Interim Audit Report of the 

Audit Division on Mike Braun for 

Indiana 

(August 7, 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. 

1

 52 U.S.C. §30111(b). 

About the Campaign (p. 2) 

Mike Braun for Indiana is the principal campaign committee for 

Michael K. Braun, Republican candidate for the United States 

Senate from the state of Indiana, and is headquartered in 

Zionsville, Indiana. For more information, see the Campaign 

Organization Chart, p. 2. 

Financial Activity (p. 2) 

• Receipts 

o Contributions from Individuals $ 6,336,454 

o Contributions from the Candidate 13,938 

o Contributions from Other Political 

Committees 833,940 

o Transfers from Other Authorized 

Committees 802,946 

o Candidate Loans 11,666,483 

o Offsets to Operating Expenditures 3,097 

Total Receipts $ 19,656,858 

• Disbursements 

o Operating Expenditures $ 18,016,343 

o Candidate Loan Repayments 1,148,925 

o Contribution Refunds 76,875 

o Other Disbursements 342,000 

Total Disbursements $ 19,584,143 

Findings and Recommendations (p. 3) 

• Misstatement of Financial Activity (Finding 1) 

• Failure to File 48-Hour Notices (Finding 2) 

• Disclosure of Occupation and/or Name of Employer 

(Finding 3) 

• Receipt of Apparent Prohibited Contributions – Loans 

(Finding 4) 

• Receipt of Contributions in Excess of the Limit (Finding 5) 

• Disclosure of Memo Entries and Candidate Loans (Finding 6) 

• Prohibited Candidate Personal Loan Repayments (Finding 7) 
Interim Audit Report of the Audit 

Division on 

Mike Braun for Indiana 

(August 7, 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 2 

Part III. Summaries 

Findings and Recommendations 3 

Part IV. Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 5 

Finding 2. Failure to File 48-Hour Notices 7 

Finding 3. Disclosure of Occupation and/or Name of Employer 8 

Finding 4. Receipt of Apparent Prohibited Contributions – Loans 11 

Finding 5. Receipt of Contributions in Excess of the Limit 17 

Finding 6. Disclosure of Memo Entries and Candidate Loans 22 

Finding 7. Prohibited Candidate Personal Loan Repayments 25 
1 

Part I 

Background 

Authority for Audit

This report is based on an audit of Mike Braun for Indiana (MBFI), 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 and loans; 

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 

Important Dates 

• Date of Registration August 10, 20172 

• Audit Coverage August 7, 2017 3 - December 31, 2018 

Headquarters Zionsville, Indiana 

Bank Information 

• Bank Depositories One 

• Bank Accounts One checking account 

Treasurer 

• Treasurer When Audit Was Conducted Thomas Datwyler 

• Treasurer During Period Covered by Audit Travis Kabrick 8/7/2017 - 12/31/2018 

Management Information 

• Attended FEC Campaign Finance Seminar Yes 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 

Overview of Financial Activity

(Audited Amounts) 

Cash on hand @ August 7, 2017 $ 0 

Receipts 

o Contributions from Individuals 6,336,454 

o Contributions from the Candidate 13,938 

o Contributions from Other Political 

Committees 

833,940 

o Transfers from Other Authorized 

Committees 

802,946 

o Candidate Loans 11,666,483 

o Offsets to Operating Expenditures 3,097 

Total Receipts $ 19,656,858 

Disbursements 

o Operating Expenditures 18,016,343 

o Candidate Loan Repayments 1,148,925 

o Contribution Refunds 76,875 

o Other Disbursements 342,000 

Total Disbursements $ 19,584,143 

Cash on hand @ December 31, 2018 $ 72,715 

2 MBFI filed a Statement of Organization on August 10, 2017. Mike Braun filed a Statement of Candidacy on 

August 9, 2017. 3 MBFI opened its bank account on August 7, 2017. 
3 

Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity

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

records revealed a misstatement of receipts and disbursements in calendar year 2018. 

MBFI overstated receipts by $6,293,350 and disbursements by $6,294,482. The Audit 

staff recommends that MBFI amend its disclosure reports or file a Form 99 

(Miscellaneous Electronic Submission) to correct the misstatement. (For more detail, see 

p. 5.) 

Finding 2. Failure to File 48-Hour Notices 

During audit fieldwork, the Audit staff identified that MBFI failed to file or untimely 

filed 48-hour notices for ten contributions totaling $262,600. This amount includes seven 

contributions totaling $9,100 for which MBFI misreported contribution dates. The Audit 

staff recommends that MBFI submit documentation demonstrating that the notices for the 

contributions in question were filed timely, that the contributions were received outside 

of the 48-hour notice reporting period or provide any additional comments it deems 

necessary with respect to this matter. The Audit staff also recommends that MBFI amend 

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

the misreported contribution dates. (For more detail, see p. 7.) 

Finding 3. Disclosure of Occupation and/or Name of 

Employer

During audit fieldwork, a review of contributions from individuals requiring itemization 

indicated that 1,363 contributions totaling $1,464,449 lacked or inadequately disclosed 

the required occupation and/or name of employer information. MBFI did not sufficiently 

demonstrate “best efforts” to obtain, maintain and submit the required information. In 

response to audit fieldwork, MBFI provided some documentation of “best efforts,” 

however, MBFI has not filed amendments to disclose and report the missing information 

and establish “best efforts.” The Audit staff recommends that MBFI amend its reports or 

file a Form 99 (Miscellaneous Electronic Submission) to disclose the missing 

information. (For more detail, see p. 8.) 

Finding 4. Receipt of Apparent Prohibited Contributions – 

Loans 

During audit fieldwork, a review of loan documents provided by MBFI, indicated 

apparent prohibited loans and lines of credit totaling $8,549,405. This included five 

loans and eleven lines of credit from banks, totaling $7,049,405, that do not appear to be 

made in the ordinary course of business. These loans were not made on a basis that 

assured repayment and, therefore, appear to be prohibited contributions from the banks. 

Additionally, the Audit staff identified two checks from one corporation totaling 

$1,500,000 that were reported as loans. 
 

4 

The Audit staff recommends that MBFI demonstrate the loans and lines of credit were 

made in the ordinary course of business and were made on a basis that assured 

repayment. Also, MBFI should submit documentation demonstrating that the 

contributions in question, reported as loans, were not made from a prohibited source or, if 

prohibited, were resolved through the timely issuance of refunds. Absent evidence that 

these contributions were made with permissible funds, MBFI should refund these 

contributions to the contributor or disgorge the contributions to a government agency or 

eligible charitable organization. (For more detail, see p. 11.) 

Finding 5. Receipt of Contributions in Excess of the Limit 

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

political committees to determine if any exceeded the contribution limit. Based on these 

reviews, MBFI received apparent excessive contributions totaling $1,173,557. This 

included apparent excessive contributions from individuals totaling $985,345 and from 

political committees totaling $188,212. These errors occurred as a result of MBFI not 

resolving the excessive portions of contributions in a timely manner and by designating 

contributions for Primary or General debt that had already been extinguished. The Audit 

staff recommends that MBFI provide documentation demonstrating that the contributions 

were not excessive, or if excessive, were resolved in a timely manner. Absent such a 

demonstration, MBFI should send letters to those contributors whose contributions are 

eligible for presumptive redesignation and/or reattribution, obtain a signed authorization 

letter from the contributor, or refund any remaining excessive amounts. (For more detail, 

see p. 17.) 

Finding 6. Disclosure of Memo Entries and Candidate 

Loans 

During audit fieldwork, the Audit staff determined that MBFI failed to properly disclose 

joint fundraising memo entries totaling $933,814 from 13 joint fundraising committees. 

MBFI also failed to properly disclose the correct loan balances and loan terms for 29 

transactions totaling $11,569,963. The Audit staff recommends that MBFI provide 

documentation demonstrating that the joint fundraising memo entries totaling $933,814 

were disclosed correctly and that MBFI properly disclosed the correct loan balance and 

loan terms for transactions totaling $11,569,963. Absent such documentation, MBFI 

should amend its disclosure reports or file a Form 99 (Miscellaneous Electronic 

Submission) to correct the disclosure errors for the joint fundraising memo entries and the 

loans and lines of credit. (For more detail, see p. 22.) 

Finding 7. Prohibited Candidate Personal Loan 

Repayments

Based on a review of loans, the Audit staff determined that MBFI made excessive 

Primary candidate loan and interest repayments totaling $750,669. This amount is in 

excess of the $250,000 limit permitted for repayment to the Candidate within 20 days 

following the Primary election. The Audit staff recommends that MBFI provide 

additional documentation to demonstrate the Primary candidate loan and interest 

repayments were not excessive and/or provide any relevant comments on the matter. 

(For more detail, see p. 25.) 
 

5 

Part IV 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

Summary 

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

records revealed a misstatement of receipts and disbursements in calendar year 2018. 

MBFI overstated receipts by $6,293,350 and disbursements by $6,294,482. The Audit 

staff recommends that MBFI amend its disclosure reports or file a Form 99 

(Miscellaneous Electronic Submission) to correct the misstatement. 

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 

• Transactions that require itemization on Schedule A (Itemized Receipts) or Schedule B 

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

Facts and Analysis 

A. Facts 

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

its bank records for calendar years 2017 and 2018. In addition to the bank records 

provided by MBFI, on May 9, 2019, the Commission issued subpoenas to one vendor and 

its financial institution to obtain documentation necessary to complete the comparison of 

MBFI’s financial activity to the information contained in the disclosure reports filed with 

the Commission. 4 The reconciliation determined that MBFI misstated receipts and 

disbursements for 2018. The following chart details the discrepancies between MBFI’s 

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

discrepancies occurred. 

2018 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash on hand @ 

January 1, 2018 

$2,313,439 $2,313,439 $0 

Receipts $22,376,798 $16,083,448 $6,293,350 

Overstated 

Disbursements $24,618,654 $18,324,172 $6,294,482 

Overstated 

Ending Cash on hand @ 

December 31, 2018 

$71,583 $72,715 $1,132 

Understated 

4 MBFI was cooperative and attempted to comply with the Audit staff’s request for documentation, but was 

unable to obtain the requested information from the associated vendors, resulting in the issuance of 

subpoenas. 
 

 

 

6 

The overstatement of receipts resulted from the following: 

• Two unreported Candidate loans + 96,520 

• Candidate loans incorrectly reported - 6,388,558 

• Unexplained differences - 1,312 

Net Overstatement of Receipts $ 6,293,350 

The overstatement of disbursements resulted from the following: 

• Disbursements not reported or reported incorrectly + 2,736 

• Credit card fees over-reported - 4,472 

• Candidate loan repayments not reported + 96,520 

• Candidate loans incorrectly reported - 6,388,558 

• Unexplained differences - 708 

Net Overstatement of Disbursements $ 6,294,482 

The $1,132 understatement of the ending cash on hand was a result of the reporting 

discrepancies described above. 

The Candidate loan and loan repayments totaling $6,388,558 were the result of MBFI 

misreporting the conversion of Candidate loans to contributions. The converted loan 

amounts should have been disclosed as memo entries on Schedule A (Itemized Receipts) 

and Schedule B (Itemized Disbursements) given the campaign finance software used by 

MBFI. 5 Instead, MBFI reported the loan amounts as transactions on Schedules A and B, 

which overstated receipts and disbursements, respectively. 

The credit card fees totaling $4,472 were the net result of some fees being over-reported 

and some fees being under-reported. 

B. Interim Audit Report & Audit Division Recommendation 

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

representatives and provided schedules detailing the misstatement of financial activity. 

In response to the exit conference, MBFI submitted a written response as follows: 

“The Committee provided documentation related to this finding during the audit 

process, including access to all banking records, electronic transaction processors, 

and the Committee’s electronic information database. The Committee has no new 

materials to provide with this response, but it is the Committee’s belief that the FEC’s 

preliminary finding mischaracterizes certain transactions. The Committee will likely 

be requesting Commission guidance on legal questions related to this finding6

, and 

the Committee intends to take further corrective action as may be required at the 

conclusion of this matter.” 

5 Various campaign finance software handle the conversion of a candidate loan to a contribution differently. 

The software used by MBFI treats the conversion of a candidate loan to a contribution as memo entries on 

Schedules A and B. 

6 MBFI did not submit a Request for Consideration of a Legal Question by the Commission with respect to 

this finding. 
 

7 

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

amend its disclosure reports or file a Form 99 (Miscellaneous Electronic Submission)7

 to 

correct the misstatements noted above, and reconcile the cash balance on its most 

recently filed report to correct any subsequent discrepancies. 

Finding 2. Failure to File 48-Hour Notices 

Summary 

During audit fieldwork, the Audit staff identified that MBFI failed to file or untimely 

filed 48-hour notices for ten contributions totaling $262,600. This amount includes seven 

contributions totaling $9,100 for which MBFI misreported contribution dates. The Audit 

staff recommends that MBFI submit documentation demonstrating that the notices for the 

contributions in question were filed timely, that the contributions were received outside 

of the 48-hour notice reporting period or provide any additional comments it deems 

necessary with respect to this matter. The Audit staff also recommends that MBFI amend 

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

the misreported contribution dates. 

Legal Standard

Last-Minute Contributions (48-Hour Notice). Campaign committees must file special 

notices regarding contributions of $1,000 or more received less than 20 days but more 

than 48-hours before any election in which the candidate is running. This rule applies to 

all types of contributions to any authorized committee of the candidate, including: 

• Contributions from the candidate; 

• Loans from the candidate and other non-bank sources; and 

• Endorsements or guarantees of loans from the banks. 11 CFR §104.5(f). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff identified 302 contributions totaling $2,345,363 

that equaled or exceeded $1,000 and were received during the 48-hour notice reporting 

period for the Primary and General elections. A review of these contributions indicated 

that MBFI did not file 48-hour notices for three contributions totaling $3,400 and 

untimely filed 48-hour notices for seven contributions totaling $259,200. These 

contributions are summarized below. 

Primary General Total 

48-Hour Notices Not Filed $0 $3,400 $3,400 

48-Hour Notices Filed Untimely $253,500 $5,700 $259,200 

TOTAL $253,500 $9,100 $262,600 

In addition, seven contributions totaling $9,100 for the General election, noted above, 

were disclosed with the incorrect receipt dates. 

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

pertinent information that is required on each schedule. 
8 

B. Interim Audit Report & Audit Division Recommendation 

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

representatives and provided a schedule of the contributions for which 48-hour notices 

were not filed or were filed in an untimely manner, as well as contributions with 

misreported dates. 

In response to the exit conference, MBFI submitted a written response as follows: 

“The Committee provided documentation related to this finding during the audit 

process, including providing the FEC with access to the Committee’s accounts and 

electronic information database. The Committee has no new materials to provide 

with this response, and the Committee intends to take any such corrective action as 

may be required at the conclusion of this matter.” 

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

submit documentation demonstrating that the 48-hour notices for the contributions in 

question were timely filed, the contributions were received outside of the 48-hour notice 

reporting period or provide any additional comments it deems necessary with respect to 

this matter. MBFI should also amend its disclosure reports or file a Form 99 

(Miscellaneous Electronic Submission)7 to correct the misreported dates for the seven 

contributions totaling $9,100. 

Finding 3. Disclosure of Occupation and/or Name of 

Employer 

Summary 

During audit fieldwork, a review of contributions from individuals requiring itemization 

indicated that 1,363 contributions totaling $1,464,449 lacked or inadequately disclosed 

the required occupation and/or name of employer information. MBFI did not sufficiently 

demonstrate “best efforts” to obtain, maintain and submit the required information. In 

response to audit fieldwork, MBFI provided some documentation of “best efforts,” 

however, MBFI has not filed amendments to disclose and report the missing information 

and establish “best efforts.” The Audit staff recommends that MBFI amend its reports or 

file a Form 99 (Miscellaneous Electronic Submission) to disclose the missing 

information. 

Legal Standard 

A. Itemization Required for Contributions from Individuals. An authorized 

candidate committee must itemize any contribution from an individual if it exceeds 

$200 per election cycle, either by itself or when combined with other contributions 

from the same contributor. 52 U.S.C. §30104(b)(3)(A). 

B. Required Information for Contributions from Individuals. For each itemized 

contribution from an individual, the committee must provide the following 

information: 

• The contributor’s full name and address (including zip code); 

• The contributor’s occupation and the name of his or her employer; 

• The date of receipt (the date the committee received the contribution); 

• The amount of the contribution; and 
9 

• The election cycle year-to-date total of all contributions from the same individual. 

52 U.S.C. §30104(b)(3)(A) and 11 CFR §§100.12 and 104.3(a)(4)(i). 

C. Best Efforts Ensure Compliance. When the treasurer of a political committee 

shows that the committee used best efforts (see below) to obtain, maintain, and 

submit the information required by the Act, the committee’s reports and records will 

be considered in compliance with the Act. 52 U.S.C. §30102(i) and 11 CFR 

§104.7(a). 

D. Definition of Best Efforts. The treasurer and the committee will only be deemed to 

have exercised “best efforts” if the committee satisfied all of the following criteria. 

• All written solicitations for contributions included: 

• A clear request for the contributor's full name, mailing address, occupation, 

and name of employer; and 

• The statement that such reporting is required by Federal law. 

• Within 30 days of receipt of the contribution, the treasurer made at least one effort 

to obtain the missing information, in either a written request or a documented oral 

request. 

• The treasurer reported any contributor information that, although not initially 

provided by the contributor, was obtained in a follow-up communication or was 

contained in the committee’s records or in prior reports that the committee filed 

during the same two-year election cycle. 11 CFR §104.7(b). 

Facts and Analysis 

A. Facts 

MBFI did not disclose or inadequately disclosed the required occupation and/or name of 

employer information for contributions requiring itemization on its FEC reports, as of the 

date of the audit notification letter. 

Contribution Lacking or Inadequate Occupation and/or Name of Employer Disclosure 

Number of Contributions 1,363 

Dollar Value of Contributions $1,464,449 

Percent of Contributions 26% 

1. Contributor Information Provided but Amendments Not Filed: 

During audit fieldwork, MBFI provided the Audit staff with the required contributor 

occupation and/or name of employer information; however, MBFI did not report the 

required amendments for the following: 
 

10 

Contributor Information Provided but Amendments Not Filed 

Number of Contributions 888 

Dollar Value of Contributions $73,622 

2. Best Efforts Documentation Not Provided: 

MBFI did not provide the Audit staff records to document “best efforts” for the 

following: 

Best Efforts Documentation Not Provided by Committee 

Number of Contributions 1,275 

Dollar Value of Contributions $1,390,827 

3. Additional Information: 

MBFI disclosed the following unacceptable entries on Schedule A: 

• “Information Requested” for 1,125 contributions totaling $1,340,623, and 

• Inadequate occupation and/or name of employer for 238 contributions totaling 

$123,826. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff provided schedules and discussed the disclosure of the contributors’ 

occupation and/or name of employer information with MBFI representatives during audit 

fieldwork and at the exit conference. MBFI representatives did not provide any 

comments during audit fieldwork. 

In response to the exit conference, MBFI submitted a written response as follows: 

“The Committee provided documentation related to this finding during the audit 

process and has no new materials to provide with this response. To date, the 

Committee has made additional preemptive adjustments to its contributor information 

and intends to take any such corrective action as may be required at the conclusion of 

this matter.” 

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

amend its reports or file a Form 99 (Miscellaneous Electronic Submission) 7 to report and 

submit the occupation and/or name of employer information for the 1,363 contributions. 

8 MBFI’s database for the audit period, provided to the Audit staff during fieldwork, contained the 

occupation and name of employer information. 
11 

Finding 4. Receipt of Apparent Prohibited Contributions – 

Loans 

Summary 

During audit fieldwork, a review of loan documents provided by MBFI, indicated 

apparent prohibited loans and lines of credit totaling $8,549,405. This included five 

loans and eleven lines of credit from banks, totaling $7,049,405, that do not appear to be 

made in the ordinary course of business. These loans were not made on a basis that 

assured repayment and, therefore, appear to be prohibited contributions from the banks. 

Additionally, the Audit staff identified two checks from one corporation totaling 

$1,500,000 that were reported as loans. 

The Audit staff recommends that MBFI demonstrate the loans and lines of credit were 

made in the ordinary course of business and were made on a basis that assured 

repayment. Also, MBFI should submit documentation demonstrating that the 

contributions in question, reported as loans, were not made from a prohibited source or, if 

prohibited, were resolved through the timely issuance of refunds. Absent evidence that 

these contributions were made with permissible funds, MBFI should refund these 

contributions to the contributor or disgorge the contributions to a government agency or 

eligible charitable organization. 

Legal Standard 

A. Loans Excluded from the Definition of Contribution. A loan of money to a 

political committee by a state bank, a federally chartered depository institution 

(including national bank) or a depository institution whose deposits and accounts are 

insured by the Federal Deposit Insurance Corporation or the National Credit Union 

Administration is not a contribution by the lending institution if such loan is made in 

accordance with applicable banking laws and regulations and is made in the ordinary 

course of business. 

A loan will be deemed to be made in the ordinary course of business if it bears the 

usual and customary interest rate of the lending institution for the category of loan 

involved; is made on a basis which assures repayment; is evidenced by a written 

instrument and is subject to a due date or amortization schedule. 11 CFR §100.82(a). 

B. Assurance of Repayment. Commission regulations state a loan is considered made 

on a basis which assures repayment if: 

• The lending institution making the loan has perfected a security interest in 

collateral owned by the candidate or political committee receiving the loan; 

• Amounts guaranteed by secondary sources of repayment, such as guarantors and 

cosigners, do not exceed the contribution limits of 11 CFR part 110; 

• The lending institution making the loan has obtained a written agreement whereby 

the candidate or political committee receiving the loan has pledged future 

receipts, such as public financing payments; and 

• If these requirements are not met, the Commission will consider the totality of 

circumstances on a case by case basis in determining whether the loan was made 

on a basis which assured repayment. 11 CFR §100.82(e). 
12 

C. Gift, subscription, loan, advance or deposit of money. A loan is a contribution at 

the time it is made and is a contribution to the extent that it remains unpaid. The 

aggregate amount loaned to a candidate or committee by a contributor, when added to 

other contributions from that individual to that candidate or committee, shall not 

exceed the contribution limits set forth at CFR § 110. A loan, to the extent it is 

repaid, is no longer a contribution. 11 CFR §100.52(b)(2). 

D. Receipt of Prohibited Contributions General Prohibition. Candidates and 

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

or loans): 

• In the name of another; or 

• From the treasury funds of the following prohibited sources: 

• Corporations (this means any incorporated organization, including a nonstock corporation, an incorporated membership organization, and an 

incorporated cooperative); 

• Federal government contractors (including partnerships, individuals, and 

sole proprietors who have contracts with the federal government); and 

• Foreign nationals (including individuals who are not U.S. citizens and not 

lawfully admitted for permanent residence; foreign governments and 

foreign 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. 

E. 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, an incorporated 

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

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: 

• 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 the steps below). 11 CFR 

§103.3(b)(1). 

• 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). 

• 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). 

• 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 
13 

explanation that is recorded by the committee in a memorandum. 11 CFR 

§103.3(b)(1). 

• 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) 

and (5). 

G. Reporting Bank Loans, Home Equity Loans and Other Lines of Credit. When a 

political committee obtains a loan from, or establishes a line of credit at, a lending 

institution as described in 11 CFR §100.82(a) through (d) and 100.142(a) through (d), 

it shall disclose in the report covering the period when the loan was obtained, the 

following information on Schedules C-1: 

• The types and value of the collateral or other sources of repayment that secure the 

loan or line of credit, and whether that security interest is perfected; 

• An explanation of the basis upon which the loan was made or the line of credit 

established, if not made on the basis of either traditional collateral or the other 

sources of repayment described in 11 CFR §§100.82(e)(1) and (2) and 

100.142(e)(1) and (2); and 

• A certification from the lending institution that the borrower’s responses to 11 

CFR §104.3(d)(1)(i)-(iv) are accurate, to the best of the lending institution’s 

knowledge; that the loan was made or the line of credit established on terms and 

conditions (including interest rate) no more favorable at the time than those 

imposed for similar extensions of credit to other borrowers of comparable credit 

worthiness; and that the lending institution is aware of the requirement that a loan 

or a line of credit must be made on a basis which assures repayment and that the 

lending institution has complied with Commission regulations at 11 CFR 

§100.82(a) through (d) and 100.142(a) through (d). 11 CFR §104.3(d)(1)(iii)-(v). 

H. Income. Income received during the current election cycle, of the candidate, 

including: 

• A salary and other earned income that the candidate earns from bona fide 

employment; 

• Income from the candidate's stocks or other investments including interest, 

dividends, or proceeds from the sale or liquidation of such stocks or investments; 

• Bequests to the candidate; 

• Income from trusts established before the beginning of the election cycle; 

• Income from trusts established by bequest after the beginning of the election cycle 

of which the candidate is the beneficiary; 

• Gifts of a personal nature that had been customarily received by the candidate 

prior to the beginning of the election cycle; and 

• Proceeds from lotteries and similar legal games of chance. 11 CFR 

§100.33(b)(1)-(7). 
 

 

 

14 

Facts and Analysis 

A. Assurance of Repayment - Bank Loans 

1. Facts 

MBFI received five loans and eleven lines of credit totaling $7,049,405. These loans 

consisted of promissory/consumer bank notes and open-ended lines of credit in the 

name of the Candidate, Mike Braun (‘Candidate’), supported with agreements from 

five lending institutions. 

Information About the Bank Loans 

• None of the five lending institution agreements provided to the Audit staff 

indicated collateral9 or guarantors were used to secure the loans and lines of 

credit. 

• MBFI reported $2,856,163 in loans and lines of credit as secured with 

collateral on Schedule C-1 (Loans and Lines of Credit from Lending 

Institutions). The remaining $4,193,242 in loans were not reported as 

secured. 

• One of the provided loan agreements was unsigned. 

• MBFI incorrectly disclosed the loan terms and balances on Schedules C and 

C-1 (see Finding 6. Disclosure of Memo Entries and Candidate Loans). 

• Two of the loans were not reported (see Finding 1. Misstatement of Financial 

Activity). 

Based upon the documents provided by MBFI, it does not appear that the loans were 

made in the ordinary course of business because, per 11 CFR §100.82(e), and they 

were not made on a basis that assured repayment based on either of the following: 

• A loan may be considered made on a basis that assures repayment if the 

lending institution making the loan perfects a security interest in collateral 

owned by the candidate or political committee receiving the loan. Documents 

supplied by MBFI showed no guarantor nor collateral offered to the financial 

institutions making the loans. 

• A loan may be considered made on a basis that assures repayment if the 

lending institution has obtained a written agreement whereby the candidate or 

political committee receiving the loan has pledged future receipts. MBFI did 

not provide documentation to support that it or the Candidate gave the 

financial institutions a pledge of future receipts or other method of assuring 

repayment. 

2. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with MBFI representatives during audit 

fieldwork and at the exit conference and provided a schedule of the loans. During 

audit fieldwork, MBFI verified loan receipt and repayment amounts and provided 

additional loan documentation. 

9

 The Audit staff reviewed the Candidate’s financial forms filed with the Senate. Based on these 

documents, the Candidate appeared to have enough personal equity to cover the loans obtained. 

However, no property or assets were listed as collateral on the financial institution documents, provided 

to the Audit staff, to secure the loans and lines of credit. 
 

15 

In response to the exit conference, MBFI submitted a written response as follows: 

“As requested by the FEC, the Committee provided extensive documentation for 

the loan agreements considered by the FEC in this preliminary finding. The 

Committee has no new materials to provide with this response, but it is the 

Committee’s belief that the documentation already provided establishes that the 

loans in question were provided by commercial lenders on terms customary in the 

ordinary course of business. The Committee will likely be requesting 

Commission guidance on legal questions related to this finding, and the 

Committee intends to take further corrective action as may be required at the 

conclusion of this matter.” 10 

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

MBFI demonstrate the loans and lines of credit totaling $7,049,405 were made in the 

ordinary course of business and were made on a basis that assured repayment. 

Documentation may include, but is not limited to submission of: 

• Fully signed copy of the loan agreement. 

• Required lending institution certifications. 

• Amended disclosure reports, consistent with 11 C.F.R. §104.3(d)(1), to 

support its contention that the loans and lines of credit were made on a basis 

that assured repayment. 

• Other information to demonstrate that the loans and lines of credit were based 

on the assurance of repayment to include the following information from each 

of the lending institutions at issue: (1) the length of time of the Candidate’s 

relationship with the bank; (2) the Candidate’s creditworthiness, net worth, 

assets and repayment history; (3) the bank’s underwriting criteria for 

unsecured loans of the type made to the Candidate; and (4) information 

demonstrating that the loan terms were not unduly favorable to the candidate. 

B. Corporate Contributions Reported as Candidate Loans 

1. Facts 

During audit fieldwork, the Audit staff identified two checks received by MBFI 

totaling $1,500,000 that appeared to be from a corporation, which is a prohibited 

source. These checks, dated October 17, 2018 and October 25, 2018, were from 

Meyer Distributing, they were reported as loans on Schedule C (Loans), and memo 

text identified these transactions as ‘Personal Funds’. The Audit staff verified the 

corporate status of Meyer Distributing, as of the date of the contribution, with the 

applicable Secretary of State office. Based on the Indiana Secretary of State website, 

this business entity is a for-profit corporation. The Candidate was President of Meyer 

Distributing during the audit period. Loans other than from lending institutions are 

considered contributions to the extent of the outstanding balance of the loan. MBFI 

did not repay the $1,500,000; rather MBFI reported $1,250,000 as a contribution from 

the Candidate on the disclosure reports and reported the remaining $250,000 as an 

outstanding loan balance on the disclosure reports. 

10 On April 8, 2020, counsel for MBFI submitted a Request for Consideration of a Legal Question by the 

Commission (Request). MBFI asked whether an unsecured line of credit issued by a commercial lending 

institution to a “high-net-worth, creditworthy” candidate may be deemed to be made within the ordinary 

course of business under 11 C.F.R. §100.82. Two or more Commissioners did not agree to consider the 

Request. MBFI was informed of this outcome on April 21, 2020. 
16 

However, MBFI did not correctly report the $1,250,000 contribution from the 

Candidate as a memo entry (see Finding 1. Misstatement of Financial Activity). 

MBFI did not maintain a separate account for questionable contributions. 

Additionally, MBFI did not maintain a sufficient balance in its bank account to refund 

the apparent prohibited contributions. 

2. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with MBFI representatives during audit 

fieldwork as well as at the exit conference and provided a schedule of the apparent 

prohibited contributions. MBFI representatives did not provide any comments during 

audit fieldwork. 

In response to the exit conference, MBFI submitted a written response as follows: 

“To support this preliminary finding, the FEC identified two checks paid from 

Meyer Distributing to Mike Braun. Despite the FEC’s mischaracterization of 

these checks, the Committee properly reported the associated value of these 

checks as loans to the Committee. The Committee intends to provide additional 

documentation demonstrating that the checks in question were initially issued to 

Mr. Braun, pursuant to his employment agreement, as compensation for services 

that he provided to Meyer Distributing; however, the Committee has been unable 

to obtain the relevant documentation because of the ongoing COVID-19 crisis, 

and the information will be provided to the FEC upon its receipt. Furthermore, 

Mr. Braun then endorsed these payments to the Committee directly as a loan to 

the Committee without first depositing and re-issuing payment, an option 

permitted by FEC rules.” 

“The Committee’s compliance with the FEC’s recommendation regarding this 

preliminary finding would cause the Committee to knowingly misrepresent the 

transactions in question and incorrectly disclose prohibited corporate 

contributions that did not take place. Therefore, the Committee declines to take 

the FEC’s recommended remedial action at this time.” 

MBFI contends that the $1,500,000 represents compensation paid to the Candidate 

from Meyer Distributing for services rendered pursuant to his employment 

agreement. To-date MBFI has not provided the employment agreement or any 

additional documentation regarding the checks in question. 

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

MBFI submit documentation demonstrating that the funds represent salary or other 

income the Candidate earned from bona fide employment and thus were the personal 

funds of the Candidate. Or that the contributions in question totaling $1,500,000 

were not from a prohibited source or, if prohibited, were resolved through the timely 

issuance of refunds. 

Absent documentation that the funds were from a permissible source or were timely 

resolved, MBFI must refund these apparent prohibited contributions to the 

corporation or disgorge them to a governmental entity or to a qualified charitable 
 

17 

organization.11 MBFI must provide proof of any refund and/or disgorgement. If 

funds are not available to make the necessary refunds or disgorgement, MBFI should 

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

until funds become available to make such refunds. 

Finding 5. Receipt of Contributions in Excess of the Limit 

Summary 

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

political committees to determine if any exceeded the contribution limit. Based on these 

reviews, MBFI received apparent excessive contributions totaling $1,173,557. This 

included apparent excessive contributions from individuals totaling $985,345 and from 

political committees totaling $188,212. These errors occurred as a result of MBFI not 

resolving the excessive portions of contributions in a timely manner and by designating 

contributions for Primary or General debt that had already been extinguished. The Audit 

staff recommends that MBFI provide documentation demonstrating that the contributions 

were not excessive, or if excessive, were resolved in a timely manner. Absent such a 

demonstration, MBFI should send letters to those contributors whose contributions are 

eligible for presumptive redesignation and/or reattribution, obtain a signed authorization 

letter from the contributor, or refund any remaining excessive amounts. 

Legal Standard 

A. Authorized Committee Limits. For the 2018 election, 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(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). 

11 See 26 U.S.C. §170(c). 
18 

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 

• 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)(ii)(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: 

• The redesignation must be signed by the contributor; 

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

committee received the original contribution; and 

• 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). 
 

19 

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: 

• Is made before that candidate’s primary election; 

• Is not designated in writing for a particular election; 

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

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

limit. 

The committee is required to notify the contributor 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)(1), (2), (3), (4), (5), 

and (6). 

F. Contributions by Multi-candidate Committees. A contribution designated in 

writing for a particular election, but made after that election, shall be made only to the 

extent that the contribution does not exceed net debts outstanding from such election. 

To the extent that such contribution exceeds net debts outstanding, the candidate or 

the candidate’s authorized political committee shall return or deposit the contributions 

within ten days from the date of the treasurers receipt of the contribution and if 

deposited, then within sixty days from the date of the treasurer’s receipt the treasurer 

shall take that the following action, as appropriate: 

• Refund the contribution using a committee check or draft; or 

• Obtain a written redesignation by the contributor for another election in 

accordance with 11 CFR §110.2(b)(5). 11 CFR §110.2(b)(3)(i). 

Facts and Analysis 

A. Contributions from Individuals 

1. Facts 

The Audit staff utilized sample testing and a review of high dollar contributions not 

included in the sample population to identify apparent excessive contributions from 

individuals, as noted below. 

Excessive Contributions - Testing Method 

Sample Projection Amount12 $568,545 

High Dollar Review Contribution Error 

Amount $416,800 

Total Amount of Excessive Contributions $985,345 

12 The sample error amount ($568,545) was projected using a Monetary Unit Sample with a 95 percent 

confidence level. The sample estimate could be as low as $378,477 or as high as $947,020. 
20 

Reason for Excessive Contributions 

Contributions not resolved via presumptive 

letter or refund $327,710 

Contributions not resolved via signed 

reattribution letter or refund $642,935 

Contributions refunded untimely $14,700 

Total Amount of Excessive Contributions $985,345 

2. Additional Information 

Contributions, totaling $642,935, could not be presumptively reattributed or 

redesignated by MBFI. These contributions were either made with a single account 

holder check, joint account holder checks that exceeded the per election limit for both 

individuals or credit cards which required signed authorization from its contributors 

or a refund. 

MBFI did not maintain a separate account for questionable contributions. 

Additionally, based on its cash on hand at the end of the audit period ($72,715), it 

appears that MBFI did not maintain sufficient funds to refund the apparent excessive 

contributions. 

3. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with MBFI representatives during audit 

fieldwork as well as at the exit conference and provided a schedule of the apparent 

excessive contributions. MBFI representatives did not provide any comments during 

audit fieldwork. 

 

In response to the exit conference MBFI submitted a written response as follows: 

“The Committee provided documentation related to these findings during the 

audit process and has no new materials to provide with this response. To date, the 

Committee has made additional preemptive adjustments to its contributor 

information and intends to take any such corrective action as may be required at 

the conclusion of this matter.” 

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

MBFI: 

• Provide evidence demonstrating that the contributions totaling $985,345 were 

not excessive or were timely resolved. 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; 

timely letters sent to contributors eligible for presumptive redesignation 

and/or reattribution; or timely refunds (copies of the front and back of 

negotiated refund checks), redesignations, or reattributions for excessive 

contributions. 
21 

• Absent evidence that the contributions were not excessive or were timely 

resolved, MBFI should review its contributions to determine which are 

excessive and how each can be resolved. For any excessive contributions that 

MBFI could have resolved by sending a presumptive redesignation and/or 

reattribution letter, it may now send letters to inform the contributors how the 

committee designated and/or reattributed the contribution and offer a refund. 

MBFI must provide evidence of such refunds (copies of the front and back of 

negotiated checks). For a reattribution, both the contributor and the individual 

to whom a contribution was reattributed must be notified. Absent the 

contributor’s request for a refund, these letters will obviate the need to refund 

the contributions or disgorgement to a governmental entity or to a qualified 

charitable organization.11 

• For any excessive contributions that were not resolved through the timely 

receipt of a signed authorization letter from the contributor or by refund, 

MBFI may obtain signed authorization notification from the contributor or 

make refunds in response to the audit. 

• If funds are not available to make such refunds, MBFI should report the 

excessive contributions as debts owed on Schedule D (Debts and Obligations) 

until funds become available to make the refunds. 

B. Contributions From Political Committees 

1. Facts 

Contributions Received in Excess of Primary Debt

As of May 8, 2018, the date of the Primary election, the Audit staff calculated that 

MBFI had net debt outstanding of $191,951. The review determined that there was 

no Primary debt as of June 30, 2018. A review of all contributions from political 

committees received after May 8, 2018 and designated by the political committees for 

primary debt, determined that MBFI received 20 apparent excessive contributions 

totaling $73,500 which exceeded the amount needed to retire the net debt outstanding 

for the Primary election. 

Contributions Received in Excess of General Debt 

As of November 6, 2018, the date of the General election, the Audit staff calculated 

that MBFI had net debt outstanding of $101,066. The review determined that there 

was no General debt as of December 18, 2018. A review of all contributions received 

from political committees after November 6, 2018 and designated by the political 

committees for general debt, identified that MBFI received 36 apparent excessive 

contributions totaling $114,712 which exceeded the amount needed to retire the net 

debt outstanding for the General election. 

MBFI did not maintain a separate account for questionable contributions. 

Additionally, MBFI did not maintain a sufficient balance in its bank account to refund 

the apparent excessive contributions. 

2. Interim Audit Report & Audit Division Recommendation 

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

and provided schedules of the apparent excessive contributions. 

In response to the exit conference, MBFI submitted a written statement as follows: 
 

22 

“The Committee provided documentation related to these findings during the 

audit process and has no new materials to provide with this response. To date, the 

Committee has made additional preemptive adjustments to its contributor 

information and intends to take any such corrective action as may be required at 

the conclusion of this matter.”13 

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

MBFI provide documentation demonstrating that the contributions in question were 

not excessive, or if excessive, were resolved by refund. MBFI may make refunds in 

response to the audit. If refunds are made, this action will be untimely, and remain in 

the finding with an explanation that the committee sent them in response to the audit. 

Finding 6. Disclosure of Memo Entries and Candidate 

Loans 

Summary 

During audit fieldwork, the Audit staff determined that MBFI failed to properly disclose 

joint fundraising memo entries totaling $933,814 from 13 joint fundraising committees. 

MBFI also failed to properly disclose the correct loan balances and loan terms for 29 

transactions totaling $11,569,963. The Audit staff recommends that MBFI provide 

documentation demonstrating that the joint fundraising memo entries totaling $933,814 

were disclosed correctly and that MBFI properly disclosed the correct loan balance and 

loan terms for transactions totaling $11,569,963. Absent such documentation, MBFI 

should amend its disclosure reports or file a Form 99 (Miscellaneous Electronic 

Submission) to correct the disclosure errors for the joint fundraising memo entries and 

the loans and lines of credit. 

Legal Standard

A. Contents of Reports. Each report must disclose for the reporting period and for the 

election cycle, the total amount of: 

• Contributions from persons other than political committees; 

• Contributions from authorized committees which makes a transfer to the reporting 

committee; 

• Loans made by or guaranteed by the candidate and the identification of each 

person who makes, endorses or guarantees a loan to the committee. 

52 U.S.C. §30104(b)(2)(G), (3)(E) and 4(D). 

B. Contents Required - Information for Contributions. For each itemized 

contribution, the committee must provide the following information: 

• The contributor’s full name and address (including zip code); 

13 On April 23, 2019, counsel for MBFI submitted a Request for Consideration of a Legal Question by the 

Commission. MBFI asked whether the proceeds from the Candidate’s personal lines of credit were 

“personal loans” per 11 C.F.R. §116.11(a); and whether the $250,000 post-election loan-repayment 

limitation was a constitutional and enforceable limitation. On June 20, 2019, the Commission concluded 

that MBFI may not repay the Candidate in excess of $250,000 more than 20 days after the Primary 

election and rejected MBFI’s argument that the candidate loan repayment requirements are 

unconstitutional. 
23 

• The contributor’s occupation and the name of his or her employer (for individual 

contributors); 

• The date of receipt (the date the committee received the contribution); 

• The amount of the contribution; and 

• The aggregate year-to-date total of all contributions from the same individual. 11 

CFR §§100.12 and 104.3(a)(4) and 52 U.S.C. §30104(b)(3)(A). 

C. Itemization of Contributions from Joint Fundraising Efforts. Participating 

political committees shall report joint fundraising proceeds in accordance with 11 

CFR §102.17(c) (8) when such funds are received from the fundraising 

representative. 11 CFR §102.17(c)(3)(iii). 

Each participating political committee reports its share of the net proceeds as a 

transfer-in from the fundraising representative and shall also file a memo Schedule A 

itemizing its share of gross receipts as contributions from the original contributors to 

the extent required under 11 CFR §104.3(a). 11 CFR §102.17(c)(8)(i)(B). 

D. Itemization required. Political committees must itemize: 

• Any contributions from an individual if it exceeds $200 per calendar year (or per 

election cycle in the case of an authorized committee) either by itself or when 

aggregated with other contributions from the same contributor. 11 CFR 

§104.3(a)(4)(i); and 

• Every contribution from any political committee, regardless of the amount. 

52 U.S.C. §30104(b)(3)(A) and (B). 

E. Itemizing Loans. Each person who makes a loan to the political committee during 

the reporting period must be disclosed with the following information: 

• Identification of any endorser or guarantor of the loan; 

• The date the loan was made; 

• The amount of the loan. 11 CFR §104.3(a)(4)(iv). 

F. Schedule C. On a Schedule C, both the original loan and payments to reduce 

principal must be reported each reporting period until the loan is repaid. The 

committee need only list the candidate as the source of the loan. Also, the type of 

loan the candidate receives (i.e., bank loan, brokerage account, credit card, home 

equity line of credit) must be disclosed in either the first box for endorsers and 

guarantors with a notation for loan type or in the box for “Loan Source” after the 

candidate’s name. 11 CFR §104.3(d) and §104.11. 

G. Reporting Bank Loans, Home Equity Loans and Other Lines of Credit. A 

political committee must disclose in the report covering the period when the loan was 

obtained on Schedules C-1: 

• The date, amount, and interest rate of the loan; 

• The name and address of the lending institution; and 

• The types and value of the collateral or other sources of repayment that secure the 

loan, if any. 11 CFR §104.3(d)(4). 
 

 

24 

Facts and Analysis 

A. Transfers from Joint Fundraising Committees 

1. Facts 

The Audit staff’s review of all joint fundraising transfers identified that MBFI failed 

to properly disclose joint fundraising memo entries totaling $933,814 from 13 joint 

fundraising committees. The chart below details the $933,814 as follows: 

Disclosure Errors 

Type of Review 100% 

Memo Entries Not Itemized $29,785 

Memo Entries Disclosed on Schedule A - Incorrect Receipt Date $904,029 

Total Amount $933,814 

2. Additional Information 

For the contributions that were disclosed on Schedule A, totaling $904,029, MBFI 

reported the date of the transfer from the joint fundraising committee rather than the 

date the contribution was reported received by the joint fundraising committee. 

3. Interim Audit Report & Audit Division Recommendation 

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

conference and provided schedules of the incorrectly disclosed joint fundraising 

memo entries. 

In response to the exit conference, MBFI submitted the written response as follows: 

“The Committee provided documentation related to this preliminary finding 

during the audit process and has no new materials to provide with this response. 

To date, the Committee has made additional preemptive adjustments to its 

contributor information, including identifying memo entries to be added to 

contribution entries. The Committee intends to take further corrective action as 

may be required at the conclusion of this matter.” 

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

MBFI provide additional documentation demonstrating that the joint fundraising 

memo entries were correctly disclosed on Schedule A. Absent such documentation, 

the Audit staff recommends that MBFI should amend its disclosure reports or file a 

Form 99 (Miscellaneous Electronic Submission) 7 to correct the memo entries totaling 

$904,029 and itemize the missing memo entries on Schedule A totaling $29,785. 
25 

B. Disclosure of Loans 

1. Facts 

During audit fieldwork, the Audit staff reviewed 31 bank loans, lines of credit and 

candidate loans to MBFI totaling $11,666,483. Of this amount: 

• Three bank loans, 13 lines of credit and 13 candidate loans, for 29 transactions 

totaling $11,569,963 were disclosed incorrectly on Schedules C and C-1; and 

• Loans and lines of credit for two transactions, totaling $96,520, were not 

reported (see Finding 1. Misstatement of Financial Activity). 

Disclosure errors consisted of disclosing incorrect or missing information including: 

loan terms and dates, repayment amounts, loan forgiveness, outstanding balances, as 

well as disclosing the Candidate’s spouse as a guarantor for a loan. The loan 

documentation did not support the information that was reported on the disclosure 

reports. 

2. Interim Audit Report & Audit Division Recommendation 

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

conference and provided a schedule of the loans and lines of credit disclosed 

incorrectly. 

In response to the exit conference, MBFI submitted a written response as follows: 

“The Committee provided documentation related to this preliminary finding 

during the audit process and has no new materials to provide with this response. 

The Committee intends to take further corrective action as may be required at the 

conclusion of this matter.” 

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

MBFI provide additional documentation demonstrating that the identified loans and 

lines of credit were correctly disclosed. Absent such documentation, the Audit staff 

recommends that MBFI amend its reports or file a Form 99 (Miscellaneous Electronic 

Submission) 7 to correct the disclosure errors. 

Finding 7. Prohibited Candidate Personal Loan 

Repayments 

Summary 

Based on a review of loans, the Audit staff determined that MBFI made excessive 

Primary candidate loan and interest repayments totaling $750,669. This amount is in 

excess of the $250,000 limit permitted for repayment to the Candidate within 20 days 

following the Primary election. The Audit staff recommends that MBFI provide 

additional documentation to demonstrate the Primary candidate loan and interest 

repayments were not excessive and/or provide any relevant comments on the matter. 
26 

Legal Standard 

A. Limitation on Repayment of Personal Loans. Any candidate who incurs personal 

loans made after the effective date of the Bipartisan Campaign Reform Act of 2002 in 

connection with the candidate’s campaign for election shall not repay (directly or 

indirectly), to the extent such loans exceed $250,000, such loans from any 

contributions made to such candidate or any authorized committee of such candidate 

after the date of such election. 52 U.S.C. §30116(j) 

B. Restriction on an Authorized Committee’s Repayment of Personal Loans 

Exceeding $250,000 Made by the Candidate to the Authorized Committee. 

Specific to this finding, personal loans mean a loan or loans, including advances, 

made by a candidate, using personal funds, as defined in 11 CFR §100.33, to his or 

her authorized committee where the proceeds of the loan were used in connection 

with the candidate's campaign for election. Personal loans also include loans made to 

a candidate's authorized committee that are endorsed or guaranteed by the candidate 

or that are secured by the candidate's personal funds. 11 CFR §116.11(1)(a). 

For personal loans that, in the aggregate, exceed $250,000 in connection with an 

election, the authorized committee: 

• May repay the entire amount of the personal loans using contributions to the 

candidate or the candidate's authorized committee provided that those 

contributions were made on the day of the election or before; 

• May repay up to $250,000 of the personal loans from contributions made to the 

candidate or the candidate's authorized committee after the date of the election; 

and 

• Must not repay, directly or indirectly, the aggregate amount of the personal 

loans that exceeds $250,000, from contributions to the candidate or the 

candidate's authorized committee if those contributions were made after the date 

of the election. 11 CFR §116.11(1)(b)(1),(2) and (3). 

If the aggregate outstanding balance of the personal loans exceeds $250,000 after the 

elections, the authorized political committees must comply with the following 

conditions: 

• If the authorized committee uses the amount of cash-on-hand as of the day after 

the election to repay all or part of the personal loans, it must do so within 20 

days of the election. 

• Within 20 days of the election date, the authorized committee must treat the 

portion of the aggregate outstanding balance of the personal loans that exceeds 

$250,000 minus the amount of cash-on-hand as of the day after the election 

used to repay the loan as a contribution by the candidate. 

• The candidate’s principal campaign committee must report the transactions in 

paragraphs (c) (1) and (c) (2) of this section in the first report scheduled to be 

filed after the election pursuant to 11 CFR §104.5(a) or (b) and 11 CFR 

§116.11(1)(c)(1),(2) and (3) 

• This section applies separately to each election. 11 CFR §116.11 (d). 
27 

Facts and Analysis 

A. Facts 

Based on a review of loans, the Audit staff determined that MBFI made Primary 

candidate loan and interest repayments totaling $1,000,669 after the May 8, 2018 Primary 

election. MBFI could have repaid up to $250,000 of the personal loans for the Primary 

election from contributions made to the Candidate after the date of the election. Also, 

after 20 days following the Primary election, MBFI was required to treat as a contribution 

the amount which was equal to the outstanding balance of the candidate Primary loans 

less the repayment limit.13 Therefore, the Audit staff identified that MBFI made 

excessive Primary candidate loan and interest repayments totaling $750,669. 

• Primary candidate loan and interest repayments + $1,000,669 

• Allowable repayment amount of candidate loans 

from contributions limit - 250,000 

Excessive Primary Candidate Loan and Interest Repayments $750,669 

B. Interim Audit Report & Audit Division Recommendation 

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

and provided schedules of the apparent excessive contributions. 

In response to the exit conference MBFI submitted a written response as follows: 

“The FEC’s preliminary finding shows no apparent “mis-disclosure” of the 

transactions in question. The Committee has no new materials to provide with this 

response, but it is the Committee’s belief that the FEC’s preliminary finding is based 

on the FEC’s mischaracterization of certain loans (which, in turn, would require the 

loans to be converted to personal contributions and not repayable). The Committee 

will likely be requesting Commission guidance on legal questions related to this 

finding.”6 

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

provide additional documentation to demonstrate the Primary candidate loan and interest 

repayments were not excessive and provide any relevant comments on the matter.