Interim Audit Report of the 

Audit Division on the Republican 

Party of Minnesota - Federal 

(January 1, 2017 - December 31, 2018) 

Why the Audit 

Was Done

Federal law permits the

Commission to conduct 

audits and field 

investigations of any 

political committee that 

is required to file reports 

under the Federal 

Election Campaign Act 

(the Act). The 

Commission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold 

requirements for 

substantial compliance 

with the Act.1 The audit 

determines whether the 

committee complied 

with the limitations, 

prohibitions and 

disclosure requirements 

of the Act.

Future Action

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any of the 

matters discussed in this 

report.

About the Committee (p. 2)

The Republican Party of Minnesota – Federal is a state party 

committee headquartered in Minneapolis, Minnesota. For more 

information, see the chart on the Committee Organization, p.2. 

Financial Activity (p. 2)

• Receipts

o Contributions from Individuals $2,668,979 

o Contributions from Political 

Party and Other Political 

Committees 590,309 

o Transfers from Affiliates 568,580 

o Loans Received 383,040 

o Other Federal Receipts 712,648 

o Transfers from Non-Federal 

Account 513,974 

Total Receipts $5,437,530 

• Disbursements

o Operating Expenditures $2,060,106 

o Allocated Federal/Non-Federal 

Expenditures 1,579,656 

o Loan Repayments 503,221 

o Refund of Contributions 5,385 

o Federal Election Activity 1,298,837 

Total Disbursements $5,447,205 

Findings and Recommendations (p. 3) 

• Recordkeeping for Employees (Finding 1) 

• Recordkeeping for Communications (Finding 2)

• Reporting of Apparent Independent Expenditures (Finding 3)

• Disclosure of Transfers and Allocation Ratios (Finding 4) 

• Excessive Coordinated Party Expenditures (Finding 5) 

• Disclosure of Loans and Loan Repayments (Finding 6) 

 

1

 52 U.S.C. §30111(b).
Interim Audit Report of the Audit 

Division on the Republican Party 

of Minnesota - Federal 

(January 1, 2017 - December 31, 2018) 
Table of Contents 

Page

Part I. Background

 Authority for Audit 1 

 Scope of Audit 1 

 Commission Guidance 1 

Part II. Overview of Committee

Committee Organization 2 

Overview of Financial Activity 2 

Part III. Summaries 

Findings and Recommendations 3 

Part IV. Findings and Recommendations

Finding 1. Recordkeeping for Employees 6

Finding 2. Recordkeeping for Communications 7

Finding 3. Reporting of Apparent Independent Expenditures 9

Finding 4. Disclosure of Transfers and Allocation Ratios 15

Finding 5. Excessive Coordinated Party Expenditures 18

Finding 6. Disclosure of Loans and Loan Repayments 22
1 

Part I

Background

Authority for Audit

This report is based on an audit of the Republican Party of Minnesota – Federal (RPOMF), 

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 loans; 

2. the disclosure of individual contributors’ occupation and name of employer; 

3. the disclosure of disbursements, debts and obligations; 

4. the disclosure of expenses allocated between federal and non-federal accounts;

5. the consistency between reported figures and bank records; 

6. the completeness of records;

7. the disclosure of independent expenditures; and 

8. other committee operations necessary to the review.

Commission Guidance

Request for Early Commission Consideration of a Legal Question 

Pursuant to the Commission’s “Policy Statement Establishing a Program for Requesting 

Consideration of Legal Questions by the Commission,” several state party committees 

unaffiliated with RPOMF requested early consideration of a legal question raised during audits 

covering the 2010 election cycle. Specifically, the Commission addressed whether monthly time 

logs under 11 CFR §106.7(d)(1) were required for employees paid with 100 percent federal 

funds. 

The Commission concluded, by a vote of 5-1, that 11 CFR §106.7(d)(1) does require committees 

to keep a monthly log for employees paid exclusively with federal funds. Exercising its 

prosecutorial discretion, however, the Commission decided it will not pursue recordkeeping 

violations for the failure to keep time logs or to provide affidavits to account for employee 

salaries paid with 100 percent federal funds and reported as such. The Audit staff informed 

RPOMF representatives of the payroll requirement and the Commission’s decision not to pursue 

recordkeeping violations for failure to keep payroll logs for salaries paid and correctly reported 

as 100 percent federal. This audit report does not include any findings or recommendations with 

respect to RPOMF employees paid with 100 percent federal funds and reported as such. 
2 

Part II

Overview of Committee 

Committee Organization 

Overview of Financial Activity 

(Audited Amounts)

Cash on hand @ January 1, 2017 $ 12,718

Receipts

o Contributions from Individuals 2,668,979

o Contributions from Political Party and Other 

Political Committees 590,309 

o Transfers from Affiliates 568,580

o Loans Received 383,040

o Other Federal Receipts 712,648

o Transfers from Non-federal Account 513,974

Total Receipts $5,437,530

Disbursements

o Operating Expenditures 2,060,106

o Allocated Federal/Non-federal Expenditures 1,579,656

o Loan Repayments 503,221

o Refund of Contributions 5,385

o Federal Election Activity 1,298,837

Total Disbursements $5,447,205

Cash on hand @ December 31, 2018 $ 3,043

Important Dates

• Date of Registration August 8, 1975

• Audit Coverage January 1, 2017 – December 31, 2018

Headquarters Minneapolis, MN

Bank Information

• Bank Depositories One

• Bank Accounts One Federal; Two Non-Federal

Treasurer

• Treasurer When Audit Was Conducted Bron Scherer

• Treasurer During Period Covered by Audit Bron Scherer

Management Information

• Attended FEC Campaign Finance Seminar Yes

• Who Handled Accounting and Paid Staff

Recordkeeping Tasks
3 

Part III

Summaries

Findings and Recommendations 

Finding 1. Recordkeeping for Employees

During audit fieldwork, the Audit staff determined that RPOMF did not maintain any 

monthly payroll logs, as required, to document the percentage of time each employee 

spent in connection with a federal election. For 2017 and 2018, the Audit staff identified 

payments to RPOMF employees totaling $297,945 for which RPOMF did not maintain 

monthly payroll logs. This consisted of payroll which was allocated with federal and 

non-federal funds and payroll paid exclusively with non-federal funds. The Audit staff 

recommends that, absent the provision of monthly payroll logs, RPOMF implement a 

plan to maintain such monthly payroll logs in the future. 

(For more detail, see p. 6.) 

Finding 2. Recordkeeping for Communications

During audit fieldwork, the Audit staff reviewed disbursements for communications to 

verify the accuracy of the information and proper classification of transactions disclosed 

on RPOMF’s reports. RPOMF reported 76 disbursements totaling $706,981, on 

Schedule B(Itemized Disbursements), Line 21(b) (Other Federal Operating 

Expenditures); Schedule B, Line 30(b) (Federal Election Activity Paid Entirely with 

Federal Funds) and Schedule H4 (Disbursements for Allocated Federal /Non-Federal 

Activity) with purposes including, “direct mail,” “direct mail advertising” or “party direct 

mail.” Another four disbursements totaling $5,681 were from the Non-Federal account. 

Documentation provided by RPOMF was insufficient to make a determination pertaining 

to the purpose for these disbursements and verification as operating expenditures, federal 

election activity, non-federal activity or allocated federal/non-federal activity. The Audit 

staff recommends that RPOMF provide the necessary information from which the 

reported disbursements and non-federal disbursements totaling $712,662 may be verified 

or explained. Such records should include copies of invoices and identification of the 

associated communication, and, if the communication has already been provided, 

information associating each communication with an invoice(s). 

(For more detail, see p. 7.) 

Finding 3. Reporting of Apparent Independent Expenditures

During audit fieldwork, the Audit staff reviewed expenditures totaling $781,290, that 

RPOMF disclosed on Schedule B (Itemized Disbursements), Line 21(b) (Other Federal 

Operating Expenditures); Schedule B, Line 30(b) (Federal Election Activity Paid Entirely 

with Federal Funds) and Schedule H4 (Disbursements for Allocated Federal /NonFederal Activity), that appear to be independent expenditures that contain express 

advocacy and should have been disclosed on Schedule E, Line 24 (Itemized Independent 

Expenditures). 
4 

For the $781,290 disclosed as operating expenditures, federal election activity, or 

allocated federal/non-federal activity which appear to be independent expenditures, 

RPOMF did not file 24/48-hour reports totaling $774,721. 

Additionally, the Audit staff identified five disbursements totaling $101,665 that RPOMF 

disclosed as federal election activity on Schedule B, Line 30(b) and operating 

expenditures on Schedule B, Line 21(b) which appeared to be independent expenditures 

requiring disclosure on Schedule E. Furthermore, if the disbursements are determined to 

be independent expenditures, then RPOMF may have been required to file 24/48-hour 

reports depending on the date of public dissemination. 

If RPOMF believes that the apparent independent expenditures, totaling $781,290, did 

not require reporting as independent expenditures, the Audit staff recommends that 

RPOMF provide documentation to support its conclusion. The Audit staff also 

recommends RPOMF provide documentation to support the volunteer materials 

exemption for expenditures totaling $101,665. Absent such documentation, the Audit 

staff recommends that RPOMF amend its reports to disclose these disbursements as 

independent expenditures on Schedule E and submit revised procedures for reporting 

independent expenditures in the future. Lastly, the Audit staff recommends that RPOMF 

provide documentation to support the date of public dissemination for each 

communication to determine whether a filing of 24/48-hour reports were required. 

(For more detail, see p. 9.) 

Finding 4. Disclosure of Transfers and Allocation Ratios

During audit fieldwork, the Audit staff identified two transfers to affiliated/other party 

committees totaling $64,303 reported on Schedule H4 (Disbursements for Allocated 

Federal/Non-Federal Activity). Party committee transfers do not qualify as allocable 

activity for disclosure on Schedule H4 but should instead be disclosed on Schedule B 

(Itemized Disbursements), Line 22 (Transfers to Affiliated/Other Party Committees). In 

addition, the Audit staff identified two fundraisers that were not reported on Schedule H2 

(Allocation Ratios), and RPOMF incorrectly applied the allocation ratio for 

Administrative expenses on Schedule H4 for 30 disbursements related to these 

fundraisers totaling $73,129. The Audit staff recommends that RPOMF amend its 

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

disclose the transfers to affiliated/other party committees on Schedule B, the fundraising 

events on Schedule H2 and the fundraising expenses on Schedule H4. 

(For more detail, see p. 15.) 

Finding 5. Excessive Coordinated Party Expenditures

During audit fieldwork, the Audit staff identified apparent coordinated expenditures for 

three House candidates that exceeded the 2018 coordinated party expenditure limit by a 

total of $255,421. The Audit staff recommends that RPOMF provide documentation 

demonstrating that the expenditures were not coordinated or seek reimbursement from 

the candidate who benefited. 

(For more detail, see p. 18.) 
5 

Finding 6. Disclosure of Loans and Loan Repayments

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

disclose 50 transactions totaling $525,742. RPOMF did not properly disclose the correct 

purpose for interest payments and loan repayments on Schedule B (Itemized 

Disbursements), Line 21(b) (Federal Operating Expenditures) and Schedule B, Line 26 

(Loan Repayments). RPOMF also disclosed the incorrect loan terms on Schedule C1 

(Loans and Line of Credit from Lending Institutions) and Schedule C (Loans). The Audit 

staff recommends that RPOMF provide documentation demonstrating that RPOMF 

properly disclosed the purpose and loan terms for these transactions. Absent such 

documentation, RPOMF should amend its disclosure reports or file a Form 99 

(Miscellaneous Electronic Submission) to correct the disclosure errors for the purpose 

and loan terms. 

(For more detail, see p. 22.) 
6 

Part IV

Findings and Recommendations

Finding 1. Recordkeeping for Employees

Summary 

During audit fieldwork, the Audit staff determined that RPOMF did not maintain any 

monthly payroll logs, as required, to document the percentage of time each employee 

spent in connection with a federal election. For 2017 and 2018, the Audit staff identified 

payments to RPOMF employees totaling $297,945 for which RPOMF did not maintain 

monthly payroll logs. This consisted of payroll which was allocated with federal and 

non-federal funds and payroll paid exclusively with non-federal funds. The Audit staff 

recommends that, absent the provision of monthly payroll logs, RPOMF implement a 

plan to maintain such monthly payroll logs in the future. 

Legal Standard 

Maintenance of Monthly Logs. Party committees must keep a monthly log of the 

percentage of time each employee spends in connection with a federal election. 

Allocations of salaries, wages, and fringe benefits are to be undertaken as follows:

• Employees who spend 25 percent or less of their compensated time in a given 

month on federal election activities must be paid either from the federal account 

or be allocated as administrative costs;

• Employees who spend more than 25 percent of their compensated time in a given 

month on federal election activities must be paid only from a federal account; and,

• Employees who spend none of their compensated time in a given month on 

federal election activities may be paid entirely with funds that comply with state 

law. 11 CFR §106.7(d)(1). 

Facts and Analysis 

A. Facts

During audit fieldwork, the Audit staff reviewed disbursements for payroll. RPOMF did 

not maintain any monthly payroll logs or equivalent records to document the percentage 

of time each employee spent in connection with a federal election. These logs are 

required to document the proper allocation of federal and non-federal funds used to pay 

employee salaries and wages. For 2017 and 2018, RPOMF did not maintain monthly 

logs for $297,945 in payroll.2 This amount includes: 

• Payroll totaling $290,060 for employees reported on Schedule H4 (Disbursements 

for Allocated Federal and Non-Federal Activity) and paid with an allocation of 

federal and non-federal funds during the same month; and

 

2

 This total does not include payroll for employees paid with 100 percent federal funds and reported as 

such (see Part I, Background, Commission Guidance, and Request for Early Commission Consideration 

of a Legal Question, Page 1). Payroll amounts are stated net of taxes and fringe benefits.
7 

• Payroll totaling $7,885 for employees paid exclusively with non-federal funds in a 

given month. 

B. Interim Audit Report & Audit Division Recommendation 

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

conference and provided a schedule of the payroll transactions. RPOMF representatives 

responded that RPOMF will implement a payroll log which will document for each 

payroll period the major tasks/projects performed by RPOMF employees spending time 

on both federal and/or non-federal activities. 

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

the provision of monthly payroll logs, RPOMF implement a plan to maintain such 

monthly payroll logs in the future. 

Finding 2. Recordkeeping for Communications

Summary 

During audit fieldwork, the Audit staff reviewed disbursements for communications to 

verify the accuracy of the information and proper classification of transactions disclosed 

on RPOMF’s reports. RPOMF reported 76 disbursements totaling $706,981, on 

Schedule B(Itemized Disbursements), Line 21(b) (Other Federal Operating 

Expenditures); Schedule B, Line 30(b) (Federal Election Activity Paid Entirely with 

Federal Funds) and Schedule H4 (Disbursements for Allocated Federal /Nonfederal 

Activity) with purposes including, “direct mail,” “direct mail advertising” or “party direct 

mail.” Another four disbursements totaling $5,681 were from the non-federal account. 

Documentation provided by RPOMF was insufficient to make a determination pertaining 

to the purpose for these disbursements and verification as operating expenditures, federal 

election activity, non-federal activity or allocated federal/non-federal activity. The Audit 

staff recommends that RPOMF provide the necessary information from which the 

reported disbursements and non-federal disbursements totaling $712,662 may be verified 

or explained. Such records should include copies of invoices and identification of the 

associated communication, and, if the communication has already been provided, 

information associating each communication with an invoice(s). 

Legal Standard 

A. Formal Requirements Regarding Reports and Statements. Each Political 

Committee shall maintain records with respect to the matters required to be reported 

which shall provide in sufficient detail the necessary information and data from which 

the filed reports may be verified, explained, clarified, and checked for accuracy and 

completeness. 11 CFR §104.14(b)(1). 

B. Preserving Records and Copies of Reports. The treasurer of a political committee 

must preserve all records and copies of reports for 3 years after the report is filed. 52 

U.S.C. §30102(d). 
8 

Facts and Analysis 

A. Facts

During audit fieldwork, the Audit staff reviewed disbursements for communications to 

verify the accuracy of the information and proper classification of transactions disclosed 

on the reports. RPOMF made 76 disbursements totaling $706,981 for which 

documentation was insufficient to make a determination pertaining to whether these 

disbursements were correctly reported on Schedule B, Line 21(b); Schedule B, Line 30 

(b) and Schedule H4. Another four disbursements totaling $5,681 disclosed from the 

non-federal account had insufficient documentation to make a determination whether the 

disbursements were for non-federal activity, for a total of $712,662.3

The Audit staff’s analysis resulted in the following: 

i. Disbursements - No Invoices or Copies of Communications Provided 

($40,240)

Disbursements totaling $40,240 were paid to three vendors and were disclosed on 

Schedule B, Lines 21(b) and 30(b) with purposes such as “direct mail,” “direct 

mail advertising” and “party direct mail,” but no invoices or associated 

communications were provided. Without sufficient detail, the Audit staff is 

unable to verify RPOMF’s reporting of these amounts as operating expenditures 

or federal election activity. The Audit staff requested copies of the invoices and 

the associated direct mail pieces for each of the disbursements. To date, these 

invoices or other information to associate the payments to a particular 

communication have not been provided. 

ii. Disbursements - Invoices Provided – No Copies of Communications 

Provided ($672,422) 

Disbursements totaling $666,741 were paid to 10 vendors and were disclosed on 

Schedule B, Lines 21(b) and 30(b) and Schedule H4 with purposes such as “direct 

mail,” “direct mail advertising” and “party direct mail.” In addition, 

disbursements totaling $5,681 were paid from the non-federal account with 

wording on the invoices such as “phone bank,” “county fair endorsed candidates’

graphic” and “plastic signs.” For these disbursements, RPOMF provided invoices 

but did not provide information about the related communications. Without 

sufficient detail, the Audit staff is unable to verify RPOMF’s reporting of these 

amounts as operating expenditures, federal election activity, non-federal activity

or allocated federal/non-federal activity. The Audit staff requested copies of the 

associated media pieces, mailers and scripts for each of the disbursements. To 

date, these communications have not been provided. 

 

3

 $712,662 = $706,981 Federal Disbursements + $5,681 Non-Federal Disbursements
9 

B. Interim Audit Report & Audit Division Recommendation

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

conference and provided a schedule of the disbursements for which further records were 

necessary to verify the accuracy of RPOMF’s reporting. In response to the exit 

conference, RPOMF representatives stated RPOMF relied on affiliated committees for 

the approval and production of some of the communication pieces and relied on third 

party entities for the production and dissemination of communication pieces. However, 

the third party entities were not able to provide all of the requested missing media

documentation. RPOMF provided some additional communication pieces, which are not 

a part of the finding amount. 

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

RPOMF provide, in sufficient detail, documentation that allows for verification of proper 

reporting for the communication disbursements totaling $712,662. This documentation 

should include the invoices, scripts, and associated communications, as well as, 

information associating each communication with an invoice(s) that may have been 

previously provided. 

Finding 3. Reporting of Apparent Independent 

Expenditures

Summary 

During audit fieldwork, the Audit staff reviewed expenditures totaling $781,290, that 

RPOMF disclosed on Schedule B (Itemized Disbursements), Line 21(b) (Other Federal 

Operating Expenditures); Schedule B, Line 30(b) (Federal Election Activity Paid Entirely 

with Federal Funds) and Schedule H4 (Disbursements for Allocated Federal /Nonfederal 

Activity), that appear to be independent expenditures that contain express advocacy and 

should have been disclosed on Schedule E, Line 24 (Itemized Independent Expenditures). 

For the $781,290 disclosed as operating expenditures, federal election activity, or 

allocated federal/non-federal activity which appear to be independent expenditures, 

RPOMF did not file 24/48-hour reports totaling $774,721. 

Additionally, the Audit staff identified five disbursements totaling $101,665 that RPOMF 

disclosed as federal election activity on Schedule B, Line 30(b) and operating 

expenditures on Schedule B, Line 21(b) which appeared to be independent expenditures 

requiring disclosure on Schedule E. Furthermore, if the disbursements are determined to 

be independent expenditures, then RPOMF may have been required to file 24/48-hour 

reports depending on the date of public dissemination. 

If RPOMF believes that the apparent independent expenditures, totaling $781,290, did 

not require reporting as independent expenditures, the Audit staff recommends that 

RPOMF provide documentation to support its conclusion. The Audit staff also 

recommends RPOMF provide documentation to support the volunteer materials 

exemption for expenditures totaling $101,665. Absent such documentation, the Audit 
10 

staff recommends that RPOMF amend its reports to disclose these disbursements as 

independent expenditures on Schedule E and submit revised procedures for reporting 

independent expenditures in the future. Lastly, the Audit staff recommends that RPOMF 

provide documentation to support the date of public dissemination for each 

communication to determine whether a filing of 24/48-hour reports were required. 

Legal Standard 

A. Definition of Independent Expenditures. An independent expenditure is an 

expenditure made for a communication expressly advocating the election or defeat of 

a clearly identified candidate that is not made in cooperation, consultation, or concert 

with, or at the request or suggestion of, a candidate, a candidate’s authorized 

committee, or their agents, or a political party or its agents.

A clearly identified candidate is one whose name, nickname, photograph or drawing 

appears, or whose identity is apparent through unambiguous reference, such as “your 

Congressman,” or through an unambiguous reference to his or her status as a 

candidate, such as “the Democratic presidential nominee” or “Republican candidate 

for Senate in this state.”

Expressly advocating means any communication that: 

• Uses phrases such as “vote for the President” or “re-elect your Congressman” or 

communications of campaign slogan(s) or individual word(s), which in context can 

have no other reasonable meaning than to urge election or defeat of one or more 

clearly identified candidates; or

• When taken as a whole and with limited references to external events, such as 

proximity to the election, could be interpreted by a reasonable person only as 

advocating the election or defeat of one or more clearly identified candidates. 11 

CFR §§100.16(a), 100.17 and 100.22. 

B. Disclosure Requirements – General Guidelines. An independent expenditure shall 

be reported on Schedule E if, when added to other independent expenditures made to 

the same payee during the same calendar year, it exceeds $200. Independent 

expenditures made (i.e., publicly disseminated) prior to payment should be disclosed 

as memo entries on Schedule E and as a debt on Schedule D. Independent 

expenditures of $200 or less need not be itemized, though the committee must report 

the total of those expenditures on line (b) on Schedule E. 11 CFR §§104.3(b)(3)(vii), 

104.4(a) and 104.11. 

C. Last-Minute Independent Expenditure Reports (24-Hour Reports). Any 

independent expenditures aggregating $1,000 or more, with respect to any given 

election, and made after the 20th day but more than 24 hours before the day of an 

election must be reported and the report must be received by the Commission within 

24 hours after the expenditure is made. A 24-hour report is required each time 

additional independent expenditures aggregate $1,000 or more. The 24-hour report 

must be filed on a Schedule E. The date that a communication is publicly 

disseminated serves as the date that the Committee must use to determine whether the 
11 

total amount of independent expenditures has, in the aggregate, reached or exceeded 

the threshold reporting amount of $1,000. 11 CFR §§104.4(f) and 104.5(g)(2). 

D. Last-Minute Independent Expenditure Reports (48-Hour Reports). Any 

independent expenditure aggregating $10,000 or more for an election in any calendar 

year, up to and including the 20th day before an election, must disclose this activity 

within 48 hours each time that the expenditures aggregate $10,000 or more. The 

reports must be filed with the Commission within 48 hours after the expenditure is 

made. The 48-hour report must be filed on a Schedule E. The date that a 

communication is publicly disseminated serves as the date that the Committee must 

use to determine whether the total amount of independent expenditures has, in the 

aggregate, reached or exceeded the threshold reporting amount of $10,000. 11 CFR 

§§104.4(f) and 104.5(g)(1). 

E. Formal Requirements Regarding Reports and Statements. Each political 

committee shall maintain records with respect to the matters required to be reported 

which shall provide in sufficient detail the necessary information and data from which 

the filed reports may be verified, explained, clarified, and checked for accuracy and 

completeness. 11 CFR §104.14(b)(1). 

F. Allocation of Expenses Between Candidates. Expenditures made on behalf of more 

than one clearly identified federal candidate shall be attributed to each such candidate 

according to the benefit expected to be derived. In the case of a publication or 

broadcast communication, the attribution shall be determined by the proportion of 

space or time devoted to all candidates. This method shall be used to allocate 

payments involving both clearly identified federal candidates and one or more clearly 

identified non-federal candidates. 11 CFR §106.1(a). 

G. Volunteer Activity. The payment by a state committee of a political party of the 

costs of campaign materials (such as pins, bumper stickers, handbills, brochures, 

posters, party tabloids or newsletters, and yard signs) used by such committee in 

connection with volunteer activities on behalf of any nominee(s) of such party is not a 

contribution, provided that the following conditions are met: 

• Such payment is not for cost incurred in connection with any broadcasting, 

newspaper, magazine, bill board, direct mail, or similar type of general public 

communication or political advertising. The term direct mail means any 

mailing(s) by a commercial vendor or any mailing(s) made from commercial lists;

• The portion of the cost of such materials allocable to Federal candidates must be 

paid from contributions subject to the limitations and prohibitions of the Act; 

• Such payment is not made from contributions designated by the donor to be spent 

on behalf of a particular candidate for federal office;

• Such materials are distributed by volunteers and not by commercial or for-profit 

operations; 

• If made by a political committee such payments shall be reported by the political 

committee as a disbursement in accordance with 11 CFR §104.3 but need not be 

allocated to specific candidates in committee reports; and 
12 

• The exemption is not applicable to campaign materials purchased by the national 

party committees. 11 CFR §100.87 (a), (b), (c), (d), (e) and (g) and 11 CFR 

§100.147 (a), (b), (c), (d), (e) and (g). 

Facts and Analysis 

A. Reporting of Apparent Independent Expenditures

1. Facts

During audit fieldwork, the Audit staff reviewed disbursements to ensure proper 

reporting. The Audit staff noted that RPOMF did not disclose any independent 

expenditures on Schedule E, however, it made apparent independent expenditures 

totaling $781,290 and disclosed them on Schedule B, Line 21(b); Schedule B, Line 

30(b) and Schedule H4. The expenditures were for 69 fundraising mailers, email ads

and campaign mailers which contained express advocacy. A breakdown analysis for 

these expenditures is as follows: 

a. Apparent Independent Expenditures Reported as Operating Expenditures, 

Federal Election Activity (FEA) and Allocated Federal/Non-Federal Activity

(Associated Mailer and Invoice Provided under 11 CFR §100.22(a)) 

RPOMF made 58 disbursements for apparent independent expenditures totaling

$653,220 for which it provided copies of the mailers and ads with associated 

invoices for the identified disbursements, and cancelled checks or wire transfer 

documentation.4

The mailers and ads provided contained the following phrases, “Defeat Democrat 

Senator Amy Klobuchar,” “Vote for our Republican candidates on the ballot,” 

“We’ve got three outstanding national conservative leaders to re-elect: 

Representatives Erik Paulsen, Tom Emmer and Jason Lewis,” “Next year, Senator 

Amy Klobuchar has got to go!,” and "Re-elect Congressmen Erik Paulsen, Tom 

Emmer and Jason Lewis to advance the reform-driven Trump Agenda." All of 

these communications contained language expressly advocating the election or 

defeat of a clearly identified candidate, as defined under 11 CFR §100.22(a). 

b. Apparent Independent Expenditures Reported as Operating Expenditures 

and Disbursements for Allocated Federal /Non-Federal (Associated Mailer

and Invoice Provided under 11 CFR §100.22(b)) 

RPOMF made 11 disbursements for apparent independent expenditures totaling 

$128,070 for which it provided copies of the mailers and ads with the associated 

invoices for the identified disbursements and cancelled checks or wire transfer 

documentation. 

The mailers contained the following phrases: 

 

4

 For 11 of these disbursements, RPOMF provided incomplete copies of the mailers and/or invoices.
13 

• “...we have an incredible opportunity to move from 'three out of eight' 

Republican Members of Congress to potentially 'four or five out of eight' 

in November!” 

• “We are optimistic about our opportunities this November and look 

forward to retiring Congressman Peterson.” 

• “...we know that voters are sticking with our two Republican members of 

Congress" and "The Republican Party of Minnesota believes in results, not 

resistance, and we look forward to re-electing these two great 

Congressmen in November!” 

• “As bad as Tina Smith, Tim Walz and Keith Ellison are for Minnesota’s 

future...That’s how good our candidate for the U.S. Senate, Karin 

Housley... Our candidate for Governor of Minnesota, Jeff Johnson... And 

our candidate for Attorney General, Doug Wardlow will be!” 

• “Also, we must make sure that our outstanding candidates for the U.S. 

Congress: Representatives Erik Paulsen, Tom Emmer and Jason Lewis 

and our nationally-targeted challengers, Jim Hagedorn, David Hughes and 

Pete Stauber are victorious.” 

• “Erik Paulsen has a record of bipartisan accomplishments”, “Erik Paulsen 

breaks with Republicans on BWCA, urges feds to reconsider”, and “Erik 

Paulsen for Congress, vote November 6th.” 

Based on the definition of express advocacy under 11 CFR §100.22(b), the Audit 

staff believes that these mailers could only be interpreted by a reasonable person 

as advocating the election or defeat of a clearly identified candidate.

2. Interim Audit Report & Audit Division Recommendation

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

conference and provided a schedule detailing these expenditures. RPOMF 

representatives indicated that the expenditures were for general fundraising with a 

call of action for giving money as opposed to containing express advocacy. In 

response to the exit conference, RPOMF representatives stated that “...expenditures 

referenced were all general party building fundraising for the committee’s general 

fund. The letters and scripts contained multi-candidate references and did not 

advocate or oppose one single candidate.” RPMOF also submitted 66 mailers and ad 

pieces to the Audit staff, of which 56 were previously provided during fieldwork and 

10 were incomplete as they were still missing identified media scripts. The Audit 

staff maintains that the identified expenditures are apparent independent expenditures. 

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

RPOMF provide documentation that apparent independent expenditures, totaling 

$781,290, did not require reporting as independent expenditures. Absent such 

documentation, the Audit staff recommends that RPOMF amend its reports to 

disclose these disbursements as independent expenditures on Schedule E. 
14 

B. Volunteer Materials Exemption 

1. Facts

RPOMF reported five disbursements totaling $101,665 on Schedule B, Line 30(b) as 

federal election activity. The reported purposes included “non-allocable FEA mail,” 

“transportation for GOTV” and “GOTV calls.” The invoices for these disbursements 

indicated “volunteer driven” but RPOMF did not provide any volunteer 

documentation to support these particular disbursements. 

The Commission has addressed the applicability of the volunteer materials exemption 

in the Final Audit Reports of the Arizona Republican Party, the Democratic 

Executive Committee of Florida, and the Tennessee Republican Party. In these 

reports, the Commission recognized a lack of clarity regarding the application of the 

volunteer materials exemption. The Commission had attempted to formulate a 

consensus policy regarding what constitutes substantial volunteer involvement for the 

purpose of applying the exemption5

, but this was never achieved. Since a lack of 

clarity exists concerning the application of the volunteer materials exemption, it 

follows that the type and amount of documentation needed to support volunteer 

involvement is also unclear. 

2. Interim Audit Report & Audit Division Recommendation

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

conference and provided a schedule detailing these expenditures. In response to the 

exit conference, RPOMF representatives stated that RPOMF was unable to locate the 

volunteer documentation for some of the identified expenditures and the remaining 

expenditures were “either general party fundraising, voter list purchase, a candidate 

reimbursement, a non-candidate printed fan or paid GOTV calls.”

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

RPOMF provide documentation and evidence that apparent independent expenditures 

totaling $101,665 did not require reporting as independent expenditures. Evidence 

should include any further documentation such as volunteer sign in sheets and 

photographs to support the involvement of volunteers processing or distributing the 

communications. Absent such evidence, the Audit staff recommends RPOMF amend 

its reports to disclose the disbursements as independent expenditures on Schedule E. 

 

5

 Proposed Interim Enforcement Policy, Agenda document No. 10-16. 

https://www.fec.gov/resources/updates/agendas/2010/mtgdoc1016.pdf 
15 

C. Failure to File 24/48-Hour Reports for Apparent Independent Expenditures

1. Facts

In addition to not reporting any independent expenditures during the audit period, 

RPOMF did not file any 24 or 48-hour reports.6 Of the $781,290 in apparent 

independent expenditures reported as operating expenditures, federal election activity 

and allocated federal/non-federal activity, 

• RPOMF failed to file 48-hour reports totaling $747,409. 

• RPOMF failed to file 24-hour reports totaling $27,312. 

Absent evidence the expenditures totaling $101,665 were not required to be reported 

as independent expenditures, RPOMF may have also been required to file 24/48-hour 

reports for these disbursements, which do not have the volunteer materials exemption. 

2. Interim Audit Report & Audit Division Recommendation

The Audit staff discussed this matter at the exit conference and provided RPOMF 

representatives a schedule detailing the expenditures along with the volunteer 

materials exemption. In response to the exit conference, RPOMF representatives 

stated that “...expenditures referenced were all general party building fundraising for 

the committee’s general fund. The letters and scripts contained multi-candidate 

references and did not advocate or oppose one single candidate.”

Absent documentation that the apparent independent expenditures totaling $876,3867

did not require reporting as independent expenditures, the Audit staff recommends 

that, within 30 calendar days of service of this report, RPOMF provide documentation 

to support the date of public dissemination for each identified expenditure to 

determine whether 24/48-hour reports were required to be filed. 

Finding 4. Disclosure of Transfers and Allocation Ratios

Summary 

During audit fieldwork, the Audit staff identified two transfers to affiliated/other party 

committees totaling $64,303 reported on Schedule H4 (Disbursements for Allocated 

Federal/Non-Federal Activity). Party committee transfers do not qualify as allocable 

activity for disclosure on Schedule H4 but should instead be disclosed on Schedule B 

(Itemized Disbursements), Line 22 (Transfers to Affiliated/Other Party Committees). In 

addition, the Audit staff identified two fundraisers that were not reported on Schedule H2 

(Allocation Ratios), and RPOMF incorrectly applied the allocation ratio for 

Administrative expenses on Schedule H4 for 30 disbursements related to these 

fundraisers totaling $73,129. The Audit staff recommends that RPOMF amend its 

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

 

6

 The date the expenditure is publicly distributed serves as the date that the independent expenditure is 

made for purposes of the additional 24/48-hour report filing requirements. In the absence of a known 

date for public dissemination, the Audit staff used the invoice date of incurrence to determine if a 24/48-

hour report was required. 7

 $876,386 = $747,409 + $27,312 + $101,665
16 

disclose the transfers to affiliated/other party committees on Schedule B, the fundraising 

events on Schedule H2 and the fundraising expenses on Schedule H4. 

Legal Standard 

A. Transfers. All disbursements, contributions, expenditures, and transfers by the 

committee in connection with any Federal election shall be made from its Federal 

account. 11 CFR §102.5(a)(1)(i). 

B. Allocation Ratio for Shared Fundraising Expenses. If a committee raises both 

federal and non-federal funds through the same fundraising program or event, it must 

allocate the direct cost of the fundraising event based upon the ratio of funds received 

by the federal account to the total amount raised for the event. 11 CFR §106.7(d)(4). 

C. Reporting of Allocation of Direct Cost for Shared Fundraising. In each report

disclosing a disbursement for the direct costs of a fundraising program, the committee 

shall: 

• Assign a unique identifying title or code to each such program or activity,

• State the allocation ratio calculated for the program or activity according to 11 

CFR 106.6(d), and 

• Explain the manner in which the ratio was derived. 

• The committee shall also summarize the total amounts spent by the Federal and 

non-Federal accounts that year, to date, for each such program or activity. 11 

CFR §104.10(b)(2).

D. Reporting of Allocations of Shared Expenses. When disclosing an allocable 

disbursement, a State, district, or local committee shall

• State and explain the allocation percentages to be applied to each category of 

allocable activity;

• State the category of activity for which each allocated disbursement was made in 

each subsequent report in the calendar year itemizing an allocated disbursement; 

and

• Summarize the total amounts expended from Federal and Non-Federal accounts, 

or from allocation accounts, that year to date for each such category. 11 CFR 

§104.17(b)(1)(i) and (ii).

Facts and Analysis 

A. Disclosure of Transfers

1. Facts

During audit fieldwork, the Audit staff reviewed transfers to affiliated/other party 

committees and identified two transfers totaling $64,303 reported on Schedule H4. 

One transfer totaling $16,072 was to the Republican National Committee, and the 

second transfer totaling $48,231 was to the Missouri Republican State CommitteeFederal. Transfers to affiliated/other party committees do not qualify as allocable 

activity for disclosure on Schedule H4 but should instead be disclosed on Schedule B, 
17 

Line 22. Based on a review of all allocable activity and amounts transferred from the 

non-federal account, it was determined that RPOMF did not make an overpayment 

from the non-federal account for its share of allocable expenses.

2. Interim Audit Report & Audit Division Recommendation

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

conference and provided a schedule of the incorrectly disclosed transfers. In response 

to the exit conference, RPOMF representatives acknowledged that the two transfers 

referenced did not qualify as allocable activity, were disclosed incorrectly on the 

wrong schedule, and provided a draft Form 99 (Miscellaneous Electronic 

Submission). As of the date of this report, RPOMF has not formally filed the Form 

99 with the Commission. 

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

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

Submission)8 to correctly disclose the transfers to affiliated/other party committees on 

Schedule B, Line 22. 

B. Disclosure of Allocation Ratios 

1. Facts

The Audit staff reviewed allocable disbursements and identified two fundraising 

events that raised funds for RPOMF's federal and non-federal accounts. These 

fundraising events were not reported on Schedule H2, and had associated expenses 

disclosed on Schedule H4. 

The Audit staff applied the “funds received”9 method to determine the allocation ratio 

for the direct costs of each fundraiser. Based on the funds received method, RPOMF

applied the incorrect allocation ratio for 30 disbursements totaling $73,129. For these 

disbursements, RPOMF applied the Administrative allocation ratio instead of the 

correct fundraising event ratio. 

Based on a review of all allocable activity and amounts transferred from the nonfederal account, it was determined that RPOMF did not make an overpayment from 

the non-federal account for its share of allocable expenses. However, RPOMF should 

amend its reports to correct the disclosure of these allocation ratios. 

2. Interim Audit Report & Audit Division Recommendation

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

conference and provided a schedule of the fundraiser allocation ratios not reported on 

Schedule H2 and the fundraising related disbursements incorrectly allocated on 

Schedule H4. In response to the exit conference, RPOMF representatives 

 

8

 If RPOMF 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. 9

 The “funds received” method is used to allocate the cost of fundraising expenses by calculating the ratio 

of federal funds received to total receipts for the program or event.
18 

acknowledged that the two fundraisers should have been disclosed on Schedule H2 

using the funds raised method of allocation. RPOMF provided a draft Form 99 and a 

draft Schedule H2 for the Audit staff’s review. In addition, RPOMF representatives 

acknowledged that the fundraising expenses were incorrectly reported on Schedule 

H4 by using the Administration allocation ratio instead of the fundraising allocation 

ratio. RPOMF provided draft Form 99s. As of the date of this report, RPOMF has

not formally filed the Form 99s with the Commission. 

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

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

Submission)8 to correctly disclose the fundraising events on Schedule H2 and 

correctly disclose the allocable fundraising expenses on Schedule H4. 

Finding 5. Excessive Coordinated Party Expenditures

Summary 

During audit fieldwork, the Audit staff identified apparent coordinated expenditures for 

three House candidates that exceeded the 2018 coordinated party expenditure limit by a 

total of $255,421. The Audit staff recommends that RPOMF provide documentation 

demonstrating that the expenditures were not coordinated or seek reimbursement from 

the candidate who benefited. 

Legal Standard 

A. Coordinated Party Expenditures. National party committees and state party 

committees are permitted to purchase goods and services on behalf of candidates in 

the general election—over and above the contributions that are subject to contribution 

limits. Such purchases are referred to as “coordinated party expenditures.” They are 

subject to the following rules: 

• The amount spent on “coordinated party expenditures” is limited by statutory 

formulas that are based on the Cost of Living Adjustment (COLA) and the voting 

age population; 

• Party committees are permitted to coordinate the spending with the candidate 

committees; 

• The parties may make these expenditures only in connection with the general 

election; 

• The party committees—not the candidates—are responsible for reporting these 

expenditures; and

• If the party committee exceeds the limits on coordinated party expenditures, the 

excess amount is considered an in-kind contribution, subject to the contribution 

limits. 52 U.S.C. §30116(d) and 11 CFR §§109.30 and 109.32. 

B. Assignment of Coordinated Party Expenditure Limit. A political party may 

assign its authority to make coordinated party expenditures to another political party 

committee. Such an assignment must be made in writing, state the amount of the 

authority assigned, and be received by the assignee before any coordinated party 
19 

expenditure is made pursuant to the assignment. The political party committee that is 

assigned authority to make coordinated party expenditures must maintain the written 

assignment for at least three years. 11 CFR §§104.14 and 109.33(a) and (c). 

C. Exempt Activity. The payment by a state committee of a political party of the costs 

of campaign materials (such as pins, bumper stickers, handbills, brochures, posters, 

party tabloids or newsletters, and yard signs) used by such committee in connection 

with volunteer activities on behalf of any nominee(s) of such party is not a 

contribution, provided that the following conditions are met: 

1. Such payment is not for costs incurred in connection with any broadcasting, 

newspaper, magazine, bill board, direct mail, or similar type of general public 

communication or political advertising. The term direct mail means any 

mailing(s) by a commercial vendor or any mailing(s) made from commercial lists.

2. The portion of the cost of such materials allocable to Federal candidates must be 

paid from contributions subject to the limitations and prohibitions of the Act. 

3. Such payment is not made from contributions designated by the donor to be spent 

on behalf of a particular candidate for Federal office.

4. Such materials are distributed by volunteers and not by commercial or for-profit

operations. 

5. If made by a political committee, such payments shall be reported by the political 

committee as a disbursement in accordance with 11 CFR §104.3 but need not be 

allocated to specific candidates in committee reports.

6. The exemption is not applicable to campaign materials purchased by the national 

party committees. 11 CFR §100.87 (a), (b), (c), (d), (e) and (g) and 11 CFR 

§100.147 (a), (b), (c), (d), (e) and (g).

D. Coordinated Party Communication. A political party communication is 

coordinated with a candidate, a candidate’s authorized committee, or agent of any of 

the foregoing, when the communication satisfies the following conditions: 

(1) The communication is paid for by a political party committee or its agent.

(2) The communication satisfies at least one of the content standards.

• Must expressly advocate a candidate’s election of defeat 11 CFR §100.22(a) 

and (b). 

• Involve the dissemination, distribution or republication of a candidate’s 

campaign materials.

• Refers to a federal candidate, is directed to the candidate’s constituents and is 

distributed within certain time frame before an election.

(3) The communication satisfies at least one of the conduct standards in 11 CFR 

§109.21(d)(1) through (d)(6), subject to the provisions of 11 CFR §109.21(e), (g), 

and (h). 

• Must have been created, produced or distributed at the request of the 

candidate or its’ agent.

• Developed with a “material involvement” of the candidate.

• Created, produced or distributed after “substantial discussion” with the 

candidate or his agents.
20 

• The use of a common vendor in the creation, production or distribution of a 

communication. 11 CFR §109.37. 

E. Reporting Coordinated Party Expenditures. Each political committee shall report 

the full name of each person who receives any expenditure from the reporting 

committee during the reporting period in connection with an expenditure under 11 

CFR Part 109, Subpart D (52 U.S.C. §30116(d)), together with the date, amount and 

purpose of any such expenditure as well as the name of, and office sought by the 

candidate on whose behalf the expenditure is made. 11 CFR §104.3 (b)(1)(viii). 

F. Limits on Contributions Made by State and Local Party Committees.

State and local party committees must comply with the contribution limits below:

• $5,000 per election to a Federal campaign if the contributing committee has 

qualified as a multicandidate committee. 

• $2,700 per election to a Federal campaign if the contributing committee has not 

qualified as a multicandidate committee.

• $5,000 per year to a separate segregated fund (corporate or labor PAC) or a 

nonconnected committee.

• Unlimited transfers to other party committees. 52 U.S.C. §30116(a). 

Facts and Analysis 

A. Facts

The coordinated expenditure limit during the 2018 election cycle for a House candidate 

in the state of Minnesota was $49,700 each for the state and national party committees. 

RPOMF and the Republican National Committee (RNC) each transferred their 

coordinated expenditure limit spending authority to the National Republican 

Congressional Committee (NRCC) to make coordinated expenditures on behalf of House 

candidates Erik Paulsen (Minnesota District 03), Jason Lewis (Minnesota District 02), 

and Pete Stauber (Minnesota District 08). 

During audit fieldwork, the Audit staff’s review of disbursements identified apparent 

coordinated expenditures made on behalf of Friends of Erik Paulsen consisting of one 

direct mail piece totaling $23,166 that was reported on Schedule B, Line 30(b). In 

addition, RPOMF made apparent coordinated expenditures on behalf of Jason Lewis for 

Congress consisting of nine direct mail pieces totaling $179,049 that were reported on 

Schedule B, Line 30(b) and Schedule H4. Finally, RPOMF made apparent coordinated 

expenditures on behalf of Pete Stauber for Congress Volunteer Committee consisting of 

four direct mail pieces totaling $68,206 that were reported on Schedule B, Line 30(b) and 

Schedule H4. These apparent coordinated expenditures were made subsequent to 

RPOMF transferring its coordinated expenditure limit spending authority to the NRCC.

10 

As a result, these expenditures were in excess of the authorized coordinated spending 

 

10 RPOMF transferred its coordinated expenditure limit spending authority to the NRCC on behalf of 

House candidates Erik Paulsen (Minnesota District 03) on 09/07/18, Jason Lewis (Minnesota District 02)

on 10/02/18, and Pete Stauber (Minnesota District 08) on 09/07/18. 
21 

limit for each candidate and resulted in an apparent excessive in-kind contribution to each 

candidate.

Our analysis was based on a three-pronged test to determine whether a communication is 

a party coordinated communication. A communication must satisfy all three prongs of 

the test to be considered a party coordinated expenditure. The three-prong test consists of 

payment prong, content prong and conduct prong. 

• Payment Prong – All communication were paid by RPOMF and traced to its 

federal account;

• Content Prong – "Vote Against Health Care Hypocrite Dean Phillips for 

Congress" (Paulsen); Refers to a clearly identified House candidate and is 

publicly distributed in the identified candidate’s jurisdiction within 90 days of the 

candidate’s general election & “Only Reasonable Interpretation” Test (Lewis); 

"Vote NO on Joe Radinovich" "Vote Pete Stauber for Congress" (Stauber); 

• Conduct Prong – Disclaimer on communication: “Paid for by Minnesota 

Republican Party and authorized by Friends of Erik Paulsen”, Paid for by 

Minnesota Republican Party and authorized by Jason Lewis for Congress”, Paid 

for by Minnesota Republican Party and authorized by Pete Stauber for Congress 

Volunteer Committee”.

The following chart details the total amount of apparent coordinated expenditures and the 

resulting apparent excessive in-kind contributions. 

RPOMF Apparent 

Coordinated 

Expenditures

Friends of 

Erik Paulsen

Jason Lewis 

for Congress

Pete Stauber for 

Congress 

Volunteer 

Committee

Total

Reported Expenditures $ 23,166 $ 179,049 $ 68,206

 Less: RPOMF

Spending Limit (0) (0) (0) 

Over Limit (In-kind 

Contribution)11 $ 23,166 $ 179,049 $ 68,206 

 Less: Allowable

Contribution12 ($5,000) ($5,000) ($5,000) 

Excessive In-kind 

Contributions $ 18,166 $ 174,049 $ 63,206 $ 255,421 

B. Interim Audit Report & Audit Division Recommendation 

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

conference and provided a schedule of the apparent excessive in-kind contributions. In 

response to the exit conference, RPOMF representatives stated that these mail pieces 

were non-allocable volunteer driven mail, covered under the volunteer materials 

 

11 Total amount over the coordinated expenditure limit before adjusting for allowable contributions was 

$270,421. 12 RPOMF did not report any contributions to federal candidates during the 2018 election cycle.
22 

exemption, and therefore did not count as a contribution to the candidate. RPOMF 

provided photos of volunteer activity for the Erik Paulsen mailer, but the content of the 

photos does not identify the mailer in question.13 RPOMF did not provide photos of 

volunteer activity for the other mailers.

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

RPOMF demonstrate that it did not exceed its coordinated spending limit on behalf of 

Friends of Erik Paulsen, Jason Lewis for Congress, and Pete Stauber for Congress 

Volunteer Committee. Evidence can include sign in sheets and pictures of volunteers 

sorting and bundling the identified mail pieces. Absent such evidence, the Audit staff 

recommends that RPOMF seek reimbursements from Erik Paulsen in the amount of 

$18,166, Jason Lewis in the amount of $174,049, and Pete Stauber in the amount of 

$63,206. 

Finding 6. Disclosure of Loans and Loan Repayments

Summary 

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

disclose 50 transactions totaling $525,742. RPOMF did not properly disclose the correct 

purpose for interest payments and loan repayments on Schedule B (Itemized 

Disbursements), Line 21(b) (Federal Operating Expenditures) and Schedule B, Line 26 

(Loan Repayments). RPOMF also disclosed the incorrect loan terms on Schedule C1 

(Loans and Line of Credit from Lending Institutions) and Schedule C (Loans). The Audit 

staff recommends that RPOMF provide documentation demonstrating that RPOMF 

properly disclosed the purpose and loan terms for these transactions. Absent such 

documentation, RPOMF should amend its disclosure reports or file a Form 99 

(Miscellaneous Electronic Submission) to correct the disclosure errors for the purpose 

and loan terms. 

Legal Standard 

A. Continuous Reporting Required. A political committee must disclose the amount 

and nature of outstanding debts and obligations until those debts are extinguished. 52 

U.S.C. §30104(b).

B. 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). 

 

13 The Audit staff notes that RPOMF was able to provide some evidence for the volunteer materials 

exemption totaling $94,361. This amount is not included in the apparent coordinated expenditures total 

noted above. RPOMF provided pictures of individuals sorting and moving the mailers to trucks along 

with the volunteer’s name and phone number.
23 

C. Disclosure of Expenditures. A political committee must disclose each person to 

whom an expenditure in an aggregate amount or value in excess of $200 within the 

calendar year is made by the reporting committee to meet the committee's operating 

expenses, together with the date, amount, and purpose of such operating expenditure. 

Purpose means a brief statement or description of why the disbursement was made. 

11 CFR §104.3(b)(3). 

D. 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). 

Facts and Analysis 

A. Facts

During audit fieldwork, the Audit staff reviewed two bank loans ($693,040) and one line 

of credit ($100,000) to RPOMF totaling $793,040. One of the loans and the line of credit 

originated prior to the audit period but still carried outstanding balances as of December 

31, 2016. Based on the review of loans and draws on the line of credit, the Audit staff 

determined that RPOMF disclosed incorrect purposes for loan repayments and interest 

payments on Schedule B, Lines 26 and 21(b), respectively, and/or incorrect or incomplete 

disclosure information on Schedules C1 and C when compared to the loan agreements. 

These errors consisted of 50 transactions totaling $525,742. 

These errors consisted of disclosing incorrect information including: terms for due dates, 

incorrect incurred dates, incorrect interest rate, marking the loans as unsecured despite 

the bank agreements indicating the loans were secured with collateral, incorrect purpose 

for interest payments and incorrect purpose for bank loan repayments. The loans and line 

of credit documentation provided by RPOMF did not support the information that was 

reported on the disclosure reports. 

B. Interim Audit Report & Audit Division Recommendation

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

conference and provided a schedule of the loan interest repayments and loan repayments 

disclosed incorrectly. 

In response to the exit conference, RPOMF representatives acknowledged the disclosure 

errors and stated: 

“Regarding the incorrect reporting of RP[O]M[F] bank note (loan) details in terms of: 

maturity date of notes, interest rates, collateral, note date, the RP[O]M[F] as noted in 

correspondence to the FEC and in various memoranda to the RP[O]M[F]’s FEC 

analyst, the RP[O]M[F]’s FEC reporting software had a significant, and at the time, 
24 

unsolved issue in this area. While we knew on each monthly filing as indicated to the 

FEC auditors that certain loan disclosures were not accurate and in spite of attempting 

to obtain corrected fields from our FEC filing software package, we were not 

successful from approximately May of 2017 through November of 2018. It should be 

noted that all loan dollar activity in terms of loan advances, loan payments, interest 

expense paid, and end of the reporting period loan balances were accurate in our filed 

FEC reports. The correct interest rate, incur date, due date and secured checked box 

are noted as well as a digital Schedule C-1 with the bank address and authorized bank 

representative’s name and electronic signature in our response in the attachment 

labeled “Finding 6 response”. The RP[O]M[F] will work closely with our FEC 

analyst to properly amend the affected FEC reports with respect to these loan terms, 

although we hope that the attached response in the excel file and the attached Schedule 

C-1 will satisfy our obligation. We are not confident our software will be able to 

properly produce amended reports from 2017-2018 without further errors. The loan 

information has already corrected and the interest rate, incur date, due date and the 

secured box checked is correct as filed.”

RPOMF provided draft Form 99s and a draft Schedule C1. As of the date of this report, 

RPOMF has not formally filed the Form 99s or amended the disclosure reports inclusive 

of the corrected Schedule C1. 

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

RPOMF provide documentation demonstrating that the identified loan interest payments 

and loan repayments were correctly disclosed. Absent such documentation, the Audit 

staff recommends that RPOMF amend its reports or file a Form 99 (Miscellaneous 

Electronic Submission)8 to disclose the correct information on Schedule B, Schedule C, 

and Schedule C1.