederal account. NCGOP made the transfer after being

instructed to do so by the FEC's Reports Analysis Division

(RAD), which advised NCGOP's staffthat donations from

a joint fundraising committee to NCGOP were not subject

to the $5,000 federal activities limit if deposited in the

NCGOP's non-federal account and used for state or local

campaign activities. Because the FEC has already

approved NCGOP's treatment ofthe transferred funds, the

only issue raised in the Report regarding BLSF funds is the

treatment ofthe remaining $28,916 in BLSF funds received

by NCGOP.

"The report states '" that the NCGOP did not notify donors

before reallocating $104,250 in BLSF donations from its

federal to non-federal account in 1999. NCGOP did not

provide such notice because it did not view the $104,250 as

amounts in excess of federal campaign contribution limits.

NCGOP made the transfer, after consultation with RAD, to

correct its error in depositing BLSF funds initially in its

federal account"

The NCREC further states that the Interim Audit Report fails to explain

the grounds for the Commission's determination that any contributions received by

NCGOP were excessive and requests that the basis be explained in the final audit report.

It also contends that the joint fundraising regulations are complex and not clear on many

aspects of donations received from joint fundraising committees, such as the limits on

contributions. The NCREC argues that no regulation or statute specifically imposes a

$5,000 limit on donations received by a state political party from a joint fundraising

committee between a state political party and another political committee. The NCREC

contends that in its efforts to comply with the contribution limits pertaining to

contributions from ajoint fundraising committees, the NCGOP staff interpreted the

Commission's joint fundraising committee regulations to impose no federal limit on

donations received from a joint fundraising committee ifthose funds were applied to the

party's state and local campaign activities. The NCREC then notes that unlike the $5,000

per contributor limitation on contributions to a state party committee for activities on

behalf offederal candidates, North Carolina law has no such limitation on donations to be

used for state and local activities. Finally, NCREC notes that the contributions at issue

were not placed in "a special campaign depository" or returned to the contributor within

60 days based on the conclusion that federal limitations on contributions do not apply to

funds received from ajoint fundraising committee and used for state and local activities.

Page 10 of 15

Approved 1/19/2001
9

After arguing that these were not excessive contributions, the NCREC

states that it has reversed the March 22,2000 transfer of$12,000 to its non-federal

account as suggested in the Interim Audit Report and has returned the $28,916 to its

contributors. On December 19, 2000, NCREC provided evidence (copies of the front and

back negotiated refund checks) that refunds of all but one excessive contribution have

been made. NCREC states that a copy ofthc remaining $5,000 negotiated refund check

will be submitted when it is received from the bank.

The NCREC's response to the Interim Audit Report appears to

alternatively argue two positions. First, that neither the Act nor the regulations limit the

amount of a contribution that a state party may accept from a joint fundraising committee,

and second, that contributions to be used for state and local activities are not limited by

the Act.

With respect to "contributions" from a joint fundraising committee to a

participant in the joint fundraising effort, there are no such contributions. Rather, there

are only transfers of contributions made to each participant through the joint fundraising

committee. Any amount received by a participant in the joint fundraising effort that

exceeds its allocated share ofthe proceeds is a contribution from the other participants,

not the joint fundraising committee. For contributions received through a joint

fundraising committee, the identity ofthe contributors is attached to each participants

share ofthe gross amount of each contribution. Contributions to a joint fundraiser must

be aggregated with all other contributions from the same contributor so that each

participating committee can detennine compliance with the contribution limitation. The

fact that the contribution is received through ajoint fundraising committee does not

exempt it from the contribution limitations of2 USC 441 a. That is made clear at sections

11 CFR §102.17 (c) (4) and (5) of the Commission's regulations.

With respect to contributions to the non-federal account, NCREC is

correct in saying that neither the Act nor the Commission's regulations place limits on

such contributions. However, for political committees that finance both activities relating

to federal and non-federal elections, 11 CFR 102.5 provides two operating options.

Either accept only federally pennissible contributions or maintain a separate federal

account that is treated as a separate political committee that receives only federally

permissible contributions. NCREC contends that even if contributions were deposited

into the federal account they should not be treated as excessive contributions to the

federal account because (1) the funds would ultimately be used for state and local

activities and (2) after consulting with RAD, the excessive portions were transferred to its

non-federal account. In NCREC's case those funds remained in the federal account and

were available during a federal election. The Commission's regulations at 11 CFR 103.3

specify that contributions deposited in the federal account that exceed the contribution

limitations, and that are not otherwise resolved within 60 days, must be returned to the

contributor. Contrary to NCREC's contentions, these contributions were in excess ofthe

limitation and they were resolved in an untimely manner.

Page II of 15

Approved 1/19/2001
I:

Page 12 ofl5

Approved 1/19/2001
FEDERAL ELECTION COMMISSION

WASHINGTON. D.C. 20463

"

January 26,2001

Mr. Steven B. Long, Treasurer

North Carolina Republican Executive Committee

P.O. Box 12905

Raleigh, NC 27605

Dear Mr. Long:

Attached please find the Final Audit Report on the North Carolina Republican

Executive Committee. The Commission approved the report on January 19,2001.

The Audit Report will be placed on the public record on January 31,2001.

Should you have any questions regarding the public release ofthe report, please contact

the Commission's Press Office at (202) 694-1220. Any questions you have related to

matters covered during the audit or in the report should be directed to Mr. Henry Miller or

Mr. Alex Boniewicz ofthe Audit Division at (202) 694-1200 or toll free at (800) 424-

9530.

Sincerely,

Robert Costa

Assistant StaffDirector

Audit Division

Attachment as Stated

Page 13 of 15

Approved 1/19/200I
•

•

Page 14 of15

Approved 1/19/2001
CHRONOLOGY

NORTH CAROLINA REPUBLICAN EXECUTWE COMMITTEE

Audit Fieldwork

Interim Audit Report

to the Committee

Response Received to the

Interim Audit Report

Final Audit Report Approved

Page 15 of 15

Approved 1/19/2001

February 22 - March 15,2000

September 28, 2000

November 15,2000

January 19, 2001
I : I .