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• FlL)~RAt. ELECTION COMMISSION

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. REPORT OF THE AUDIT DIVISION

ON THE

STEWART FOR CONGRESS COMMITTEE

I. Background

A. Overview

This report is based on an audit of the stewart For

Congress Conunittee ("the Conunittee"), undertaken by the Audit

Division of the Federal Election Conunission in accordance with

the Commission's audit policy to determine whether there has

been compliance with the provisions of the Federal Election

Campaign Act of 1971, as amonded ("the Act"). The audit was

conducted pursuant to Section 438(a) (8) of Title 2 of the united

States Code which directs the Commission to make from time to

time audits and field investigations with respect to reports

and statements filed under the provisions of the Act.

The Committee registered with the Federal Llection

Commission on May 3, 1976, as the principal campaign conmlittee

designated by Mr. E. L. stewart, Jr., candidate for the office

of United States Representative for the 2nd Congressional District

of Oklahoma. The Committee maintains its headquarters in

Muskogee, Oklahoma.

The audit covered the period from April 1, 1976,

the inception date of the Committee, through September 30,

1977, the final coverage date of the latest report filed by

the Commi.ttee at the time of the audit. The Conunittee

reported a beginning cash balance on Arril 1, 1976 of $-0-,

total receipts for the period of $107,660.12, total expenditures for the period of $107,478.26 and a closing cash balance

on December 31, 1976 of $181.86. l/

!/ The Committee was exempt from filing disclosure reports

for the first three (3) quarters of 1977. However, the

FEC Form 3a was filed for each quarter.

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This audit report is based on documents and working

papers which support each of the factual statements. They

form part of the record upon which the Commission based its

decisions on the matters in the report and were available to

Commissioners and appropriate staff for review.

B. Key Personnel

The principal officers of the Cormnittee at the time

of the audit were Mr. Bob R. Berry, Chairman and Mr. Bill

Beckman, Treasurer.

C. Scope

The audit included such tests as verification of total

reported receipts and expenditures and individual transactions;

review of required supporting documentation and analysis of Committee debts and obligations; and such other audit procedures

as deemed necessary under the circumstances.

II. Auditor's statement and Description of Findings

It is the opinion of the Audit staff, based upon examination

of the reports and statements filed and the records presented,

that, except for the deficiencies noted below, the reports and

statements of the Stewart For Congress Committee fairly present

the financial activities of the Conwittee for the period covered

by the audit. Further, except as noted below, no material

problems in complying with the Federal Election Campaign Act

were discovered during the course of the audit.

A. Reporting of In-Kind Contributions

Section 434(b) (2) of Title 2 of the United States Code

states, in part, that each report shall disclose the full name

and mailing address (occupation and the principal place of

business) of each person who has made one or more contributions

to or for such committee within a calendar year in an aggregate

amount or value in excess of $100, together with the amount and

date of such contributions.

Additionally, section l04.3(a) of the Commission's

Regulations states, in part, that each in-kind contribution

shall be valued at the usual and normal charge on the date

received and reported if in excess of $100 on the appropriate

schedules of receipts and expenditures, identified as to its

nature and listed as an in-kind contribution •

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The Committee reported one (1) in-kind contribution

of $721~ as a receipt without reporting the appropriate expenditure,

and reported five (5) in-kind contributions, totaling $350, as

expenditures without reporting the appropriate receipts. The

treasurer stated that he was unaware that this situation existed.

The apparent $721 in-kind contribution was reported as

being received on OctoLpr 25, 1976, from the Okmulgee County

Republican Committee. Suusequent to our field work we were able

to determine throu0h convcrsatibns with the Ch~irman of the

Okmulgee County Republican Committee, and from reports filed by

the Oklahoma Republican f;tate Committee that this transaction

was actually an expendi.ture made by the County Committee, on behalf

of the candidalc, under ~;('ction 44la(d) of rritlc 2 of the united

States Code, and report. 'd through the Oklahoma Republican state

Conunittee. section lOu. I (b) of the Commission's Regulations does

not require this type t r'ansaction to be reported by the candidate

or his authorized comm.it.tce.

However, bast'd on the records available to us during

the field work and disctl~jsions with the treasurer, we recommended

during the exit confert'lJcc, that the Committee file an amended

report to properly disc](}se the six (6) transactions. On November

11, 1977, the Committee filed amended reports disclosing the six (6)

in-kind contributions. Subsequent to November 11, 1977 the nature

of the transaction was verified, hence we recommended that the

reported $721 in-kind contribution be deleted from the Committee's

reports.

Recommendation

On April 24, 1978, the Committee filed an amended report

deleting the transaction: therefore, we recommend no further

action on this matter.

B. Endorsements and Reporting of Loan

Section 43l(c) (5) (G) (ii) of Title 2 of the United

States Code states, in part, that a loan from a national or

state bank nlade in the o)'din~ry cou~se of business, shall be

considered a loan by each endorser or guarant.or, in that

proportion of the unpajll ~alancc thereof, that each endorser

or guarantor bC'ilrs to lhl~ lotal number of endorsers or

guaran t:ors.

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Section 434(b) (5) of Title 2 of the United States

Code states, in part, that each report shall disclose each

loan to or from any person within the calendar year in an

aggregate amount or value in excess of $100, together with

the full names and mailing addrc~ses (occupations and principal

places of business, if any) of the lenders, endorsers, and

guarantors, if any, and the date and amount of such loans.

The Committee received a $5,000 loan from the

Commercial Bank and Trust Company (Muskogee, Oklahoma) on

October 28, 1976. This loan was equally endorsed by three (3)

individuals (the Candidate, Chairman and Treasurer). The

Committee repaid $4,500 on December 2, 1976, and made a final

payment in August, 1977. The loan, while outstanding,

represented contributions from the endorsers, with two (2)

endorsers exceeding their contribution limit for the period

Octohpr 28, 1976 through December 2, 1976. The treasurer

stated he was unaware that endorsing a loan made to the

Comm.ittee constituted a contribution to that Committee.

Additionally, this loan was not reported on Schedule A,

disclosing the lender, endorsers and their respective occupations

and principal places of business. However, this loan was reported

on the "Detailed Summary Schedule of Receipts and Expenditures",

Line l6a, and the appropriate schedule of "Debts and Obligations."

The Conmittec treasurer offered no explanation regarding this

matter.

R~commendation

The loan has been repaid in full and the Committee has been

advised of the appropri.:lte r<.~qui.rements of the Act. The Committee

has also filed a statement, disclosing the required information

concerning this loan, therefore, we recon~cnd no further action

on these matters.

C. Retention of Supporting Documentation for Expenditures

Section 432(d) of Title 2 of the United States Code

states, in part, it shall be the duty of the treasurer to obtain

and keep a receipted bill, st~ting the particulars, for every

expenditure made in excess of $100, and for expenditures in a

lesser amount, if the aggregate amount of such expenditures to

the same person during a calendar year exceeds $100.

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Section l02.9(c) (4) of the Commission's Regulations

states, in part, that when a receipted bill is not available,

the treasurer may keep the cancel~ed checks and the bill, invoice

or other contemporaneous memorandum.

During the course of the audit, it was determined the

Committee did not obtain and keep a bill, invoice, or other

contemporaneous memorandum in 43 instances or 22% of the total

expenditures requiring such support. These items totaled

$13,360.11, representing 13.4% of the dollar value of all

expenditures requiring supporting documentation. The Committee

treasurer offered no explanation regarding this matter.

Recommendation

The Committee obtained 32 of the 43 necessary documents,

and made them available to the Audit staff for review. In

addition, the Committee has presented evidence of their efforts

to obtain the documentation for the remaining 11 items. It is

our opinion that the Committee has demonstrated its best efforts

to obtain and submit the required documentation, pursuant to

Section 102.9(e) of the Commission's Regulations, therefore, we

recommend no further action on this matter.

D. Itemization of Transfers

Section 434(b) (4) of Title 2 of the United states Code

requires, in part, that a committee disclose the name and address

of each political committee from which the reporting committee

received any transfer of funds, together with the amounts and

dates of all transfers.

Our review of the Committee records revealed that five

(5) transfers from political committees, totaling $1,251.40, (l8.8~

of the total number and 3.9~ of the dollar value of all transfers

received) were improperly disclosed as unitemized contributions.

The Committee treasurer responded that he was unaware these

transfers were not itemized as required.

Recommendation

Since we received the Committee's amended schedules on

November 11, 1977, disclosing the required information, we

rcconwend no further action on this matter.

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E. Disclosure of Contributions

Section 434(b) (2) of Title 2 of the United States Code

states, in part, that each report shall disclose the full name

and mailing address (occupation rlnd principal place of business,

if any) of each person who has made one or mo~e contributions to

or ro., such committee or candiuate within a calendar year in an

aggrt'q.lte amount or value in excess of $100, together with the

amount and date of such contributions.

During the course of the audit, it was determined that

the Committee incorrectly reported nine (9) contributions as

unitcmized receipts. six (6) of these contributions, totaling

$1,600 were in excess of $100 and the remaining three (3) contributions, totaling $250 aggregated in excess of $100. These items

represent 2.9't of the number and 4.3% of the dollar value of

individual contributions requiring itemization. The Committee

treasurer informed us that he was unaware of this oversight.

Recommendation

Since we received the Conmlittee's amended report on

November 11, 1977, disclosing the required information, we

recomrh""nd no further action on this matter.

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,. CCNGRESStCNAL ~uotr ~EPO~T

• E. L. Stewart. Jr. - 6/15/78

State:

01stric~:

Location:

Oklahoma

2

Muskogee

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• Politica: Par~ ~ffiliaticn: Republican

Major Cppcnant{s): Theodore Risenhoover (0)

Theodore Ri senhoover - 4/13/78

Votes Cast: G~ne~l' E1ac:ion - Risenhoover 102,402

Stewart 87,341

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P i -~ . r marJ elSC~'O" - Stewart 8,488 - 60.1%

John R. Druwmond (R) 5,642 - 39.9~

$107,660.12

$107,478.26

1974

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