CHRONOLOGY

BILL BRADLEY FOR PRESIDENT, INC.

Audit Fieldwork
Preliminary Audit Report to
the Committee

Response Received to the
Preliminary Audit Report

Final Audit Report Approved

Page 14 of 14

July 31 2000 -
March 31, 2001

November 28, 2001

February 27, 2002

April 18, 2002

Approved April 18, 2002


STATEMENT OF NET OUTSTANDING CAMPAIGN OBLIGATIONS

As of March 9, 2000
As Determined at 1/31/02

ASSETS
Cash in Bank $2,877,526
Accounts Receivable: 1,632,515
Capital Assets 7,200
Other Assets $5,208
Total Assets $4,522,449
OBLIGATIONS
Loan Payable 6,880,235,
Disbursements for Qualified Campaign 5,521,768 (a)
Expenses and Winddown through
January 31, 2002
Remaining Accounts Payable as of 1/31/2002 27,961
Winding Down Costs 135,191 (c)
2/01/02 and later: Estimated
Amount Payable to U.S. Treasury:
Stale-dated Checks 28,085 (b)
Total Obligations $12,593,241
NET OUTSTANDING CAMPAIGN OBLIGATIONS ($8,070,792)
FOOTNOTES TO NOCO
(a) The Accounts Payable figure has been adjusted for non-qualified campaign expenditures paid

after the candidate's date of ineligibility. No mention of non-qualified expense is included in
Preliminary Audit Report because the majority were paid after all Federal funds had been

expended.

(b) BBFP's Cash in Bank and Accounts Payable for Qualified Campaign expenses have been
adjusted to reflect Pre and Post date of Ineligibility stale-dated checks.

(c) Some estimates were used in computing this amount: the Audit staff will review BBFP's

disclosure reports and records to compare the actual figures with the estimated
figures. Should actual disbursements depart significantly from estimated amounts,

a greater or lesser repayment could result.

Page 8 of 14

Approved April 18, 2002



REPORT OF THE AUDIT DIVISION
ON

Bill Bradley for President, Inc.

Approved April 18, 2002

FEDERAL ELECTION COMMISSION
999 E STREET, N.W.
WASHINGTON, D.C.



FEDERAL ELECTION COMMISSION

WASHINGTON. DC 20465

April 24, 2002
Theodore V. Wells, Jr., Treasurer
Bill Bradley for President, Inc.
c/o Peter Nichols
222 Stony Brook Road
Hopewell, NJ 08525

Dear Mr. Wells:

Attached please find the Report of the Audit Division on Bill Bradley for
President, Inc. The Commission approved the report on April 18, 2002. As noted on
page 3 of the attached report, the Commission may pursue any of the matters discussed in
an enforcement action.

In accordance with 11 CFR §§9038.2(c)(1) and (d)(1), the Commission has made
a determination that a repayment to the Secretary of the Treasury in the amount of
$14,055 is required within 90 calendar days after service of this report (July 22, 2002).

Should the Candidate dispute the Commission's determination that a repayment is
required, Commission regulations at 11 CFR §9038.2(c)(2) provide the Candidate with an
opportunity to submit in writing, within 60 calendar days after service of the
Commission's notice (June 22, 2002), legal and factual materials to demonstrate that no
repayment, or a lesser repayment. is required. Further. 11 CFR §9038.2(c)(2)(ii) permits
a Candidate who has submitted written materials to request an opportunity to address the
Commission in open session based on the legal and factual materials submitted.

The Commission will consider any written legal and factual materials submitted
within the 60 day period when deciding whether to revise the repayment determination.
Counsel may submit such materials if the Candidate so elects. If the Candidate decides
to file a response to the repayment determination, please contact Gregory R. Baker of the
Office of General Counsel at (202) 694-1650 or toll free at (800) 424-9530. Ifthe
Candidate does not dispute this determination within the 60 day period provided, it will
be considered final.

The Commission approved Audit Report will be placed on the public record on or
about April 25, 2002. Should you have any questions regarding the public release of this
report, please contact Ron Harris of the Commission's Press Office at (202) 694-1220.

Page 12 of 14
Approved April 18, 2002



Cc. CAMPAIGN ORGANIZATION

The Bill Bradley for President Exploratory Committee (the Exploratory
Committee) registered with the Federal Election Commission on December 4, 1998 as
the principal campaign committee for Bill Bradley (the Candidate), a candidate for the
Democratic Party’s nomination for the office of President of the United States. On
February 5, 1999, the Exploratory Committee’s name was changed to Bill Bradley for
President, Inc.

BBFP currently maintains its headquarters in Princeton, New Jersey. The
Treasurer for BBFP is Theodore V. Wells, Jr. On January 12, 1999, Peter D. Nichols
became Assistant Treasurer and continues to serve in that capacity.

BBFP maintained depositories in Newark, Princeton and Roseland, New
Jersey. To handle its financial activity, BBFP utilized 28 bank accounts. From these
accounts the campaign made approximately 22,000 disbursements. In addition, BBFP
received contributions totaling about $29,654,000, from approximately 103,100
contributors. BBFP also received loans totaling $6,880,235, $1,564,840 in offsets to
expenditures, and $469,338 in interest and other receipts.

In addition to the above, the Candidate was determined eligible to receive
matching funds on March 25, 1999. BBFP made 9 matching fund requests totaling
$12,597,738 and received $12,462,047 from the United States Treasury. This amount
represents 73.78% of the $16,890,000 maximum entitlement that any candidate could
receive. For matching fund purposes, the Commission determined that Bill Bradley’s
candidacy ended on March 9, 2000, the date on which he ceased to be an active candidate
for the nomination. On June 15, 2000, BBFP received its final matching fund payment to
defray expenses and to help defray the cost of winding down the campaign.

D. AUDIT SCOPE AND PROCEDURES

A matter noted during the audit is pending before the Commission in
another context. When the Commission concludes its consideration of this matter,
information will be made public in accordance with Commission procedures.

In addition to a review of expenditures made by BBFP to determine if they
were qualified or non-qualified campaign expenses, the audit of BBFP covered the
following general categories:

1. the receipt of contributions or loans in excess of the statutory
limitations;

2. the receipt of contributions from prohibited sources, such as those
from corporations or labor organizations;

Page 4 of 14
Approved April 18, 2002


FEDERAL ELECTION COMMISSION
WASHINGTON, D.C 20463
REPORT OF THE AUDIT DIVISION
ON
BILL BRADLEY FOR PRESIDENT, INC.

EXECUTIVE SUMMARY

Bill Bradley for President, Inc. (BBFP) registered with the Federal
Election Commission on December 4, 1998 as the principal campaign committee for Bill
Bradley (the Candidate), a candidate for the Democratic Party’s nomination for the office
of President of the United States. On February 5, 1999, the Exploratory Committee’s
name was changed to Bill Bradley for President, Inc.

The audit is mandated by Section 9038(a) of Title 26 of the United States Code,
requiring the Commission to audit committees authorized by candidates who receive
Federal Funds. The Candidate received $12,462,047 in matching funds from the U.S.
Treasury.

The findings of the audit were presented to BBFP at an exit conference held on
June 29, 2001 and in the Preliminary Audit Report (PAR). BBFP’s responses to those
findings are contained in the audit report.

The following is an overview of the findings contained in the audit report.

ITEMIZATION OF RECEIPTS AND DISBURSEMENTS — 2 USC §§434(b)(3)(F), (G)
and 434(b)(4)(D) and (E). The Audit staffs review of receipts and disbursements
showed that BBFP had not itemized or reported interest earned in the amount of $25,712,
offsets to operating expenditures in the amount of $130,594 and had failed to itemize
interest paid on loans in the amount of $75,024. In response to the PAR, BBFP filed
amended disclosure reports.

FEDERAL FUNDS RECEIVED IN EXCESS OF ENTITLEMENT — 11 CFR
§§9034.1(b) and 9038.2(b)(1). The Audit staff calculated that the candidate received
matching funds in excess of entitlement totaling $14,055. The excess resulted primarily
from the BBFP’s overstatement of estimated winding down expenses on its Statement of
Net Outstanding Campaign Obligations. The Commission determined that this amount is
repayable to the U.S. Treasury.

STALE-DATED CHECKS — 11 CFR §§9038.6. The Audit staff identified checks
issued by BBFP totaling $28,085 that had not been negotiated. The Commission
determined that these amounts are payable to the U.S. Treasury. The Commission
received the payment on February 27, 2002.

Page 1 of 13
Approved April 18, 2002





Mr. Theodore V. Wells, Jr., Treasurer
Page 2

Any questions you may have related to matters covered during the audit or in the
Audit Report should be directed to Rhonda Simmons or Russ Bruner of the Audit
Division at (202) 694-1200 or toll free at (800) 424-9530.

Sincerely,
hex:
UL ie
“Joseph F. Stoltz 7
Assistant Staff Director“
Audit Division
Attachment
cc: Peter D. Nichols, Assistant Treasurer
Page 13 of 14

Approved April 18, 2002



FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 20463

REPORT OF THE AUDIT DIVISION
ON
BILL BRADLEY FOR PRESIDENT, INC.

I. BACKGROUND
A. AUDIT AUTHORITY

This report is based on an audit of Bill Bradley for President, Inc. (BBFP).
The audit is mandated by Section 9038(a) of Title 26 of the United States Code. That
section states, “After each matching payment period, the Commission shall conduct a
thorough examination and audit of the qualified campaign expenses of every candidate
and his authorized committees who received payments under section 9037.” Also,
Section 9039(b) of Title 26 of the United States Code and Section 9038.1(a)(2) of
Title 11 of the Code of Federal Regulations state that the Commission may conduct other
examinations and audits from time to time, as it deems necessary.

In addition to examining the receipt and use of Federal funds, the audit
seeks to determine if the campaign has materially complied with the limitations,
prohibitions, and disclosure requirements of the Federal Election Campaign Act of 1971
(FECA), as amended.

B. AUDIT COVERAGE

The audit covered the period from BBFP’s first bank transaction,
December 4, 1998 through May 31, 2000. BBFP reported an opening cash balance of
$-0-, total receipts of $50,442,496, total disbursements of $49,104,335 and a closing cash
balance of $1,351,631.! In addition, a limited review of BBFP’s financial activity and
disclosure reports for the period from June 1, 2000 through January 31, 2002 was
conducted to determine BBFP’s matching fund entitlement based on its financial
position.

The amounts do not foot as the result of amendments filed during 1999 which changed the ending
cash for December 31,1999. This difference ($13,407) was not carried forward into 2000.

Page 3 of 14
Approved April 18, 2002


FEDERAL ELECTION COMMISSION

WASHINGTON. D.C 20463
April 25, 2002
MEMORANDUM
TO: RON M. HARRIS
PRESS OFFICER
PRESS OFFICE ,
FROM: JOSEPH F. STOLTZ Me

SUBJECT:

ASSISTANT STAFF DIRECTOR
AUDIT DIVISION

PUBLIC ISSUANCE OF THE AUDIT REPORT ON
BILL BRADLEY FOR PRESIDENT, INC.

Attached please find a copy of the audit report on Bill Bradley for President, Inc.
which was approved by the Commission on April 18, 2002.

All parties involved have received informational copies of the report and the report
may be released to the public.

Attachment as stated

ce: Office of General Counsel
Office of Public Disclosure
Reports Analysis Division
FEC Library

CHEK


4

aggregate value or amount in excess of $200 within the calendar year ”, together with the
date and amount of such receipt.

Furthermore, Section 434(b)(4)(D) and (E) of Title 2 of the United States
Code state, in part, that each report under this section shall disclose for an authorized
committee, repayment of loans made by or guaranteed by the candidate, and repayment
of all other loans.

1. Interest Received:

A review of interest received by BBFP identified $25,712 of
interest earned on its investment accounts that was neither reported nor itemized in its
disclosure reports.

BBFP representatives reviewed the items and recognized that the
amounts were not reported and itemized. They explained that, “(t]he omission of earned
interest from the Committee’s reports for the third and fourth quarters of 1999 was the
result of an administrative oversight. Factors that contributed to the committee’s error
include changes in the format of bank statements, and efforts by the committee to report
interest on an accrued basis as opposed to a cash basis. (Note: Both missed interest
receipts represent interest earned in one FEC reporting period, but received in another. In
preparing the reports, it was thought that the missed interest had been picked-up in the
preceding report). The Committee acknowledges receipt of the interest.” The
representatives agreed to file amended reports.

2. Offsets to Operating Expenditures:

During the review of bank activity and Press Plane use, it was
discovered that several deposits comprised of reimbursements from members of the press
had not been reported nor itemized. Deposits totaling $130,594 during March of 2000
had not been entered into BBFP’s database and thus were not reported. BBFP’s treasurer
told the Audit staff that “the error occurred at a time when a large volume of press
reimbursement transactions was being processed and a large batch of press receipts was
not entered into the committee’s FEC reporting system. Because of this, the receipts
were not reported. The committee acknowledges an under-reporting of press
reimbursement receipts.” BBFP representatives agreed to file amended reports to reflect
the omitted transactions.

3. Interest Paid:

The Audit staff reviewed all loans obtained by BBFP and
determined that three interest payments amounting to $75,024 had not been itemized on
Schedule B as required. BBFP’s treasurer stated, “[t]he committee failed to correctly
report interest paid on a loan taken against federal matching fund receivables. Based on
the manner in which the bank released escrowed funds as receivables were paid by the

2 Effective for reporting periods after December 31, 2000, this subsection is amended to require

authorized committees to report on an election cycle basis rather than by calendar year

Page 6 of 14
Approved April 18, 2002


3

3. proper disclosure of contributions from individuals, political
committees and other entities, to include the itemization of
contributions when required, as well as the completeness and accuracy
of the information disclosed;

4. proper disclosure of disbursements including the itemization of
disbursements when required, as well as, the completeness and
accuracy of the information disclosed (see Finding II.);

5. proper disclosure of campaign debts and obligations;

6. the accuracy of total reported receipts, disbursements and cash
balances as compared to campaign bank records;

7. adequate recordkeeping for campaign transactions;

8. accuracy of the Statement of Net Outstanding Campaign Obligations
filed by the Committee, to disclose its financial condition and to
establish continuing matching fund entitlement (see Findings III.A.
and IIL.B.);

9. BBFP’s compliance with spending limitations; and,

10. other audit procedures that were deemed necessary in the situation (see
Findings II. and III.C.).

As part of the Commission’s standard audit process, an inventory of
campaign records is normally conducted prior to the audit fieldwork. This inventory is
conducted to determine if the committee’s records are materially complete and in an
auditable state. The records were found to be materially complete and the audit
fieldwork commenced.

Unless specifically discussed below, no material non-compliance was

detected. It should be noted that the Commission may pursue further any of the matters
discussed in the audit report in an enforcement action.

I. FINDING AND RECOMMENDATION - NON-REPAYMENT MATTER

ITEMIZATION OF RECEIPTS AND DISBURSEMENTS

Sections 434(b)(3)(F) and (G) of Title 2 of the United States Code state, in
part, that each report under this section shall disclose the identification of each person
who provides a rebate, refund or other offset to operating expenditures to the reporting
committee in an aggregate amount or value in excess of $200 within the calendar year,
together with the date and amount of such receipt; and the identification of each person
who provides any dividend, interest, or other receipt to the reporting committee in an

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Approved April 18, 2002


Page 2 of 13
Approved April 18, 2002




7

Section 9034.1(b) of Title 11 of the Code of Federal Regulations states
that if on the date of ineligibility a candidate has net outstanding campaign obligations as
defined under 11 CFR §9034.5, that candidate may continue to receive matching
payments for matchable contributions received and deposited on or before December 31
of the Presidential election year provided that on the date of payment there are remaining
net outstanding campaign obligations, i.e., the sum of contributions received on or after
the date of ineligibility plus matching funds received on or after the date of ineligibility is
less than the candidate’s net outstanding campaign obligations. This entitlement will be
equal to the lesser of: (1) the amount of contributions submitted for matching; or (2) the
remaining net outstanding campaign obligations.

Section 9038.2(b)(1)(i) of Title 11 of the Code of Federal Regulations
states, the Commission may determine that certain portions of the payments made to a
candidate from the matching payment account were in excess of the aggregate amount of
payments to which such candidate was entitled. Examples of such excessive payments
include, but are not limited to, the following: payments made to the candidate after the
candidate’s date of ineligibility where it is later determined that the candidate had no net
outstanding obligations as defined in 11 CFR §9034.5.

The Statement of Net Outstanding Campaign Obligations as of March 9,
2000, presented in Section III.A. above, shows BBFP to be in a deficit position in the
amount of $8,070,792. Presented below are adjustments for funds received after March
9, 2000, based on the most current financial information available as of January 31,

2002°:

Net Outstanding Campaign Obligations (Deficit) as of 3/9/00 (S$ 8,070,792)
Private Contributions Received 3/10/00 to 6/15/00 5,754

Matching Funds Received 3/10/00 to 5/15/00 7,872,931 7,878,685
Deficit as of 5/15/00 ($192,107)
Matching Funds Received 6/15/00 206,162
Total Matching Funds in Excess of Entitlement $14,055

BBFP has received matching fund payments in excess of its entitlement.
This issue was discussed at the exit conference and copies of workpapers were provided.
BBFP acknowledged that it appeared that some amount would be repayable, subject to
their review of the workpapers.

In the PAR, BBFP was advised to provide evidence that it had not
received matching fund payments in excess of entitlement. Absent such evidence, it was
stated that the Audit staff would make a recommendation that the Commission determine
that $22,038 was repayable to the United States Treasury.

Audit staff concluded fieldwork on March 30, 2001, but subsequent to that date received bank
statements, disclosure reports, and documentation for BBFP activity covering April 1, 2001, through
January 31, 2002.

Page 9 of 14
Approved April 18, 2002



9

Subsequent to the receipt of the PAR, BBFP submitted additional
information with respect to some of the outstanding checks. The Audit staff up-dated the
list of outstanding checks and determined that a total of $28,085 (126 - $12,162 —
Operating Account, 39 - $10,746 — Contribution Refund account and 8 - $5,177 — Payroll
account) in stale-dated checks remains. In response to the recommendation in the PAR,
BBFP submitted a check in the amount of $28,085 payable to the U.S. Treasury.

Iv. SUMMARY OF AMOUNTS DUE TO THE U.S. TREASURY
Finding III.B. Federal Funds Received in Excess of $ 14,055
Entitlement
Finding III.C. Stale-Dated Checks 28,085
Total 42,140
Less Amount Paid In Response to the PAR (28,085
Remaining Amount Due to U.S. Treasury $14,055
Page 11 of 14

Approved April 18, 2002







5

federal government, the committee treated payable interest as a part of the total loan.
This was an error. The committee acknowledges incurring additional loan expense.”
The Committee representatives agreed to amend the reports to reflect the transactions.

All of the above matters were discussed with BBFP representatives at the
conference held at the end of fieldwork and again at the exit conference.

In the Preliminary Audit report (PAR) it was recommended that BBFP file
amended disclosure reports to correct the errors noted. In response to this
recommendation the requested amended reports were filed.

il. FINDINGS AND RECOMMENDATIONS ~ AMOUNTS DUE TO THE
U.S. TREASURY

A. DETERMINATION OF NET OUTSTANDING CAMPAIGN OBLIGATIONS

Section 9034.5(a) of Title 11 of the Code of Federal Regulations requires
that within 15 calendar days after the candidate’s date of ineligibility, the candidate shall
submit a statement of net outstanding campaign obligations which reflects the total of all
outstanding obligations for qualified campaign expenses plus estimated necessary
winding down costs.

In addition, Section 9034.1(b) of Title 11 of the Code of Federal
Regulations states, in part, that if on the date of ineligibility a candidate has net
outstanding campaign obligations as defined under 11 CFR 9034.5, that candidate may
continue to receive matching payments provided that on the date of payment there are
remaining net outstanding campaign obligations.

The Candidate’s date of ineligibility (DOI) was March 9, 2000. The Audit
staff reviewed BBFP’s financial activity through January 31, 2002 (plus projections
through December 31, 2002), analyzed winding down costs, and prepared the Statement
of Net Outstanding Campaign Obligations that appears below:

Page 7 of 14
Approved April 18, 2002


Subsequent to the receipt of the PAR, BBFP sent additional
documentation for receipt and disbursement activity covering the period July 1, 2001,
through January 31, 2002. The Audit staff up-dated the NOCO and as shown in the
calculation presented above, determined that a total of $14,055 in matching funds in
excess of entitlement has been received.

In response to the report, BBFP’s Assistant Treasurer stated, “the
committee believes that federal funds in excess of entitlement may have been received.
The committee is prepared to make a repayment to the United States Treasury for such
excess upon reconciliation of the committee’s Net Outstanding Campaign Obligations
(NOCO) and the determination of an actual excess amount.”

Recommendation

The Audit staff recommends that the commission determine that BBFP has
received matching funds in excess of entitlement in the amount of $14,055 and that an
equal amount is repayable to the U.S. Treasury.

Cc. STALE-DATED CHECKS

Section 9038.6 of Title 11 of the Code of Federal Regulations states that if
the committee has checks outstanding to creditors or contributors that have not been
cashed, the committee shall notify the Commission. The committee shall inform the
Commission of its efforts to locate the payees, if such efforts have been necessary, and its
efforts to encourage the payees to cash the outstanding checks. The committee shall also
submit a check for the total amount of such outstanding checks, payable to the United
States Treasury.

The Audit staff identified 127 stale-dated checks totaling $12,469 issued
by BBFP from its Operating Account, 48 stale-dated checks totaling $15,056 from its
Contribution Refund account and 9 stale-dated checks totaling $5,408 issued from its
Payroll Account. The checks were dated between June 30, 1999 and October 8, 2000 and
had not cleared the bank as of June 30, 2001.

The matter was discussed at the conference held subsequent to the close of
fieldwork and at the exit conference. BBFP was provided detailed schedules of the stale-
dated checks. BBFP representatives agreed to pay these amounts to the U.S. Treasury.

In the PAR, the Audit staff recommended that BBFP provide evidence that
the checks are not outstanding (i.e., copies of the front and back of the negotiated
checks), or that the outstanding checks are voided and that no obligation exists. The PAR
explained that absent the provision of such evidence, the Audit staff would recommend
that BBFR was required to pay $32,933 to the U.S. Treasury.

Page 10 of 14
Approved April 18, 2002