FEDERAL ELECTION COMMISSION

WASHINGTON, 0.( 20463

June 16, 1999

MEMORANDUM

TO:

FROM:

RON M. HARRlS

PRESS OFFICER

PRESS OFFICE

ROBERT J. COSTA

ASSISTANT STAFF DIRECTOR

AUDIT DIVISION

SUBJECT: PUBLIC ISSUANCE OF THE FINAL AUDIT REPORT ON

CLINTON/GORE '96 PRIMARY COMMITTEE, INC.

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

Clinton/Gore '96 Primary Committee, Inc. which was approved by the Commission on

June3,1999.

Informational copies ofthe report have been received by all parties involved and

the report may be released to the public.

Attachment as stated

cc: Office ofGeneral Counsel

Office of Public Disclosure

Reports Analysis Division

FEC Library
REPORT OF THE AUDIT DIVISION

ON

CLINTON/GORE '96 PRIMARY

COMMITTEE, INC.

Approved June 3, 1999

FEDERAL ELECTION COMMISSION

999 E STREET, N.W.

WASHINGTON, D.C.
FEDERAL ELECTION COMMISSION

WASHINGTON, o.c. 20463

June 10, 1999

The Honorable William J. Clinton

c/o Ms. Lyn Utrecht, Esquire

Ryan, Phillips, Utrecht & MacKinnon

1133 Connecticut Avenue, N.W.

Suite 300

Washington, D.C. 20006

Dear Mr. President:

Attached please fmd the Report ofthe Audit Division on Clinton/Gore '96 Primary

Committee, Inc. The Commission approved the report on June 3, 1999. As noted on page

5, the Commission may pursue any ofthe matters discussed in an enforcement action.

In accordance with 11 CFR §§9038.2(c)(1) and (d)(l), the Commission has made a

determination that a repayment to the Secretary ofthe Treasury in the amount of$126,680

is required within 90 calendar days after service ofthis report (September 13,1999).

Should you dispute the Commission's determination that a repayment is required,

Commission regulations at I I CFR §9038.2(c)(2) provide you with an opportunity to

submit in writing, within 60 calendar days after service ofthe Commission's notice

(August 13, 1999), 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.

Such materials may be submitted by counsel if you so elect. Ifyou decide to file a

response to the repayment determination, please contact Kim L. Bright-Coleman of the

Office of General Counsel at (202)694-1650 or toll free at (800) 424-9530. If you do not

dispute this determination within the 60 day period provided, it will be considered final.
•

•

The Honorable William 1. Clinton

Page 2

The Commission approved Audit Report will placed on the public record on or

about June 15, 1999. Should you have any questions regarding the public release ofthis

report, please contact Ron Harris ofthe Commission's Press Office at (202) 694-1220.

Any questions you may have related to matters covered during the audit or in the

audit report should be directed to Leroy Clay or Thomas Nurthen ofthe Audit Division at

(202) 694-1200 or toll free at (800) 424-9530.

Assistant StaffDirector

Audit Division

Attachments:

Audit Report
FEDERAL ELECTION COMMISSION

WASHINGTON, DC 20463

•

June 10, 1999

Ms. Joan Pollitt, Treasurer

Clinton/Gore '96 Primary Committee, Inc.

c/o Ms. Lyn Utrecht, Esquire

Ryan, Phillips, Utrecht & MacKinnon

1133 Connecticut Avenue, N.W.

Suite 300

Washington, D.C. 20006

Dear Ms. Pollitt:

Attached please find the Report ofthe Audit Division on Clinton/Gore '96 Primary

Committee, Inc. The Commission approved the report on June 3,1999. As noted on page

5, the Commission may pursue any ofthe matters discussed in an enforcement action.

In accordance with 11 CFR §§9038.2(c)(1) and (d)(l), the Commission has made a

determination that a repayment to the Secretary ofthe Treasury in the amount of$126,680

is required within 90 calendar days after service ofthis report (September 13, 1999).

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 ofthe Commission's

notice (August 13, 1999), 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.

Such materials may be submitted by counsel ifthe Candidate so elects. Ifthc Candidate

decides to file a response to the repayment determination, please contact Kim L.

Bright-Coleman ofthe Office ofGeneral 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.
•

Ms. Joan Pollitt, Treasurer

Page 2

The Commission approved Audit Report will be placed on the public record on or

about June 15, 1999. Should you have any questions regarding the public release ofthis

report, please contact Ron Harris ofthe Commission's Press Office at (202) 694-1220.

Any questions you may have related to matters covered during the audit or in the

audit report should be directed to Leroy Clay or Thomas Nurthen ofthe Audit Division at

(202) 694-1200 or toll free at (800) 424-9530.

Sincerely,

fd:f2 .Assistant StaffDirector

Audit Division

Attachments:

Audit Report
TABLE OF CONTENTS

CLINTON/GORE '96 PRIMARY COMMITTEE, INC.

APPROVED JUNE 3, 1999

Page

ft'=,

iiJ. Final Audit Report

;Jj

~, "".

rq Background

til Findings 6 fH.=

0 Legal Analysis 26 •

i"<;

"".,J Transmittal to Committee 56 ..

ttl Chronology 60

r~
FEDERAL ELECTION COMMISSION

WASHINGTON, DC. 20463

REPORT OF THE AUDITDIVISION

ON

CLINTON/GORE '96 PRIMARY COMMITTEE, INC.

This report is based on an audit ofthe Clinton/Gore '96 Primary

Committee, Inc. (the Primary Committee). The audit is mandated by Section 9038(a) of

Title 26 ofthe United States Code. That section states that "After each matching

payment period, the Commission shall conduct a thorough examination and audit ofthe

qualified campaign expenses ofevery candidate and his authorized committees who

received payments under section 9037." Also, Section 9039(b) ofTitle 26 ofthe United

States Code and Section 9038.1 (a)(2) ofthe Commission's Regulations state that the

Commission may conduct other examinations and audits from time to time as it deems

necessary.

I. BACKGROUND

A. AUDIT AUTHORITY

In addition to examining the receipt and use of Federal funds, the audit

seeks to determine ifthe campaign has materially complied with the limitations,

prohibitions, and disclosure requirements ofthe Federal Election Campaign Act of

1971 (FECA), as amended.

B. AUDIT COVERAGE

The audit ofthe Primary Committee covered the period from its inception,

April 10, 1995 through December 31, 1997. The Primary Committee reported an

opening cash balance of$-O-; total receipts of$44,753,599; total disbursements of

$44,603,123; and a closing cash balance of$150,476.

C. CAMPAIGN ORGANIZATION

The Primary Committee registered with the Federal Election Commission

on April 14, 1995. The Treasurer ofthe Primary Committee is Ms. Joan Pollitt. The

Primary Committee maintains its headquarters in Washington, DC.

During the period audited, the Primary Committee maintained depositories

in the District ofColumbia, Arkansas, Georgia, New York and Texas. To handle its
financial activity, the Primary Committee utilized a total of9 bank accounts. From these

accounts the campaign made approximately 23,654 disbursements. Approximately

293,043 contributions from 190,426 persons were received. These contributions totaled

$28,987,800.

In addition to the above contributions, the Primary Committee received

$13,412,198 in matching funds from the United States Treasury. This amount represents

87% ofthe $15,455,000 maximum entitlement that any candidate could receive. The

Candidate was determined eligible to receive matching funds on October 31, 1995. The

Primary Committee made a total of9 matching fund requests totaling $14,245,229. The

Commission certified 94.15% of the requested amount. For matching fund purposes, the

Commission determined that President Clinton's candidacy ended on August 28, 1996.

This determination was based on Section 9032(6) ofTitle 26 ofthe United States Code

which states that the matching payment period ends "on the date on which the national

convention ofthe party whose nomination a candidate seeks nominates its candidate for

the office of President ofthe United States, ..." see also 11 CFR §9032.6. On August 2,

1996 the Primary Committee received its final matching fund payment to defray expenses

incurred through August 28,1996 and to help defray the cost of winding down the

campaign.

D. AUDIT SCOPE AND PROCEDURES

In addition to a review ofthe committee's expenditures to determine the

qualified and non-qualified campaign expenses incurred by the campaign (see Finding

IILB.), the audit covered the following general categories:

1. The receipt of contributions or loans in excess of the statutory

limitations (see Finding lILA.);

2. the receipt ofcontributions from prohibited sources, such as those

from corporations or labor organizations (see Finding II.A.);

3. proper disclosure of contributions from individuals, political

committees and other entities, to include the itemization of

contributions when required, as well as the completeness and accuracy

ofthe information disclosed (see Finding III.C.);

4. proper disclosure of disbursements including the itemization of

disbursements when required, as well as, the completeness and

accuracy of the information disclosed;

5. proper disclosure of campaign debts and obligations;

6. the accuracy oftotal reported receipts, disbursements and cash

balances as compared to campaign bank records;

2
7. adequate recordkeeping for campaign transactions;

8. accuracy ofthe Statement ofNet Outstanding Campaign Obligations

filed by the Clinton/Gore '96 Primary Committee, Inc. to disclose its

financial condition and to establish continuing matching fund

entitlement (see Finding III.E.);

9. the Primary Committee's compliance with spending limitations (see

Finding III.D.); and

10. other audit procedures that were deemed necessary in the situation (see

Finding III.F.).

As part ofthe Commission's standard audit process, an inventory of

campaign records is normally conducted prior to the audit fieldwork. This inventory is

conducted to determine ifthe auditee's records are materially complete and in an

auditable state.

The inventory began on January 6, 1997. Due to the unavailability of

records, the Audit staffsuspended fieldwork on January 22, 1997. Prior to leaving, an

itemized list ofrecords needed was provided to the Primary Committee. These records,

consisting of: bank statements and enclosures for three campaign depositories; check

registers for certain operating and payroll accounts; records relative to in-kind

contributions, campaign travel, campaign materials, Primary Committee credit cards,

media placements, public opinion polls, fundraising, event and allocation codes;

workpapers detailing FEC report preparation and components for the Statement ofNet

Outstanding Campaign Obligations; copies of all Primary Committee

contracts(agreements; copies ofIRS forms 940 and 941; a listing of key personnel,

including positions and responsibilities; and, Computerized Magnetic Media for

disbursements were initially requested in writing during the period January 7,1997

through January 22,1997.

In a letter dated January 29,1997, the Primary Committee was notified

that the records were to be made available on or before February 21,1997; with respect to

records not made available, the Commission would issue subpoenas for production ofthe

records not only to the Primary Committee, but also to vendors, banks or any other

persons in possession ofrelevant materials. In addition, the Audit staff identified records

that, at a minimum, had to be made available before fieldwork could resume.

In addition, on January 8,1997, the Audit staff was instructed that all

requests for vendor files would be directed to a designated staff person and that such

requests would be limited to documentation associated with a block of no more than 500

checks (e.g., check numbers 1000 - 1499). The Audit staffmet with Primary Committee

representatives on January 15, 1997 in an attempt to reach a workable solution as to

3
access. A solution was not reached and Primary Committee counsel was notified that we

were prepared to recommend subpoenas for all vendor files in the event that a reasonable

solution could not be worked out. On February 19, 1997, Audit Division representatives

met with Primary Committee counsel to discuss resuming fieldwork and access to vendor

files. A workable solution as to access was reached.

Audit fieldwork resumed on February 24, 1997. However, the Primary

Committee continued to delay production ofrecords. The Audit staff was informed that

attorneys had to review all records prior to them being made available to the Audit staff.

In certain instances, the Primary Committee refused to make records available and in

other instances, were not initially accurate as to the existence and/or availability of certain

records requested. For example, the Primary Committee refused to make available bank

records pertaining to the bank account maintained by the media vendors who placed and

paid for media buys on behalf ofthe Primary Committee (see Finding IILA.). Further,

the Primary Committee refused to make available, without conditions and/or restrictions,

copies of all polls conducted on its behalf. With respect to certain electronic spreadsheets

for fundraising and/or legal and accounting allocations, as well as other computerized

records, Primary Committee representatives stated on numerous occasions that such

records could not or would not be made available ·in a computerized format. When

continuing to inquire why these records could not be made available in a computerized

format, the Audit staff was informed by the Primary Committee's accountant that the

Primary Committee's ChiefCounsel had said that computerized records were not to be

made available to the Audit staff. The Audit staffmade repeated attempts to meet with

Counsel, however, no such meeting was ever scheduled. Near the end offieldwork, in

1998, certain electronic spreadsheet records were eventually provided.

As a result, during the period May 28, 1997 through February 3, 1998, the

Audit staffrequested the Office of General Counsel to prepare subpoenas for the

production of records. The Commission issued 22 subpoenas to either the Primary

Committee or respective vendors in order to obtain records generally made available to

the Audit staff at the beginning of fieldwork.!

It is the opinion ofthe Audit staffthat the delays in production ofrecords

by the Primary Committee resulted in wasting numerous staff hours which directly

delayed the completion ofthe audit fieldwork a minimum offour months.

Accordingly, the scope ofwork performed was limited due to delays

encountered in obtaining records necessary to perform the audit. Certain findings in the

Memorandum were supplemented with information obtained from sources other than the

Primary Committee.

Records concerning payments made by the Primary Committee's media vendors on behalf of the

Democratic National Committee are not in this category.

4
The Primary Committee as part ofits response to the Exit Conference

Memorandum made various comments concerning the Audit staffs discussion ofthe

scope ofthe audit. The Primary committee asserted that this section ofthe audit report

provided a distorted and incomplete view ofthe process, and then provides certain

examples of "mischaracterizations" included therein. Further, the Primary Committee

claimed that "[d]espite its full cooperation with these numerous and often cont1icting

requests, always maintained a cooperative posture during the audit process "for all

information requested that was reasonably within the scope ofthe audit." (Emphasis not

in original.)

Various examples and explanations were cited, such as: logistical

problems inherent with the Primary Committee's move to new offices; the auditors'

demand for additional office space at that location; that "no existing record in the Primary

Committee's possession was refused;" that the Audit Division refused all attempts at

cooperative compromise pertaining to gaining access to the Primary Committee's media

vendor's records; and that the auditors repeatedly insisted that particular records which

the Primary Committee "did not have" in a computerized format be created.

The Audit staff stands by the scope limitation and related discussion as

presented in the Exit Conference Memorandum and this report. The candidate agreed as

a condition to obtaining matching funds to: furnish all documents related to

disbursements and receipts, including computerized information; furnish all

documentation relating to disbursements made on the candidate's behalf by other

organizations; permit an audit and examination of all receipts and disbursements

including those made by the candidate, authorized committee or any agent authorized to

make expenditures on behalf of the candidate or authorized committee. Further, the

candidate agreed to facilitate the audit by making available in one central location office

space, records and such personnel as are necessary to conduct the audit and examination.

The candidate and committee agreements provided for at II CFR §9033.1 were signed in

October, 1995.

As detailed above, certain records necessary to the conduct ofthe audit

were not made available at the commencement of audit fieldwork in January, 1997 and in

some cases were not made available until subpoenas were issued by the Commission to

compel production. The Primary Committee is entitled to express its opinion and attempt

to explain why it feels "[i]t would be utterly inappropriate for such a distorted and onesided description ofthe process to be included in the proposed draft Final Audit Report."

The Primary Committee's response will be included in the documents available to the

Commission when the audit report is considered in open session.

Unless specifically discussed below, no material non··compliance was

detected. It should be noted that the Commission may pursue further any ofthe matters

discussed in the audit report in an enforcement action.

5
In a series ofmeetings between December 3, 1998, and April 29, 1999, the

Commission considered the findings and recommendations contained below. The action

taken with respect to each issue is described at the end ofthe respective finding.

II. FINDINGS AND RECOMMENDATIONS - NON-REPAYMENT

MATTERS

A. RECEIPT OF PROHIBITED CONTRIBUTIONS RESULTING FROM

EXTENSIONS OF CREDIT BY COMMERCIAL VENDORS

The issue involved whether the extension of credit by Penn + Schoen, the Primary

Committee's main polling firm, conformed to the usual and normal practice in its

business or in its industry as required by 11 CFR § 116.3. The Staff concluded that a

contribution in the amount of$74,970 was made by Penn +Schoen to the Primary

Committee.

The Commission decided to reject the Staffs conclusion with respect to this

matter.2

III. FINDINGS AND RECOMMENDAnONS - REPAYMENT MATTERS

A. RECEIPT OF AN ApPARENT EXCESSIVE CONTRIBUTION - MEDIA ADS

P AID FOR BY THE DEMOCRATIC NATIONAL COMMITTEE

The issue addressed was whether the costs associated with the production

and broadcast of alleged issue ads paid for by the Democratic National Committee (DNC)

were in-kind contributions to the Primary Committee and chargeable to its spending

limitation.

The Staffrecommended that the Commission determine that the cost,

$46,580,358, of producing and broadcasting the ads discussed above represented an inkind contribution from the DNC to the Primary Committee. The Staff also recommended

that it be determined that this in-kind contribution was attributable to the Primary

Committee's spending limitation.

By a vote of 6-0, the Commission rejected the Staffrecommendation for a

matching fund repayment related to $46,580,358 in media expenses. The repayment

would have resulted from the media expenses being added to expenditures subject to the

limitation, and the exceeding ofthat limitation.

Please refer to Agenda Documents 98-85 & 99-47at Finding II.A., and the relevant audio tapes for

the Open Session meetings ofDecember 3'd, 9'", 10"', 1998, January 14''', 2S''', February 3'd,25''',

March 4'", and April 29'h, 1999 for additional information.

6
By a motion adopted on a 6-0 vote, the Commission directed the Audit

Division to revise the portion ofthe report relating to party ads to clarify that the

Commission has not reached any conclusion regarding the Audit Division's in-kind

contribution analysis, and to indicate that Commissioners may submit statements for the

record.

By a motion adopted on a 6-0 vote, the Commission decided that DNC

expenditures for advertising, featuring the presumptive nominee, made before or during

the nominating convention, and reported by the DNC as 441a(d) coordinated

expenditures should be accepted as claimed and counted against the DNC's 44Ia(d)

limit.)

B. ApPARENT NON-QUALIFIED CAMPAIGN EXPENSES

Section 9032.9(a) ofTitle 11 ofthe Code of Federal Regulations defines,

in part, a qualified campaign expense as one incurred by or on behalf ofthe candidate

from the date the individual became a candidate through the last day of the candidate's

eligibility; made in connection with his or her campaign for nomination.

Section 9033.11 (a) ofTitle 11 ofthe Code of Federal Regulations states,

in part, that each candidate shall have the burden ofproving that disbursements made by

the candidate or his or her authorized committee(s) or persons authorized to make

expenditures on behalf ofthe candidate or committee(s) are qualified campaign expenses

as defined in 11 CFR 9032.9.

Section 9033.11(b)(l) ofTitle II ofthe Code of Federal Regulations, in

part, that for disbursements in excess of $200 to a payee, the candidate shall present a

canceled check negotiated by the payee and either: A receipted bill from the payee that

states the purpose of the disbursement; or ifsuch receipt is not available, one ofthe

following documents generated by the payee: a bill, invoice, or voucher that states the

purpose ofthe disbursement; or a voucher or contemporaneous memorandum from the

candidate or the committee that states the purpose ofthe disbursement; or the candidate

or committee may present collateral evidence to document the qualified campaign

expense. Such collateral evidence may include, but is not limited to: Evidence

demonstrating that the expenditure if part of an identifiable program or project which is

otherwise sufficiently documented such as a disbursement which is one of a number of

documented disbursements relating to a campaign mailing or to the operation of a

campaign office; or evidence that the disbursement is covered by a pre-established

written campaign committee policy. Ifthe purpose ofthe disbursement is not stated in

the accompanying documentation, it must be indicated on the canceled check.

Please refer to Agenda Documents 98-85 & 99-47 at Finding III.A., and the relevant audio tapes

for the Open Session meetings ofDecember 3",9'", 10"', 1998, January 14th, 28'10, February

3",25'", March 4"', and April 29"', 1999 for additional information.

7
Section 9034.4(e)(l) ofTitle II ofthe Code of Federal Regulations states

that any expenditure for goods or services that are used exclusively for the primary

election campaign shall be attributed to the expenditure limit for the primary. Any

expenditure for goods or services that are used exclusively for the general election

campaign shall be attributed to the general election limit.

Section 9034.4(e)(3) ofTitle 11 ofthe Code of Federal Regulations states

that overhead expenditures and payroll costs incurred in connection with state or national

campaign offices, shall be attributed according to when the usage occurs or the work is

performed. Expenses for usage of offices or work performed on or before the date of the

candidate's nomination shall be attributed to the primary election, except for periods

when the office is used only by persons working exclusively on general election

campaign preparations.

Section 9034.4(a) ofTitle 11 ofthe Code of Federal Regulations, states

that all contributions received by an individual from the date he or she becomes a

candidate and all matching payments received by the candidate shall be used only to

defray qualified campaign expenses or to repay loans or otherwise restore funds (other

than contributions which were received and expended to defray qualified campaign

expenses) which were used to defray qualified campaign expenses.

Section 9034.4(a)(5)(ii) ofTitle 11 ofthe Code of Federal Regulations,

states that gifts and monetary bonuses shall be considered qualified campaign expenses,

provided that all monetary bonuses for committee employees and consultants in

recognition for campaign-related activities or services are provided for pursuant to a

written contract made prior to the date ofineligibility and are paid no later than thirty

days after the date ofineligibility.

Section 9034.4(b)(8) ofTitle 11 ofthe Code of Federal Regulations, states

that the cost oflost or misplaced items may be considered a nonqualified campaign

expense. Factors considered by the Commission in making this determination shall

include, but not be limited to, whether the committee demonstrates that it made

conscientious efforts to safeguard the missing equipment; whether the committee sought

or obtained insurance; the type of equipment involved; and the number and value of items

that were lost.

Section 9034.4(b)(3) ofTitle 11 ofthe Code of Federal Regulations states,

that any expenses incurred after a candidate's date of ineligibility are not qualified

campaign expenses except to the extent permitted under 11 CFR 9034.4(a)(3). In

addition, any expenses incurred before the candidate's date ofineligibility for goods and

services to be received after the candidate's date of ineligibility, or for property, services,

or facilities used to benefit the candidate's general election campaign, are not qualifieJ

campaign expenses.

8
Section 9038(b)(2)(A) ofTitle 26 ofthe United States Code states that if

the Commission determines that any amount of any payment made to a candidate from

the matching payment account was used for any purpose other than to defray the qualified

campaign expenses with respect to which such payment was made it shall notify such

candidate ofthe amount so used, and the candidate shall pay to the Secretary an amount

equal to such amount.

Section 9038.2(b)(2)(iii) ofTitle 11 ofthe Code of Federal Regulations

states that the amount of any repayment sought under this section shall bear the same

ratio to the total amount determined to have been used for non-qualified campaign

expenses as the amount ofmatching funds certified to the candidate bears to the

candidate's total deposits, as of90 days after the candidate's date ofineligibility.

Section 9038 .2(a)(2) of Title 11 ofthe Code of Federal Regulations states

that the Commission will notify the candidate of any repayment determinations made

under this section as possible, but not later than three years after the close ofthe matching

payment period. The Commission's issuance ofthe audit report to the candidate under 11

CFR §9038.1 (d) will constitute notification for purposes ofthis section.

1. General Election Expenses Paid by the Primary Committee

During our review of vendor files, expenses were noted that

appeared to further the Candidate's general election campaign for election but were paid

by the Primary Committee. Each is discussed briefly below:

a. Bismarck Enterprises

The Primary Committee paid Bismarck Enterprises

$22,9844 for catering services provided on August 29, 1996 at the Democratic National

Convention (the Convention). These services were provided after the Candidate's date of

ineligibility (August 28, 1996) and therefore considered a general election expense. The

Primary Committee contended that the Candidate's date ofineligibility was not until

August 29, 1996, the last day ofthe Convention, because under Democratic Party rules

the nominee for the office of President does not become the candidate ofthe Democratic

Party ofthe United States until he or she has completed his or her acceptance speech to

the Convention.s

o

The catering charges include equipment rental and gratuities which were pro rated by the Audit

staff based on a percentage ofthe catering charges for August 29th to the total catering charges.

The Primary Committee submitted a letter challenging the Commission's determination that the

candidate's date ofineligibility is August 28, 1996. It argued that the date should be August 29,

1996. The Commission denied the Primary Committee's request.

9
•

The Primary Committee provided a letter from Sam

Karatas, Director of Food and Beverage Bismarck Enterprises, which stated that the

Primary Committee utilized several suites and banquet facilities during the Convention

on the dates of August 26 through August 29. Mr. Karatas also related that food and

beverages were provided to nineteen suites during this period and that on August 27, a

luncheon buffet was prepared for Mrs. Gore. Mr. Karatas added that a small banquet was

also set up in the President's waiting lounge on August 29 before he went on the main

stage.

Concerning the above information, neither Mr. Karatas nor

the Primary Committee provided documentation or evidence which demonstrated that the

catering services provided on August 29, 1996, the day after the President received the

nomination, were goods and services used exclusively for the Candidate's primary

election campaign.

In the Memorandum the Audit staffrecommended that the

Primary Committee provide evidence or documentation that the goods and services were

used exclusively for the Candidate's primary election campaign or evidence that the

General Committee has reimbursed the Primary Committee $22,984. Absent adequate

documentation to demonstrate the expenses were exclusive to the primary election

campaign or evidence that the Primary Committee has received reimbursement from the

General Committee, the Audit staff will recommend that the Commission make at

determination that the Primary Committee make a pro-rata repayment to the United

States Treasury.

In response to the Memorandum, the Primary Committee

stated that in light ofthe Commission's previous ruling on the date ofineligibility, the

General Committee agreed to reimburse the Primary Committee for the full amount ofthe

Bismarck Enterprises services ($22,984).

To date no evidence was provided which demonstrated the

General Committee reimbursed $22,984 to the Primary Committee. Therefore, the

payment to Bismarck Enterprises is viewed as a non-qualified campaign expense and a

pro rata repayment of $7,260 is due the United States Treasury ($22,984 x .315876).

Recommendation

The Audit staffrecommended the Commission make a determination that the

Primary Committee make a pro-rata repayment of$7,260 ($22,984 x .315876) to the

United States Treasury pursuant to 26 U.S.C. 9038(b)(2).6 Ifthe Primary Committee

This figure (.315876) represents the Primary Committee's repayment ratio, as calculated pursuant

to II CFR §9038.2(b)(2)(iii). The Commission decided to exclude from the repayment

calculation ratio the issue ads for which the Commission has determined there would be no

repayment.

10
receives a reimbursement of $22,984 from the General Committee, no repayment is

required.

The Commission approved the Staffrecommendation.

b. AT&T Capital Corporation

The Primary Committee entered into a lease agreement

with AT&T Capital Corporation for equipment. The term ofthe lease was for 18 months

commencing on June 1, 1995. It appeared, based on documentation, that the

Clinton/Gore '96 General Committee, Inc. was to have assumed the lease after the

Candidate's date ofineligibility (August 28, 1996) through November, 1996. The total

lease payments including sales tax were $422,826. The General Committee's allocable

share was $94,1337 ofwhich the General Committee paid only $30,397. The balance,

$63,736, paid by the Primary Committee should have been paid by the General

Committee. The Primary Committee in its response acknowledged that the General

Committee should have paid $93,464, based on its calculation.8 Accordingly, the Audit

staff included on the Primary Committee statement ofNet Outstanding Campaign

Obligations an account receivable from the General Committee in the amount of$63,736.

In the Memorandum, the Audit staffrecommended that the

Primary Committee provide evidence that the balance, $63,736, paid by the Primary

Committee is not exclusively related to the general campaign or evidence that the

Primary Committee has received a reimbursement from the General Committee for

$63,736. Absent adequate documentation to demonstrate the above amount was

exclusive to the general campaign or evidence that the Primary Committee has received

reimbursement from the General Committee ($63,736) the Audit staff will recommend

that the Commissi{)n make a determination that the Primary Committee make a pro-rata

repayment to the United States Treasury.

In response to the Memorandum, the Primary Committee

stated that the General Committee agreed to reimburse the Primary Committee $63,736.

However, the Primary Committee has not provided evidence that it received a

reimbursement from the General Committee. Therefore, the amount is viewed as a nonqualified campaign expense.

This amount was derived by pro rating $30,397 for three days in August, 1996 plus $30,397 each

for September, October and November.

The difference between Audit and the Primary Committee is $669.

II
Recommendation

The Audit staff recommended the Commission make a determination that the

Primary Committee make a pro-rata repayment of$20,133 ($63,736 x .315876) to the

United States Treasury pursuant to 26 U.S.C. 9038(b)(2). Ifthe Primary Committee

receives a reimbursement of $63,736 from the General Committee, no repayment is

required.

The Commission approved the Staffrecommendation.

c. Salary and Overhead

The Primary Committee paid salary and overhead

expenses, totaling $340,579, that were incurred subsequent to the Candidate's date of

ineligibility. For example, the Primary Committee paid all costs associated with the

Little Rock office for the period August 29, 1996 through December 5, 1996. Staff in

this office, according to Primary Committee records, were working on both primary

contribution processing and GELAC contribution. processing. These expenses are

attributable to the general election and should have been paid by the General

Committee/GELAC pursuant to II CFR 9034.4(e)(3). The Audit staff determined based

on our review ofthe Primary Committee's records pertaining to its allocation ofsalary

and overhead that $192,288 in expenses are attributable to the General Committee and

$148,291 to the GELAC. With respect to that portion ofsalary and overhead expenses

attributable to GELAC ($148,291), it should be noted that the GELAC as ofJanuary 31,

1997 reimbursed the Primary Committee $94,972. Therefore, expenses for salary and

overhead, totaling $53,319 ($148,291 - 94,972), is due the Primary Committee from the

GELAC and $192,288 is due the Primary Committee from the General Committee.

Schedules were provided to the Primary Committee at a

conference held on March 18, 1998. The Primary Committee did not respond other than

to state it believed winding downing expenses, consisting ofsalary and overhead, should

be permissible subsequent to the Candidate's date ofineligibility.

In the Memorandum, the Audit staffrecommended that the

Primary Committee provide documentation which demonstrates that the expenses for

salary and overhead paid by the Primary Committee subsequent to the Candidate's date

ofineligibility represented the cost of goods and services used exclusively for the primary

election campaign or evidence that the Primary Committee has received reimbursements

from the General Committee ($192,288) and the GELAC ($53,319). Absent adequate

documentation to demonstrate the expenses were exclusive to the primary election

campaign or evidence that the Primary Committee has received reimbursement from the

General Committee totaling 192,288, and $53,319 from the GELAC the Audit staff will

recommend that the Commission make a determination that the Primary Committee make

12
a pro-rata repayment of $77,627 ($192,288 +53,319 x .316062)9 to the United States

Treasury.

In response to the Memorandum, the Primary Committee

stated that pursuant to §9034.4(a)(3)(iii), 100% ofsalary, overhead and computer

expenses incurred after the date ofineligibility may be treated as exempt legal and

accounting beginning with the first full reporting period after the date ofineligibility.

The Primary Committee stated further that nothing in the regulation limits the ability of a

candidate in the general election to pay primary winding down costs during the general

election period. In addition, the Primary Committee stated that the Commission's bright

line regulation at §9034.4(e) refers to campaign expenditures subject to the limit, not to

winding down costs. Also, it is stated by the Primary Committee that the entire

accounting/matching funds staff located in Little Rock provided no general election

services other than the GELAC contribution services. Finally, the Primary Committee

stated that costs related to Primary Committee winding down were incurred in the DC

accounting office by accounting personnel specifically assigned to accounting for the

Primary Committee and those individuals spent no time related to general election

activity.

The Primary Committee agreed that the General Committee

would reimburse the Primary Committee for expenses totaling $39,753 that were

allocable to the General Committee, but that no additional reimbursements are due the

Primary Committee from the General Committee due to the inapplication of 11 CFR

§9034.4(e)(3) to post DOl winding down expenses. As of 9/30/98, the $39,753 has not

been paid to the Primary Committee according to disclosure reports filed.

It is the opinion ofthe Audit staffthat 11 CFR §9034.4(e)

applies to both operating costs and winding down costs. Expenditures must be

exclusively for the primary campaign or the general election campaign to be attributed to

that campaign. The Explanation and Justification for 11 CFR §9034.4(e)(3) addresses

overhead and payroll costs incurred in connection with state or national campaign offices.

These costs are attributed according to when usage of the office occurs. For usage on or

before the date ofthe candidate's nomination, these expenses are attributed to the primary

election, except for periods when the office is used only by persons working exclusively

on general election campaign preparations.

Recommendation

The Audit staffrecommended the Commission make a determination that the

Primary Committee make a pro-rata repayment of$77,581 ($192,288 + 53,319 x

.315876) to the United States Treasury pursuant to 26 U.S.C. §9038(b)(2). Ifthe Primary

The repayment ratio used in the Memorandum (.3\6062) has been revised for purposes of this

Audit Report to .315876.

13
Committee receives a reimbursement of $192,288 from the General Committee and

$53,319 from the GELAC, no repayment would be required.

The Commission approved the Staff recommendation.

2. Morris & Carrick, Inc.

A consulting agreement was entered into between the Primary

Committee and Morris & Carrick, Inc. (M&C). The agreement covered the period

February 1, 1996 through August 30, 1996. M&C billed the Primary Committee on a

monthly basis. In accordance with the agreement, the Primary Committee paid M&C

$15,000 per month.

In addition, M&C billed the Primary Committee on August 30,

1996 for an additional $30,000, which the Primary Committee paid on September 30,

1996. The invoice to the Primary Committee was annotated "Remaining Primary

Invoice." Although the agreement stated it may be further extended, renewed or amended

upon written agreement ofthe parties, there was no provision in the original agreement or

any amendments to the agreement which covered this billing and/or the payment made on

September 30, 1996. A Primary Committee representative stated the vendor performed

extra work than was originally anticipated and, therefore, was paid an additional $30,000.

Subsequently, the Primary Committee submitted a written response

which stated that the $30,000 payment was actually owed by the General Committee, not

the Primary Committee. M&C was actually owed a total of $95,000 under the General

Committee contract, but was only paid $65,000 on October 10,1996 by the General

Committee. Further, the Primary Committee stated because M&C mistakenly billed the

$30,000 to the Primary Committee, committee staff paid the invoice as directed.

Although the Primary Committee stated a copy ofthe "misdirected invoice" was included

with its response, it was not. Finally, the Primary Committee stated that the General

Committee will reimburse the Primary Committee $30,000, representing the amount paid

and owed to M&C.

In support ofits current position, the Primary Committee provided

a copy of a consulting agreement between M&C and the General Committee. This copy

was not signed by either party.tO Subsequently, the Primary Committee made available a

copy ofthe "misdirected invoice."

The unsigned agreement between the General Committee and

M&C specified an effective date of August 30, 1996 and a termination date of November

30, 1996. It further states M&C was to be paid $95,000 within 30 days of execution of

the agreement.

10 The Primary consulting agreement was signed by the Primary Committee and JYJ&C.

14
In our opinion, based on the information provided as ofthe close of

audit fieldwork, the General Committee's agreement appeared to be effective as of

August 30, 1996, it was unclear why M&C would mistakenly issue an invoice on the

same date and for only $30,000, when, in fact, the entire amount ($95,000) to be paid,

pursuant to the agreement, was due within 30 days of execution. On September 30, 1996,

when M&C did directly issue an invoice to the General Committee, it was for $65,000.

In the Memorandum, the Audit staffrecommended that, the

Primary Committee provide a copy ofthe executed contract (signed by all parties and

dated) between the General Committee and Morris & Carrick. In addition, a signed

statement from M & C which explains in detail why M & C billed the Primary

Committee for $30,000 on August 30, 1996, when the Primary Committee obligations

under its contract were fulfilled. Absent adequate documentation to demonstrate the

expenses at issue were, in fact qualified campaign expenses, the Audit staff will

recommend that the Commission make a determination that the Primary Committee make

a pro-rata repayment of $9,482 ($30,000 x .316062) to the United States Treasury

pursuant to II CFR §9038.2(b)(2).

In response to the Memorandum, the Primary Committee stated

that an executed contract between the General Committee and Morris & Carrick did not

exist. However, the Primary Committee provided an affidavit from William A. Carrick,

Jr., the President ofMorris & Carrick, Inc.

Mr. Carrick stated that M & C agreed to provide political

consulting services to both the Primary Committee and General Committee. M & C

agreed in writing to provide services to the Primary Committee in return for $105,000 -

$15,000 per month for 7 months and M & C was paid in full for all services provided to

the Primary Committee.

Mr. Carrick continued that the General Committee orally agreed

that services would be provided in return for $95,000, to be paid within 30 days from the

anticipated date of execution ofthe contract (August 30, 1996). The agreement was

reflected in a proposed written contract, however, unintentionally, the parties never

signed that contract. Mr. Carrick stated further, that both parties treated the proposed

contract as though it had been fully executed and abided by all ofits terms.

According to Mr. Carrick, M & C mistakenly billed the Primary

Committee, instead ofthe General Committee for $30,000 and that the Primary

Committee paid the bill without questioning it. He stated that M & C was unaware ofthe

mistake on this bill and was also unaware that the $30,000 was paid from the Primary

Committee. Further, M & C received payments totaling $200,000 in full satisfaction of

all obligations owed and duties performed under the Primary and General Committee

agreements and that M & C did not receive any funds above and beyond those called for

in the agreements with the Primary and General Committees. Finally, Mr. Carrick stated

that M & C never received a bonus payment from either the Primary or the General

15
Committee and that all payments were in accordance with its written agreements with

both the Primary and General Committees.

Although the Primary Committee did not provide a copy of an

executed contract between the General Committee and M & C, as recommended, it did

provide information in the form of an affidavit from William Carrick, Jr. which explained

that the Primary Committee was apparently billed in error.

In view ofthis apparent billing error and resulting payment by the

Primary Committee of a General Committee expense, the General Committee should

reimburse the Primary Committee $30,000. 11 Absent such a reimbursement, the amount

paid ($30,00012

) by the Primary Committee represents a non-qualified campaign expense.

Recommendation

The Audit staff recommended that the Commission determine that the Primary

Committee make a pro rata repayment of $9,476 ($30,000 x .315876) to the United

States Treasury pursuant to 11 CFR § 9038.2(b)(2). Should the Primary Committee

provide evidence that it has been reimbursed by the General Committee, the repayment

would not be required.

The Commission approved the Staffrecommendation.

c. SHERATON NEW YORK HOTEL & TOWERS

Section 441a(a)(2)(A) ofTitle 2 ofthe United States Code states that no

multicandidate political committee shall make contributions to any candidate and his

authorized political committees with respect to any election for Federal office which, in

the aggregate, exceed $5,000.

Section 441a(a)(7)(B)(i) ofTitle 2 ofthe United States Code states that

expenditures made by any person in cooperation, consultation, or concert, with, or at the

request or suggestion of, a candidate, his authorized political committees, or their agents,

shall be considered to be contribution to such candidate.

Section 110.8(e)(I)(i)(ii) ofTitle 11 ofthe Code ofFederal Regulations

states that a political party may make reimbursement for the expenses of a candidate who

is engaging in party-building activities, without the payment being considered a

II

12

This amount is shown as due to the Primary Committee on the Statement of Net Outstanding

Qualified Campaign Expenses prepared by the Audit staff and included in the General

Committee's Audit Report.

This amount is not included on the Statement of Net Outstanding Campaign Obligations as due

from the General Committee because the payment to M&C occurred after the candidate's date

of ineligibility.

16
contribution to the candidate, and without the unreimhursed expense being considered an

expenditure counting against the limitation as long as the event is a bona fide party event

or appearance; and no aspect ofthe solicitation for the event, the setting ofthe event, and

the remarks or activities ofthe candidate in connection with the event were for the

purpose ofinfluencing the candidate's nomination for election.

Section 110.8(e)(2)(ii) ofTitle 11 ofthe Code of Federal Regulations

states that an event or appearance occurring on or after January 1 ofthe year ofthe

election for which the individual is a candidate is presumptively for the purpose of

influencing the candidate's election, and any contributions or expenditures are governed

by the contribution and expenditure limitation.

Section 100.7(a)(l) ofTitle 11 ofthe Code of Federal Regulations states,

in part, that the term contribution includes the following payments, services or other

things ofvalue: a gift, subscription, loan advance or deposit ofmoney or anything of

value made by any person for the purpose ofinfluencing any election for Federal office.

Section 100.7(a)(I)(iii)(A) ofTittle 11 ofthe Code of Federal Regulations states that for

purposes of 11 CFR 100.7(a)(l), the term anything of value includes all in-kind

contributions. Unless specifically exempted under 11 CFR 100.7(b), the provision ofany

goods or services is a contribution.

The Primary Committee made payments to the Sheraton New York Hotel

& Towers (the Sheraton) totaling $252,555. One ofthe payments was a wire transfer on

January 4, 1996 in amount of $134,739, which appeared to represent a deposit. In

addition, the Primary Committee received and paid an estimated bill for an event in the

amount of $117,816.

In response to the Audit staffs inquiry, the Primary Committee provided

the following chronology regarding the payments made to the Sheraton. The payment of

$134,739 pertained to an event scheduled to occur in January, 1996. This event was

subsequently canceled. The Sheraton sent the Primary Committee a refund of

$103,260;13 a cancellation fee of$31,479 was charged. This event was then rescheduled

to February 15, 1996. On February 8, 1996, a $117,816 payment was made to the

Sheraton for the February 15, 1996 event. Finally, the Primary Committee stated the

DNC invited some of its donors to the event, and based on the number ofDNC attendees

and the expenses incurred by DNC staff, the DNC paid $19,832. The Primary Committee

provided a copy of an invoice issued by the Sheraton to the Primary Committee, dated

March 8,1996, in the amount of$142,322 plus a copy of an estimated bill issued by the

Sheraton to the DNC for $19,832.

Costs itemized on the DNC's estimated bill were: dinner ($13,200), floral

($446), linen ($185), stanchions, ropes, pipe and drape, ($220), Clinton-Gore/DNC office

1l A copy ofthe refund check was provided.

17
rental ($610), Clinton-GorelDNC office phone/fax/printer ($671), and sleeping rooms

($4,500). Comparison ofthe charges listed on the Primary Committee's invoice versus

the charges listed on the estimated ONC bill, revealed that except for dinners ($13,200)

floral ($446) and linen ($185), the remaining categories ofitemized charges on the

ONC's estimated bill do not appear on the Primary Committee's invoice - the Primary

Committee's invoice apparently represents all the categories or types of charges billed by

the Sheraton directly related to the event. The expenses representing the difference,

$6,001 ($19,832 - 13,831) appear to be related to the event, even though not included on

the Sheraton's March 8,1996 invoice. Consequently, absent additional documentation,

the Audit staff could not determine how, or if, expenses totaling $10,675,14 as reflected on

the Sheraton's invoice issued to the Primary Committee were paid.

Based on the information available as ofthe close of audit fieldwork, the

cost ofthe event appeared to be a qualified campaign expense; the Sheraton invoice

referenced a "Clinton/Gore '96 Reception/Oinner." Further, this event did not appear to

represent a joint fundraising effort in which the ONC was a participant. Absent

documentation demonstrating that the expenses paid by the ONC were expenses NOT in

connection with the candidate's campaign for nomination, the Audit staffviewed the

amount paid by the ONC as an in-kind contribution. Further, the value ofthe apparent

in-kind contribution ($19,832) was added to the amount of expenditures subject to the

overall limitation.

It was recommended in the Memorandum, that the Primary Committee provide:

a) The final invoice issued by the Sheraton to the ONC;

b) an explanation as to the method used to "allocate" the costs ofthe event

between the Primary Committee and the ONC, along with documentation

to support that "allocation" ratio used;

c) documentation, in the form of canceled check(s) that demonstrates the

$10,675 in event expenses were paid;

d) documentation to show how the expenses paid by the ONC are expenses

not in connection with the candidate's campaign for nomination, and thus

not an in-kind contribution to the Primary Committee.

In response to the Memorandum, the Primary Committee provided

invoices and documentation which demonstrated that all expenses relating to the event

were paid. Although the estimated bill for the ONC was $19,832, the actual amount paid

by the ONC was $24,926 (catering and room charges). In addition, the Primary

Committee provided documentation which explained the method used to "allocate" the

Apparent total cost of event, $142,322 less $117,816 paid by the Primary Committee, less $13,831

paid by the ONC.

18
cost between the Primary Committee and the ONC. The ONC paid 11 % ofthe cost

which it considered as its share for the 165 guests invited by the ONC.

According to the Primary Committee, the primary purpose ofthis event

was to gamer support for the Clinton/Gore '96 presidential ticket and to bring attention to

the candidates and their agenda in the state ofNew York. This was not a fundraising

event for the Primary Committee. The ONC, however, was conducting fundraising in

New York at the time ofthe event, and when it learned that the President and Vice

President would be appearing, asked the Primary Committee to allow the ONC to invite a

small number of potential contributors to the event (emphasis added).

The Primary Committee also submitted an affidavit from Joseph Sandler,

who at the time ofthe event was General Counsel at the ONC. Mr. Sandler stated the

ONC was raising money in New York during the same time period as the event, and

when the ONC heard that the President and Vice President were attending this dinner the

ONC invited its own guests. It should be noted that Mr. Sandler makes no reference in

his affidavit that the ONC guests were potential contributors. No documentation has

been made available that demonstrated the ONC guests received any solicitation as a

result of attending this event.

Based on our review of all the information available, it appears that the

ONC was conducting fundraising in New York and did invite certain individuals to attend

the Primary Committee event. These individuals were among the 1,544 guests attending

this event, an event that by the Primary Committee's own admission, "was to garner

support for the Clinton/Gore '96 presidential ticket." The cost ofthis primary campaign

event may not be apportioned to the ONC or any other political committee without an inkind contribution resulting. 15

Accordingly, the ONC made and the Primary Committee received an

excessive in-kind contribution from the DNC. Further, the value ofthe in-kind

contribution ($24,926) is included in the amount of expenditures subject to the overall

limitation.

The Commission voted to receive this finding without any determination

on the merits ofthe analysis of the facts or the interpretation ofthe law contained therein.

15 A political party may reimburse the expenses of a candidate who is engaging in party building

activities without the payment being considered a contribution to the candidate, and withoutthc

unreimbursed expense being considered an expenditure counting against the limitation as long as

the event is a bona fide party event or appearance and no aspect of the solicitation for the event

was for the purpose of influencing the candidate's nomination or election.

19
D. EXPENDITURE LIMITATION

The Staffs inclusion ofmedia expenses paid by the DNC as an in-kind

contribution as discussed in Finding IILA. and the necessary adjustments/additions

discussed at Findings m.B and C. would have caused the limit to be exceeded by

$46,348,005, ofwhich $46,247,210 was subject to a pro rata repayment to the United

States Treasury.16

Based on its applicable pro rata calculation, the Staffrecommended the

Commission determine that $6,966,217 is repayable to the United States Treasury

pursuant to 11 CFR §9038.2(b)(2)(ii)(A).

A motion that the Commission determine in general that it will make no

repayment determinations based on aUeged overaU excessive spending by candidates

receiving presidential matching funds, failed on a vote of3-2, with 1 abstention.

As noted on page 6, by a vote of6-0, the Commission rejected the Staff

recommendation for a matching fund repayment related to $46,580,358 in media

expenses. The repayment would have resulted from the media expenses being added to

expenditures subject to the limitation, and the exceeding ofthat limitation. I?

E. DETERMINATION OF NET OUTSTANDING CAMPAIGN OBLIGATIONS

Section 9034.5 (a) ofTitle 11 ofthe Code of Federal Regulations requires

that within 15 calendar days after the candidate's date ofineJigibility, the candidate shall

submit a statement of net outstanding campaign obligations which reflects the total of aU

net outstanding obligations for qualified campaign expenses plus estimated necessary

winding down costs.

In addition, Section 9034.1 (b) ofTitle 11 of the Code of Federal

Regulations states, in part, that if on the date ofineligibility 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.

President Clinton's date ofineligibility was August 28,1996. The Audit

staff reviewed the Committee's financial activity through December 31, 1997, analyzed

11

Without the inclusion of$46,580,358 in DNC media expenses, the Primary Committee is

approximately $232,000 under the spending limitation.

Please refer to Agenda Document 98-85 at Finding III.D., and the relevant audio tapes for the

Open Session meetings of December 3", 9'h, 10'", 1998, January 14'",28'", February 3",25'", March

4'

", and April 29'", 1999 for additional information.

20
winding down costs, and prepared the Statement of Net Outstanding Campaign

Obligations.

It should be noted that the Primary Committee submitted with its response

to the Memorandum its version ofthe Statement ofNet Outstanding Campaign

Obligations. There were several differences between the Audit prepared statement and

the one prepared by the Primary Committee. According to the Primary Committee, the

deficit as of August 29, 1998 was $1,071,056, whereas, the deficit calculated by the Audit

staff as of August 28, 1998 was $895,646 a difference of approximately $175,000.

However, the Primary Committee did not provide worksheets, schedules or other

documentation to support the derivation ofits numbers.

The Audit staffs prepared Statement ofNet Outstanding Campaign

Obligations appears below. Based on our analysis, the Primary Committee did not

receive matching funds in excess of its entitlement.

21
CLINTON/GORE '96 PRIMARY COMMITTEE, INC.

STATEMENT OF NET OUTSTANDING CAMPAIGN OBLIGATIONS

as of August 28, 1996

as determined through December 31,1997

ASSETS

Cash in Bank $ 3,389,406 (1)

Cashon Hand 292

, Investments in U.S. Treasury Notes/Bonds 2,146,940 ,-=1

~:

Accounts Receivable:

1'1

Accrued Interest 9,171 (2)

iJ1 Vendor Deposits 54,933 (3)

ill Due from GELAC 151,757 (4) Id Clinton/Gore '96 General Committee 87,159 (5) ..

r~ Vendor Refunds 385,568 (6)

Id

Capital Assets 497,427 (7)

ru

fH.= Total Assets 6,722,653

OBLIGATIONS

Accounts Payable for Qualified Campaign Expenses 4,338,553 (8)

Refunds ofContributions 7,275 (9)

Federal Income Tax 165,480 (10)

Amount Due GELAC 88,878 (11)

Amount Due General Committee 12,427 (12)

Amount Due U.S. Treasury - Stale-dated Checks 12,230 (13)

Actual Winding Down Expenses 1,822,556

December 6, 1996 - December 31, 1997

Estimated Winding Down Expenses 1,170,900 (14)

January 1, 1998 - December 31, 1999

Total Obligations 7,618,299

Net Outstanding Campaign Obligations (Deficit) (895,646)

22
FOOTNOTES TO NOCO STATEMENT

(1) Audited Bank Reconciliation at 8/28/96 which includes stale-dated checks dated

on or before date ofineligibility added back to cash in bank.

(2) Accrued interest income 7/25/96 - 8/28/96.

(3) This amount represents vendor deposits outstanding as of 8/28/96.

(4) This amount reflects GELAC reimbursements to the Primary Committee for

GELAC salaries and overhead expenses initially paid by the Primary Committee

on or before 8/28/96. An offset ($88,878) was calculated by the Audit staffto

reflect the expenses ofindividuals not working exclusively on GELAC matters

(see Note 11).

(5) This amount represents: (a) Primary Committee payment ($22,984) to Bismarck

Enterprises for catering services provided to the General Committee; (b) an

amount ($63,736) paid by the Primary Committee for an AT&T phone lease

which should have been paid by the General Committee; (c) a GTE refund ($439)

addressed to the Primary Committee but erroneously deposited by the General

Committee.

(6) Amounts deposited post date ofineligibility for transactions made on or before

date ofineligibility plus the reported amount owed to the Primary Committee by

one of its media vcndors.

(7) Recognition of gross capital assets including software and licensing fees less

depreciation of 40%.

(8) Reflects actual accounts payable through 12/31/97 absent a reduction to accounts

payable for post date ofineligibility stale-dated checks and winding down costs.

(9) Represents contributions dated 8/28/96 or before and refunded to contributors.

(10) This amount reflects the tax liability for investment income and interest earned on

deposits [or the period 111/96-8/28/96.

(11) This offsets the GELAC reimbursement to the Primary Committee at Note 4; the

difference of $62,879 represents the allowable reimbursement by GELAC for staff

working 100% on GELAC matters prior to date of ineligibility.

(12) This amount represents; (a) DNC Convention related travel on TWA paid

($7,291) by the General Committee; (b) a leg ofDNC Convention travel from

Chicago to Cape Girardeau, MO relative to the Primary Committee that was paid

($5,136) by the General Committee (see Audit Report ofthe General Committee,

Finding III.B.l.).

(13) Primary Committee's outstanding checks to vendors or contributors that have not

been cashed.

(14) This amount is based on the Primary Committee's actual 1997 year-end winding

down expenses.

23
F. STALE-DATED CHECKS

Section 9038.6 of Title 11 ofthe Code of Federal Regulations states that if

the committee has checks outstanding to creditors or contributions that have not been

cashed, the committee shall notify the Commission. The committee shall inform the

Commission ofits efforts to locate the payees, ifsuch 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 ofsuch outstanding checks, payable to the United

States Treasury.

During our review ofthe Primary Committee's disbursement activity, the

Audit staff identified 97 stale-dated checks totaling $38,164 dated between April 27,

1995 and December 16, 1997. The Audit staff provided a schedule ofthe stale-dated

check to the Primary Committee on Thursday, March 19, 1998.

In the Exit Conference Memorandum, the Audit staffrecommended that

the Primary Committee present evidence that the checks were not outstanding (i.e., copies

ofthe front and back ofthe negotiated checks), or that the outstanding checks were

voided and/or that no Primary Committee obligation exists.

In response to the Memorandum, the Primary Committee provided

evidence that checks, totaling $25,934, had been voided, reissued and cleared the bank

($20,044); had cleared the bank subsequent to the end offieldwork ($2,890); had been

originally issued in error ($1 ,000); and, had been voided and a check reissued to the U.S.

Treasury ($2,000).

Documentation was also made available with respect to action taken on

the remaining stale-dated checks, totaling $12,230, however, evidence offinal disposition

has not been made available.

Based on the above, the Audit staffreduced the amount of unresolved

stale-dated checks to $12,230.

Recommendation

The Audit staffrecommended that the Commission make a determination that the

Primary Committee is required to make a payment of$12,230 to the United States

Treasury.

The Commission approved the Staff recommendation.

24
F. RECAP OF AMOUNTS DUE TO THE U.S. TREASURY

this report.

Shown below is a recap of amounts due the U.S. Treasury as discussed in

•

Non-qualified Campaign Expenses

(Finding III.B.)

Stale-Dated Checks (Finding III.F.)

Total

25

$ 114,450

12,230

$ 126,680
MEMORANDUM

TO:

THROUGH:

FROM:

SUBJECT:

FEDERAL ELECTION COMMISSION

WASHINGTON. O.c. 20463

October 1, 1998

Robert J. Costa

Assistant Staff Director

Audit Division

James A. Pehrkon

Lawrence M. Noble

General Counsel

Kim Bright-Coleman

Associate General CO~Sfl

Rhonda 1. Vosdingh ,~lJf Assistant General Counsel

Delbert K. Rigsby b\<=K.

Attorney

Proposed Audit Report on the Clinton/Gore '96 Primary Committee, Inc.

(LRA#485)

I. INTRODUCTION

The Office ofGeneral Counsel has reviewed the proposed Audit Report on the

Clinton/Gore '96 Primary Committee, Inc. ("Primary Committee") submitted to this Office on

September 17, 1998.1 As you note in your cover memorandum transmitting the proposed Report

to this Office, it appears that at this time the Commission seeks to address this matter in early

November 1998. This proposed schedule necessarily requires an expedited legal review from

1 Since the proposed Audit Report concerns the audit of a candidate and his authorized committee that

received Presidential primary matching funds, this Office recommends that the Commission's discussion ofthis

document be conducted in open session in accordance with 1I C.F.R. § 9038.1(e)(I). See also II C.F.R. § 2.4.

26
Memorandum to Robert Costa

Clinton/Gore' 96 Primary Committee Audit Report

(LRA #485)

Page 2

this Office. In order to efficiently perform our review and to provide you with time to make our

suggested revisions, this Office intends to provide you with "rolling" comments. Thus, the

following memorandum lists sections ofthe proposed Report in which we concur with your

findings and recommendations. This Office has no comments on such sections. We understand

that the proposed Audit Report was submitted to this Office prior to the completion of the

referencing process and, therefore, we request that you alert us to any changes to these sections

that may be made during this process. This Office is drafting comments on sections of the

proposed Report that are not listed herein, and will submit those comments in future memoranda.

If you have any questions concerning our comments, please contact Delbert K. Rigsby, the

attorney assigned to this audit.

II. DISCUSSION

This Office concurs with your findings and recommendations on the following sections

of the proposed Report and has no comments on such sections:

Receipt of Prohibited Contributions Resulting from Extensions ofCredit by Commercial

Vendors (ILA)2

Apparent Non-Qualified Expenses - Bismarck Enterprises (IlLB.l.a)

Apparent Non-Qualified Expenses - AT & T Capital Corporation (III.B.l.b)

Determination ofNet Outstanding Campaign Obligations (IlLE)

Primary Stale-Dated Checks (IlLF)

Other Staff Assigned

Delanie DeWitt Painter

Andre D. Pineda

Joel J. Roessner

Parenthetical references are to the relevant sections ofthe Primary Committee's proposed Audit Report.

27
•

MEMORANDUM

TO:

THROUGH:

FROM:

SUBJECT:

/t-<t.'bCfc.Q

\D I(3("1

FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 20463

October 13, 1998

Robert 1. Costa

Assistant StaffDirector

Audit Division

Kim Bright-Coleman /C{1G

Associate General Counsel

Rhonda J. Vosdingh fJVPt1 J

Assistant General Counsel

Proposed Audit Report on the Clinton/Gore '96 Primary Committee, Inc,

(LRA#485) I

I. INTRODUCTION

The Office of General Counsel is continuing its review ofthe proposed Audit Report on

the Clinton/Gore '96 Primary Committee, Inc, ("Primary Committee") submitted to this Office

on September 17, 1998. As noted in our October 1, 1998 memorandum, this Office will present

its comments to you as they are prepared. The following memorandwn contains our comments

on several sections ofthe proposed Audit Report. We understand that the proposed Audit Report

was submitted to this Office prior to the completion ofthe referencing process and, therefore, we

request that you alert us to any changes to these sections that may be made, This Office is

drafting comments on matters that are not included in this memorandum or in our memorandum

dated October 1, 1998. We will provide these comments in a future memorandum. If you have

any questions concerning our comments, please contact Delbert K. Rigsby or De1anie DeWitt

Painter.

28
Memorandum to Robert Costa

Clinton/Gore' 96 Primary Comminee Audit Report

(LRA 11485)

Page 2

II. SALARY AND OVERHEAD (lll.B.l.e) l

This Office concurs with the proposed Report's finding that salary and overhead expenses

paid by the Primary Committee subsequent to the candidate's date ofineligibility are nonqualified campaign expenses.1 Moreover, we concur with the recommendation that the

Commission make a determination that a pro rata repayment of $37,965 is due to the United

States Treasury.)

The Commission promulgated "bright line" rules in 1995 for expenditures by candidates

who receive public funding in both the primary and general elections. 11 C.F.R. § 9034.4(e);

see also, Explanation & Justification for 11 C.F.R. § 9034.4, 60 Fed. Reg. 31854,31866-67

(June 16, 1995).4 This Office interprets 11 C.F.R. § 9034.4(e) to apply to all qualified campaign

expenses, including campaign operating costs and winding down costs. See 11 C.F.R.

§ 9034.4(a)(3)(i). Section 9034.4(e) provides that any expenditure for goods and services that

are used exclusively for the primary election campaign shall be attributed to the primary

committee, and any expenditure for goods and services that are used exclusively for the general

election campaign shall be attributed to the general committee. 11 C.F.R. § 9034.4(e)(I). There

are also specific rules for certain categories of expenses. Overhead expenditures and payroll

costs incurred in connection with state or national campaign offices shall be attributed according

to when the usage occurs or the work is performed. 11 C.F.R. § 9034.4(e)(3). Under this rule,

overhead and payroll costs for periods after the date of nomination are general election expenses,

unless the expenditures were "used exclusively" for the primary election. 11 C.F.R.

§§ 9034.4(e)(l) and (3). Thus, the new "bright line" rules do not allow most wind down

expenditures for party nominees' primary campaigns until after the date of the general election.

For the Primary Committee to claim post-date ofineligibility winding down costs for

payroll and overhead, the Primary Committee must demonstrate that the expenditures were

Parenthetical references are to the relevant sections ofthe proposed Report.

This Office addressed the issue of the attribution of expenditures for state or national campaign offices

between the primary and general election expenditure limitations in a memorandum to the Audit Division dated

March 20, 1998.

This Office suggests that the recommendation clarify that the repayment is due unless the Clinton/Gore '96

General Committee, Inc. (the "General Committee") reimburses $192,288 to the Primary Committee, consistent

with other Report recommendations involving general election expenditures paid for by the Primary Committee.

In the Explanation & Justification for 11 C.F.R. § 9034.4(e), the Commission recognized that it can be

difficult to "select a single bright line date appropriate for all campaigns under all circumstances" and

acknowledged that "the adoption of the bright line rules could in certain instances result in the primary committee's

subsidizing the general election committee, or vice versa" and that there could be "situations in which this approach

does not accurately reflect the relative impact of particular expenditures." 60 Fed. Reg. 31854, 31866-67.

Nevertheless, the Commission reasoned that these differences should "balance themselves out over the eourse of a

lengthy campaign" and adopted the "bright line" rules to conserve agency resources and complete audits more

quickly. [d. at 31867.

29
Memorandum to Robert Costa

Clinton/Gore' 96 Primary Committee Audit Report

(LRA #485)

Page 3

exclusively related to winding down the primary election campaign consistent with 11 C.F.R.

§ 9034.4(e)(l). Since the Primary Committee has not demonstrated that the payroll and overhead

costs were exclusively related to the primary election, these expenditures must be attributed to

the general election, and a repayment is required.

IV. MORRIS & CARRICK PAYMENTS (III.B.2)

This Office concurs with the proposed Audit Report's finding that the Primary

Committee payment of $30,000 to Morris & Carrick (M & C) on September 30, 1996 was

a non-qualified campaign expense, and with the recommendation that a pro rata payment of

$4,637 is due to the U.S. Treasury unless the General Committee reimburses $30,000 to the

Primary Committee. The consulting agreement between the Primary Committee and M & C

ended on August 30, 1996. M & C's agreement with the General Committee was from

August 30, 1996 to November 30, 1996. Moreover, William Carrick provided an affidavit that

M & C erred in sending an invoice for $30,000 to the Primary Committee rather than to the

General Committee. He also averred that M & C did not receive any funds above the amounts

set forth in the agreements with the Primary Committee and the General Committee. Thus, it

appears that the $30,000 was not a bonus payment from the Primary Committee to M&C.5

Nonetheless, since this payment was apparently a general election expense, it was not incurred in

connection with President Clinton's campaign for the nomination. See 11 C.F.R. § 9032.9(a)(2).

Thus, it is a non-qualified campaign expense of the Primary Committee and a pro rata

repayment is required under 26 U.S.C. § 9038(b)(2)(A) and 11 C.F.R. § 9038.2(b)(2). Since the

payment appears to have been for qualified campaign expenses of the general election campaign,

a reimbursement by the General Committee to thc Primary Committee would resolve the issue.

Finally, this Office believes that the proposed Report should contain a statement

explaining that the $30,000 is not included on the Net Outstanding Campaign Operations

(NOCO) statement under the accounts receivable catcgory because this payment to M & C

occurred after the candidate's date of ineligibility. See 11 C.F.R. § 9034.5.

V. SHERATON NEW YORK HOTEL & TOWERS (lILC)

This Office concurs with the proposed Audit Report's finding that the Primary

Committee received an excessive in-kind contribution from the DNC in the amount of $19,832

in connection with the Primary Committee event held at the Sheraton New York Hotel on

February 15, 1996. 2 U.S.C. 441a(a)(2)(A); ] 1 C.F.R. 100.7(a)(I). A political party may

reimburse the expenses ofa candidate who is engaging in party-building activities without the

payment being considered a contribution to the candidate, and without the unreimbursed expense

being considered an expenditure counting against the limitation as long as the event is a bona

Since it nO longer appears that this issue involves a bonus payment. this Office suggests that the heading

for this section ofthe report be changed from "Apparent Bonus Payments."

30
Memorandum to Robert Costa

Clinton/Gore' 96 Primary Committee Audit Report

(LRA #485)

Page 4

fide party event or appearance and no aspect ofthe solicitation for the event, the setting ofthe

event, and the remarks or activities ofthe candidate in connection with the event were for the

purpose ofinfluencing the candidate's nomination or election. II C.F.R. §§ 110.8(e)(1)(i) and

(ii). Moreover, an event or appearance occurring on or after January 1 ofthe year ofthe election

for which the individual is a candidate is presumptively for the purpose ofinfluencing the

candidate's election and any contributions or expenditures are governed by the contribution or

expenditure limitations. 11 C.F.R. § llO.8(e)(2)(ii).

The event appears to have been a Clinton/Gore campaign event. The Primary Committee

acknowledges that the primary purpose ofthe event was to garner support and bring attention to

the candidate and his agenda in New York. Thus, the Primary Committee did not rebut the

presumption that the event was for the purpose ofinfluencing the candidate's election. The fact

that the DNC may have invited some of the attendees to the event does not change the nature of

the campaign event or permit the DNC to defray expenditures for the event. Since the event was

for the purpose ofinfluencing the candidate's nomination or election, and was held during the

year ofthe election, the Audit staff was correct in concluding that the DNC's payment of a

portion ofthe costs was an excessive in-kind contribution to the Primary Committee. This

Office believes that the Audit stafrs argument that the DNe's payment of a portion ofthe

costs of this event is an in-kind contribution can be strengthened by including a discussion of

11 C.F.R. § IIO.8(e)(l) and (2).

StaffAssigned: Delanie DeWitt Painter

Delbert K. Rigsby

Andre Pineda

Joel Roessner

31
MEMORANDUM

TO:

THROUGH:

FROM:

SUBJECT:

FEDERAL ELECTION COMMISSION

WASHINGTON, DC. 204&3

October 21, 1998

Robert J. Costa

Assistant Staff Director

Audit Division

James A. Pehrkon

Acting Staff Dire r

Lawrence M. No;;://

General CounselIV. ,

Kim Bright-Coleman Ij/!V

Associate General c~un~l

Rhonda J. Vosdingh '?-O/

Assistant General Counsel

Proposed Audit Report on the Clinton/Gore '96 Primary Committee, Inc.

(LRA#48S)

I. INTRODUCTION

The Office of General Counsel is continuing its review ofthe proposed Audit Report on

the Clinton/Gore '96 Primary Committee, Inc. ("Primary Committee") submitted to this Office

on September 17, 1998. As noted in our October 1, 1998 memorandum, this Office will present

its comments to you as they are prepared. The following memorandum contains our comments

on section IILD.2 ofthe proposed Audit Report which is entitled "Expenses in the Legal and

Matching Fund Not Considered 100% Exempt Compliance." We understand that the proposed

Audit Report was submitted to this Office prior to the completion ofthe referencing process and,

therefore, we request that you alert us to any changes to this section, This Office is drafting

comments on matters that are not included in this memorandum or our previous memoranda. We

will provide these comments in a future memorandum. If you have any questions concerning our

comments, please contact Delanie DeWitt Painter or Delbert K. Rigsby.

32
Memorandum to Robert Costa

Clinton/Gore' 96 Primary Committee Audit Report

(LRA #485)

Page 2

II. EXPENSES IN THE LEGAL AND MATCHING FUND DEPARTMENTS

NOT CONSIDERED 100% EXEMPT COMPLIANCE (Ill.D.l)

The proposed Audit Report states that the Audit staff did not accept the Primary

Committee's initial allocations ofthe legal-compliance and matching fund cost centers as totally

exempt compliance because the activities ofthese cost centers were not entirely related to

compliance. The Primary Committee allocated legal costs as 100% exempt compliance except

for the costs related to one lawyer, Ken Stern, and matching fund cost center as approximately

83% exempt compliance and approximately 17% accounting expenditures. The Primary

Committee in tum allocated the accounting expenditures as 85% compliance costs and 15%

operating expenditures. Instead, the proposed Report applies 85% ofthe expenditures for the

legal and matching fund cost centers to exempt compliance and 15% to operating expenditures.

Because operating expenditures count against the expenditure limitation, 11 C.F.R. § 9035.1,

such portion ofthe legal and matching fund cost centers that are operating expenditures result in

an increase of $395,187 to expenditures subject to the overall expenditure limitation, rather than

$117,817 suggested by the Primary Committee.

A candidate may exclude from the overall expenditure limitation an amount equal to 10%

of all salaries and overhead expenditures as an exempt legal and accounting compliance cost.

II C.F.R. § 9035.I(c)(I). A candidate may claim a larger compliance exemption for any person

by establishing allocation percentages for each individual who performs compliance duties by

keeping a detailed record to support the derivation of each percentage. II C.F.R.

§ 903S.I(c)(I)(i). Alternatively, the Commission's Financial Control and Compliance Manual

for Presidential Primary Candidates Receiving Public Financing ("Compliance Manual")

contains accepted allocation methods for calculating a compliance exemption. Id.; see

Compliance Manual at 31-33. However, the allocation methods delineated in the Compliance

Manual are not the exclusive alternatives available to candidates. See Explanation and

Justification, 52 Fed. Reg. 20871 (June 3,1987). Each cost group must be allocated consistently

by a single method, but different cost groups may be allocated by different methods.

Compliance Manual at 33. The costs of preparing matching fund submissions that are

considered exempt compliance are limited to those functions not required for general

contribution processing. 11 C.F.R. § 903S.I(c)(1)(ii). Data entry, batching contributions for

deposit and preparing Coriunission reports are considered general contribution processing

functions. Id

This Office concurs with the Audit staffs conclusion that the Primary Committee did not

properly allocate the expenditures related to the legal-compliance cost center. The Primary

Committee initially allocated 100% of the legal cost center expenditures as exempt compliance,

but the Audit staff found that several lawyers performed non-compliance duties, such as

negotiating contracts and collecting rent from a tenant. In response to the Exit Conference

Memorandum, the Primary Committee proposed re-a1locating the expenditures for one lawyer,

Mr. Stem, to another cost center because he virtually perfonned all non-compliance duties; the

remaining legal costs were allocated as lOO% compliance. However, the Primary Committee's

33
Memorandum to Robert Costa

Clinton/Gore' 96 Primary Committee Audit Report

(LRA #485)

Page 3

allocation ofthe expenditures related to Mr. Stern to another cost center is insufficient to support

the 100% exempt allocation ofthe remaining expenditures ofthe legal-compliance cost center. I

While the Primary Committee may change its allocation of Mr. Stern's expenditures ifit

recalculates all allocations for legal expenditures, 11 C.F.R. § 903S.1(c), it appears that the

Primary Committee also allocated some amount of expenditures for non-compliance legal

activities by legal staff other than Mr. Stern as 100% exempt legal compliance. Indeed, the

Primary Committee acknowledges that other staff did "minimal" work that was not compliance

related, but asserts that compliance work by Mr. Stern would offset these activities.

The proposed Report's discussion ofthe matching fund cost center needs clarification.

Based on our discussions with Audit staff, the Primary Committee initially allocated 100% ofthe

matching fund cost center expenditures as exempt compliance, but incorrectly included some

costs for general contribution processing, such as data entry, in the matching fund cost center.

See II C.F.R. § 903S.1(c)(l)(ii). The Primary Committee then proposed allocating

approximately 83% ofthe expenditures for the matching fund cost center as 100% exempt

compliancc and the 17.33% in remaining expenditures as accounting expenditures. However, the

Primary Committee also allocated 85% ofthe 17.33% accounting expenditures as exempt

compliance. Thus, the amount ofmatching fund cost center expenditures the Primary Committee

allocated to the expenditure limitation is 15% afthe 17.33% accounting portion ofthe total, or

only approximately 2.6% ofthe total expenditures for the matching fund cost center. We suggest

that this section ofthe proposed Report be revised to clarify the facts, particularly the percentage

ofmatching fund cost center expenditures the Primary Committee proposes to exempt as

compliance.

The documentation the Primary Committee submitted purporting to support its allocation

of the matching fund cost center expenditures is insufficient. It does not appear that the

allocation is based on allocation percentages established for each individual who performed

compliance duties in the matching fund cost center. See 11 C.F.R. § 9035. 1(c)(l)(i); Compliance

Manual at 30-33. For example, the Primary Committee has not provided documentation ofthe

actual amount oftime staffspent on compliance activities. Therefore, we concur that the

Primary Committee's allocation ofthe matching fund cost center is not correct. Based on

documents provided to us by the Audit staff, it appears that the Primary Committee devised its

allocation ofthe matching fund cost center based upon a formula which calculates the average

amount oftime spent for data entry of accounting information based on typing speed and treats

The Primary Committee's response states that there were two legal cost centers and that all non-compliance

expenditurcs were allocated as "legal-other." The Primary Committee maintains that the auditors only questioned

the expenditures for Mr. Stem and one payment to the flrm of Wright, Lindsey & Jenkins. The Primary Committee

states that other expenditures were compliance-related. However, the Audit staff have informed us that other staff

activities allocated to the legal-compliance cost center do not appear to be exclusively related to compliance. Ifthe

Primary Committee were correct that all expenditures other tban those for Mr. Stern were compliance related, tbis

Office believes the Primary Committee's solution would be acceptable. Therefore, we suggest that the proposed

Report be revised to include the evidence which indicates that other staff~llocated as legal-compliance performed

non-compliance activities.

34
Memorandum to Robert Costa

Clinton/Gore' 96 Primary Committee Audit Report

(LRA #485)

Page 4

time in excess ofthe amount theoretically needed for accounting purposes as related to matching

funds purposes. The Primary Committee has not sufficiently explained its formula or provided

sufficient documentation regarding the duties of certain employees within the matching fund

department. 2 Moreover, the Primary Committee's formula does not appear to consider other

factors that could increase the amount of time spent on accounting functions such as illegible

checks, missing information, problem contributions that require clarification and staff breaks.

Nor does the formula account for time spent on other non-compliance activities in addition to the

time theoretically spent on typing a contributor's name, address and contribution amount.

This Office agrees that the Primary Committee has not properly allocated legal or

matching funds cost centers. The Audit staff have applied a percentage of 85% compliance to

the matching fund and legal cost centers.) Under the circumstances, such as a lack of

information from the Primary Committee, this Office concurs with the Audit staffs use of an

allocation method that is acceptable pursuant to II C.F.R. § 9035.I(c)(l)(i). It appears that the

Audit staff used this ratio for the matching fund and legal compliance cost centers because an

85/15% split is one alternative delineated in the Compliance Manual for allocation of accounting

expenditures for a campaign's national office. See Compliance Manual at 31·32; 11 C.F.R.

§ 9035.1(c)(I)(i). The proposed Report should clarify that this alternative allocation for

accounting expenditures was the basis for using the 85/15% ratio for the matching fund and legal

costs centers, and explain why these percentages represent a reasonable approach.

Staff Assigned: Delanie DeWitt Painter

Delbert K. Rigsby

Andre G. Pineda

Joel 1. Roessner

On several occasions, the Audit staff attempted to obtain additional documentation from the Primary

• Committee and clarification on the fonnula, but were unsuccessful.

The legal cost centers consist of "legal-compliance" and "legal-other."

35
FEDERAL ELECTION COMMISSION

WASHINCTON. O.c. 20403

RECEIVED

fEDERAL ELECT/ON

OOMMISSION

AUDIT DIVISION

OCT 26 4 13 PH 'sa

Si

October 26, 1998

MEMORANDUM

TO: Robert J. Costa

Assistant Staff Director

Audit Division

THROUGH: James A. Pehrkon

Acting StaffDi

FROM: LawrenceM.N:/

General counsej{/~, ,

Kim Bright-Coleman

Associate General CO~\I

Rhonda J. Vosdingh O~ Assistant General Co~el

SUBJECT: Proposed Audit Report on the Clinton/Gore'96 Primary Committee, Inc. -

CoreStates Bank Wire Transfers (LRA #485 and #508)

I. INTRODUCTION

The Office of General COllllsel is continuing its review ofthe proposed Audit Report on

the Clinton/Gore '96 Primary Committee, Inc. ("Primary Committee") submitted to this Office

on September 17,1998. As noted in our October 1, 1998 memorandum, this Office will present

its comments to you as they are prepared. The following memorandum contains our comments

on the issue of wire transfers from CoreStates Bank to media vendors. We understand that the

proposed Audit Report was submitted to this Office prior to the completion ofthe referencing

process and, therefore, we·request that you alert us to any changes relevant to this issue. This

Office is drafting comments on matters that are not included in this memorandum or in our

memorandum dated October 1, 1998. We will provide these comments in a future memorandum.

Ifyou have any questions concerning our comments, please contact Delanie DeWitt Painter or

Delbert K. Rigsby.

36
o'

Memorandum to Robert J. Costa

CoreStates Bank Wire Transfers (LRA #485 and #508)

Page 2

II. CORESTATES WIRE TRANSFERS (llI.A) 1

During the course ofthe audits ofthe Primary Committee and the Clinton/Gore '96

General Conunittee, Inc. ("General Committee")(collectively, "the Committees"), a question

arose concerning wire transfers from CoreStates Bank ("CoreStates") to two accounts at the

National Capital Bank of Washington in the name ofthe Committees' media vendors, Squier

Knapp Ochs Communications ("SKO") and the November 5 Group, Inc. ("NOVS"); specifically,

whether the transferred funds were the proceeds of a commercial loan. This Office believes that

the information provided to date by CoreStates in response to the Commission subpoena issued

on February 24, 1998 is sufficient to resolve any question about whether the source offunds was

a commercial loan, and we recommend that the Audit Division not pursue this matter further.

As part ofthe audits ofthe Committees, the Audit staff reviewed documents provided by

the National Capitol Bank of Washington for two bank accounts in the name of SKO and NOVS,

media vendors for the Committees who were also paid by the Democratic National Committee

and various state party committees for media expenditures which appear to have been made on

behalf of President Clinton's re-election campaign. The auditors' review revealed numerous

wire transfers totaling in excess of$4,000,000 into the media vendors' accounts from CoreStates

between October 1995 and August 1996. The wire transfer credit advices contained the notation

"CORESTATES PHIL /ORG=COMMERCIAL LOAN/HARRISBURG HARRISBURG FIS

ORO #0101 PA 00." The Audit Division requested that this Office prepare a subpoena to

CoreStates requesting documentation of any commercial loan that was the source ofthe wire

transfers.2 The Commission issued the subpoena on February 24, 1998.

CoreStates responded that the source ofthe wire transfers was a bank account held by the

Pennsylvania Democratic Party ("PDP") and that there was no connection to any commercial

loan. While CoreStates provided no loan documentation, it provided documentation ofthe wire

transfers. In response to several requests, by telephone and letter, for an explanation ofthe

notation on the wire transfer credit advices, Kim Heffner, CoreStates' representative, explained

that the notation indicated the bank's departmental group name for the department that was

involved in the wire transfers. In a memorandum dated April 16, 1998, the Audit Division

requested that tius Office obtain affidavits from senior officials at CoreStates explaining the

notation on the wire transfer credit advices and stating that no responsive documents exist.

CoreStates responded to tills Office's request for affidavits with two notarized letters from senior

bank officials. Katie Smarilli, Senior Vice President, states in her letter that the notation

represents "the departmental name. The monies did not come from a commercial loan." Linda

A. Pinkasavage, Vice President ofCommercial Loan Services, states that the "original source for

Parenthetical references are to the relevant sections ofthe proposed Report.

The possibility that a commercial loan was the source ofthe funds raised issues such as whether the loan

was made in the ordinary course of business or was a prohibited contribution, whether an individual or prohibited

source guaranteed the loan, and whether the transaction was properly reported. 2 U.S.C. §§ 434(b); 44Ia(a)(I)(A);

441b.

37
.'

Memorandum to Robert J. Costa

CoreStates Bank Wire Transfers (LRA #485 and #508)

Page 3

the wire transfers" was "not related in any way to a commercialloan."J The Audit staff believes

these responses were insufficient because they were not in the fonn of affidavits. In addition, the

Audit staffhas expressed concerns that CoreStates' representatives may not have thoroughly

checked the bank's records for the existence of a loan.

In several follow-up telephone conversations, Ms. Smarilli, who is currently in charge of

the Commercial Banking Group for all ofsouthern Pennsylvania, including the Harrisburg office,

explained that she is in charge ofthe commercial department that was used to process the wire

transfers and that the notation on the wire transfer documents refers to the department name, and

does not indicate the existence of any commercialloan.4 She explained that the notations

"COMMERCIAL LOANfHARRISBURG" on the wire transfer documents refer to the

commercial bank department in Harrisburg that processed the wire transfer transactions and that

the wire transfer credit advices state "CORESTATES PIDL" because all of the bank's wire

transfers go through Philadelphia. Ms. Smarilli explained that the bank department that

processed the wire transfers has been referred to by several names, including the "Commercial

Department" and the "Commercial Banking Group." The department deals in fmancial

transactions involving commercial and business entities rather than individual or consumer

banking and conducts all kinds of activities, including commercial deposit accounts and cash

management accounts. In addition to other services, it sells, underwrites and closes commercial

loans, but it does not deal exclusively with commercial loans. Finally, she surmised that the

individual who processed the wire transfers may have referred to the commercial department as

the commercial loan department because of confusion over departmental names due to several

bank mergers.

This Office believes that the infonnation obtained to date from CoreStates is sufficient to

resolve any question about whether the source offunds was a commercial loan. There is no

evidence that the wire transfers were related to a loan or line of credit. CoreStates

representatives have consistently reiterated that none ofthe wire transfers were related to any

loan, commercial loan or line of credit. They have stated that the source of each ofthe wire

transfers was a bank account in the name ofthe PDP. Their representation is supported by the

In another attempt to satisfy the Audit staffs concerns that the information was notsubmitted under oath,

this Office prepared an affidavit including the information provided by CoreStates and seeking confirmation of

additional information requested by the Audit staff. Adraft ofthis affidavit was forwarded to the Audit staff by

electronic mail on July 30,1998. On October 8,1998, the Audit staffinformed staff ofthis Office that the affidavit

should be sent to CoreStates. This Office will send the affidavit to CoreStates. Based on our discussions with

CoreStates' legal department, we do not anticipate any problems in obtaining a signed affidavit from CoreStates.

Neverthelcss, this Office's recommendation that this matter should not be pursued further remains unchanged.

The Audit staff has expressed concern that during one telephone conversation, Ms. Smarilli appeared to be

unaware ofthe correct dates ofthe wire transfers. This Office does not believe that Ms. Smarilli's confusion ofthe

dates undermines her credibility or the veracity ofthe information she provided concerning the Commercial

Department. The timing ofthe wire transfers is not relevant to the information Ms. Smarilli provided. There is no

indication that the individuals who checked the bank's records for the existence of a loan were W3aware ofthe dates

ofthe wire transfers. Nor is there any indicatiOn that CoreStates' representatives did not thoroughly check the

bank's records for the existence of a loan during the appropriate time period.

38
Memorandum to Robert J. Costa

CoreStates Bank Wire Transfers (LRA #485 and #508)

Page 4

wire transfer documents CoreStates has provided which, for example, list the PDP account as the

"Account Title" on the wire transfer requests, and state the transfers were "by order of' the PDP.

This explanation also comports with the PDP's disclosure reports, which disclose payments to

the media vendors that generally are on the same dates and in the same amounts as the wire

transfers.

CoreStates has checked its loan records and has fOW1d no evidence ofany loan to the PDP

or to the media vendors. There is no reason to question CoreStates' representations that they

have thoroughly checked the bank's records for the existence of a loan. Moreover, other

available information reviewed by this Office provides no evidence of any loan related to the

wire transfers. Neither PDP's disclosure reports nor commercial databases such as Dunn and

Bradstreet report any large loans to the PDP during this period. This Office's review of

Democratic National Committee ("DNC") and PDP disclosure reports reveals a pattern of

transfers from the DNC to the PDP and PDP payments to the media vendors that is typical of

activity in numerous other states. There is no indication that a large amount ofmoney from a

loan or line of credit was received by the PDP and paid to the media vendors. The fact that some

ofthe wire transfers to the media firms preceded DNe transfers to the PDP in similar amounts

does not demonstrate that a loan or line of credit existed. It is also unclear why the PDP would

not report such a loan or line of credit but would report the receipt of numerous large transfers

from the DNC that appear to be the source ofthe funds transferred to the media firms. Finally,

CoreStates' consistent explanation ofthe notations on the wire transfer documents is plausible.

There is no reason to doubt the credibility ofthe CoreStates representatives or to question the

veracity oftheir explanation that the notation merely refers to the bank department in Harrisburg

that was used to process the wire transfers.

This Office believes that further pursuit ofthis matter would not be an effective use of the

Commission's limited resources. We recognize that CoreStates provided letters rather than

affidavits in response to the subpoena, and that questions remain about these transactions.

However, in order to fully explore whether the PDP received a loan from any source during this

period, an audit ofthe PDP would probably be necessary. Moreover, while this matter is related

to the media expenditures issue in the audit reports, it is tangential at best and additional

investigation is unlikely to reveal information which would support a repayment determination.

Therefore, this Office considers this matter to be resolved and recommends that the Audit

Division not pursue this matter further.

39

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-R",;::, 'D I'-"/2:1/r,({

Auo. 'iMEMORANDUM

TO:

THROUGH:

FROM:

SUBJECT:

FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 20463

October 27, 1998

Robert 1. Costa

Assistant Staff Director

Audit Division , . ,( .

James A. Pehr.'-kO--,,~.~~·~; Acting Staff~~~.

Lawrence M. Nobl ./

General Counselr-"

Kim Bright-Coleman I(~ Associate General co~;' -

Rhonda 1. Vosdingh fiji

Assistant General Counsel

Proposed Audit Report on the Clinton/Gore '96 Primary Committee, Inc. -

Media Advertisements Paid for by the Democratic National Committee

(LRA#485)

I. INTRODUCTION

The Office of General Counsel has completed its review of the proposed Audit Report on

the Clinton/Gore '96 Primary Committee, Inc. ("Primary Committee") submitted to this Office

on September 17, 1998. The following memorandum contains our comments on several issues

related to the media section ofthe proposed Audit Report (sections Ill.A., D. ofthe proposed

Report). We understand that the proposed Audit Report was submitted to this Office prior to the

completion ofthe referencing process and, therefore, we request that you alert us to any changes

to these sections. If you have any questions concerning our comments, please contact Delanie

DeWitt Painter or Delbert K. Rigsby.

40
Memorandum to Robert J. Casta

Clinton/Gore' 96 Primary Committee Audit Report

(LRA #485)

Page 2

n. DNe EXPENDITURES FOR MEDIA (III.A. and D)

The proposed Audit Report attributes media expenditures paid for by the Democratic

National Committee ("DNC") on behalf of President Clinton's campaign to the Primary

Committee's overall expenditure limitation. The proposed Audit Report recommends that the

Commission find that the DNC paid a total of $44,311,664 directly and through Democratic state

party committees for media expenditures on behalf ofthe Clinton campaign that aired between

June 1995 and August 1996. This recommendation is based on your conclusion that there is

evidence the campaign staff and consultants as well as the candidate and White House staff

coordinated with the DNC regarding the creation and placement ofthe media advertisements that

appear to contain an "electioneering message" and a "clearly identified candidate."

This Office concurs with the proposed Report's recommendation that the cost ofthe

advertisements paid for by the DNC on behalf of the Primary Committee should be added to the

expenditures subject to the Primary Committee's overall expenditure limitation. For the reasons

discussed below, we also believe that the costs ofthe advertisements which the DNC reported as

coordinated party expenditures pursuant to 2 U.S.C. § 441 a(d) should also be subject to the

Primary Committee's overall expenditure limitation.. Moreover, this Office concurs that, as a

result, the Primary Committee exceeded the expenditure limitation. 2 U.S.C. §§ 441a(b)(I)(A)

and (c); 26 U.S.c. § 9035(a). Further, we concur with the recommendation that the Commission

determine that the Primary Committee must make a pro rata repayment for non-qualified

campaign expenditures in excess ofthe expenditure limitation.

The overall expenditure limitation for candidates receiving public funds for the primary

election is set forth at 26 U.S.C. § 9035(a). See also II C.F.R. §§ IID.S(a); 9035. 1(a)(l). An

expenditure is made on behalf of a candidate, and thus subject to the expenditure limitation, ifit

is made by an authorized committee or any other agent ofthe candidate or any person authorized

or requested by the candidate, an authorized committee of the candidate, or an agent of the

candidate, to make the expenditure. 2 U.S.C. § 44Ia(b)(2)(B). Because the statute requires that

expenditures made by others at the campaign's request be subject to the expenditure limitation,

this Office believes that it is appropriate to apply the DNC expenditures to the Primary

Committee's overall expenditure limitation as long as the expenditures were "knowingly

incurred in connection with the candidate's campaign for the nomination." 26 U.S.C. § 9035(a);

see also Statement ofReasons Supporting Final Repayment Determination in Dole for President

(February 6, 1992) (Commission concluded that in-kind contributions from a political committee

to a presidential committee are subject to the state expenditure limitation). The evidence of

coordination between the DNC and the Clinton campaign with regard to the media expenditures

establishes that the Clinton campaign knowingly incurred the expenditures.

A. DNe's Coordination With Clinton Campaign

As noted above, your recommendations are based on the conclusion that the DNC's

media expenditures wcre coordinated with the Clinton campaign and the advertisements

41
Memorandum to Robert J. Costa

Clinton/Gore' 96 Primary Committee Audit Report

(LRA #485)

Page 3

contained an electioneering message with reference to a clearly identified candidate. Thus, we

begin our analysis with the question of whether the DNC's expenditures for media were "made

by any person in cooperation, consultation, or concert, with, or at the request or suggestion of, a

candidate, his authorized political committees or their agents.'" 2 U.S.C. § 441 a(a)(7)(B)(i);

Buckley v. Valeo, 424 U.S. 1, 78 (1976) (the tenn "contribution" includes "all expenditures

placed in cooperation with or with the consent of a candidate, his agents, or an authorized

committee of the candidate"); see 11 C.F.R. § 109.1 (b)(4). Congress's decision to treat

coordinated expenditures as in-kind contributions was designed to prevent and limit the

opportunities for corruption and the appearance of corruption inherent in coordinated activity.

The Buckley Court stated that the absence of prearrangement or coordination of an expenditure

"alleviates the danger that expenditures will be given as a quidpro quo for improper

commitments from the candidate." 424 U.S. 1,47 (1976). The reverse is equally true - the

presence of prearrangement or advance coordination of an expenditure between a candidate or

his or her committee or agents and the person making the expenditure presents a danger of an

illicit quid pro quo like a contribution ofmoney. The Commission must consider all ofthe facts

and circumstances to determine whether the quantity and substance of contacts between a

candidate and a person, entity or political committee compromised the independence of an

expenditure and transformed it into a coordinated exp'enditure pursuant to 2 U.S.C.

§ 441a(a)(7)(B)(i).

In defining independent expenditures related to communications that include express

advocacy, the Federal Election Campaign Act, as amended ("FECA" or the "Act"), 2 U.S.C.

§§ 431 et seq., describes the quantity and substance of contact that defeats the independence of

the expenditure. 2 U.S.C. § 431 (17). To be independent, an expenditure must be made without

cooperation or consultation with any candidate, or any authorized committee or agent ofsuch

candidate, and it must not be made in concert with, or at the request or suggestion of, any

candidate, or any authorized committee or agent ofsuch candidate. ld. The Commission's

regulation on this subject states that any arrangement, coordination, or direction by the candidate

or his or her agent prior to the communication is sufficient to defeat the independence of an

expenditure and to render the expenditure a contribution to the candidate. 11 C.F.R.

§ l09.l(b)(4) and (c).

While the line has not always been clear, the Commission has provided some guidance on

the quantity and substance of contacts that constitute coordination.1 For example, the

The statute's inclusion of authorized political committees, agents of the candidate and agents ofthe

committees establishes that a finding of coordination can be based on the activities of any ofthese actors. Such a

finding does not require candidate involvement.

See. e.g.. II C.F.R. § I 14.2(c) (any coordinated communications may negate the independence of any

subsequent communications). See also II C.F.R. § t 14.4(c)(S) (concerning voter guides that include express

advocacy: any contact or other cooperation) coordination, consultation, reguest, or suggestion will result in a

contribution. Concerning voter guides that do not include electioneering messages: any contact other than written

exchanges about the candidate's positions on issues will result in a contribution). BUI see Clifton v. FEC. 114 F.3d

1309 (lst Cir. 1997), cerl, denied. 11& S. Ct. 1036 (1998) (declaring II C.F.R. § 114.4(c)(S) invalid under First

42
Memorandum to Robert J. Costa

Clinton/Gore' 96 Primary Committee Audit Report

(LRA #485)

Page 4

Commission has taken the approach in some cases that passing any information about a

candidate's plans, projects or needs from the campaign to the expending person may trigger a

conclusion of coordination that compromises the independence of an expenditure.l However, in

other cases, the Commission has not pursued matters where contacts between a candidate and an

expending person resulted in changes to the content of a specific communication.4

In discussing the quantity and substance of contact necessary to impair the independence

of an expenditure and constitute coordination, the United States Supreme Court recently stated

that there was not coordination in a situation that lacked a "general or particular understanding."

FECv. Colorado Republican Fed. Campaign Comm. 518 U.S. 604, 614 (l996)(plurality op.).!

This Office believes that the phrase was intended to convey a realistic understanding of the

concept of coordination that is broad enough to effectuate the statute's purpose oflimiting real or

Amendment insofar as it limited contact with candidates to written inquiries and replies). Cf 62 Fed. Reg. 24,367

(May 5, 1997) (notice of proposed rulemaking regarding the definition of coordination to be codified at II C.F.R.

§ 100.23).

See, e.g.. MUR 3918 (Hyatt for Senate) (supporting probable causc dctermination, coordination found

where advertisements, ostensibly for a candidate's law firm, were written by the campaign's media adviser and

approved by the candidate); MUR 3192 (Orton for Congress) (supporting probable cause determination,

coordination found where an ad hoc citizens' group attacked a candidate's opponent where member of group had

formerly been a policy advisor to the candidate in the same election cycle and the group learned from the candidate

that he would not publicly attack his opponent on allegations raised by group and that the candidate did not want the

allegations raised.) See also Advisory Opinion ("AO") 1996-1 (coordinated endorsements by a trade association

may compromise its ability to make subsequent independent expenditures); AO 1984-30 (coordinated in-kind

contributions in the primary election precluded independent expenditures rcgarding same candidates in the general

election); FEC v. National Conservative PAC. 647 F. Supp. 987, 990 (S,D.N,Y. 1986) (use of common campaign

strategist constitutes coordination).

The Supreme Court's holding in Colorado Republicans was that the First Amendment prohibits the

presumption that national party committee's expenditures arc coordinated with its congressional candidates.

Colorado Republicans, 518 U.S. at 608. The Supreme Court expressly limited its holding, stating: "Since this case

involves only the [FECAl provision concerning congressional races, we do not address issues that might grow out

of the public funding of Presidential campaigns." Jd., 518 U.S. 604, at 612; see also RNe v. FEe. 487 F. Supp, 280,

284-87 (S.D.N.Y.) (Congress may condition public funding eligibility upon candidate's voluntary acceptance of

expenditure limits), affd memo 445 U.S. 955 (1980). However, the Supreme Court did not specify which public

financing issues it was referencing. Of course, the conclusion in the proposed Audit Report that the DNC's media

expenditures were coordinated with the Primary Committee is based on the facts, not on any presumption.

See, e.g., MUR 4282 (Archdiocese of Philadelphia), where it was alleged that after a candidate's committee

received word that the Archdiocese's planned voter guide misstated the candidate's record and put him in no better

light than his opponent, a representative ofthe candidate contacted the Archdiocese to complain, and as a result, the

Archdiocese changed the voter guide. Although that case involved admitted contact between a candidate's

representative and an expending person that was about, and resulted in changes to, the content of a specific

communication, the Commission was divided 3-2 on a motion to find reason to believe that violations ofthe Act

occurred, See also MUR 4116,. Statement of Reasons of Chairman Joan D. Aikens and Commissioner Lee Ann

Elliott, 3 (June 4, 1998) ("we would not agree that mere inquiries, without a meeting of the minds of two or more

persons on a course of action resulting in expenditures, is sufficient for coordination").

l

43
Memorandum to Robert 1. Costa

Clinton/Gore' 96 Primary Committee Audit Report

(LRA #485)

Page 5

apparent corruption without violating First Amendment rights. While some "general

understanding" regarding the expenditures may be necessary, requiring a specific agreement in

every case would allow expending persons to make "independent" expenditures after extensive

consultation with the candidate or committee about plans, projects, activities and needs, so long

as the campaign had no approval of the final content or timing ofthe communication. Indeed, it

might then be more difficult to prove that an expenditure was "coordinated" and therefore a

contribution -. a statutory structure intended to broadly limit opportunities for illicit quid pro

quos _. than it would be to prove the quid pro quos themselves under criminal bribery and

extortion statutes such as the Hobbs Act, 18 U.S.C. § 1951. See Evans v. United States, 504 U.S.

255,274 (Kennedy, J., concurring) ("The official and the payor [in a Hobbs Act bribery/extortion

case] need not state the quidpro quo in express terms, for otherwise the law's effect could be

frustrated by knowing winks and nods."). Such a situation would be at odds with the purpose of

2 U.S.C. § 44la(a)(7)(B)(i) -- to avert real or apparent corruption.

The Primary Committee argues that coordination between a party and its candidates is

both permissible and presumed. The Commission previously presumed coordination between a

party and its candidates in the context of expenditures made pursuant to 2 U.S.C. § 441a(d)(a).

While Colorado Republican invalidated this presumption with respect to congressional

candidates, the Supreme Court explicitly declined to decide whether its holding applies to

campaigns involving publicly financed presidential candidates. 518 U.S. at 612; see supra, n.S.

Thus, it is unclear whether the 2 V.S.c. § 441a(d)(2) limit applies in the absence of actual

coordination between a national committee and its Presidential nominee. However, the

Commission need not resolve that issue here as there is evidence that the media campaign funded

by the DNC was implemented in cooperation with, or at the request of, the candidate and/or his

campaign committees.6

We concur with the proposed Report's conclusions on coordination and believe that the

DNC's expenditures were "made ... in cooperation, consultation, or concert, with, or at the

request or suggestion of, a candidate, his authorized political committees or their agents."

2 U.S.C. § 44Ia(a)(7)(B)(i). Indeed, the Primary Committee essentially concedes that the

advertisements were coordinated.? Moreover, the record in the audit includes evidence of

substantial communication between the DNC and the Primary Committee on every facet ofthe

media campaign. Thus there is sufficient evidence of coordination between the DNC, Primary

Committee staff and consultants, and the candidate to support the Audit staff's conclusion that

the DNC media expenditures were in-kind contributions to the Primary Committee. The

Even ifthey were considered to be § 441a(d) expenditures, the costs of the advertisements exceeded the

2 U.S.C. § 441 a(d)(2) limit. But see Section C, infra.

In its response to the Exit Conference Memoranda, the Primary and General Committees state, "The ONC

consulted with Democratic officeholders and candidates; including the President, in developing and broadcasting

the ads.... The Committee does not dispute that the ads were coordinated." This Office is aware of no evidence,

however, that any candidate other than Mr. Clinton was involved with the advertisement.> at issue.

44
Memorandum to Robert J. Costa

Clinton/Gore' 96 Primary Comminee Audit Report

(LRA #485)

Page 6

evidence of coordination that the Report details is such that it is difficult to distinguish between

the activities ofthe DNC and the Primary Conunittee with respect to the creation and publication

ofthe media advertisements at issue.

It appears that the DNC media advertisements and advertisements paid for by the Primary

Conunittee were created in a similar fashion by the same media firms and consultants, and were

discussed and revised in regular meetings attended by DNC representatives, Primary Committee

staff and consultants, the candidate and White House staff. For example, the Primary Committee

and the DNC shared the expenses for producing many advertisements, such as production

expenses totaling $10,605 related to an advertisement shot in Iowa in February 1996, and

production expenses for a "B-roll shoot" between February 29, 1996 and March 20,1996 which

cost $23,076. Moreover, the Primary Committee and the DNC worked together with regard to

the placement of advertisements. The evidence indicates, for example, that during one period the

media vendor placed advertisements on behalf of both the primary Committee and the DNC with

the same 112 broadcast stations. It is interesting to note that the media vendor issued checks on

behalf ofthe DNC and the Primary Committee to 109 of those stations in the same amounts,

even though the DNC subsequently decided not to air many of the media flights after the checks

had been sent to the stations. 8 Furthermore, it appears that the Primary Committee and the DNC

used a standard memorandum for authorizing production and air time of advertisements. The

memorandum states "the cost will be allocated __% for the DNC and __% for

Clinton/Gore '96," and the next line states "attorneys to determine." There is also evidence of

coordination between the Primary Committee and the DNC with respect to polling. Mark Penn,

an official ofthe Penn & Schoen polling firm, stated in an affidavit that "beginning in April 1995

until November 1996, I presented polling results at meetings held in the White House residence,

on a weekly basis. The results were presented simUltaneously to the representatives of

Clinton/Gore, the White House and the DNC who were in attendance at those meetings." Thus,

the facts set forth in the Audit Report are sufficient to support a conclusion that the media

expenditures made by the DNC were "made ... in cooperation, consultation, or concert, with, or

at the request or suggestion of, a candidate, his authorized political committees or their agents."

2 U.S.C. § 44Ia(a)(7)(B)(i).

B. Content of Advertisements Paid for by the DNC

The next question in determining whether a media expenditure by a national committee is

an in-kind contribution is whether the content ofthe advertisement constitutes an "electioneering

message" and references a "clearly identified candidate."9 See AOs 1985-14; 1984-15. In order

The stations kept the money for these time buys and applied the funds to the next media buy placed by the

DNe.

The Act defines "clearly identified" as meaning "(A) the name of the candidate involved appears; (B) a

photograph or draWing of the candidate appears; or (C) the identity ofthe candidate is apparent by unambiguous

reference." 2 U.S.c. § 431(18); see also II C.F.R. § 100.17.
Memorandum to Robert J. Costa

Clinton/Gore' 96 Primary Committee Audit Report

(LRA #485)

Page 7

to determine ifthe advertisement includes an electioneering message and references to a clearly

identified candidate, the Commission will consider the purpose, content and timing of the

advertisements at issue.

The Commission first set forth thc clearly identified candidate/electioneering message

standard in AO 1984-15 and AO 1985-14. In AO 1984-15, the Commission determined that two

television advertisements which the Republican National Committee ("RNC") proposed to

broadcast had "[t]he clear import and purpose ... to diminish support for any Democratic Party

presidential nominee and to garner support for whoever may be the eventual Republican Party

nominee" and "effectively advocate the defeat of a clearly identified candidate." The

Commission concluded that because the "expenditures for these advertisements benefit the

eventual Republican presidential candidate and are made with respect to the presidential general

election and in connection with the presidential general election campaign," the expenditures

would be reportable either as contributions subject to the limitation set forth at 2 U.S.C.

§ 441 a(a)(2)(A), or as coordinated party expenditures subject to the limitation set forth at

2 U.S.C. § 44Ia(d).

AO 1985-14 involved television, radio and print advertisements, and mailers, which the

Democratic Congressional Campaign Committee ("DCCC") proposed to publish, and which

purported to describe Republican policies. Citing AO 1984-15, the Commission concluded that

amounts used to fund the communications would be expenditures subject to the limitation set

forth at 2 U.S.C. § 441a(d) ifthe advertisement funded by that amount "(1) depicted a clearly

identified candidate and (2) conveyed an electioneering message." The Commission cited

United States v. United Auto Workers, 352 U.S. 567, 585, 587 (1957), in which the Supreme

Court stated that advertisements "designed to urge the public to elect a certain candidate or

party" constitute an "expenditure in connection with any federal elcction."1D Applying this

standard, the Commission determined that advertisements which referred to "the Republicans in

Congress" were not subject to limitation under 2 U.S.c. § 441a(d), regardless ofwhether the

advertisement closed with the statement "Vote Democratic." The Commission also concluded

that advertisements which referred to "your Republican Congressman" were not subject to

limitation under 2 U.S.C. § 441a(d) if the advertisement did not close with the statement "Vote

Democratic." However, the Commission on a tie vote was unable to decide whether

advertisements which referred to "your Republican Congressman" and which closed with the

statement "Vote Democratic" were subject to limitation under 2 U.S.C. § 441a(d). Finally, the

Commission concluded that the costs ofproduction and distribution ofthe proposed mailer

would be subject to limitation under section 441 a(d). Because the advertisements in this audit

identify specific Republican and Democratic candidates, these advertisements are akin to the

proposed mailer at issue in AO 1985-14, in which the DCCC intended to identify specific

congressmen by name. Based on its understandings that the proposed mailers would identify

particular congressmen by name, and that the distribution ofthe mailer would include all or part

10 In United States v. United Aulo Workers, the Supreme Court defined "expenditure in connection with any

federal election" as used in section 304 ofthe Taft-Hartley Act. 352 U.S. at 582.

46
12

Memorandum to Robert J. Costa

Clinton/Gore' 96 Primary Committee Audit Report

(LRA #485)

Page 8

of the district represented by the congressman identified in that mailer, the Commission

concluded that the costs of production and distribution would be subject to limitation under the

Act.

In AOs 1984-15 and 1985-14, the Commission considered the purpose, content, and

timing ofthe advertisements at issue. The Commission's determination that the costs ofthe

proposed mailer were subject to limitation under section 441a(d) was based on the Commission's

assumptions that the mailer would identify particular congressmen by name, and that the

distribution of the mailer would include all or part ofthe district represented by the congressman

identified in that mailer. As to timing, the Commission considered the proposed dates on which

the advertisements were to be run, stating that the "proposed program is for the purposes of

influencing the 1986 election process," "emphasiz[ing) that this opinion is limited to the

timetable you have specified." The Commission's reference to the place and the timing ofthe

communicative activity makes clear that the determination whether spending for a particular

communication contains an electioneering message requires consideration ofthe context in

which the communication is published. II The Commission also considered the purpose ofthe

advertisements. In AO 1985-14 the Commission explicitly relied on the representation that the

mcdia program had "the clear purpose ofinfluencing voter perceptions of these candidates with a

view toward weakening their positions as candidates for re-election." Similarly, in AO 1984-15,

the conclusion that the proposed television advertisements were subject to regulation as

contributions or coordinated party expenditures was explicitly based, in part, on the opinion that

"the clear import and purpose of [the) proposed advertisements [was) to diminish support for

whoever may be the presidential nominee and to garner support for whoever may be the eventual

Republican Party nominee."l2

II The Commission in AO 1985-14 assumed that the media campaign was developed without cooperation or

consultation with any candidate, and based the theory that the limitations under 2 U.S.C. § 441 a(d) apply to party

expenditures irrespective of actual coordination with a candidate. AO 1984. 15 involved a RNC media campaign

which, in the view of the Commission, was intended to benefit "the eventual Republican Party nominee [for

President]." Thus, AOs 1985-14 and 1984-15 both involved media campaigns which had a purpose of influencing

the election of certain candidates, but which were implemented without coordination with the candidate. Both

AO 1984-15 and 1985-14 were issued prior to the Supreme Court's 1996 decision, Colorado Republicans.

In another opinion, AO 1995-25, the Commission concluded that costs related to advertisements focusing

on national legislative activity and the promotion ofthe RepUblican Party were allocable between the Republican

Party's federal and nonfederal accounts pursuant to 11 C.F.R. § 106.5(b)(2)(i) and (ii). Unlike the situation in

AO 1995-25, here the content of the media campaign, the coordination between Clinton campaign officials and the

DNC, and the content ofthe advertisements together reveal that the purpose of the advertising campaign was to

influence the election of President Clinton. Moreover, the Commission in AO 1995-25 explicitly declined to

address the issue whether or not the proposed advertisements contained an electioneering message, stating that

"[t]he Commission relies on [the requesting party's) statement that those advertisements that mention a Federal

candidate or officeholder will not contain any electioneering message. In view ofthis representation, the

Commission does not express any opinion as to what is or is not all electioneering message by a political party

committee." AO 1995-25 at n.!. Moreover, the Commission explicitly left open the possibility that the

advertisements might be subject to section 441a(d), stating its conclusion iliat "legislative advocacy media

advertisements that focus on national legislative activity and promote the Republican Party should be considered as

47
Memorandum to Robert J. Costa

Clinton/Gore' 96 Primary Committee Audit Report

(LRA #485)

Page 9

As noted, the FECA permits limited coordinated expenditures to be made by party

committees "in connection with general election campaign[s) of candidates for federal office,"

including expenditures for conununications such as media advertising. 2 U.S.C. § 441a(d). The

Supreme Court, in Colorado Republican. did not address the appropriate measure ofthe content

ofsuch communications. However, the Court of Appeals in its earlier decision in FEC v.

Colorado Republican Federal Campaign Comm.; 59 FJd 1015 (lOth Cir. 1995), vacated and

remanded on other grounds. 518 U.S. 604 (1996) (plurality op.), expressly deferred to the

Commission's long standing "construction of § 441a(d) as regulating political conunittee

expenditures depicting a clearly identified candidate and conveying an electioneering message."

59 F.3d at 1022 (citing AO 1984-15). The Court of Appeals relied not upon particular language

in the communication, but rather upon the overall impact ofthe message as one intended to

"garner support" for one candidate and to "diminish support" for another. 59 F.3d at 1023.

The Primary Committee argues that the Audit Division did not apply the "express

advocacy" and "electioneering message" standards, but rather applied an incorrect "purpose,

content and timing" test. 13 However, the Commission has not required express advocacy in order

to detennine that a coordinated disbursement is a contribution or, in the case of coordinated party

expenditures, subject to the limitations of 2 V.S.c. § 441a(d). The Buckley Court applied the

"express advocacy" test only in the limited context of independent expenditures, 424 U.S. at 40-

44,78-79, and no court has, without being overruled by a higher court, required application of

the express advocacy test to anything other than independent expenditures." The Supreme Court

in Buckley recognized a distinction between independent expenditures and expenditures for

communications that are authorized or requested by the candidate, an authorized conunittee of

the candidate, or an agent ofthe candidate, and held that the latter are to be treated as

expenditures ofthe candidate and contributions by the person or group making the expenditure.

424 U.S. at 46-47, n. 53. Thc Court explained that coordinated expenditures are treated as inkind contributions subject to the contribution limitations in order to "prevent attempts to

circumvent the Act through prearranged or coordinated expenditures amounting to disguised

contributions." 424 U.S. at 46-47.

made in connection with both Federal and non-federal elections, unless the ads would qualify as coordinated

expenditures on behalf of any general election candidates of the party under 2 U.S.C. § 44 I a(d)."

IJ As discussed above, this Office believes that purpose, content and timing of an advertisement are relevant

to the question of whether the advertisement has an electioneering message. The proposed Audit Report correctly

applies the "cleady identified candidate" and "electioneering message" standard to the advertisements at issue.

" Another reason to limit the express advocacy test to independent expenditures is that not all coordinated

expenditures are communicative. For instance, jf a supporter proVided aircraft charter service to a publicly funded

candidate's campaign, in coordination with the campaign, the supporter has made an in-kind contribution and an

expenditure. This is consistent with the definition of"expenditure" at 2 U.S.C. § 431(9)(A) and with 2 U.S.C.

§ 44 1a(a)(7)(B)(i), which provides that coordinated expenditures are contributions. Yet, there is surely no "express

advocacy" in the provision of the aircraft charter services to the campaign. As the Colorado Republicans Court

noted, coordinated expenditures and other kinds of contributions are similar: "many [coordinated] expenditures are

also virtually indistinguishable from simple contributions (compare, for example, a donation of money with direct

payment ofa candidate's media bills)." 518 U.S. at 624.

48
IS

Memorandum to Robert J. Costa

Clinton/Gore' 96 Primary Committee Audit Report

(LRA 11485)

Page 10

Furthennore, the vagueness concerns that caused the Supreme Court to apply the express

advocacy test to independent expenditures in Buckley and FEe v. Massachusetts Citizensfor

Life, Inc., 479 U.S. 238 (1986),15 are not present in the case of coordinated expenditures. The

Buckley Court was concerned that the requirements ofthe FECA for disclosure of independent

expenditures above a certain dollar threshold "could be interpreted to reach groups engaged

purely in issue discussion." 424 U.S. at 79. However, because "the distinction between

discussion ofissues and candidates and advocacy of election or defeat of candidates may often

dissolve in practical application," id. at 42, it would be difficult to know in advance without the

express advocacy standard whether a given independent communication had a sufficient nexus to

a Federal election to be subject to the Act; but in the case of a coordinated communication some

ofthe required nexus to a Federal election may be found in the act of coordination itself. See id.

at 78 ("So defined, 'contributions' have a sufficiently close relationship to the goals ofthe Act,

for they are connected with a candidate or his campaign").

Moreover, the application of a strict "express advocacy" test to coordinated expenditures

would undennine the statutory purpose of protecting the electoral process from real or apparent

corruption. The Buckley Court noted that:

It would naively underestimate the ingenuity and resourcefulness of persons and

groups desiring to buy influence to believe that they would have much difficulty

devising expenditures that skirted the restriction on express advocacy of election

or defeat but nevertheless benefited the candidate's campaign. Yet no substantial

societal interest would be served by a loophole-closing provision designed to

check corruption that permitted unscrupulous persons and organizations to expend

unlimited sums of money in order to obtain improper influence over candidates

for elective office.

Buckley, 424 U.S. at 45. The Supreme Court went on to say that the independent expenditure

limitations were, in any event, not necessary to close a loophole in the Act's contribution

limitations, because the Act treated coordinated expenditures as contributions, thus closing the

loophole. Id. at 45-46. Thus, express advocacy only applies to independent expenditures.

The advertisements in question in the audit explicitly identify President Clinton and in

some cases Senator Dole, who were both candidates at the time the advertisements aired.

Moreover, it appears that these advertisements were aimed, at least in part, at President Clinton's

campaign for the nomination. They address the policies ofthe President and his Republican

opponents in a way which, on its face, appears calculated to encourage the viewer to vote for

President Clinton. Thus, the advertisements meet both the "clearly identified candidate" and

See also California Medical Ass'n v. FEC, 453 U.S. 182, 195 (1981) (plurality op.); Akins v. FEC. 101

F.3d 731,741 (D.C. Cir. 1996) (en bane), vacated on other grounds. 118 S.Ct. 1777 (1998) and Orloski v. FEe. 795

F.2d 156, 167 (D.C. Cir. 1986).

49
Memorandum to Robert J. Costa

Clinton/Gore' 96 Primary Committee Audit Report

(LRA #485)

Page 11

"electioneering message" tests. The images and scripts of the advertisements generally portray

President Clinton and his positions in a positive light, for example, as a protector ofthe elderly

and children, with a background of an American flag, but portray Senator Dole and his positions

in a negative light, for example, as an obstructionist who "says no" to Clinton's plans.

Based on the Audit Report, it appears that references in the advertisements which support

an argument that the purpose and targeting ofthe advertisements were related to an overall party

agenda (rather than the President's re-election) are only present because ofa deliberate effort to

put the advertisements outside the reach ofthe expenditure limitations. For example, an agenda

for a September 13, 1995 meeting with President Clinton entitled "CampaignIDNC Advertising

Financial Strategy" recommended four flights of advertisements for the period between

January 15, 1996 to April 15, 1996, and stated that the media flights would be "answers to

Republican primary attacks" and "run in primary states which are also swing states for us." The

agenda suggests several ways to make the media flights appear to be for state parties and the

DNC such as: "create relationship to current legislation;" "defend more Dems than Clinton;

attack more Republicans than Dole, " "run in non primary states as well" and "run in some areas

well before the primary."

Furthermore, a memorandum dated February 22, 1996, which relates to campaign

spending projections, indicates that the Clinton/Gore campaign wanted to use DNC money on

advertisements to help the re-election of Clinton. The memorandum states that the Clinton/Gore

campaign would need $2.5 million through May 28, 1996 "unless Alexander is nominated and

we cannot use DNC money to attack him. IfDole is nominated, we need no additional CG

money for media before May 28 since we can attack Dole with DNC money." Despite these

efforts, we agree that the advertisements contain electioneering messages. Therefore, this Office

concurs with the proposed Audit Report's conclusion that the DNC and the Clinton campaign

coordinated the media expenditures, that the advertisements contain an electioneering message

and references to a clearly identified candidate, and that the advertisements should be considered

an in-kind contribution to the Primary Committee. 16

C. Treatment of Media Expenditures as Primary Expenditures

The proposed Audit Report applies the DNC media expenditures on behalf of President

Clinton's campaign to the Primary Committee's overall expenditure limitation. The magnitude

and type of activity involved raises the difficult question of whether these expenditures should be

applied to the primary or general election expenditure limit. Based on the available evidence,

there is an argument that none ofthe media expenditures were used exclusively for the primary

or exclusively for the general campaign. Rather, it can be argued that the advertisements were

used for both the primary and the general elections. For example, the September 13, 1995

" We understand that the audit of Dole for President. Inc.• includes an issue concerning polls paid for by the

RNC, while the Clinton audits have no finding concerning polls paid for by the ONC. If the facts in the Clinton and

Dole situations are similar, the Audit Division should use the same approach to the polls in both audits. Iftherc are

relevant factual distinctions, then alternative approaches for the two audits may be justified.

50
MemoranduIn to Robert J. Costa

Clinton/Gore' 96 Primary Committee Audit Report

(LRA #485)

Page 12

meeting agenda discussed above stated that media flights aired between January 15, 1996 and

April 15, 1996 would be "answers to Republican primary attacks" and "run in primary states

which are also swing states for US." Thus, under a "functional" approach, an allocation ofthe

expenditures between the primary and general election would seem appropriate. This Office,

however, agrees with the Audit Division's conclusion that these media expenditures should be

considered Primary Committee expenditures and applied to the overall Primary Committee

expenditure limitation because the media expenditures were simultaneously in-kind contributions

by the DNC and expenditures by the candidate, and thus, are equivalent to and commingled with

expenditures paid for by his authorized committee and are subject to the expenditure limitations.

See 11 C.F.R. § 104.13(a); 2 U.S.C. §§ 44Ia(b) and (c); 26 U.S.c. § 9035(a) cf 11 C.F.R.

§ 109.I(c).

This Office reaches this conclusion because it believes that the Commission's "brightline" rules at 11 C.F.R. § 9034.4(e) for attribution of expenditures between the primary and

general election limitations provide guidance for the attribution of the media expenditures,

consistent with the application ofthese rules to all expenditures subject to the expenditure

limitations. Using this approach, based on the timing of the advertisements, the media

expenditures were primary campaign expenditures that are allocable to the Primary Committee's

expenditure limitations. 11 C.F.R. § 9034.4(e)(6). Therefore, this Office concurs with the

finding in the Audit Report that the Primary Committee exceeded the expenditure limitation and

the recommendation that the Commission determine that the Primary Committee must make a

pro rata repayment. 26 U.S.C. § 9038(b)(2).

The Commission promulgated 11 C.F.R. § 9034.4(e) to establish a "bright line" cut-off

date between primary and general election expenses "with regard to certain specific types of

expenditures that may benefit both the primary and the general election." See Explanation and

Justification for 11 C.F.R. § 9034.4(e), 60 Fed. Reg. 31,867 (June 16, 1995). The general "bright

line" rule is that goods or services used exclusively for the primary or general election campaign

are allocable to that election. 11 C.F.R. § 9034.4(e)(I). Otherwise, expenditures for media and

other communications used for both the primary and general elections are attributed between the

primary and general elections based upon whether the date of broadcast or publication is before

or after the candidate's date of nomination. 17 11 C.F.R. § 9034.4(e)(6).

In adopting the rule, the Commission recognized that the application ofthe rules could

result in the attribution ofsome primary-related expenditures to the general election expenditure

limitations and vice versa, but reasoned that "these differences should balance themselves out

over the course of a lengthy campaign." 60 Fed. Reg. 31,867 (June 16, 1995). The Commission

has promulgated regulations based on the timing ofthe contribution in other contexts, such as the

designation of contributions to the primary or general election. See, e.g., 11 C.F.R.

11 Media production costs for media broadcast both before and after the date of nomination are split 50% to

the primary and 50% to the general election. 11 C.F.R. § 9034.4(e)(5).

51
Memorandum to Robert J. Costa

Clinton/Gore' 96 Primary Committee Audit Report

(LRA #485)

Page 13

§ 110.2(b)(2)(ii); see also 11 C.F.R. § 102.9(e). While 11 C.F.R. § 9034.4(e) does not explicitly

discuss national party committees, the regulation applies to a publicly financed candidate's

expenditures subject to the limitations, which include expenditures in the fonn ofin-kind

contributions.

This Office believes that the "bright line" regulations should apply because in-kind

contributions are also expenditures by the recipient candidate. See 11 C.F.R. §§ 104. 13(a)(1) and

(2); 109.1(c). By coordinating with the Primary Committee and paying for media expenditures

in order to influence the election of President Clinton, the DNC made in-kind contributions to the

candidate which were simultaneously expenditures by his campaign committees. See 2 U.S.C.

§§ 431 (8)(A)(i) and (9)(A)(i); 11 C.F.R. §§ 100.7(a)(l)(iii) and 11 0.8(a)(1 )(iv)(A). The

Commission treats in-kind contributions like any other expenditures by a publicly financed

candidate. See Statement ofReasons, Senator Robert Dole and the Dole for President

Committee, Inc. at 24 (February 6, 1992)(The Commission "generally allocates in-kind

contributions to a [publicly financed) committee's expenditure limitation."). Moreover, the inkind contributions are considered commingled with the candidate's other expenditures and

subject to repayment: "[o]rdinarily, federal matching funds and private contributions are

commingled in a committee's accounts. The Commission considers in-kind contributions to be

part of this commingled pool of available funds." ld. at 25. Thus, all ofa publicly financed

candidate's expenditures, including expenditures in the form of in-kind contributions received,

it are considered commingled in the mixed pool of expenditures subject to the expenditure

limitations. See 2 U.S.C. §§ 44Ia(b) and (c); 26 U.S.C. § 9035(a). The "bright line" rules

should be applied consistently to all of a campaign's expenditures, including in-kind

contributions paid for by national party committees, in order to avoid having two identical media

expenditures paid for and broadcast at the same time and made on behalf of a candidate's

campaign treated as primary and general expenditures depending on whether the candidate or

party committee paid for them. AU ofthe advertisements in question aired before the date of

President Clinton's nomination. Thus, under section 9034.4(e)(6), all the media expenditures

incurred prior to President Clinton's nomination count against the Primary Committee's

expenditure limitations.

This approach does give rise to an anomaly regarding 2 U.S.C. § 441a(d) expenditures

which, we believe, warrants a revision to the recommendation. The DNC reported media

expenditures totaling $2,098,415, which occurred in August 1996 as 2 U.S.C. § 44Ia(d)

"coordinated party expenditures."18 We believe that a consistent application ofthe rules requires

these expenses to be considered Primary Committee expenditures and, therefore, counted against

the Primary Committee's expenditure limitation.

" The remaining DNC media expenditures that occurred earlier during the primary period were not reported

as 2 U,S.C. § 441a(d) coordinated party expenditures.

52
Memorandum to Robert J. Costa

Clinton/Gore' 96 Primary Committee Audit Report

(LRA #485)

Page 14

As a result of applying 11 C.F.R. § 9034.4(e) to some of the media expenditures involved

in this audit, advertisements that may have a sufficient general election purpose to have been

permitted as section 441 a(d) coordinated party expenditures but for section 9034.4(e)'s

requirement that mixed purpose advertisements be attributed based on broadcast timing, should

not be permitted as coordinated party expenditures and, instead, should be attributed to the

Primary Committee's expenditure limit. We recognize that this consequence may be

undesirable. If 11 C.P.R. § 9034.4(e) did not control the attribution ofthe media expenditures,

AO 1984-15 would provide guidance. In that advisory opinion, which was issued before the

promulgation of 11 C.F.R. § 9034.4(e), the Commission concluded that a national party

committee could make coordinated party expenditures pursuant to 2 U.S.C. § 44Ia(d) on behalf

of its "presumptive nominee" before the individual has received the official nomination. The

Commission explained, "[a]lthough timing is relevant, the Commission does not view the timing

of broadcast as controlting how expenditures for the advertisements should be treated for

limitation and reporting purposes." AO 1984-15. Instead, "the proper analytical focus for

attributing a national party expenditure between a primary and a general election campaign is

whether the expenditure was made for the purpose of influencing the outcome of the general

election or for the purpose of influencing the outcome ofthe nomination." Id. However, the

advisory opinion applies only to 2 U.S.C. § 44Ia(d) expenditures, while I 1 C.F.R. § 9034.4(e)(l)

allocates expenditures exclusively related to an election to that election regardless of timing.

Thus, we do not believe that the advisory opinion resolves the issue of how to attribute

expenditures between the primary and general election limitations where the expenditures appear

to have a mixed purpose related to both the primary and general elections. The Commission

promulgated 11 C.F.R. § 9034.4(e) in order to resolve these kinds ofsituations.

The Office of General Counsel believes that the better approach is to analyze these

expenditures under II C.F.R. § 9034.4(e). To analyze each mixed purpose advertisement,

including external events occurring at the time each was developed and aired, in addition to

investigating activity leading to the creation of each particular advertisement, to determine which

purpose predominated, would be a difficult undertaking. The Commission promulgated the

"bright line" rules for expenditures having a mixed purpose in order to obviate the need to use its

limited resources to perform such a time consuming task. This Office recommends that the audit

report should be revised to apply II C.F.R. § 9034.4(e)(2) through (6), which allocate

expenditures based on date, to any expenditures used to benefit both President Clinton's primary

and general elections that were reported by the DNC as coordinated party expenditures pursuant

to 2 U.S.C. § 441a(d). While this approach may seem to limit the DNC's ability to allocate

expenditures under section 441 a(d) before the candidate's date of nomination in apparent

contradiction to the guidance provided by AO 1984-15, the exclusivity standard in I I C.F.R.

§ 9034.4(e)(I) preserves the national party committees' ability to use coordinated party

expenditures subject to 2 U.S.C. § 441a(d) prior to the nomination of their candidates. Finally, it

is important to note that the repayment amount in these proposed Audit Reports is substantial not

because of 11 C.F.R. § 9034.4(e)(1)'s limitation on 2 U.S.C. § 441a(d) to expenditures that are

used exclusively for the general election. Instead, the repayment amounts are substantial due to

the size of the DNC's in-kind contribution to the Primary Committee, which dwarfs either ofthe

53
Memorandum to Robert J. Costa

Clinton/Gore' 96 Primary Committee Audit Report

(LRA #485)

Page 15

applicable contribution limits, whether it is for a $5,000 contribution to the Primary Committee

under 2 U.S.C. § 441a(a)(2) or whether it is the amount remaining under 2 U.S.C. § 441a(d) for a

coordinated party expenditure.

III. OVERALL EXPENDITURE LIMITATION AND THE REPAYMENT RATIO

The Commission may seek a repayment for the amounts spent in excess ofthe

expenditure limitations. See 11 C.F.R, §§ 9038.2(b)(1)(i) and (ii). Amounts in excess of the

overall expenditure limitation are non-qualified campaign expenses. 11 C.F.R. § 9034.4(b)(2),

The Commission may sl:;ek a repayment for non-qualified campaign expenses. 26 U.S.C.

§ 9038(b)(2). However, the non-qualified campaign expense or the amount in excess ofthe

expenditure limitation is not composed of only expenditures that the DNC made on behalf ofthe

Primary Committee, it is also composed of public funds. See 11 C.F.R. § 9034.4(a); Kennedy for

President Committee v. FEC, 734 F.2d 1558, 1565 (D.C. Cir. 1984); Reagan/or President

Committee v, FEC, 734 F.2d 1569 (D.C, Cir. 1984), Therefore, when the Commission seeks a

repayment for amounts in excess of the expenditure limitation, it is not capturing expenses paid

by the DNC on behalf ofthe Primary Committee. Rather, the repayment for exceeding the

expenditure limitation is an attempt "to 'recoup' only the federal funds used for unqualified

expenditures." Kennedy, 734 F.2d at 1565. See John Glenn Presidential Committee v, FEC, 822

F.2d 1097, 1098 (D.C. Cir. 1987)("The statutory recoupment remedy pursued by the FEC does

not call back private spending; it does police thc restrictions Congress placed on the expenditure

of public moneys"). The regulations contemplate that the sum to be repaid for exceeding the

expenditure limitation will equal the portion of the matching payments that was used for nonqualified purposes. 11 C.F.R. § 9038.2(b)(2).

The proposed Report raises a related issue of whether contributions made by the DNC to

the Primary Committee are to be included in the total deposits when calculating the repayment

ratio. The repayment ratio in the proposed Report is 0.154577. 19 The Report includes all

contributions, whether in-kind or monetary, in the mixed pool of public and private funds used in

calculating the repayment ratio. The in-kind contributions are included in the repayment ratio's

denominator as part oftotal deposits, This Office agrees that the method for calculating the

repayment ratio in the proposed Report is correct.

The regulations establish that the amount of a repayment shall bear the same ratio to the

total amount detemlined to have been used for non-qualified campaign expenses as the amount

ofmatching funds certified to the candidate bears to the candidate's total deposits, as of90 days

after the candidate's date of ineligibility. II C.F.R. § 9038.2(b)(2)(iii). Total deposits is defined

as all deposits to all candidate accounts minus transfers between accounts, refunds, rebates,

19 We note that the proposed Audit Report states a repayment ratio rounded to the nearest hundredthousandth, while the proposed Audit Report for Dole for President. Inc. states a repayment ratio rounded to the

nearest hundredth, We recommend that you round and state the ratios consistently in the two proposed Audit

Reports.

54
Memorandum to Robert J. Costa

Clinton/Gore' 96 Primary Committee Audit Report

(LRA #485)

Page 16

reimbursements, checks returned for insufficient funds, proceeds of loans and other similar

amounts. 11 C.F.R. § 9038.3(c)(2). However, the Commission's regulations do not explicitly

state whether in-kind contributions are to be included in the denominator ofthe fraction for total

deposits when calculating the repayment ratio.

The Office of General Counsel believes that the in-kind contributions that are attributable

to the expenditure limitation should be included in the denominator ofthe fraction for total

deposits. The purpose ofthe repayment process is to recapture public funds used for nonqualified campaign expenditures. 11 C.F.R. § 9038.2(b)(2). Since federal matching funds and

private contributions are commingled in the campaign fund, it is difficult to determine an

absolutely accurate estimate of the amount ofmatching funds used for non-qualified purposes.

Kennedy, 734 F.2d at 1565. In order to be as accurate as possible in recapturing public funds, inkind contributions must be included in the denominator. The Kennedy Court noted that "by

requiring repayment of 100 percent ofthe amount ofunqualified expenditures, without at least

estimating the extent to which such expenditures derived from matching funds sources, the

Commission has shirked its statutory responsibility to make a reasonable determination that the

repayment sum represents the matching funds used for unqualified purposes." [d. at 1562.

Including in-kind contributions in the denominator for total deposits lowers the ratio ofpublic

funds to more accurately reflect the amount that can be recaptured as public funds spent in excess

of the overall expenditure limitation. 20 Furthermore, in an example of a calculation ofthe

repayment ratio based on surplus funds, the amount of in-kind contributions are included when

determining total deposits and receipts ofthe committee.21 See Financial Control and

Compliance Manual, at 67-68 (January 1996).

It is unclear whether all in-kind contributions were included in the calculation of the

repayment ratio. Therefore, we recommend that the proposed Audit Report be revised to note the

amount and types of in-kind contributions that were included in the ratio calculation. In order to

facilitate the discussion ofthis issue, this Office recommends that the Report include discussion

on calculating the repayment ratio when a committee receives an in-kind contribution subject to

the expenditure limitations.

Staff assigned: Delanie DeWitt Painter

Delbert K. Rigsby

Joel J. Roessner

Andre G. Pineda

10 According to the proposed Report, the DNC's media expenditures, and their expenditures relating to the

Primary Committee event at the Sheraton Hotel were detennined to be in-kind contributions by the DNC to the

Primary Committee. Footnote 33 oflhe proposed Report states the figure that represents the repayment ratio.

" Had these expenditures been attributable to the General Committee, the entire contribution amount would

have been repayable since publicly fmanced general election committees that receive the full public grant must

repay the entire amount of a contribution. 26 U.S.C. § 9007(b)(3).

55
FEDERAL ELECTION COMMISSION

WASHINGTON, DC 20463

June 10, 1999

The Honorable William 1. Clinton

c/o Ms. Lyn Utrecht, Esquire

Ryan, Phillips, Utrecht & MacKinnon

1133 Connecticut Avenue, N.W.

Suite 300

Washington, D.C. 20006

Dear Mr. President:

Attached please find the Report ofthe Audit Division on Clinton/Gore '96 Primary

Committee, Inc. The Commission approved the report on June 3,1999. As noted on page

5, the Commission may pursue any ofthe matters discussed in an enforcement action.

In accordance with 11 CFR §§9038.2(c)(l) and (d)(I), the Commission has made a

determination that a repayment to the Secretary of the Treasury in the amount of $126,680

is required within 90 calendar days after service ofthis report (September 13,1999).

Should you dispute the Commission's determination that a repayment is required,

Commission regulations at 11 CFR §9038.2(c)(2) provide you with an opportunity to

submit in writing, within 60 calendar days after service ofthe Commission's notice

(August 13, 1999), legal and factual materials to demonstrate that no repayment, or a lesser

repayment, is required. Further, 11 CPR §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.

Such materials may be submitted by counsel if you so elect. If you decide to file a

response to the repayment determination, please contact Kim L. Bright-Coleman of the

Office ofGeneral Counsel at (202) 694-1650 or toll free at (800) 424-9530. If you do not

dispute this determination within the 60 day period provided, it will be considered final.

56
The Honorable William J. Clinton

Page 2

The Commission approved Audit Report will placed on the public record on or

about June 15, 1999. Should you have any questions regarding the public release ofthis

report, please contact Ron Harris ofthe Commission's Press Office at (202) 694-1220.

Any questions you may have related to matters covered during the audit or in the

audit report should be directed to Leroy Clay or Thomas Nurthen ofthe Audit Division at

(202) 694-1200 or toll free at (800) 424-9530.

Assistant Staff Director

Audit Division

Attachments:

Audit Report

57
FEDERAL ELECTION COMMISSION

WASHINGTON, DC. 20463

June 10, 1999

Ms. Joan Pollitt, Treasurer

Clinton/Gore '96 Primary Committee, Inc.

c/o Ms. Lyn Utrecht, Esquire

Ryan, Phillips, Utrecht & MacKinnon

1133 Connecticut Avenue, N.W.

Suite 300

Washington, D.C. 20006

Dear Ms. Pollitt:

Attached please find the Report ofthe Audit Division on Clinton/Gore '96 Primary

Committee, Inc. The Commission approved the report on June 3, 1999. As noted on page

5, the Commission may pursue any ofthe matters discussed in an enforcement action.

In accordance with 11 CFR §§9038.2(c)(1) and (d)(l), the Commission has made a

determination that a repayment to the Secretary ofthe Treasury in the amount of$126,680

is required within 90 calendar days after service ofthis report (September 13, 1999).

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 all

opportunity to submit in writing, within 60 calendar days after service ofthe Commission's

notice (August 13, 1999), 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.

Such materials may be submitted by counsel ifthe Candidate so elects. Ifthe Candidate

decides to file a response to the repayment determination, please contact Kim L.

Bright-Coleman ofthe 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.

58
Ms. Joan Pollitt, Treasurer

Page 2

The Commission approved Audit Report will be placed on the public record on or

about June 15, 1999. Should you have any questions regarding the public release ofthis

report, please contact Ron Harris ofthe Commission's Press Office at (202) 694-1220.

Any questions you may have related to matters covered during the audit or in the

audit report should be directed to Leroy Clay or Thomas Nurthen ofthe Audit Division at

(202) 694-1200 or toll free at (800) 424-9530.

Assistant StaffDirector

Audit Division

Attachments:

Audit Report

59
CHRONOLOGY

CLINTON/GORE '96 PRIMARY COMMITTEE

•

Audit Fieldwork

Exit Conference Memorandum to Committee

Response Received to the Exit Conference

Memorandum

Final Audit Report Approved

60

01/06/97 - 03118/98

05/15198

07/29198

06/03/99
kn

rlJ 10
FEDERAL ELECTION COMMISSION

Washington, DC 20463

.'.f " ;I .~

i

, ,

/ '.

/

/

Attached is a copy of the Statement of Reasons regarding

Audits of 1996 Clinton/Gore and Dole/Kemp Campaigns signed by

MEMORANDUM

TO:

FROM:

DATE:

SUBJECT:

Commissioners

Staff Director Pehrkon

General Counsel Noble

Press Office Ron Harris f!)~

Mary W. DoveNeneshe Ferebee-Vine ~~ Commission Secretary

July 6,1999

Statement for the Record in Audits of

1996 Clinton/Gore and Dole/Kemp Campaigns

Chairman Scott E. Thomas and Commissioner Danny Lee McDonald.

This was received in the Commission Secretary's Office on July 6, 1999

at 11 :42 a.m.

cc: V. Convery

Attachments
FEDERAL ELECTION COMMISSION

WASHINGTON, DC 20463

•

III

ru

Statement for the Record in Audits of

1996 Clinton/Gore and Dole/Kemp Campaigns

Chairman Scott E. Thomas

Commissioner Danny L. McDonald'

Our colleagues, Commissioners Sandstrom, Wold, Elliott and Mason,

recently joined in what must be seen as a very odd Statement of Reasons

regarding the audits of the 1996 Clinton and Dole campaigns. 1 Little is written of

the audits. Instead, the thrust of their statement is a tirade against an innocuous

shorthand reference the Commission coined in Advisory Opinion 1985-142 to

analyze whether party communications are subject to the statutory limits on

support of particular candidates. The energy expended by our colleagues to

savage the Commission's own advisory opinion process is surprising. The

strangest aspect of the Sandstrom ef al. Statement, though, is that it claims to

abhor vagueness but, in the end, is itself very confusing.

We write this Statement to explain the state of the law in this area, and to

clarify that the Sandstrom et al. Statement does not effect a 'sea change' when

analyzing which party communications should be subjected to the statutory limits

on coordinated expenditures. In particular, we wish to emphasize that 'express

advocacy' is not required.

I.

The limits on coordinated expenditures by party committees on behalf of

their candidates have been on the books for over 24 years. They were part of

the Federal Election Campaign Act Amendments of 1974.3 In addition to the

1 Statement of Reasons of Vice Chairman Wold and Commissioners Elliott, Mason and Sandstrom

issued June 24, 1999 (hereinafter "Sandstrom et al. Statement").

2 Fed. Elec. Camp. Fin. Guide (CCH Transfer Binder), 5819.

3 Pub. L. 93-443, 88 Stat. 1263, § 101.
$5,000 per election contribution limit available to all political committees,· parties

have coordinated expenditure allowances permitting additional spending in

connection with the general election campaigns of their candidates. 5

The party coordinated expenditure limits serve an important role in

preventing party donors from having an indirect way of effecting a 'quid pro quo'

arrangement with candidates for federal office-- the link between money and

official government action the statute is designed to prevent. If a party

committee is able to undertake only a limited amount of coordinated expenditure

activity on behalf of a particular candidate, donors or groups of donors will not be

able to expect large-scale donations to the party to result in large-scale spending

by the party on behalf of such candidate. For example, ten banking industry

PACs who donate $15,000 each to a party's House campaign committee and

who are close to a particular House committee chairman running for reelection

would not be able to expect $150,000 in coordinated expenditures by the party

on behalf such candidate because the coordinated expenditure limit would

prevent it.

The direct payment of funds to a candidate's campaign has been treated

as a "contribution"6 subject to the contribution limit. A party's coordinated

payment to a third party on behalf of a candidate has been treated as either an

in-kind "contribution" or a coordinated "expenditure, "7 at the option of the

expending committee. 8 If treated as a coordinated expenditure, the party has to

4 Currently codified at 2 U.S.C. § 441a(a)(2)(A).

511 C.F.R. § 110.7(a)(3), (b)(3). Codified at 2 U.S.C. § 441a(d), the coordinated expenditure

allowance provides:

Notwithstanding any other provision of law with respect to limitations on expenditures or

limitations on contributions, the national committee of a political party and a State

committee of a political party, including any subordinate committee of a State committee,

may make expenditures in connection with the general election campaign of candidates

for Federal office, SUbject to the limitations contained in paragraphs (2) and (3) of this

SUbsection.

Subsections (2) and (3) set forth formulas that in the last presidential election permitted a national

party committee to spend over $12 million on behalf of its presidential candidate, and that in the

1998 congressional elections permitted a national and state party committee each to spend

$32,550 for a House candidate and each to spend amounts ranging from $65,100 in small states

like Wyoming to over $1.5 million in California for a Senate candidate.

62 U.S.C. §431(8).

72 U.S.C. § 431(9).

8 FEC Campaign Guide for Party Committees (1996) at 16. The FEC for many years operated

with a presumption that all party spending was coordinated with the parties' eventual nominees.

11 C.F.R. § 110.7(a)(5), (b)(4) (1996). The Supreme Court invalidated that presumption in

Colorado Republican Federal Campaign Committee v. FEC, 518 U.S. 604 (1996) (hereinafter

"Colorado I"). As a result, only party spending that can be shown to meet the legal test of

'coordination' can be subjected to the limits at 2 U.S.C. § 441a(a)(2)(A) and (d). The legal test for

coordination is set forth at 2 U.S.C. § § 431 (17) and 441a(a)(7)(8) and at 11 C.F.R. § 109.1(b)(4)

and (d)(1).

2
keep within the coordinated expenditure limit, but only the party need report the

transaction. 9

Because party committees are primarily in the business of electing

candidates, the Commission has required virtually all party-building activity to be

at least allocated so that indirect federal candidate support is not paid for with

funds not permitted under federallaw. 10 At the same time, recognizing party

committees sometimes undertake generic party-building activities that may help

their candidates only in a general way-- a way that should not result in a

contribution to or coordinated expenditure on behalf of a particular candidate--

the Commission has tried to clarify when a party activity need not be subjected to

a candidate-specific limitation. Thus, the Commission has specified at 11 C.FR.

§ 106.1 (c) that an expenditure for rent, personnel, overhead, general

administrative costs, educational campaign seminars, training of campaign

workers, or registration or get-out-the-vote drives need not be attributed to

individual candidates unless the expenditure is "made on behalf of a clearly

identified candidate, and the expenditure can be directly attributed to that

candidate."

When identifying which party activities fall under the candidate-specific

limits, though, the Commission must deal first and foremost with the underlying

statutory terms. A "contribution" is a payment or gift of value made "for the

purpose of influencing any election for Federal office."11 A coordinated

"expenditure" is a payment, advance or gift of anything of value made "for the

purpose of influencing any election for Federal office" and "in connection with the

general election campaign" of a candidate for Federal office. 12

Over the years, the Commission has grappled with the difficult factual

distinctions that make a party communication a generic party-building

expenditure on the one hand, or an in-kind contribution or coordinated

expenditure on the other. The best-known instances were Advisory Opinion

1984-1513 and the aforementioned Advisory Opinion 1985-14. In each of those

opinions, the Commission analyzed the facts according to the basic underlying

statutory provisions cited above.

In Advisory Opinion 1985-14, the Commission developed a shorthand

reference to the legal analysis to be used. Instead of repeating the statutory

phrases, "for the purpose of influencing" and "in connection with," the

Commission described the process as a search for whether the communication

911 C.F.R § 104.3(a)(3)(iii).

'°11 C.F.R. § 106.5.

11 2 U.S.C. § 431(8). 12 2 U.S.C. §§ 431(9) and 441a(d).

13 Fed. Elec. Camp. Fin. Guide (CCH Transfer Binder), 1[5766

3
contained an "electioneering message." 14 The Commission then cited a

Supreme Court decision for further guidance as to what was meant by

"electioneering message."15 There, the Court simply described its view of the

reach of the corporate and union prohibition at 2 U.S.C. § 441b: whether a

communication is "designed to urge the public to elect a certain candidate or

party."1B This phrasing, of course, is Virtually indistinguishable from the "for the

purpose of influencing any election for Federal office" language at the heart of

any "contribution" or "expenditure" inquiry. Thus, at most, the Commission in

Advisory Opinion 1985-14 was paraphrasing the statutory language underlying

any coordinated party expenditure analysis.

II.

Our colleagues grossly overstate the significance of the "electioneering

message" phrase and then gyrate into an inappropriate constitutional hypothesis

regarding the vagueness of that phrase and other phrases used in Advisory

Opinions 1984-15 and 1985-14. Along the way, they grumble about perceived

improper rulemaking through the advisory opinion process.

A.

Dealing with the last 'red herring' first, to our knowledge no commissioner

has been confused about the legal effect of advisory opinions. While advisory

opinions clearly have binding consequences, the statute is clear that general

rules of law have to emanate from the statute or from regulations of the

Commission. 17 Nonetheless, our colleagues seem convinced that the

Commission's use in Advisory Opinions 1984-15 and 1985-14 of paraphrases

and synonyms for the statutory test was, in fact, the creation of a new

substantive rule of law.1s The reality, of course, is that there are only so many

words in the English language, and after citing the underlying statutory

provisions, the Commission simply attempted to explain the legal test in other

helpful ways.19

14 Fed. Elec. Camp. Fin. Guide (CCH Transfer Binder), 115819 at 11,185.

'5 United States v. United Auto Workers, 352 U.S. 567 (1957) (hereinafter "UAW').

'6 Id. At 587.

17 2U.S.C. §437f(b).

,. At one point our colleagues call the phrases used a "test" and at other times they refer to them

as an "amalgam." Sandstrom et al. Statement at 2 and 4.

'9 Lest our colleagues be struck down by a bolt of lightning for insinuating they would never stoop

to helpful descriptions of the underlying statutory and regulatory provisions, they should concede

that only recently in AdVisory Opinion 1999-11, they engineered a description of the statute's

reach that depended on whether there was "any campaign activity" at the event in question. See

Memorandum from Commissioner Sandstrom, Agenda Doc. No. 99-61-A; Advisory Opinion 1999-

11 (unpublished) at 3.

4
Thus, our colleagues have felled a demon they didn't need to imagine in

the first place. The regulated community has had notice of the underlying

statutory provisions at 2 U.S.C. §§ 431(8) and (9) and 441a(d) all along.

Advisory Opinions 1984-15 and 1985-14 neither expanded nor diminished those

underlying rules of law.

Interestingly, our colleagues do not purport to supersede Advisory.

Opinions 1985-14 and 1984-15, but rather disagree with the phrasing of the legal

analysis therein. We take that to mean the Commission's conclusions regarding

specific proposed ads in those opinions still serve as valid legal precedent in

terms of the underlying statute. For example, a party committee that ran ads

under materially indistinguishable circumstances could 'rely upon' the

conclusions reached by a majority of commissioners in those opinions in

determining whether the ads would be a coordinated expenditure or not. 20 This

rightly diminishes the negative impact of our colleagues' statement and suggests

only that the Commission cease using the pesky "electioneering message"

phrase when explaining its interpretations under the statute.

We must address our colleagues' suggestion that an advisory opinion

may not be used as a "sword of enforcement." Sandstrom et al. Statement at 3.

Apparently, they disregard the statutory language quoted in the previous

footnote. Someone who receives an advisory opinion that certain conduct would

be illegal, as well as anyone in materially indistinguishable circumstances, surely

may 'rely on' that legal conclusion to file a complaint against someone else

engaging that conduct. Essentially, that is what happened when Democratic

Party representatives received a response in Advisory Opinion 1985-14 that

certain targeted communications attacking a likely opponent would be

coordinated expenditures subject to limit. Other Democratic Party

representatives then filed a complaint against the Colorado Republican Party

regarding certain ads that attacked the likely Senate nominee, Tim Wirth. That

enforcement case became the subject of the Supreme Court's decision in

Colorado I, supra.

Our colleagues may have missed the fact that the 10th Circuit in that

case upheld the FEC's use of Advisory Opinion 1985-14 (even its

"electioneering message" phrase) to bolster its c1aimY Although the Supreme

Court vacated the 10th Circuit's opinion on other grounds, Colorado I, this is a

strong indication advisory opinions can be used as a "sword."

20 The statute provides that any advisory opinion rendered by the Commission "may be relied

upon" by the person to whom the opinion is issued or by "any person involved in any specific

transaction or activity which is indistinguishable in all its material aspects ...." 2 U.S.C. §

437f(c)(1 ).

21 FEC v. Colorado Republican Federal Campaign Committee, 59 F. 3d 1015 (101h Cir. 1995).

5
This proposition is supported by a 9th Circuit decision, a case our

colleagues cite but misconstrue.22 There, in a successful enforcement action

against a committee that accepted excessive contributions, the FEC used its

advisory opinion precedent as a "sword," and the court specifically sanctioned

this approach.23

The courts have strongly indicated the Commission is bound to apply its

advisory opinion precedent consistently.24 We caution our colleagues not to get

so agitated over the use of paraphrases and shorthand references in prior

advisory opinions that they issue statements undermining the ability of the

agency to enforce the law.

B.

Our colleagues go well beyond their role as commissioners by opining

about the possible unconstitutional vagueness and overbreadth of the words

"electioneering message."25 First, as just explained, everyone should agree that

"electioneering message" is not a rule of law and, hence, it is not the proper

focus of any constitutional debate. Second, even if it were, Commissioners are

not members of the judiciary entitled to render their own rules unconstitutional.26

It is one thing to interpret the statute in an advisory opinion, or to interpret the

22 FEC v. Ted Haley Congressional Committee, 852 F.2d 1111, 1115 (9'h Cir. 1988) (hereinafter

"Haley") ("interpretation of FECA by the FEC through its regulation and advisory opinions is

entitled to due deference and is to be accepted by the court unless demonstrably irrational or

clearly contrary to the plain meaning of the statute").

23 We cannot fathom our colleagues' attempt to distinguish Haley. They appear to argue the

court's reliance on advisory opinions is insignificant because there happened to be a relevant

regulation to apply as well. Sandstrom et a/. Statement at 4, n. 9. As our colleagues well know,

the existence of a regulation is not essential to the legal value of an advisory opinion. The law, 2

U.S.C. § 437f(a), specifically contemplates adVisory opinions applying the statute as well-- just as

was the case in Advisory Opinions 1984-15 and 1985-14. As precedent, such opinions may be

"relied upon" just as much as advisory opinions applying a regulation. 2 U.S.C. § 437f(c).

24 See Common Cause v. FEC, 676 F. Supp. 286 (D.D.C. 1986) (certain FEC commissioners,

including Commissioner Elliott, ordered to issue statement of reasons in dismissed enforcement

case where advisory opinion precedent seemingly inconsistent); Common Cause v. FEC, Fed.

Elec. Camp. Fin. Guide (CCH Transfer Binder), 119263 (D.D.C. 1988) (related case noting, "The

importance of respect for the Rule of Law ... requires that courts be vigilant to ensure that in the

process 'prior policies and standards are being deliberately changed, not casually ignored.''').

25 Sandstrom et a/. Statement at 4.

26 Commissioners have an obligation to seek compliance with the statute passed by Congress. 2

U.S.C. § 437c(b)(1). The D.C. Circuit has stated, "[A]dministrative agencies ... cannot resolve

constitutional issues." American Coalition for Competitive Trade v. Clinton, 128 F.3d 761, 766 n. 6

(D.C. Cir. 1997). See also, Gilbert v. National Transportation Safety Board, 80 F.3d 364,366-67

(9th Cir. 1996) ("challenges to the constitutionality of a statute or a regulation promulgated by an

agency are beyond the power or the jurisdiction of an agency").

6
statute through a clarifying regulation. 27 It is altogether different to opine that a

mere shorthand reference used to paraphrase the statute is unconstitutional. 28

That said, we believe it important to note a fundamental flaw in our

colleagues' 'judicial detour.' Their reliance on Supreme Court analysis of

independent spending provisions is simply inapposite. In the area of

coordinated expenditures, there is no basis for applying the "express advocacy"

standard created in Buckley29 and FEC v. Massachusetts Citizens for Life30

where independent disbursements were at issue. Indeed, Buckley could not

have been clearer that its "express advocacy" test did not apply to coordinated

expenditures. When analyzing former 18 U.S.C. § 608(e), the independent

expenditure limit struck down by the Court, the per curiam opinion noted:

The parties defending § 608(e)(1) contend that it is necessary to prevent

would-be contributors from avoiding the contribution limitations by the

simple expedient of paying directly for media advertisements or for

other portions of the candidate's campaign activities. They argue that

expenditures controlled by or coordinated with the candidate and his

campaign might well have virtually the same value to the candidate as a

contribution and would pose similar dangers of abuse. Yet such

controlled or coordinated expenditures are treated as contributions

rather than expenditures under the Act. [footnote omitted] Section

27 The D.C. Circuit has noted that the adVisory opinion process provides an opportunity "to reduce

uncertainty or narrow the statute's reach" and that "the susceptibility of the [Federal Election

Campaign Act] to challenge on the grounds of vagueness has consequently been reduced."

Martin Tractor Co. v. FEC, 627 F.2d 375, 386 (D.C. CiL), cert. denied, 449 U.S. 954 (1980).

28 This would apply, as well, to our COlleagues' constitutional analysis of other phrases used at one

time or another by the Commission to explain the application of the underlying statutes, such as

whether the communication would "tend to diminish support for one candidate and garner support

for another candidate." Sandstrom et at. Statement at 4, n. 11, discussing Advisory Opinion 1984-

15.

We are baffled by our colleagues' suggestion that the Supreme Court's phrase in UAW

("designed to urge the public to elect a certain candidate or party") is but "charming" and of little

"practical use" because it dates back to the days of a '57 Chevy. Sandstrom et a/. Statement at

5, n. 13. That might explain why the old case of Marburv v. Madison, 5 U.S. 137, 178 (1803) (It is

for Article III jUdges to consider constitutional disputes and "say what the law is."), is of little value

to them. More importantly, because the phrasing used in UAW is so close to the current language

of the statute governing coordinated expenditures ("for the purpose of influencing any election for

Federal office"), we hope our colleagues are not suggesting the latter is unconstitutionally vague.

In Buckley v. Va/eo, 424 U.S. 1(1976), the Court made crystal clear that it viewed the phrase "for

the purpose of influencing" in the context of coordinated expenditures to be free of constitutional

vagueness concerns ("We construed [the term 'contribution' which relies on a 'for the purpose of

influencing' test] to include ... expenditures placed in cooperation with or with the consent of a

candidate. . .. So defined, 'contributions' have a SUfficiently close relationship to the goals of the

Act, for they are connected with a candidate or his campaign."). 424 U.S. at 78, referring back to

n. 24 at 23. 29 424 U.S. at 42-44, 76-82. 30 479 U.S. 238, 249-50 (1986) (hereinafter "MCFL").

7
608(b)'s contribution ceilings ... prevent attempts to circumvent the Act

through prearranged or coordinated expenditures amounting to disguised

contributions. By contrast, § 608(e)(1) limits expenditures for express

advocacy of candidates made totally independently of the candidate

and his campaign.31

Similarly, in MCFL, the Court made clear that its "express advocacy" construction

need only apply to the provision in 2 U.S.C. § 441 b "that directly regulates

independent spending."32

III.

We can only hope our colleagues' statement does not get misconstrued

by the regulated community and the courts. We note with interest, for example,

that one business day after our colleagues' statement was circulated at the

Commission, counsel for the defendant in FEC v. Christian Coalition33 filed a

pleading suggesting its relevance to the issue in that case: whether a

corporation made in-kind contributions or independent expenditures prohibited

under 2 U.S.C. § 441b. In fact, no allegation in that case involves a claim that

depends on the phrase "electioneering message."34

31 424 U.S. at 46,47. See also Buckley at 78-80 (defining coordinated expenditures as

"contributions" and defining non-coordinated "expenditures" covered by former 2 U.S.C. § 434(e)

to reach only communications containing 'express advocacy'). 32 479 U.S. at 249.

33 No. 96-1781 (D.D.C., filed 1996).

34 Interestingly, the Commission passed a regulation in 1995 that implements 2 U.S.C. § 441b as it

relates to certain voter guides. It uses the phrase "electioneering message." Specifically, for

voter gUides prepared with the candidates' cooperation and participation, the regulation specifies

that such guides "shall not score or rate the candidates' responses in such way as to convey an

electioneering message." 11 C.F.R. § 114.4(c)(5)(ii)(E). As it post-dates the activities at issue in

FEC v. Christian Coalition, supra, it should not enter the debate there, but that has not stopped

the defendant's counsel. For activities properly sUbject to this regulation, we can only ponder

what our colleagues will say.

8
The confusion generated by our colleagues is regrettable. While the

Commission's efforts to apply the in-kind contribution and coordinated

expenditure provisions in the statute must focus, as always, on the words of the

statute, surely a great deal of energy now will be expended on what to make of

the banning of the innocuous "electioneering message" phrase. The answer is,

"not much." Sadly, a lot of explaining will be required to get there.

Date

Date

9

Scott E. Thomas, Chairman

~'ifc~~~ DannyL. cDonalct:Qmmissioner ~.7Y.,,{)
FEDERAL ELECTION COMMISSION

WASHINGTON, DC. 20463

MEMORANPUM

TO:

FROM:

DATE:

SUBJECT:

Commissioners

Staff Director Pehrkon

General Counsel Noble

Press Officer Harris

Mary W. Dove/Lisa R. Da is

Acting Commission Secre

June 25,1999

Statement of Reasons for the Audits of

Clinton/Gore '96 and Dole/Kemp '96.

Attached is a copy of the Statement of Reasons in the Audits of

Clinton/Gore '96 and Dole/Kemp '96 signed by Vice-Chairman Darryl R.

Wold, Commissioner Lee Ann Elliott, Commissioner David M. Mason and

Commissioner Karl J. Sandstrom. This was received in the Commission

Secretary's Office on Thursday. June 24, 1999 at 3:47 p.m.

cc: V. Convery

Attachment
FEDERAL ELECTION COMMISSION

WASH INC TON. 0 C 2U4bJ

STATEMENT OF REASONS of

VICE CHAlRMA.l'l DARRYL R. WOLD and

COMMISSIONERS LEE ANN ELLIOTT,

DAVID M. MASON and,

KARL J. SANDSTROM

On The Audits Of

"DOLE FOR PRESIDENT COMMITTEE, INC." (pRIMARY),

"CLINTON/GORE '96 PRIMARY COMMITTEE, INC.,"

"DOLEIKEMP '96, INC." (GENERAL),

"DOLEIKEMP '96 COMPLIANCE COMMITTEE, INC'~ (GENERAL),

"CLINTON/GORE '96 GENERAL COMMITTEE, INC.," and

"CLINTON/GORE '96 GENERAL ELECTION

LEGAL AND COMPLIANCE FUND"

Pursuant to 26 U.S.C. §§ 9038(a) and 9007(a), the Federal Election Commission

("the Commission") audited the "Dole For President Committee, Inc.," the "Clinton/Gore

'96 Primary Committee, Inc.," "DolelKemp '96, Inc.," the "DolelKemp '96 Compliance

Committee, Inc.," the "Clinton/Gore '96 General Committee, Inc." and the "Clinton/Gore

'96 General Election Legal And Compliance Fund." In doing so, our Audit Division and

Office ofGeneral Counsel (collectively the "staff') analyzed media advertisements the

Democratic and Republican National Committees (collectively "the parties") ran during

1995 and 1996. The purpose ofthis analysis was to determine whether the cost ofthese

advertisements constituted in-kind contributions (coordinated expenditures) by the parties

on behalf oftheir respective presidential candidates' committees (which, among other

things, could have caused the presidential committees to exceed their primary or general

election spending limits in violation of2 U.S.C. § 44Ia(b».

In analyzing these advertisements, I the staff examined their content for the

presence oftwo factors to determine whether the advertisement were "for the purpose of

influencing" an election for Federal office, as that phrase is used in 2 U.S.C. § 431 (8)(A)

("contribution") and (9)(A) ("expenditure"): Whether the advertisements referred to a

"clearly identified candidate" and whether they contained an "electioneering message."2

J See. e.g., "Report of the Audit Division on the Dole For President Committee, Inc. (Primary)" ("Report

on DFP"), Agenda Document 98-87, 11/19/98 at 14 & 50; "Report of the l\udit on Clinton/Gore '96

Primary Committee, Inc." ("Report on CGP"), Agenda Document 98-85, 11/19/98 at 10,32-35 & 36-38.

2 The staff cited Advisory Opinions ("AO")1984-15 and 1985-14 as the authority for using "electioneering

message" as a test ofthe content of a communication. Only AO 1985-14 used that phrase, and it did so in

erroneously concluding that the Commission had employed the "electioneering message" test in AO 1984.

15, see AO 1985-15 at 7; in fact, those words never appear in AO 1984-15. See footnote eleven, infra, for

a discussion ofthe problems with the staffs interpretation of these opinions.
Because the stafffound that both factors were present/ the staffrecommended that the

Commission detennine that the costs ofthe advertisements were in-kind contributions

from the parties to their respective presidential campaign committees. 4 The staff also

recommended that the Commission detennine that the applicable spending limits were

exceeded based in part on the cost ofthe advertisements, and that the Commission require

a repayment ofpresidential matching funds. For various reasons, the Commissioners

unanimously rejected the staff's repayment recommendations.

We write here to express our disagreement with the use of "electioneering

message" as a test to detennine whether communications are "for the purpose of

influencing" elections and, therefore, constitute expenditures or contributions under the

Federal Election Campaign Act ("FECA"). Specifically, we agree that: (1) The phrase

"electioneering message" cannot serve as a substantive test to describe the content of

communications that are "for the purpose ofinfluencing" an election because it is derived

only from advisory opinions and is not found either in the FECA or in regulations

promulgated by the Commission in accordance with the rulemaking procedures specified

in the FECA; and (2) The phrase "electioneering message" cannot be used as a shorthand

expression ofthe Commission's interpretation ofthe statutory standard of "for the

purpose ofinfluencing" an election because the advisory opinions from which the phrase

is drawn do not convey a clear and consistent application ofthe statutory standard, and

the phrase, standing alone, is both too vague and too broad to have a sufficiently definite

meaning. Therefore, we conclude that the phrase "electioneering message" should not be

used to describe the content ofcommunications which the Commission would detennine

to be "for the purpose ofinfluencing" an election to Federal office.

Procedural Defects With Employing The "Electioneering Message" Standard

Congress included an express prohibition in the FECA against the Commission

using advisory opinions to establish rules of conduct. SUbpart (b) of 2 U.S.c. § 437[, the

section governing the use ofsuch opinions, provides that the Commission may employ

rules oflaw that are not set forth in the FECA only ifit complies with the procedures set

forth in 2 U.S.C. § 438(d) in promulgating them.s By necessary implication, subpart (b)

of § 437fprohibits the Commission from using advisory opinions as rules oflaw, for the

3 See. e.g., Report on DFP, Agenda Document 98-87,11/19/98 at 50; Report on COP, Agenda Document

98·85, 11/19/98 at 38.

4 See. e.g., Report on DFP, Agenda Document 98-87, 11/19/98 at 52; Report on COP, Agenda Document

98-85, 11/19/98 at 43.

S See id. at § 437f(b) ("Any rule oflaw which is not stated in this Act or in chapter 95 or chapter 96 of title

26 may be initially proposed by the Commission only as a rule or regulation pursuant to procedures

established in section 438(d) of this title."); United States Defense Committee v. Federal Election

Commission, 861 F.2d 765,771 (2" Cir. 1988) (USDC) (citing 2 U.S.C. § 438(d)) ("A rule oflaw may

initially be proposed by the Commission only as a rule or regulation pursuant to very elaborate procedures

involving submission ofthe rule or regulation to the Congress.").

2
Commission does not follow the requirements of2 U.S.c. § 438(d) in drafting such

opinions; instead, it follows the requirements of § 437f."

As a result, the Commission may not use advisory opinions as a substitute for

rulemaking. Rulemaking is not simply the preferred method for filling in gaps in the

FECA. It is the required method. 2 U.S.C. § 437f(b), note five, supra. Where the law is

of uncertain application, advisory opinions cannot be used as a sword of enforcement.

See generally id. The regulated community can, however, use advisory opinions as

shields against Commission enforcement actions in appropriate circumstances. 2 U.S.C.

§ 437f(c).

Advisory opinions are binding only in the sense that they may be relied on

affirmatively by any person involved in the specific transaction or activity

discussed in the opinion or in any materially indistinguishable transaction or

activity.... On the other hand, to the extent that the advisory opinion does

not affirmatively approve a proposed transaction or activity, it is binding on

no one-not the Commission, the requesting party, or third parties. 7

This reading ofthe FECA's rulemaking requirements, of course, does not prevent

the Commission from enforcing the FECA in novel or unforeseen circumstances. It only

requires that, absent controlling regulations or the authoritative interpretations ofthe

courts, the Commission's enforcement standard be the natural dictate ofthe language of

the statute itself.8

The threshold problem with the "electioneering message" standard, then, is that it

is not a rule. It is only a shorthand phrase that purports to describe the Commission's

reasoning in two advisory opinions. See note two, supra. The phrase is not defined in

either ofthose opinions. In fact, it does not appear at all in one ofthem. Rather than

being promulgated pursuant to the requirements ofthe FECA (see 2 U.S.C. §§ 438(d) and

"See 2 U.S.c. § 437f(b) ("... No opinion of an advisory nature may be issued by the Commission or any

ofits employees except in accordance with the provision ofthis section [i.e., § 4371].").

7 USDC, 861 F.2d at 771 (emphasis added) (citing 2 U.S.C. §§ 438(d) and 437f(b)&(c)); see also Weber v.

Heaney. 793 F. Supp. 1438, 1452 n. 9 (D. Minn 1992) (" ... Commission advisory opinions are binding in

the sense that they may be relied upon affirmatively by any person involved in the specific transaction or

activity discussed in the opinion or in any materially indistinguishable transaction or opinion."), aff'd. 995

F.2d 872 (8'h Cir. 1993); Stockman v. Federal Election Commission. 138 F.3d 144.149 n. 9 (5'" Cir. 1998)

(same). Some argue that Orloski v. Federal Election Commission. 795 F.2d 156 (D.C. Cir. 1986), supports

the contrary conclusion. Unlike USDC, however, Orloski did not address the FECA's clear prohibitions on

using advisory opinions as rules of conduct. Instead, Orloski analyzed the advisory opinions implicated

there for purposes of determining whether the Commission's interpretation of the FECA was reasonable

and consistent and thus should be accorded deference. 795 F.2d at J64-167.

8 See Sullivan v. Everhart, 494 U.S. 83, 89 (1990) (Scalia, J.) (quoting Chevron U.S.A.. Inc. v. Natural

Resources Defense Council. bic.. 467 U.S. 837, 843 (1984) and National Labor Relations Board v. Food

and Commercial Workers, 484 U.S. 112, 123 (1987)) (,"[I]fthe statute is silent or ambiguous with respect

to the specific issue, the question for the court is whether the agency's answer is based on a permissible

construction of the statute,' that is, whether the agency's construction is 'rational and consistent with the

statute. ''').

3
437f(b) & (e), the "electioneering message" standard is an amalgam ofthese advisory

opinions. Even at that, it is not the most natural, let alone the only reasonable, reading of

those opinions. In fact, it is difficult to draw any clear meaning from a comparison or

combination ofAOs 1984-15 and 1985-14 (see "Substantive Difficulties," infra).

As a result, the regulated community most likely does not have notice as to how

this standard will govern its conduct, and it certainly did not have an opportunity to

comment on whether it should. Because ofits procedural infirmities, the Commission

may not employ the phrase "electioneering message" as expressing a general rule for

determining whether communications are "for the purpose ofinfluencing" a federal

election.·

Substantive Difficulties With The "Electioneering Message" Standard

Apart from its procedural infirmities, the "electioneering message" standard

suffers from serious problems of vagueness and overbreadth. As presented by the staff, a

communication satisfies this standard ifit includes statements which are "designed to

urge the public to elect a certain candidate or party,'O or which would tend to diminish

support for one candidate and garner support for another candidate." See, e.g., Report on

DFP, Agenda Document 98-87,11119/98 at 14 (citing AO 1984-15); Report on CGP,

Agenda Document 98-87, 11119/98 at IO (citing AO 1984-15).11

• Democratic Congressional CampaIgn Committee v. Federal Election Commission, 645 F. Supp. 169

(D.D.C. 1986), aff'd in part and rev 'd in part, 831 F.2d 1131 (D.C. CiL 1987) (DCCC) and Federal

Election Commission v. Ted Haley Congressional Committee, 852 F.2d 1111 (9'h CiL 1988) (Haley) do not

affect this conclusion. In DCCC, the Commission dismissed a complaint, contrary to the recommendation

ofits General Counsel, without providing a statement ofreasons for domg so when it appeared the

complaint alleged activity that satisfied the "electioneering message" standard. 645 F. Supp. at 170-171.

The Court, in an action brought pursuant to 2 U.S.c. § 437g(a)(8), was faced with the question of whether

the Commission had acted "contrary to law" for appearing to disregard its "electioneering message" test

without articulating any reason for doing so, id. at 171-174; the Court was not faced with the issue here:

whether thattesl, itself, was validly established. In Haley, the Court noted that the Commission's

interpretation ofthe FECA in its regulations and advisory opinions was entitled to due deference. 852 F.2d

at 1115. But all the advisory opinions to which that Court referred interpreted a Commission regulation,

id. at 1114-1115; they did not attempt to circumvent the FECA's clear requirement that for rules of

conduct, the Commission have a regulation. See also Federal Election Commission v. Legi-Tech. 967 F.

Supp. 523, 529-530 (D.D.C. (997) (Commission advisory opinions interpreted regulation).

'0 The staff cites AO 1984-15 as authority for this phrase. This phrase, however, comes from 1985-14. See

id. at 7 (citing United States v. United Auto Workers. 352 U.S. 567, 587 (1957)).

11 There is substantial question as to whether the staffs analysis properly characterizes AO 1984-15. While

that opinion uses the phrases "diminish support" and "gamer support," id. at 5, it concludes that

advertisements which clearly identif'y presidential candidates of one party and include exhortations to

"vote" for another party "effectively advocate the defeat of a clearly identified candidate." /d. Whatever

distinction there may be between "effectively" and "expressly" advocating, the facts presented in that

advisory opinion bear similarities to the facts in Federal Election Commission v. Massachusetts Citizensfor

Life. Inc.. 479 U.S. 238 (1986) (MCFL), and the Commission's conclusion in AO 1984-15 and the court's

conclusion in MCFL can be read consistently. The staffsuggests an extremely broad interpretation of AO

1984-15, citing the phrase "dimish [or] gamer support." See Reports on DFP & CGP. supra. That

opinion's facts, however, suggest a more narrow, and more natural, construction, similar to MCFL.

4
Such formulations, the Supreme Court has held, offend the First Amendment. ]n

Buckley v. Valeo, 424 U.S. I, 42-44 (1976), the High Court held as impermissibly vague

the "relative to ... advocating the election or defeat of[a clearly identified) candidate"

standard in 18 U.S.C. § 608(e) (1970) ofthe original FECA. The "diminish support for

one candidate" prong--like the "relative to" standard in the original FECA- is especially

problematic because "the distinction between discussion ofissues and candidates and

advocacy ofelection or defeat ofcandidates may often dissolve in practical application."

Buckley, 424 U.S. at 42 (emphasis added)."

The factual question ofwhat a particular statement was designed to do also gives

rise to vagueness problems. The fact that the term "electioneering" and the phrase

"designed to urge the public to elect a certain candidate or party" were plucked out of

context from a four-decade old Supreme Court opinion (United States v. Auto Workers,

352 U.S. 567 (1957) (UA W)) does not resolve the question. 13 First, it is clear that UA W

was not enunciating a constitutionally-permissible standard for regulating speech, but

describing a particular communication in the course of an opinion explicitly refusing to

reach a ruling on the constitutionality ofregulating the specific speech'so described. See

id. at 591 (internal citation omitted) ("Clearly in this case it is not absolutely necessary to

a decision to canvass the constitutional issues."). Second, the speech at issue in UAW

included specific endorsements of candidates. Id. at 584. Third, the per curiam opinion

in Buckley cites the dissent in UAW, see 424 U.S. at 43 (citing UAW, 352 U.S. at 595-596

(Douglas, J., dissenting)), which had urged that the FECA's predecessor statute be

declared unconstitutional as applied to the electioneering speech at issue in UA W.

The relationship, if any, ofthe two prongs ofthe "electioneering message" test

underscores the test's vagueness. Read narrowly, "urge the public to elect a candidate,"

AD 1985-14 at 7, could be construed as equivalent to communications "that expressly

12 The "relative to" standard, on its face, was thus unhelpful in distinguishing between these two types of

speech. Id. As a result, to allow unfettered issue discussion while regulating candidate advocacy, the

government, under this standard, had to attempt to divine the speaker's intent. Jd at 43. This. the Court

noted. would not only be difficult, but dangerous.

Whether words intended and designed to fall short of invitation would miss that mark is a

question both ofintent and effect. No speaker, in such circumstances, safely could

assume that anything he might say upon the general subject would not be understood by

some as an invitation. In short, the supposedly clear-cut distinction between discussion,

laudation, general advocacy, and solicitation puts the speaker in these circumstances

wholly at the mercy ofthe varied understanding of his hearers and consequently of

whatever inference may be drawn as to his intent and meaning. Such a distinction offers

no security for free discussion. In these conditions, it blankets with uncertainty whatever

may be said. It compels the speaker to hedge and trim.

Id. (quoting Thomas v. Collins•. 323 U.S. 516, 535 (1945)). The second prong of the "electioneering

message" test--given its "diminish (candidate] support" focus--requires the same difficult and dangerous

subjective inquiry.

Il Like a '57 Chevy, a dated Supreme Court opinion may be channmg. but often requires substantial

restoration to be of practical use.

5
advocate the election or defeat of a clearly identified candidate." Federal Election

Commission v. Massachusetts Citizens For Life, Inc., 479 U.S. 238, 249-250 (1986)

(quoting Buckley, 424 U.S. at 80). In contrast, there is virtually nothing which could be

said about a candidate for federal office which might not be interpreted as "diminish[ing]

support for one candidate [or] gamer[ing] support for another candidate." See, e.g.,

Report on DFP, Agenda Document 98-87, 11/19/98 at 14 (citing AO 1984-15); Report

on CGP, Agenda Document 98-87, 11/19/98 at 10 (citing AO 1984-15).

The "electioneering message" test is also unconstitutionally overbroad for related

reasons. As the Buckley Court observed,

[c]andidates, especially incumbents, are intimately tied to public issues

involving legislative proposals and governmental actions. Not only do

candidates campaign on the basis oftheir positions on various public

issues, but campaigns themselves generate issues of public interest.

424 U.S. at 42. Regulation of any statement which" diminishes [or garners] support for

[a] candidate," AO 1984-15 at 5, would encompass, then, virtually any meaningful

utterance identifying a candidate.

The vagueness and overbreadth problems ofthe "electioneering message" and

"relative to" standards are thus two sides ofthe same counterfeit coin. They are vague

because it is not clear when they encompass issue discussion and not candidate advocacy.

They are overbroad because, given the nature of campaigning, they will inevitably

encompass both. For the same substantive reasons that the Supreme Court held the

"relative to" standard in the FECA to be unconstitutional, the Commission may not

employ "the electioneering message" standard. Even in the context of coordinated, or

presumably coordinated, communications in which the "electioneering message" test has

generally been proposed (see 11 C.F.R. § 114.4(c)(5)(ii)(B)(2)(E) (regulation of voter

guides», the Commission may not ignore these constitutional requirements.

Conclusion

a~k;;'f-?:J Lel~:m Elliott Date

Co issioner

/-d/~ r;/zfh1

I Karl VSandstrorn Date

Commissioner

Given the procedural and substantive infirmities with the "electioneering

message" standard, the Commission may not employ it in administering the FECA, the

Presidential Primary Matching Payment Account Act, the Presidential Election Campaign

Fund Act, or its own regulations.

/(\'/1//._, / I ,fJJ1v'f11jt1~:/t!tft,; t-~'1!¥1

Darryll{, Wold Date

f1~~ ;)p/1j

David M. Mason Date

Commissioner

6
March 23, 2000

MEMORANDUM

TO:

THROUGH:

FROM:

BY:

FEDERAL ELECTION COMMISSION

WASHING TON, 0 C 20463

The Commission

James A. Pehrkon

Staff Director

Lawrence M. Noble

General Counsel

l.;:im Leslie Bright

Associate General Counsel

/!d~ RECEIVED

FEDERAL ELECTION

COMl11SSION

SECF~ T\RIAT

2000 MAR 21 P lj: 10

SUBJECT: President Clinton and the Clinton/Gore '96 Primary Committee, Inc.

(LRA #529)

Pursuant to the Commission's March 16, 2000 discussion and detennination in

connection with Agenda Document No. 00-31, attached for your infonnation is a letter to Lyn

Utrecht, counsel for the Clinton/Gore '96 Primary Committee, Inc. The letter summarizes the

Commission's action with respect to the Future Tech disgorgement detennination.

If you have questions about this letter, please contact Andre G. Pineda, the attorney

assigned to this matter.

Attachment

Letter from Kim Leslie Bright to Lyn Utrecht
FEDERAL ELECTION COMMISSION

WASHINGTON. DC 20463

Lyn Utrecht, Esq.

Ryan, Phillips, Utrecht & MacKinnon

1133 Connecticut Avenue, N.W.

Suite 300

Washington, D.C. 20036

•

Dear Ms. Utrecht:

Re: Clinton/Gore '96 Primary Committee, Inc.

Disgorgement Payment (LRA #529)

On July 15, 1999, the Commission determined that President Clinton and the

Clinton/Gore '96 Primary Committee, Inc. (collectively "the Committee") must disgorge $25,000

to the United States Treasury for contributions that were identified as being part of a corporate

contribution scheme involving Future Tech International ("Future Tech") and its corporate

officers. By letter dated October 8, 1999, the Committee sent the Office ofGeneral Counsel a

$25,000 check made payable to the United States Treasury. In addition to enclosing the

disgorgement payment, the letter indicated that the Committee is "somewhat concerned about the

Commission's authority to order the disgorgement, particularly in light ofa lawsuit that has been

related to a Commission disgorgement order to another 1996 presidential campaign." The

Committee's letter also stated that U[w]e assume that the Commission would defend [it] should

any legal action be brought against the Committee to seek return ofthese funds to the

contributor."

Although the letter does not identify the lawsuit, it appears that it is referring to Fireman

v. United States, 44 Fed. C1. 528 (1999), a United States Court of Federal Claims decision which

granted, in part, and denied, in part, a motion to dismiss that was filed by the Department of

Justice ("DOJ"). The lawsuit, filed by Simon C. Fireman, was a claim against the United States

for $69,000 pursuant to 28 U.S.c. § 1491 ("the Tucker Act"). The amount sought was equal to

the amount of contributions Mr. Fireman and Aqua-Leisure Industries, Inc. made to the Dole for

President Committee, Inc. and the Dole for President Compliance Committee, Inc. (collectively

"the Dole Committees"), which were later disgorged to the United States Treasury by the Dole

Committees. On November I, 1999, the United States Court of Federal Claims dismissed Mr.

Fireman's lawsuit.

On March 16, 2000, the Commission determined to retain the disgorgement with the

United States Treasury. Please note that any Tucker Act claim tiled in the United States Court

(

(.

2- 'j
F~

fbi ,~ .. '

L,-. Utrecht

Page 2

of Federal Claims by a donor for monies disgorged by the Committee would name the United

States as a party. Accordingly, it appears that the Committee would not properly be named a

party to such a claim.

My Office will keep you apprised of any developments regarding this matter, should any

occur. If you have aD" questions, please contact Andre G. Pineda, the attorney assigned to this

matter, at (202) 694-1650.

Sincerely,

Kim Leslie Bright

Associate General Counsel

I --~--

1 ")-1

_·,~.L".""'Jl':':!~"::'""""
I

i't

~";'''r;;;'"J.l;'''

~'. ;- ...... ",~.

E[i [ .( !\ f : ' ]'~', r;

C:" .,: '.: .. ;: : .

... '":" ."

FEDERAL ELECTION COMMISSION

WASHINGTON. DC 204&3

September 7, 1999

SUBJECT: REPAYMENTS RECENED FROM CLINTON/GORE '96 PRIMARY

COMMITTEE, INC, & CLINTON/GORE '96 GENERAL COMMITTEE,

INC,

THE COMMISSION

FROM:

THROUGH:

TO:

On August 12, 1999 the subject committees submitted their responses to the audit

reports approved by the Commission. In the case ofthe Clinton/Gore 1996 primary

campaign, a check in the amount of$11,180, payable to the United States Treasury, was

included to satisfy the amount due the Treasury related to stale-dated checks.' The

repayment ($114,450) related to non-qualified campaign expenses cited in the audit

report was obviated by virtue ofthe primary campaign having made or received

reimbursements to/from the general campaign as discussed in the audit report.

•

OJ

~"

i Yi '.'-r/

\

With respect to the Clinton/Gore 1996 general campaign a check in the amount of

$3,241, payable to the United States Treasury, was included to satisfy the amount due the

Treasury related to interest earned (less applicable taxes). The repayment ($12,427)

related to non-qualified campaign expenses cited in the audit report was obviated by

virtue ofthe general campaign having received a reimbursement from the primary

campaign as discussed in the audit report.

Photocopies ofthe receipts indicating delivery ofthe repayment checks to the

United States Treasury are attached. If you have any questions, please contact Ray Lisi

or Tom Nurthen at 694-1200.

Attachments as stated

I The aITl()unt (SI2,230) cited in the audit report was adjusted to account for SI,050 in checks which cleared the bank, leaving

SII.180 due the Treasury.
FEDERAL ELECTION COMMISSION

WASHING TON. 0 C /04!> I

n.

=

. August 3 I, 1999

RECEIPT FROM THE

UNITED STATES DEPARTMENT OF TREASURY

FORA

PAYMENT TO THE GENERAL FUND OF THE U. S. TREASURY

Received on August 31, 1999 from the Federal Election Commission (by

hand delivery) a check drawn on Nations Bank, N. A. for $3,241.00.

The check represents a payment for interest income on federal funds

from the Clinton/Gore '96 General Committee, Inc.

The payment should be deposited into the General Fund ofthe

U. S. Treasury.

Clinton/Gore '96 General Committee, Inc.

Amount ~f Payment: $3,241.00

",,--..

Presented by: Received by:

I

!Jl~LL8& for the

United States Treasury

....~---
FEDERAL ELECTION COMMISSION

August 31, 1999

RECEIPT FROM THE

UNITED STATES DEPARTMENT OF TREASURY

FORA

PAYMENT TO THE GENERAL FUND OF THE U. S. TREASURY

Received on August 31, 1999 from the Federal Election Commission

(by hand delivery) a check drawn on Nations Bank, N. A. for $11,180.

The check represents a payment for stale dated checks from

Clinton/Gore '96 Primary Committee, lnc.

The payment should be deposited into the General Fund ofthe

U. S. Treasury.

Clinton/Gore '96 Primary Committee, Inc.

Amount of Payment: $11,180

Federal

Presented by: Received by:

trkL/;Jd!4

for the

United States Treasury
Attached is the revised Notice ofRepayment Determination and Disgorgement

Detennination circulated for infonnational purposes. On June 15, 1999, the Commission

detennined that President Clinton and the Clinton/Gore '96 Primary Committee, Inc.

(collectively "the Committee") must repay $10,948.25 to the United States Treasury for

receiving funds in excess of entitlement. On the same date, the Commission also determined that

the Committee must disgorge $25,000 for contributions that were associated with the Department

ofJustice Campaign Task Force Investigation of Future Tech International, Inc., et al.

MEMORANDUM

TO:

THROUGH:

FROM:

SUBJECT:

FEDERAL ELECTION COMMISSION

WASHINpON. DC 20463

August 4, 1999

The Commission

James A. Pehrkon

Staff Director

Lawrence M.NOb:-t

General Counsel /1.-/

President Clinton and the Clinton/Gore '96 Primary Committee, Inc.

(LRA#529)

At the July 15, 1999 meeting on this malter, the Commission approved a draft Notice of

Repayment Detennination with the condition that this Office add language setting forth the basis

ofthe disgorgement detennination. The attached Notice ofRepayment Determination and

Disgorgement Determination contains this additional language. Stafffrom this Office has been

in contact with the offices ofCommissioners Mason and Thomas regarding this language.

This Office will send the attached Notice ofRepayment Determination and Disgorgement

Detennination to the Committee at the conclusion ofthe circulation period, unless we receive an

objection. If you have any questions, please contact Andre G. Pineda, the attorney assigned to

this malter, at 694-1650.

Attachment

Notice of Repayment Determination and Disgorgement Determination
BEFORE THE FEDERAL ELECTION COMMISSION

In the Matter of )

)

President William J. Clinton )

Clinton/Gore '96 Primary Committee, Inc. )

)

LRA#529

•

•

u

•

NOTICE OF REPAYMENT DETERMINATION AND DISGORGEMENT

DETERMINATION

On July 15, 1999, the Federal Election Commission ("the Commission") determined that

President William J. Clinton and the Clinton/Gore '96 Primary Committee, Inc. (collectively

"the Committee") must repay $10,948.25 to the United States Treasury for receiving funds in

excess of entitlement. 26 U.S.C. § 9038(b)(I). Specifically, the Commission determined that the

Committee must repay payments or portions ofpayments made on the basis ofmatched

contributions later determined to have been non-matchable. 11 C.F.R. § 9038.2(b)(1)(iii). The

Committee is ordered to pay $10,948.25 to the United States Treasury within 90 calendar days

after service ofthis determination. 11 C.F.R. §§ 9038.2(c)(1) and (d)(1). This Notice of

Repayment Determination sets forth the legal and factual basis for the repayment determination.

11 C.F.R. § 9038.2(c)(l).

On July 15, 1999, the Commission also determined that the Committee must disgorge

$25,000 to the United States Treasury for 25 contributions that were associated with the

Department ofJustice CDOJ") Campaign Finance Task Force ("Task Force") investigation of
; -=,

2

Future Tech International, Inc., et al., and the subsequent criminal guilty pleas that were entered

into as a result ofthat investigationl

. See infra, pp. 3-6 and 8-10.

I. BACKGROUND

In 1995 and 1996, President Clinton was a candidate for the Democratic presidential

nomination. On April 14, 1995, the Committee registered with the Commission. On

October 31, 1995, the Commission determined that the Committee was eligible to receive public

funds under the Presidential Primary Matching Payment Account Act ("the Matching Payment

Act,,).2 26 U.S.C. §§ 9031-9042; see also, Memorandum to the Commission entitled

Notification 0/Date a/Ineligibility - President William J. Clinton (LRA#485), dated

August 29, 1996. The Committee received $13,412,198 in public funds pursuant to the

Matching Payment Act.) See Report ofthe Audit Division on Clinton/Gore '96 Primary

Committee, Inc. (approved June 3, 1999) ("the audit report").

The DOJ created the Task Force to investigate alleged violations ofthe Federal Election

Campaign Act of 1971, as amended ("the FECA"), by various individuals and entities that may

have occurred during the 1995-1996 Presidential election cycle. The investigations resulted in

The repayment procedures described at II C.F.R. §§ 9038.2(c) and 9038.5 do not apply to the

disgorgeme'nt determination.

Pursuant to the Matching Payment Act, the Committee was entitled to received public funds for campaign

activity through August 28, J996, the date that President Clinton garnered the Democratic presidential nomination.

26 U.S.c. §§ 9031-9042; see also, 11 C.F.R. §§ 9032.6 and 9033.5.

The Commission conducted an audit and examination of the Committee's receipts, disbursements and

qualified campaign expenses, as provided for in the Matching Payment Act and the Commission's regulations.

26 U.S.C. § 9038(a) and 11 C.F.R. § 9038.1. The findings of the audit and examination are contained in the Report

ofthe Audit Division on Clinton/Gore '96 Primary Committee, Inc. (approved June 3, 1999) ("the audit report").

The faces which are the basis for the additional repayment determination set forth in this Notice of Repayment

Determination and Disgorgement Determination were not included in the audit report. See 11 C.F.R. § 9038.2(f).
3

criminal indictments against individuals and entities for their activity involving contributions to

the Committee.

One ofthe Task Force investigations involved Future Tech International, Inc. ("Future

Tech"); Mark Vision Computers, Inc. ("Mark Vision"); Mark Jimenez, the ChiefExecutive

Officer ("CEO") of Future Tech; and Juan Ortiz, the Chief Financial Officer ("CFO") of Future

Tech (collectively "the Future Tech investigation").4 Another involved Johnny Chung.

One aspect ofthe Future Tech investigation involved 25 contributions to the Committee

totaling $25,000.5 Future Tech was a Miami, Florida based corporation whose primary business

involved the distribution ofcomputer components and related equipment in South America; it

also distributed equipment manufactured by leading United States companies. Attachment Bat

18 and Attachment C at 24. Mark Vision was a Florida corporation that assembled computer

systems. Attachment B at 18 and Attachment C at 26. Mr. Jimenez was CEO ofFuture Tech; he

also exerted "substantial control" over Mark Vision. Attachment B at 17-18 and Attachment C at

24 and 26.

Beginning "at least as early as September 1994, and continuing until in or about

November of 1996," Future Tech, with the knowledge and consent ofMr. Jimenez, "devised and

executed a scheme whereby corporate money belonging to [Future Tech] would be used to make

On September 30, 1998, DOJ filed an indictment against Mr. Jimenez alleging violations of 2 U.S.C.

§ 441fand 18 U.S.C. §§ 2, 371, and 1001. Attachment A at I. On Aprill5, 1999, DOJ filed another indictment

against Mr. Jimenez alleging violations of2 U.S.c. § 441 f, 18 U.S.C. §§ 2, 371, 1001, and 1343 as well as

26 U.S.C. § 7201; the April 15th indictment purportedly incorporates the allegations contained in the September 30th

indictment. Mr. Jimenez reportedly is residing in the Philippines, and the United States has reportedly requested

that Mr. Jimenez be extradited to the United States.

The Future Tech investigation involved contributions to the Committee as well as contributions to other

political committees. See Attachments A-C. This Notice concerns only those contributions to the Committee that

were identified by DOJ as part ofthe Future Tech investigation.
4

secret, disguised and illegal corporate campaign contributions to various federal candidates ...

and their political committees." Attachment C at 30. To execute this scheme, Mr. Jimenez

identified candidates that Future Tech would support, then "solicited or instructed others to

solicit campaign contributions from numerous conduits," including Future Tech and Mark Vision

employees. Id. Future Tech agreed to reimburse these conduits for their contributions with

either Future Tech or Mark Vision funds or with Mr. Jimenez' personal funds. Id. These

reimbursements were disguised in Future Tech and Mark Vision books and records "by coding

the reimbursements as employee wages, bonuses, adjustments to regular wages, or 'other.",6 [d.

Later, at the direction ofMr. Jimenez, Future Tech reimbursed conduit contributors by cash. Id.

at 31. The treasurer of Future Tech "exchanged checks from Jimenez' personal bank account for

id cash available at [Future Tech] and distributed that cash to conduit campaign contributors as

n~ reimbursement for their contributions ... " Id.

fiJ

Around July 1995, Mr. Jimenez pledged to raise $25,000 in connection with a Committee

fundraising event that was held in Miami, Florida on September 19, 1995. [d. at 34. Around

September 1995, Mr. Jimenez informed Mr. Ortiz, as well as Future Tech's President and

Operations Vice-President, "that he needed $25,000 from 25 [Future Tech] employees in

personal $1,000 checks." Id. Mr. Jimenez instructed "certain [Future Tech] employees to solicit

the checks from employees in their departments and that they would be reimbursed." [d. Based

on his past experience, Mr. Ortiz reimbursed the employees who gave checks through Future

Tech and Mark Vision payroll systems. Id.

This scheme included Future Tech and Mark Vision reimbursement to employees through payroll

accounts. Attachment C at 30.
5

In September 1995, Mr. Jimenez arranged for 26 individuals to make contributions to the

Committee and to have Future Tech and Mark Vision reimburse these individuals for their

contributions. Between September 6, 1995 and September 8, 1995, Mr. Jimenez solicited Mr.

Ortiz for a $1,000 personal check payable to the Committee and promised him reimbursement.

Attachment B at 22-23 and Attachment C at 35. On or about September 6, 1995, Mr. Ortiz wrote

a personal check for $1,000 to the Committee. Attachment B at 22. Between September 6, 1996

;£) and September 8, 1995, Mr. Jimenez also "collected or caused to be collected 25 checks payable

to the [Committee] in the amount 0[$1,000." Attachment C at 35.

Shortly after September 6, 1995, Mr. Ortiz was given a list of approximately 23 Future

Tech or Mark Vision employees who were asked to make personal checks payable to the

\:}. Committee. Attachment B at 23. Between September 6, 1995 and September 8, 1995, Mr. Ortiz

"

instructed a Future Tech accounting department employee to contact Automated Data Processing

("ADP"), Future Tech's and Mark Visions' payroll processor, to arrange [or corporate

reimbursement to 15 non-executive and eight executive employees who had contributed $1,000

each to the Committee. Id.; see also, Attachment C at 35. Pursuant to this request, ADP

"executed the requested reimbursements to 23 [Future Tech] and [Mark Vision] employees with

payroll checks or credits in the net amount of approximately $1,000" on or about

September 8, 1995.7 Id. Once these transactions were completed, Mr. Jimenez "delivered or

caused to be delivered 25 [$1,000] checks" on or about September 13, 1995 to the Committee.

Attachment C at 36.

These reimbursements were coded as "bonus" or "other" to "conceal the fact ofreimbursements from

auditors. lawyers and the [Internal Revenue Service]." Attachment C at 35-36.
6

Twenty-five checks submitted by the Committee for matching funds were associated with

Future Tech and Mark Vision.s Attachment D. The Committee received $6,083.25 in matching

funds for these contributions (25 x $243.33).9 Id

Another target ofthe Task Force investigation was Johnny Chung ("the Chung

investigation"). One aspect ofthe Chung investigation involved 20 contributions to the

Committee totaling $20,000. 10 Mr. Chung was the chief executive officer and majority

shareholder ofAutomated Intelligent Systems, Inc. ("AISI"), a California corporation.

Attachment E at 1. On September 21, 1995, Mr. Chung attended a Committee fundraising event

in Century City, California with "approximately twenty guests;" the cost for attending the event

was $1,000 a person. Id at 7. To pay for the attendance ofhis guests at this event, Mr. Chung

and others agreed on September 22, 1995 to an arrangement whereby Mr. Chung would

contribute "at least $20,000 of his own money" to the Committee that he would disguise as

contributions from other persons. Id. at 7-8. Mr. Chung instructed an AISI employee to recruit

conduit contributors "by asking them to write individual checks [for $1 ,000 to the Committee],

drawn on their own checking accounts." Id. at 8. Mr. Chung then directed that cash be

The Audit Division queried the Committee's database and its related matching fund database; based on

these queries, 25 individuals associated with Future Tech, and one individual associated with Mark Vision, were

identified as each making a $1,000 contribution to the Committee. Attachment D at I. In addition, the Audit

Division identified one contributor who had the same address as another contributor who listed his employer as

Future Tech, and another individual whose check to the Committee was returned for non-sufficient funds. Id. The

Commission's repayment determination does not include any matching funds that may have been paid for the

former contribution. Nor does it include the latter contribution, as it was not submitted for matching.

The Committee submitted 25 checks for matching; thus, it sought $250 in matching funds for each

submitted check. See 26 U.S.C. § 9034(a). The total amount ofmatching funds approved was $6,083.25 (25 x

$250 x .9733). Attachment D at 3.

10 Like the Future Tech investigation, the Chung investigation involved contributions to the Committee, as

well as contributions to another political committee. See Attachment C at 6-12. Additionally, the Chung

investigation involved tax evasion and bank fraud. Id. at 1-5. This Notice concerns only those contributions to the

Committee that were identified by DOJ as part of the Chung investigation.
7

withdrawn from two ofhis personal bank accounts and delivered to him and an AlSI employee at

AISI's offices; he also directed an AlSI employee to deliver $1,000 in cash to each of20 conduit

contributors to reimburse them for their contributions. Id. Mr. Chung also directed an AISI

employee to deliver the 20 conduit checks to the Committee. I I Id.

Twenty checks submitted by the Committee for matching funds were associated with

Johnny Chung. Attachment F. The Committee received $4,865 in matching funds for these

'1J contributions (20 x $243.25).12 Id.

II. ANALYSIS

A. LAW

Candidates who are eligible to receive public funding under 26 U.S.C. § 9033 may

submit contributions that they receive from their contributors for matching of up to $250 for each

individual contributors' contribution. 26 U.S.C. § 9034(a). However, certain types of

contributions are not matchable. I I C.F.R. § 9034.3. Contributions from a corporation or

contributions made in the name of another cannot be matched with public funds. 11 C.F.R.

§§ 9034.3(d) and (e); see 2 U.S.C. § 441 band 44If. If a contribution was matched and it is later

determined to be non-matchable, the Commission may seek a repayment to the United States

Treasury for the non-matchable payment. 26 U.S.C. § 9038(b)(I) and I I C.F.R.

§ 9038.2(b)( I)(iii). A committee may be required to make an additional repayment to the United

II Additional details pertaining to the Chung contributions are contained in an Interim Report from the

Committee on Government Reform and Oversight Campaign Finance Investigation and Related Matters, Chapter

IV, Part C (Johnny Chung: His Unusual Access to the White House and His Political Donations).

<http://www.house.gov/reform/reports/fundraising/4c_chung.html>.

12 The Committee submitted 20 checks for matching; thus, it sought $250 in matching funds for each

submitted check. See 26 U.S.C. § 9034(a). The total amount of matching funds approved was $4,865 (20 x $250 x

.9730. Attachment F at I.
8

States Treasury when there exist facts not used as the basis for any previous detennination.

11 C.F.R. § 9038.2(f). Any additional repayment detennination will be made in accordance with

11 C.F.R. § 9038.2. Id.

A guilty plea in a criminal matter "is the equivalent ofadmitting all material facts alleged

in the charge." United States v. Kelsey, 15 Fed. 3'd 152, 153 (loth Cir. 1994). A knowing and

voluntary plea constitutes an admission of all material facts alleged in an indictment and a waiver

j~1

\Q' of all non-jurisdictional defects in the proceeding. United States v. McFarlane, 881 F. Supp.

562, 565-66 (M.D. Fla. 1995), affd, 140 F.3d 1042 (11 th Cir. 1998). Ifa guilty plea is "voluntary

(and entered with effective assistance of counsel), it is conclusive on all factual and legal issues

other than a contention that the very initiation ofthe proceedings violated the Constitution."

Young v. United States, 124 F.3d 795, 797 (7th Cir. 1997), cert. denied, 118 S.Ct. 2324 (1998).

B. DISCUSSION

1. The Future Tech Investigation

The infonnation underlying Future Tech's and Mr. Ortiz's guilty plea is sufficient to

conclude that the related contributions to the Committee were non-matchable. By signing the

plea agreements and factual resumes, Future Tech and Mr. Ortiz have agreed that all ofthe facts

surrounding the pleas are true. See Kelsey, 15 F.3d at l53. The plea agreements and factual

resumes demonstrate that the source ofthe funds used for the contributions to the Committee

were Future Tech monies and the contributions were made by the contributors at the direction of

Future Tech officials. Therefore, the contributions should not have been matched. See 11 C.F.R.

§ 9034.3(d) and (e).

On January 5, 1999, Mr. Ortiz pled guilty to violating 2 U.S.C. § 441ffor his

involvement in the contributions at issue in the Future Tech investigation. Attachment Bat 2-16.
•

9

The factual resume accompanying the plea agreement sets forth the basis for his guilty plea and

includes specific reference to the reimbursement scheme outlined in the DOJ indictment against

Mr. Jimenez. Attachment B at 17-28; see also, pp. 3-6, supra.

On December 17, 1998, Future Tech pled guilty to violating 26 U.S.C. § 7201 for filing

false Federal Income Tax forms stemming, in part, from the Committee conduit contribution

scheme. Attachment C at 4-23. The factual resume accompanying the plea agreement sets forth

the ba~is for the guilty plea and includes specific reference to the reimbursement scheme.

Attachment C at 34-37; see also, pp. 4-6, supra.

The guilty pleas entered into by Mr. Ortiz and Future Tech are "the equivalent of

admitting all material facts alleged in the [indictment]." United States v. Kelsey, 15 Fed. 3'd 152,

153 (lOth Cir. 1994) and United States v. McFarlane, 881 F. Supp. 562, aff'd, 140 F.3d 1042

(3'd Cir. 1998). The plea agreements were entered into voluntarily and there is no indication that

Mr. Ortiz and Future Tech received ineffective assistance of counsel; accordingly, "[the plea

agreements are] conclusive on all factual and legal issues." Young v. United States, 124 F.3d

795, 797 (7th Cir. 1997), cert. denied, 118 S.Ct. 2324 (1998).

The conduit contribution scheme described in the Ortiz and Future Tech plea

agreements and factual resumes clearly indicate that the contributions to the Committee

associated with the Future Tech investigation were in violation ofthe FECA. As a result,

the Committee should not have received matching funds for these contributions and it

should repay $6,083.25 to the United States Treasury.13 11 C.F.R. § 9034.3(e).

1l The factual resumes for Mr. Ortiz and Future Tech collectively refer to 26 contributions. See pp. 4-6,

supra. However, they also refer to a payroll reimbursement scheme involving 23 individuals. Id The

Commission's review ofthe Committee's matching fund submissions identifies 25 contributions that are associated

with Future Tech and Mark Vision. Attachment D. The Commission's repayment determination is based on the

number of contributions that were submitted for matching. See note 8, supra.
10

2. The Chung Investigation

The infonnation underlying Mr. Chung's guilty plea is also sufficient to conclude that the

related contributions to the Committee were non-matchable. By signing a plea agreement, Mr.

Chung agreed that all ofthe facts surrounding the plea are true. See Kelsey, IS F.3d at 153.

Although Mr. Chung's plea agreement was filed under seal and has not been publicly released,

his indictment demonstrates that the source ofthe funds used for the contributions to the

Committee were his own and the contributions were made by the contributors at the direction of

Mr. Chung. Therefore, the contributions should not have been matched. See 11 C.F.R.

§ 9034.3(d) and (e).

On March 16, 1998, Johnny Chung pled guilty to violating 2 U.S.C. §§ 441a, 44lf and

437g(a), 18 U.S.c. §§ 371 and 1344 as well as 26 U.S.C. § 7201. Chung Pleads Guilty (last

modified March 16, 1998) <http://www.cnn.com!ALLPOLITICS/ 1998/03/16/chung.pleads/

index.html>. Although Mr. Chung's plea agreement was filed under seal, his indictment sets

forth the basis for his guilty plea and includes specific reference to the conduit contribution

scheme. Attachment E at 6-9; see also, pp. 6-7, supra.

The guilty plea entered into by Mr. Chung is "the equivalent of admitting all

material facts alleged in the [indictment]." United States v. Kelsey, 15 Fed. 3'd 152, 153

(lO'h Cir. 1994) and United States v. McFarlane, 881 F. Supp. 562, affd, 140 F.3d 1042

(3rd Cir. 1998). The plea agreement was entered into voluntarily and there is no evidence

which indicates that Mr. Chung received ineffective assistance of counsel; accordingly,

"[the plea agreement is] conclusive on all factual and legal issues." Young v. United

States, 124 F.3d 795, 797 (7th Cir. 1997), cert. denied, 118 S.Ct. 2324 (1998).
II

The conduit contribution scheme described in the Chung indictment, as well as

the Interim Report from the Committee on Government Refonn and Oversight Campaign

Finance Investigation and Related Matters, clearly indicate that the contributions to the

Committee associated with the Chung investigation were in violation ofthe FECA. As a

result, the Committee should not have received matching funds for these contributions

and it should repay $4,865 to the United States Treasury. II C.F.R. § 9034.3(e).

W III. DISGORGEMENT

A. LAW

Disgorgement is an equitable remedy which serves "to prevent defendants from profiting

from their illegal conduct." SECv. Bilzerian, 814 F. Supp. 116,121 (D.D.C.1993),aff'd,SEC

v. Si/zerian, 29 F. 3d. 689 (D.C. Cir. 1994); see also, SEC v. Tome, 833 F. 2d 1086, 1096 (2nd

Cir. 1987). Disgorgement also prohibits unjust enrichment and deprives the wrongdoer ofillgotten gains. SEC v. First Financial Corp., 890 F.2d 1215, 1231 (D.C.Cir. 1989); SEC v.

Commonwealth Chemical Securities, Inc., 574 F. 2d. 90, 95 (2nd Cir. 1978). Disgorgement does

not constitute punishment. SEC v. Bilzerian, 29 F. 3d. 689, 696 (D.C. Cir. 1994).

Governmental agencies can order disgorgement as an appropriate remedy, even in the

absence of a specific statutory provision, if an agency's enabling statute pennits equitable

relief. I. SEC v. Texas GulfSulphur Co., 446 F. 2d 1301, 1307 (2d Cir. 1971), cert denied, 404

U.S. 1005 (I 971); see also, CFTC v. Hunt, 591 F.2d 121 I, 1222 (7th Cir. 1979). Disgorgement

14 Federal agencies whose enabling statutes do not specifically permit equitable relief can avail themselves of

the disgorgement remedy based on "the traditional equity powers ofa court." CFTC v. Hunt, 591 F.2d 1211, 1222

(7"' Cir. 1979); see also, SEC v. First Financial Corp., 890 F.2d 1215, 1230 (D.C. Cir. 1989).
12

ofill-gotten gains have been made payable to the United States Treasury. See u.s. v. Bonanno

Organized Crime Family, 683 F. Supp. 1411 (E.D.N.Y. 1988), afJ'd, 879 F.2d 20 (2d. Cir. 1989).

B. DISGORGEMENT DETERMINATION

The Commission has required political committees to disgorge excessive and prohibited

contributions to the United States Treasury in a variety ofcircumstances. 15 For example, the

Commission has required publicly-funded committees to disgorge monies to the United States

Treasury for excessive or prohibited contributions in the 1992 and 1996 election cycles. 16 See

Explanation and Justification for 11 C.F.R. § 9007.1,60 Fed Reg. 31863 (June 16, 1995)

(Disgorgement in the public financing context eliminates the need to monitor the refunds of

excessive or prohibited contributions that have not been timely refunded, permits one payment

to be made to United States Treasury, rather than refunding multiple contributions, and is a

practical solution when a sample review has revealed excessive or prohibited contributions).

The Commission has also required the disgorgement of excessive and prohibited

contributions in signed conciliation agreements with political committees. 17 Moreover, the

" In the mid-1970's, the President Ford Committee paid monies to the United States Treasury for apparent

excessive contributions. See Memorandum to Robert 1. Costa from Charles N. Steele entitled Response of the

Mondale for President Committee, Inc. to the Interim Addendum to the Final Audit Report, p. 2. (undated). In the

early 1980's, the Kennedy for President Committee disgorged to a charity an amount equal to the contributions that

the Commission had identified as being legally suspect. ld Finally, in 1987, the Mondale for President Committee,

Inc. disgorged an amount equal to outstanding stale-dated checks to a tax exempt charitable organization based on a

Commission determination. See Memorandum to Robert J. Costa from Lawrence M. Noble and Kim L. BrightColeman entitled Addendum to the Final Audit Report on the Mondale for President Committee, Inc. (LRA 203), p.

4, dated May 26, 1987.

'6 For the 1992 election cycle, the following committees made disgorgements to the United States Treasury:

Buchanan for President, Americans for Harkin, Inc., Tsongas for President Committee, Inc. (disgorgement required,

but never made), Bush-Quayle '92 Primary Committee, Inc. and Wilder for President Committee. For the 1996

election cycle, the Commission required Arlen Specter '96 to disgorge monies to the United States Trea~ury for

excessive or prohibited contributions.

11 See MURs 1704 (Mondale for President Committee, Inc., et al.), 2595 (Populist Party), 2992 (People for

Joseph DioGuardi), 3309 (Dole for President), 3360 (Kemp for President), 347\ (Gantt for Senate Campaign

Committee), 4194 (Mascara for Congress, et al.), 4427 (Elgin Builders, Inc., et al), and 4259 (Lautenberg
13

Commission has recommended disgorgement ofimproper contributions by non- presidential

committees that have been selected for audit pursuant to 2 U.S.c. § 438(b).18 Finally, the

Commission has recommended disgorgement as an appropriate remedy in the advisory opinion

process. 19

The information obtained by the Task Force investigation regarding contributions to the

Committee that were associated with Future Tech is sufficient to conclude that they were legally

suspect. See, supra, p. 3-6 and 8-10. By signing the plea agreements and factual resumes,

Future Tech and Mr. Ortiz have agreed that all ofthe facts surrounding the pleas are true. See

Kelsey, 15 F.3d at 153. The plea agreement and factual resumes demonstrate that the source of

funds used for the 25 contributions identified by the Audit Division were Future Tech monies,

and that the contributions were made by donors at the direction ofFuture Tech officials.

Accordingly, based on past Commission practice, the Committee is required to disgorge $25,000

to the United States Treasury, an amount equal to the 25 Future Tech related contributions. See

Bilzerian, 814 F. Supp. at 121 and First Financial Corp., 890 F.2d at 1231.

Committee, et al). In the 1980's, the Commission also obtained a disgorgement remedy for illegally solicited

contributions in a consent order involving the National Right to Work Committee. See Memorandum to Robert J.

Costa from Charles N. Steele entitled Response of the Mondale for President Committee, Inc. to the Interim

Addendum to the Final Audit Report, p. 2. (undated).

The Commission has also sought disgorgement in the following matters, even though disgorgement was

not included in signed conciliation agreements: MURs 2241 (MondaIe for President Committee, Inc.), 2892

(Waihee, et al.), 4235 (Murkowski for U.S. Senate Committee, et al.), 3460 (Sports Shinko (Pukalani) Co., Ltd., et

al.), and 4582 (Indian-American Leadership Investment Fund, et al.).

" See Report of the Audit Division on the Republican Campaign Committee of New Mexico, p. 18 (approved

July 30, 1996) and Report of the Audit Division on Kemp for Vice President, p. 8 (approved May 13, 1999).

" See Advisory Opinion (HAO") 1991-39 (Friends of Senator D'Amato); AO 1995-19 (Indian-American

Leadership Investment Fund) and AO 1996-5 (Jay Kim for Congress).
•

14

IV. CONCLUSION

For the foregoing reasons, the Commission has determined that President William

J. Clinton and the Clinton/Gore '96 Primary Committee, Inc. must repay $10,948.25

($6,083.25 for the Future Tech-related contributions + $4,865 for the Chung-related

contributions) to the United States Treasury for payments or portions ofpayments made

on the basis ofmatched contributions later determined to have been non-matchable.

II C.F.R. § 9038.2(b)(l)(iii). Accordingly, President William J. Clinton and the

Clinton/Gore '96 Primary Committee, Inc. are ordered repay $10,948.25 to the United

States Treasury. 11 C.F.R. §§ 9038.2(c)(I) and (d)(I).

The Commission has also determined that President William J. Clinton and the

Clinton/Gore '96 Primary Committee, Inc. must pay $25,000 to the United States

Treasury for 25 contributions that were associated with the Department ofJustice

Campaign Task Force Investigation of Future Tech International, Inc., et al.

Attachments

A. Indictment of Mark B. Jimenez filed on September 30, 1998 in the United States District

Court for the District ofColumbia

B. Information, Plea Agreement, and Factual Resume ofJuan M. Ortiz filed on

December 17, 1998 in the United States District Court for the District ofColumbia (with

DO) notations)

C. Information, Plea Agreement, and Factual Resume of Future Tech International, Inc. filed on

December 17, 1998 in the United States District Court for the District ofColumbia

D. Memorandum to the Office ofGeneral Counsel from the Audit Division dated

December 29, 1998

E. Indictment ofJohnny Chung filed on March 5,1998 in the United States District Court for

the Central District ofCalifornia

F. Memorandum to the Office of General Counsel from the Audit Division dated June 16, 1999.
FEDERAL ELECTION COMMISSION

WASHINGTON.O.C 20403

November 5, 1999

Nov 5 4 P:~ ''''l

I I II oJ"

MEMORANDUM

TO:

THROUGH

FROM:

BY:

The Commission

James A. Pehrkon

StaffDirector

Lawrence M. Noble

General Counsel

Kim Bright-Coleman

Associate General Cou,el

Rhonda J. Vosdingh

Assistant General Counsel

Delanie DeWitt Painter

Attorney

SUBJECT: Status ofRepayment Determinations - Clinton/Gore'96 Primary Committee,

Inc., Clinton/Gore '96 General Committee, Inc. and Clinton/Gore '96 General

Election Legal and Accounting Compliance Fund (LRA #485 and #508)

On June 3, 1999, the Commission approved the audit reports on the Clinton/Gore'96

Primary Committee, Inc. ("Primary Committee"), the Clinton/Gore '96 General Committee, Inc.

("General Committee") and the Clinton/Gore '96 General Election Legal and Accounting

Compliance Fund ("GELAC") (collectively, the "Committees") containing the Commission's

repayment determinations and payment determinations. l The audit reports recommended that

most ofthe repayments would not be necessary ifspecific amounts offunds were transferred

among the Committees. The Committees were notified ofthe determinations by letters dated

The repayments and payments arising from the Commission's audits of the Committees are distinct from

the Commission's repayment determination on July 15, 1999, which was based on the Primary Committee's

receipt of matching funds in excess of its entitlement for illegal contributions related to a corporate contribution

scheme involving Future Tech International and its corporate officers and a reimbursement scheme involving

Johnny Chung. See 26 U.S.C. § 9038(b)(l); 11 C.F.R. § 9038.2(b)(l)(iii).
Memorandum to the Commission. -

Status ofRepayment Determinations -

Clinton/Gore'96 Committees (LRA #485 and #508)

Page 2

June 10, 1999. On August 12, 1999, the Committees filed ajoint response and attached payment

and repayment checks for stale-dated checks and interest income, as well of documentation of

several transfers recommended in the audit reports, which obviated the remaining repayments2

Attachment I. Because the checks and documentation submitted resolve all ofthe outstanding

repayment and payment matters for the Committees, these repayment matters are now concluded.

The Committees' response states that the Committees are "providing this information in

order to demonstrate that a lesser repayment is required in each oftheir respective cases."

Attachment I at 1. On September 9, 1999, staff ofthis Office contacted the Committees' counsel

to clarify whether the Committees dispute the repayment determinations and seek an

administrative review pursuant to 11 C.P.R. §§ 9007.2(c)(2) and (3) and 9038.2(c)(2) and (3).

The Committees' counsel stated that it was her understanding that the checks and documentation

submitted by the Committees would resolve the repayment matters and there are no issues

remaining in dispute; therefore an administrative review would not be necessary.

The Commission determined that the Primary Committee must repay $114,450 to the

United States Treasury for non-qualified campaign expenses that were allocable to the general

election pursuant to II c.P.R. § 9034.4(e), including $7,260 for catering services, $20,133 for

equipment, $77,581 for salary and overhead and $9,476 for political consulting services. See

26 Us.c. § 9038(b)(2); 11 c.PR. § 9038.2(b)(2). However, the audit report stated that no

repayment would be required ifthe Primary Committee received reimbursements in the amounts

of: $22,984 from the General Committee for catering services; $63,736 from the General

Committee for equipment; $192,288 from the General Committee and $53,319 from the GELAC

for salary and overhead; and $30,000 from the General Committee for political consulting

services. The audit report also contained a determination that the Primary Committee must pay

$12,230 to the Treasury for unresolved stale-dated checks. See II C.P.R. § 90386.

In response, the Primary Committee provided documentation that it received $309,008 in

wire transfer reimbursements from the General Committee and $53,319 in wire transfer

reimbursements from the GELAC. Attachment 1 at 1, 5-11. Since the Primary Committee has

provided sufficient documentation to demonstrate that the wire transfers have been made, the

repayment determinations are obviated and no further action is required. With respect to the

stale-dated checks, the Primary Committee provided documentation that $1,050 in additional

stale-dated checks have cleared the bank. Attachment 1 at 1, 12-22. The Primary Committee

adjusted the amount ofstale-dated checks to $11,180 ($12,230 - $1,050) and submitted a check

in the amount of$11, 180 made payable to the United States Treasury. Attachment 1 at 3. The

Primary Committee has provided adequate documentation that the stale-dated checks totaling

$1,050 have cleared, and its payment ofthe remaining $11,180 to the United States Treasury

resolves the issue.

On September 7, 1999, the Audit Division circulated a memorandum with the repayment and payment

checks to the Commission.
Memorandum to the Commission. -

Status of Repayment Detenninations -

ClintoniGorc'96 Committees (LRA #485 and #508)

Page 3

The Commission determined that the General Committee must repay $16,412 to the

United States Treasury, including $12,427 for non-qualified campaign expenses related to travel

costs allocable to the primary election, and $3,985 for interest earned on investment of public

funds. See 26 U.S.C. § 9007(b)(4); 11 c.F.R. §§ 9007.2(b)(2); 9004.5. However, the audit

report noted that ifthe General Committee provides evidence that it has been reimbursed by the

Primary Committee for the travel expenses, the $12,427 repayment would not be necessary.

Moreover, the audit report stated that the amount repayable for interest income would be $3,985

less applicable federal, state and local taxes due.

In response, the General Committee provided documentation that it received $12,427 in

reimbursements from the Primary Committee by wire transfer. Attachment 2 at 2, 23-32.

Because the General Committee has provided adequate documentation to demonstrate that the

wire transfers have been made, the repayment determination is obviated and no further action is

required. Moreover, the General Committee calculated the amount ofinterest income net oftaxes

at $3,241, and attached a worksheet, documentation and a repayment check for this amount.

Attachment 1 at 2, 33-43. The General Committee's calculation ofthe amount ofinterest income

net oftaxes appears to be correct and is supported by adequate documentation. Therefore, the

repayment of $3,241 to the United States Treasury resolves this issue.

Attachment

Letter from Lyn Utrecht and Eric Kleinfeld dated August 12, 1999 (with attachments)
•

RYAN, PHILLIPS, UTRECHT & MACKINNONATTORNEYS AT LAW

• NONLAWYER PARTNER

I 133 CONNECTICUT AVENUE, N.W.

SUITE 300

WASHINGTON, D.C. 20036

(202) 293-1177

FACSIMILE (202) 293-341 I

August 12, 1999

Robert J. Costa

Assistant StaffDirector

Audit Division

Federal Election Commission

999 E Street, NW

Washington, DC 20463

Re: Clinton/Gore '96 Primary Committee

Clinton/Gore '96 General Committee

Dear Mr. Costa:

This is the response ofthe Clinton/Gore '96 Primary Committee and the

Clinton/Gore '96 General Committee (the "Committees") to the Final Audit Reports of

the Audit Division. Pursuant to II C.F.R. §9038.2(c )(2), the Committees are hereby

providing this information in order to demonstrate that a lesser repayment is required in

each oftheir respective cases.

Clinton/Gore '96 Primary Committee

With respect to the Clinton/Gore '96 Primary Committee, the Commission made a

determination that a repayment to the Secretary ofthe Treasury of $126,680 would be

required, unless the Primary Committee received certain reimbursements. Accordingly,

per the recommendation ofthe Audit Division, the Primary Committee has received

$309,008 in reimbursements from the General Committee. In addition, the Primary

Committee received $53,319 in reimbursements from the Clinton/Gore '96 General

Election Legal and Accounting Compliance Fund (the "GELAC"). These

reimbursements were made by wire transfer; and the appropriate documentation is

attached hereto as Exhibit 1.

As a result ofthe reimbursements described above, the only remaining repayment

issue in the Audit Report ofthe Primary Committee relates to stale-dated checks.

Attached as Exhibit 2 is documentation demonstrating that an additional $1050 in staledated checks have cleared the bank. Consequently, the amount ofthe repayment due for

stale-dated checks has been adjusted to $11,180 ($12,230 less $1050), and attached is a

repayment to the U.S. Treasury in that amount.

ATTACHMEl-i'l' I

Page --.1_-~"'--O-f--153
•

Clinton/Gore '96 General Committee

With respect to the Clinton/Gore '96 General Committee, the Commission made a

determination that a repayment to the Secretary ofthe Treasury of$16,412 would-be·

required, unless the General Committee received certain reimbursements. Accordingly,

per the recommendation ofthe Audit Division, the General Committee has received

$12,427 in reimbursements from the Primary Committee. These reimbursements were

made by wire transfer, and the appropriate documentation is attached hereto as Exhibit 3.

As a result ofthe reimbursements described above, the only remaining issue in the

Audit Report ofthe General Committee relates to interest income. Attached as Exhibit 4

is a worksheet and other documentation demonstrating that the interest income net of

taxes is $3,241. Attached is a repayment in this amount to the U.S. Treasury.

Conclusion

The Committees respectfully request that the Commission revise the repayment

determinations contained in the Audit Reports to reflect the materials and information

supplied herein.

Respectfully submitted,

r7r.~

Lyn Utrecht

itartr~~ Eric Kleinfeld

2
\,;LIN ION· GORE' 9 6 PRIMARY COMMITTEE. INC. 15395

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AMOUNT

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NATIONSBANK, N.A.

WASHINGTON. D.C.

15·120·540

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WASHINGTON D.C. 20036·8983

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ATTACHMEHT

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, - of~L
'CLINTON/GORE '96 GENERAL COMMITTEE, INC. 1622

CLINTON/GORE '96 GENERAL

COMMITTEE, INC.

P.O. BOX 19584

WASHINGTON. DC 20036

m

(It ..

NATIONSBANK, N.A.

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15·12()..540

. DATE"

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AMOUNT

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CON\iERSAT:::ON 0 ENTITY: NDC

ACCOuNT: 001933067562 PRD: BUS

·.lINTON GORE 96

~RIMARY CAMPAIGN COMMI~TEE INC

(C,D,S)

.' PAGE; 1

DESCRIPTION-SCREEN BALANCE

Deposit 76,621.41

ZBA TRANSFER 75,064.38

00001933067559

Check 73,678.20

Deposit 105,497.39

ZBA TRANSFE 104,134.03

00001933067559

ZBA TRANSFE 102,974.04

00001933067559

DATA: ITEM TYPE

1,159.99

1,386.18

31,819.19

1,363.36

TYPE: FABC SEARCH

DATE(S)

AMT(Sj

CK/SER#(S)

401,340.59 TRAN CODE

ITEM AMOUNT CHECK/SER# REFERENCE

601.10 84110564496

1,557.03 00008130608

2000000

15347 83110876341

83310863850

00008130618

20QOOOO

00008130621

2000000

1101*060999

2101*061499

3052*061899

LEDGER BALANCE:

TiC DATE

2101*060799

3052*060899

t,":, 3052*062199

~~~ 0. *** ADDITIONAL TRANSACTIONS ***

FILE DATE 080999

G, PF9=TH MENU PF10=PAGE FORWARD PF11=PAGE BACK PF8=CLEAR SEARCH DATA

0. PF4=MAIN MENU PF5~HELP PF6~lffiW CONVERSATION PF7=OLD CONVERSATION PF12=LINE 24

A·~"I~~'.£~C:!:{:;:21i"r f

,·2.",0 _~_. Df ~3'
AUG 10 1999 10:09 FR NATIONSBANK TO 92636011 P.03/15 &.JV\JoJ J.l,.l.oJL'I. U'J..., ...J J.L'-""'lrrJ,.'lW.,n...... J. .... vJ,." L.L.l..oJJ.V.I,\..l. .JJ.,.,.f"U."...... u ::J:J/ UUj loU :J • ...J I • .J..J

CONVERSATION 0 ENTITY: NDc

*** ADDITIONAL TRANSACTIONS ***

FILE DATE 080999

PF9=TH MENU PFIO=PAGE FORWARD PF11=PAGE BACK PF8=CLEAR SEARCH DATA

PF4=MAIN MENU PF5=HELP PF6=NEW CONVERSATION PF7=OLD CONVERSATION PF12=LINE 24

ACCOUNT: 001933067562 PRD: BUS

CLINTON GORE 96

PRIMARY CAMPAIGN COMMITTEE INC

ITEM TYPE (e,D,S'

. _, PAGE: 2

DESCRIPTION-SCREEN BALANCE

Check 102,733.65

Check 102,720.40

Check 101,634.00

Check 101,625.75

ZEA TRANSFE 100,262.39

00001933067559

Check 99,175.99

ZEA TRANSFER 98,016.00

00001933067559

1,086.40

1,159.99

TYPE: FABC SEARCH DATA:

DATE(S)

AMT(S)

CK/SER#(S)

401,340.59 TRAN CODE

ITEM AMOUNT CHECK/SER# REFERENCE

240.39 15348 83810621222

13.25 15350 83310535425

1,086.40 15351 84010663403

8.25 15349 83710173995

1,363.36 00008130702

2000000

15355 84010566615

00008130706

2000000

1101*070699

3052*070699

LEDGER BALANCE:

TiC DATE

1101*062399

1101*062399

1l0P'063099

1101 *070299

3052*070299
AUG 10 1999 10:09 FR NATrONSBRNK TO 92535011 P.04/1S W\..'\)..,J ';";.JoJl\ :..JV-.JU J.':'~1-..Jrl.."'... .J,.':"V~1 ':".I..J. ..JJ.V.l.\J, .,)L.onJ,\..... ,I.ol. .~.JI VI)/ .... V • ..I' • ..J":

CONVERSATION 0 ENTITY: NDe

1,159.99

PRD: BUS TYPE: FABC SEARCH DATA: ITEM TYPE (C,D,S)

DATE (5)

AMT(S)

CK/SER#(S)

401,340.59 TRAN CODE" PAGE: 3

ITEM AMOUNT CHECK/SER# REFERENCE DESCRIPTION-SCREEN BALANCE

217.00 15353 83210181836 Check 97,799.00

31,601.46 15357 83210680543 Check 66,197.54

5,842.J6 15356 83710573076 Check 60,355.18

39.75 15354 83710578871 Check 60,315.43

432.32 15352 83210518599 Check 59,883.11

1,363.36 00008130716 ZBA TRANSFER 58,519.75

2000000 00001933067559

00008130720 ZBA TRANSFER 57,359.76

2000000 00001933067559

3052*072099

ACCOUNT: 001933067562

LINTON GORE 96

2RIMARY CAMPAIGN COMMITTEE INC

LEDGER BALANCE:

TiC DATE

1101*070999

1101*071299

1101*071399

1l0P'071399

1101*071599

3052*071699

ru

W *** ADDITIONAL TRANSACTIONS *H

FILE DATE 080999 1"'-

~; PF9=TH MENU PFIO=PAGE FORWARD PFll=PAGE BACK PF8=CLEAR SEARCH DATA ~f PF4=MAIN MENU PF5=HELP PF6=NEW CONVERSATION PF7=OLD CONVERSATION PF12=LINE 24

ATTACHMENT~(~-,,~ __

Page 3'. of q;;_
AUG 10 1999 10:09 FR NATIONSBANK TO 92636011 P.05/15 ...,....~v .. ~.l.lv.L\ U\J~.J-..J ..l. .... \.t"U'fvr'l.......... J..V.l.~ ,U.L..,).V"L\.L v.L",J>.J,'''.lJ. ..I •.'/V\)/.J..U ./~ ..)f • ..J"'"

CONVERSATION 0 ENTITY: NDC

. - PAGE: 4

DESCRIPTION-SCREEN BALANCE

Check 56,273.36

Check 55,303.04

Check 55,086.04

Check 55,071.04

Check 55,057.79

Check 53,971.39

ZBA TRANSFER 51,440.59

00001933067559

ACCOUNT: 001933067562 PRD: BUS TYPE:

CLINTON GORE 96

PRIMARY CAMPAIGN COMMITTEE INC

LEDGER BALANCE:

TiC DATE

1101*072199

llOp·073099

1101*073099

1101*073099

1101*073099

OJ 1101*080499

U'j 3052*080499

fABC SEARCH DATA:

DATE(S)

AMT(S)

CK/SER#(S)

401,340.59 TRAN CODE

ITEM AMOUNT CHECK/SER# REFERENCE

1,086.40 15358 84110285029

970.32 15360 83410052882

217.00 15361 83210095363

15.00 15362 83210117371

13.25 15363 83210117370

1,086.40 15359 83210046486

2,530.80 00008130804

2000000

ITEM TYPE (e, D, S

tn

f~ *** ADDITIONAL TRANSACTIONS *** • FILE DATE 080999

PF9=TH MENU PFIO=PAGE FORWARD PFl1=PAGE BACK PF8=CLEAR SEARCH DATA

PF4=MAIN MENU PF5=HELP PF6=NEW CONVERSATION PF7=OLD CONVERSATION PF12=LINE 24 •
RUG 10 1999 113:139 FR NATIONSBANK

::Jvv,J ! u ..:;.!.\. uv...... .,; ..l,. 1.\..("U~~rl."" ol...l. ......... '

CONVERSAEON 0

TO 925351311 p.eS/iS ... "" ~'" I ......... J .... , • .." •

ENTITY: NVC

*** NO MORE TRANSACTIONS ***

. I

\

\

\

\,

I

\

\

I

(C,D,S)

12,427·90

309,008.00

FABC SEARCH DATA: ITEM TYPE

DATE{S)

AMT(S)

CK/SER#(S)

401,340.59 TRAN CODE PAGE: 5

ITEM AMOUNT CHECK/SER# REFERENCE DESCRIPTION-SCREEN BALANCE

53,319.00 00094500806 ACCOUNTTRA 104,759.59

9020021 0002902 NBKOS45

00094500806 FUNDS TRANSF 92,332.59

4460178 NMD 5018446 NBKBISP

00094500809 ACCOUNT TRA 401,340.59

9020002 0002902 NBKOS45

4005 080999

9011'080699

ACCOUNT: 001933067562 PRD: BUS TYPE:

-:LINTON GORE 96

2RlMARY CAMPAIGN coMMITTEE INC

LEDGER BALANCE:

TiC DATE

4005*080699

FILE DATE 080999

'1'·. PF9"'TH MENU l'FIO==PAGE FORWARD PFn=PAGE BACK PF8=CLEAR SEARCH DATA

Q PF4"'~4rN MEm; PF5=HELP PF6=NEW CONVERSATION PF7=OLD CONVERSATION PF12=LINE 24 •

ATTACHMENT

De '~'J l ()
88/11/1999 11:12 5813757777 CLINTON-GORE'96 . RUG 11 1999 : 1 : 17 FR Ef'l'j< OF RME''Il CR m 3.3757777

S013 THSR ** BOSS-~RANSACTION HISTORY SEARCH •• CONVERSATION G

PAGE 82

p.e2/ld2

99/08/11 11.07.59

ENTITY: NAR

ACCOUNT: 000089455841 PRO: BUS TYPE:

CLINTON/GORE '96 GENERAL ELECTION

LEGAL & ACCT COMPLIANCE FUND INC

IC, D,S)

12,000.00

250,000.00

299,490.83

FASC SEARCH DATA: ITEM TYPE

DATE(S) 080699

AMT(S)

CK/SEF."(SJ

94,624.62 T~~ COVE PAGE: 1

ITEM AMOUNT CHECK/SER* REFERENCE DESCRIPTION-SCREEN BALANCE

53,319.00 00094500806 ACCOUNT TRAN 94,624.62

9020020 0002902 NBKOS4S

00094500806 ACCOUNT TRA 147,943.62

9020022 0002902 NBKOS45

00094060806 INVTRN 8919 397,943.62

0001497 EFr DATE: 080699

00094500723 ACCOUNT TRAN 98,~52.79

9020009 0002902 NBKOS45

LEDGER 13ALA."lCE:

Tic DATE

9011 OB0699

9011 080699

4013 080699

9011*072399

I "

: .j *T* ADDITIONAL TR}~SACTIONS ***

FILl!: DATE 081099 Pf9=TR MENC PFI0~PAGE FORWARD PFll=PAGE BACK PFB=CLEAR SEARCH DATA

PF4=MA!N MENu PF5~H~LP pr6.NEW CONVERSATION pr7=OLD CONVERSATION PF12;LINE 24

~* TDTRL PRGE.0Q *~
Exhibit 2
.CLINTON/GORE ·96 PRIMARY COMMITTEE

REPAYMENT TO TREASURY FOR STALE-DATED CHECKS

•

Repayment required per final audit report

Adjust for checks clearing after audit performed:

Check #3094 Mrs. Harry Reasoner

Check #310 I Cantrell Properties, Inc.

Check #3157 Judilh Spaers

Adjusted Repayment required

Copies ofchecks are attached.

$12,230

1,000

25

25

$11,180

f.';'TACHM811T _.-:...1_--.,----

Ps.:re __I of~_
88/11/1999 11:12 . . 5813757777 CLINTON-GORE' 95 PAGE 84

NationsBank"

Nation.Bank, N.1I. Ra~,,",,1 G"utor, VA2-12!Hl4-01

I'.0. ·11.." 'Z702.~

lUchnn",d. VA 23201·702.~

--

-

-

H

A"""nnt Roor..."D"" W .........tioD

hcron,,!. Nmnhcr: 1lO1~:l.'l1l6 7r;GZ

TIL" II> Nambo,r: S2·1ll29232

W 05 0 C Enclo."r"" 3 .1'

StHt.llrUlr.nt ['ur;o,1 GOOnl·

01109199 L1Iroll&1' O!I!Sl99

St.:r.tement Period 01/09/99 through 01115/99

1'I.fumber of Deposita/Credits 0

'U1Ibor of Withdra.walsIDebits 4

CLINTON GORE -!16

PRIMARY CAMPAIGN COMMITTEE INC

PO BOX 2100

LITTLE ROCK AR. 72203

Numbnr of Enclosures

Number of Days in Cyclo

3

18

CastOI11"~ Service:

N'ationsBunk. N.A.

P.O. BOll: 27025

Richmond, Virginia 23261-7025

1-800-289·1299

StlItement Beginning Balance

Amount of DoposiWCl'lldi.ts

Amount of Withch·Q.wllls/Debits

Statement Ending 13 olo.nc~

Average Ledgor Bl11a.nce

Service Chug\!

81,355.45

0.00

1,520.84

80,3M.&:

88,286.111.

Cl.0l

Withdrawals and D..bite

,Jj09

01112

01114

01/15

81,738.00

80,334.64
22 .. 0:;''' .. 025 ,,3S;:tJ7' ...... _,' ._.~ __..:-0lI , _••~.--'" __• __..__ • _., . __ •••.__.,._..

.**********is·DOLCARS nND 00 CENTS

y .... Jallles Loftus ':. ..

325 CDn5titutiori·Av~, NE

Washington DC 20002

15a36

PAV

'to'llff

OF

CUNTON· GORE' 96 PRIMARY . COp,tJ~TTEE. INC.

'PO"1I0l( mas WASHr~GTl)N D.O. 200M-89l13 ,

"

'.'"

"'\ .",

\i ..

NAJlONB8ANI(. H.A.

WASHINGTON. D.O.

15-120-540

06/30/98

.), 2600893310L 2 O'H 7 12. 26

AMOlINT

.*********15.00

.... "",...

i

s

J

I

J

11'0' 5 Bl;II' ':051,00 L201,.: Lq :1:101; 7 51; ~M' ,1'000000 Lsao"'

,..._'.

,-':\ ._l

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\-

;~.,

\ i

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~\

012~OOOO lSTHIX

260059331 0520-0027-6

260059331 01-12-99

056Q(l7397 w,am

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.22' .,D7" n2S ",31C';88

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la£lQ09£(~

-*********75.m!ll

66··2J-IO 2EE69009~

9-L200-0~SO 2E869009Z ~IW~SI ~)oo,aJo

HAT/ONSBANK. N.....

WASHINGTON. D.C.

18·j2()..S'O

06/30/98

2600693::32 012·W9 01 t 7 t 2 26

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6l~

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i ~~.;:~ -:'1' t~ "j"

~"

J .1IlU~ 5 Lo ft I.IS .

3~5 Constitution Ave, NE

Washington .DC ~0002

it·ltH"**~***75 ·!lOL.LARS AND 00 CENfS

CLINTON-GORE '86 PRIMARY

COMMITTEE. INC.

PO BOX lSs.a

WASHINGTON D.C. aOOU.lMl83

PAY

10 Th'£

aIlEll

OF

o

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68/11/1999 11:12 5613757777 CLINTON-GORE' 95 PAGE 63

NationsBank"

NatiousBdUk. N.A.

MOI·8oo·17.09

P.O. Bo" 700251

St. LOI.';', 1<10 63179·02-'1

-

A""D\l1lt Refenmc.. Infol

Acttlunl N'uuber: 0000 894-.

Ta." ID Number: ~O-OOOOOOO

W04 0 C Ene!o.ur.. 1

St4\LQlneJlt PO'riod

17/18108 tlmJIIlh 12/24/08

3.~

.......

-

32,134.29

0.00

32.138.21·

0.00

"'_'''''"'''-I:;~,.~,n 32, .

1

27

Customer Service:

NationsBank. N.A.

P,O. Box 798

Wichita, KS 67201

1-800.551·7050

CLINTON/GORE 9~ PRIMARY COMMITTEE

PO BOX 2100

LITTLE ROCK AR 72203-2100

wnLer of Enclosures

umber of Daye in Cycle

Account Summary Information

tatertlllnt Period 12/18198 through 12/24/98 Statement Beginl1ing Balance

umber of Deposits/Credits 0 AmolUlt or Deposits/Credits

umber of WithdrawalslDebits 1 AmolUlt of Withdl'awalalDebits

Statement EndinG' BallUlce _

Average Ledger Balo.nce

Service Char&"

Witbdrnwals and Debits
P

H

Z

-;

I

LD

(]'l

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"-

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LD

LD

.....

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Ul

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if

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AMOUNT

-'51' --.: i'::;; n

,"000000 SOD," .

: . -'.:.1 ..... _.'-. '.,:.: N':':"

B6£09£0~ i~~~nA~ ~~ , SG11.C1l~\r91<l . \'l~~.'Lw\J\l:-L 961.21,1 , BOI7ZIZI I:. ...... .,A.! 2~ ,'&W{~rB& f

06/2G/98

OA1C

J

,

B

I $***'''*****25.1210 J

1 ~P/4~. m

B0A1TIlEN'I

N4nDNALBANKOFARkAHSAI

LITTle flOCK. ARKANSAS

81·7·920

-----_._-_...

I

>'. ,

'.. f

:~ :':~~ ::r.:r;·f::\.r~:l~, :h; :(~ ~,

::-:;,::::1' fll7' P'::::llS ill,S; as F

S

_S_ 'F

S ' ~."". iI,,_, ,,_, _ . «- L ...: OF _ _ ..

-;/,

3101

II·OOj~OLIr· ':0820000731: 00B~.... "'r.~q"'511.

• -------.-•.--..- ,..- ····1.:·

Cantt'l!ll Pt'O~llH'tie5, 1nl':.

320 N. Tenne!nee Ave.

1"1: C1vli\h TN 37::;:'H

HI'**·lt*-H***2S DDU.. /:>RS AND 0\l1 CENTS

_LINTON/GORE '96 PRfMARV COMMITTEE, INC.

P.O,80K2100

LrrrtE FlOCK, AR 72200

PAY

lQTHE

OflOER

OF

I.... i"":-

f :.1

'. ,

'.,.

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68/11/1999 11:12 5613757777 CLINTON-GORE' 95 PAGE 65

35

-

NationsBanke

t-1alion.Bank. N.I\.

MO\4lOO·\7-o9

P.O. Box 7DOZSI

Sl. LOllis. MO e3179·0251

",

Aee_ Rcl........" .. 1..101 " A.CCG1rnt Number- ססoo ~4. •

T"" II> Nmnber: 4O-OOOOOOO

W 04 0 C Endoo"r"" 1

Slalem_ Pllt'lod

UI/III/ll9 thnnJrl. 1Il/07/1l9

-

32.1.

32,105.85

0.00

32.113.21 . "I\()

Average Ledge!' Balance

Serrice Charge

Customer Semce:

NationsBank. N.A..

P.O. Box 798

Wichita, KS 672C1

1-800.551·7050

1

7

CLINTON/GORE 9' PRIMARY COMMITTEE

PO BOX 2100

LITTLE ROCK AR 72203-2100

umber of Enclosures

umber of Daye in Cycle

Account Summary Information

tement Period 01/01/99 through 01/01/99 Statement Beginnins- Balance

umber of Deposits/Cx-edits 0 Amount of Depo&i.te/Credita umber of Withdrawal.;Dobits 1 Amount of WithdrawaIalDebita

Statement Ending Balance -

Withdrawals lU1d nebita

l..TTACI{ME~;T _ I

P2 '.:0 ~1_q=-(j:-2 "-9"-1==
.::;-~

rll'_. O::;c

1

,

<

",07 N 025 ru 3Slt~1l2

n

i

... ··f~··" . .. ; ..' •. -.1:. '"J-:; '.:< .:~.:"~:'.J?~:J

U I I ()- 000 1 -!5

O(;(10950f5.:=J 0 L 10··0001 - 5

I II. .\"(,J~bt'!:.;~'1 0 1 .- O(:i- 9~:1

0a20~1::)13B ellG6m

5i ()i~i5{)5394

;;: ,:.:? :, ~)J~I

FNB~Ql10GfJ9l)( . .f<9

:.!t~f.t~~~':~~'· k}i.;..."','- n - J J.; .,

"tf4l~:r2~'1,*j

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:1

3157

1 ,

8 c

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AMOUNT

,

,1'000000 i! 500," . .

0612€'/ge

DATE

BOATMEN'S

NATIONAL BANK OF ARl\ANSAS

LlTTU: ROCK, ARKANSAS

8H-Ill!O

,

06009S0S;:l i 0 6600'1tJ:!'~f1i1·U-.t"i~&~~f

~003~5?r I:OB20000?~I: OOBq~~ffi~lqffi5n'

Judi til T•. Sclp!!rs

26 eh esh",,. Rd.

Brocllcllne MA 02145

*********ir'*2'5 DOLl.FlRS AND 00 CENTS

CllNTONlGORE '96 PRIMARY COMMmee, INC.

P.O. aOX2100

lrrTLE ROCK, All 72203

PAY

To rttE

ORDEII

OF

ttl l'> IJ' t-3: G~ t-~

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08/11/1999 13:43 5013757777 CLINTON-GORE' 96 PAGE 132

NalionsBank~

NationsBank, N.A.

MOj·aOIH7.og

P.O. Bo,", 790251

St. Louis. MO 63179·0251

-

Acr.OQut RrrE!'rent:" hllDr

hCCOIIJJt Number: 0000 8944

T"" CD Numb<!r: 4U·OIlUOOQO

W 1I4 0 C EneJostlNI:I 2 35

5tatomellt Period _'" II/IW~8 t"rough lI(1g/~8

- CLINTON/GORE 96 PRlf'/ARYCDHHITTEE

PO BOX 2100

LITTLE ROCK AR 72203-2100

Customer Service:

NationeBank. N.A.

P.O. Box 798

Wichita. KS 67201

1-800-551·7050

35.138.21

0 00

3.0Q..,,\i;.~;·

32.13

35,032.73

0.00

Page 1 I)( 1

AVC1"o.ge Ledger Balance

Service Charg"

2

19

Ac:co"IDt Swnmary Infonnation

tament Period 11/13/98 thro~gh 11/19/98 Statement Beginning Bala.nce

er of Deposits/Credits 0 Amount of Deposita/CI-edits

er of Withdrawals/Debits 2 Amount of Withclrawa!s/D<lbits

Statement Ending Balance

mber of Enclosures

nber of Days in Cycle

Withdrawals and Debits .

3094 I

..,.,ediAr: ebeck (or "hlteu) ia outrtandinc-. ill Included in -111'7 IidiD... oe b... be.... included iD a 1""''';Q,,"" .tateruont.

,

Daily'Ledger Balances

:.113 35,138.21 11118 33,138.21 11119 32,138.21

ATTACHMENT - \ L(L "Pn~e _.zJ- of_
~....,_'" ....... fI r

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CUNTON/GORE '96 PRIMARY COMMITIEE, INC.

P,O.00)(.2Ioo

ume ROCK, "R 72203

.~no_

3094

P

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AMOUNT

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tit***** 1, 001Z', 00

06/26/9f~

.oATil

8OATIaI£)l'S

HA~ONAL8ANKOFARKANSAS

UTTU: ROCK, ARKANSAS

81-7-112D

(.

.

w. i

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:'\': .

Ml'S. Harry M. R~a5Dne,'

Vinson & Elkins, LLP

2811'I0 1st City Twl' 1001 Fannin

~Ioultcn TX 7"7002-6760

'**'******1,000 DOLLARS AND 00 CENTS PAY

TOlliE

ClIIPEll

OF

"0 - p ::. \.lQ ."': (t, : ..:..:'

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Exhibit 3
RUG 10 1999 10:09 FR NATlONSBANK TO 92636011 P.07/1S

oUV'.) In'::''l\ ... oV.:J.:)-J, ..."'\l"'UV.)t'\1".,J.J.V.L\' n.L."'.t.V1'\.l .JC.t1.l\"-'H :7.7 1 VUt;.V .7. _.,.1; • ., tJ

coNVERsATI 01" 0 EN'I'I':'Y: :JDC

ITE!"! TYPE (e,[;,S)

PAGE: 1

DESCRIPTION-SCREEN BALANCE

Deposit 100,984.72

Check 100,969.56

WIRE TYPE:F 123,969.56

DATE:061499 TIME:1725

Check 123,169.56

Check 122,769.56

Check 122,265.62

Check 121,854.91

Check 121,640.41

800.00

400.00

503.94

410.71

214.50

FMC SEA.~CH DATA:

DATE(S)

AM! (5)

CK/SER#(S)

85,123.16 TRAN CODE

ITEM AMOUNT CHECK/SER# REFERENCE

614.00 84110564499

15.16 16147 83110876342

23,000.00 00090410614

0025036

16159 83210146987

16166 83810518990

16162 83110882789

16168 83210878930

16165 83110882790

ACCOUNT: 001933064772 PRO: BUS TYPE:

-LINTON GORE 96

~NERAL COMMITTEE OPERATING

LEDGER BALANCE:

TIC DATE

2101*060799

1101*060999

2011*061499

1101*061699 \~j 1101*061799 g~

ii'J 1101*062199 i::if:

i'"~ 1101*062199

1101*062199

rb~ *** ADDITIONAL TRANSACTIONS ***

U *** FOR EXPANDED DESCRIPTIONS, PRESS PF2 *** FILE DATE 080999

0, PF9=TH MENU PF10=PAGE FORWARD PFl1=PAGE BACK PFB=CLEAR SEARCH DATA

a PF4=MAIN MENU PFS=HELP PF6=NEW CONVERSATION PF7=OLD CONVERSATION PF12=LINE 24

rVi

i"iir

it~::\·"('t·

ATTACHMENT --\-----r~ ___

1'888 _LL of Cf3..
AUG 10 1999 10:09 FR NATIONSBANK TO 92636011 P.08/15 ~v.v.., 1'-'''. w .., - - "~""- --_.. _-- ~"" - -, --

CONVERSATION 0 ENT:TY: KDC

..** ADDITIONAL TRANSACTIONS ***

FILE DATE 080999

PF9=TH MENU PF10~PAGE FORWARD PFll=PAGE BACK PF8=CLEAR SEARCH DATA

PF4;MAIN MENU PF5=HELP PF6=NEW CONVERSATION PF7=OLD CONVERSATION PF12=LINE 24

PAGE: 2

DESCRIPTION-SCREEN BALANCE

Check 121,466.83

Check 121,360.93

Check 121,282.18

Check 113,534.04

Check 107,284.04

Check 106,684.04

Check 106,084.04

Check 105,574.68

Check 105,379.68

FABC SEARCH DATA: ITEM TYPE (e,D,S)

DATE(S)

AMT(S)

CK/SER!t(S)

85,lZ9.16 TRAN CODE

ITEM AMOUNT CHECK/SER# REFERENCE

173.58 16176 83210863118

105.90 16163 83110882788

78.75 16164 83110882791

7,748.14 16170 83110526869

6/250.00 16169 83110526868

600.00 16160 83210063769

600.00 16167 83810764881

509.36 16171 89030003192

195.00 16148 83210548201

ACCOUNT: 001933064772 PRD: BUS TYPE:

CLINTON GORE 96

GENERAL COMMITTEE OPERATING

LEDGER BALANCE:

TiC DATE

1101*062199

1101*062199

1101*062199

1101 "'062299

1101"062299

1101*062299

1101*062399

1101*062499

1101*062499

• oj"..
III FILE DATE 080999

r~\ PF9=TH MENU PFlO==PAGE FORWARD PF11=PAGE BACK PF8=CLEAR SEARCH DATA

,.' PF4==MAIN MENU PF5=HELP PF6=NEW CONVERSATION PF7==OLD CONVERSATION PFl2""LINE 24

j

j

j

j

j

j

j

j

j

j

j

j

j

j

j

j

j

j

j

j

j

j

j

j

ITEM TYPE (C,D,S)

TO 926361311 p. 139/15

ENTI:'Y: l\DC

PAGE: 3

DESCRIPTION-SCREEN BALANCE

Check 105,184.68

Check 105,078.55

Check 105,045.01

Check 100,808.80

Check 100,764.40

Check 100,751.83

Check 100,739.26

Check 100,476.56

Check 100,434.58

ATTACifMS!II' I

--- Page 2(;_ Of~~

***

E'ABC SEARCH DATA:

DATE(S)

AMT(S}

CK/SER#(Sl

85,129.16 TRAN CODE

ITEM AMOUNT CHECK/SER# REFERENCE

195.00 16149 83210548202

106.13 16161 83210548229

33.54 16154 83210520677

4,236.21 16156 83110557928

44.40 16151 83520739157

12.57 16152 83520739490

12.57 16153 83920688562

262.70 16155 83210875684

41.98 16150 84220599537

~UG 10 1999 113:113 FR NATIONSBANK BOO.}' THS?; .... ov.;),,-u.......·w,,~._v •. ------.

VERSATION 0

*** ADDITIONAL TRANSACTIONS

ACCOUNT: 001933064772 PRD: BUS TYPE:

CLINTON GORE 96

GENERAL COMMITTEE OPERATING

LEDGER BALANCE:

TIC DATE

1101 *062499

1101*062499

1101*062499

1101*062599

1101*062599

1101*062599

1101*062599

1101*062899 • 1101 *062899

,..;
.';;~~~•.l';'lt:':"··':;'::"",ll:,.l-,.,._..:_·_... •·..·_ •.-.'

RUG 10 1'399 10: 10 FR NATiONSBANK ..,' TO .9~3~11 . ,-,vV.J H1..:>:\ " ou::.::.- nV\.N:JAI..U'JN til~ ... l)!:'I.r Sl;AACH ".

CONVZRSATION 0

P.14/1S

~~/U~/~(j 9.57.51

ENTI':'Y: NDC

ITEM TYPE (C, D, SI

PAGE: 4

DESCRIPTION-SCREEN BALANCE

Check . 100,402.74

Check 100,349.74

Check 100,321.84

Check 100,308.69

WIRE TYPE:F 120,308.69

DATE:070299 TlME:1729

Check 120,290.79

Check 120,200.79

Check 119,983.79

17.90

90.00

217.00

FMC SEARCH DATA:

DATE(S)

AMT(S)

CK/SER#(S)

85,129.16 TRAN CODE

ITEM AMOUNT CHECK/SER# REFERENCE

31.84 16158 83110774487

53.00 16174 83410471856

27.90 16173 83410471855

13.15 16172 83410490497

20,000.00 00090410702

0027021

16186 84010566614

16177 83210527972

16182 83210181835

LEDGER BALANCE:

TIC DATE

1101*062899

1101*063099

1101*063099

1101*063099

2011*070299

110P070699

1101"070899

1101*070999

ACCOUNT: 0019]306~772 PRD: BUS TYPE:

CLINTON GORE 96

GENERAL COMMITTEE OPERATING _

**" ADDITIONAL TRANSACTIONS ***

*** FOR EXPANDED DESCRIPTIONS, PRESS PF2 *~* FILE DATE 080999

PF9=TH MENU PF10=PAGE FORWARD Pf11=PAGE BACK PF8~CLEAR SEARCH DATA

PF4=MAIN MENU PF5=HELP PF6=NEW CONVERSATION PF7=OLD CONVERSATION PF12=LINE 24
RUG 10 1999 10:10 FR NRTIONSBANK TO 92636011 P.15/15

1.JV'J.) 1n.::>l'\ •• oU::>::>-UV'IJ.~;;'i\l..llUl~ tU::>lUKI ::>tMLh ~~ ';j'j/ Utl/ 1v ';j.::;".:JL

COh~RSATION 0 ENTITY: ~JC

PAGE: 5

DESCRIPTION-SCREEN BALANCE

Deposit 151,585.25

Check 151,572.74

Check 151,560.23

Check 133,991.30

Check 133,972.25

Check 133,462.60

Check 133,421.65

check 133,399.23

CheCk 133,332.30

ITEM TYPE (C,D,S)

_.

PRD: BUS TYPE: FABC SEARCH DATA:

DATE(S)

AMT(S)

CK/SER#(S)

85/12~.16 TRAN CODE

ITEM AMOUNT CHECK/SER# REFERENCE

31,601.46 83210680542

12.51 16178 84120919072

12.51 16179 84120919073

17,568.93 16189 83710573077

19.05 16188 83710490811

509.65 16190 88130025625

40.95 16193 83510010687

22.42 16191 84110241756

66.93 16181 83210517892

ACCOUNT: 001933064772

~LINTON GORE 96

~NERAL COMMITTEE OPERATING

LEDGER BALANCE:

TIC DATE

2101*071299

1101*071299

1101*071299

1101*071399

1101 *071399

W 1101 *071499

W 1101*071499 ~Jji 1101*071499 ~'il

_ 1101 *071599

ru *** ADDITIONAL TRANSACTIONS *** i~ FILE DATE 080999

!~ PF9=TH MENU PFIO=PAGE FORWARD PF11=PAGE SACK PF8=CLEAR SEARCH DATA

r~ PF4=MAIN MENU PF5=HELP PF6=NEW CONVERSATION PF7=OLD CONVERSATION PF12=LINE 24 '0:1.;;;:",

f,

** TOTRL PRGE.1S **
· HUI.J 110 1':1':1':1 110: 110 FR NAT IONSBANK ~UVJ ln~~ --.

CONVERSATION 0

TO 92536011 P. 10/15

an :. y : ,WI.

ITEM TYPE: (C, J, S~

PAGE: 6

DESCRIPTION-SCREEN BALANCE

Check 133,292.69

Check 133,226.99

Check 133,170.50

Check 132,942.50

Check 132,891.74

Check 132,785.61

ACCOUNT TRA 144,785.61

0002902 NEKOS45.

800.00 Check 143,985.61

PRD: BUS TYPE: FABC SEARCH DATA:

DATE(S)

AMT (51

CK/SER#ISl

85,129.16 TRAN CODE

ITEM AMOUNT ~HECK/SER# REFERENCE

39.61 16180 83110169672

65.70 16194 84310106829

56.4~ 16187 83210114979

228.00 16192 83920777400

50.76 16195 83310832511

106.13 16185 83210402939

12,000.00 00094500723

9020010

16199 83210264113

ACCOUNT: 001933064772

CLINTON GORE 96

GENERAL COMMITTEE OPERATING

LEDGER BALANCE:

TiC DATE

1101*071599

1101*071699

11017071699

1101*072099

1101*072199

1"'\ 1101*072299 ~-.f

\I'd' 4005 .... 072399

t1J C *........ ADDITIONAL TRANSACTIONS

FILE DATE 080999

~. PF9=TH MENU PF10=PAGE FORWARD PFI1-PAGE BACK PF8-CLEAR SEARCH DATA

C PF4=MAIN MENU PF5=HELP PF6=NEW CONVERSATION PF7=OLD CONVERSATION PF12=LINE 24
RUG 10 1999 10:10 FR NATIONSBANK BOUj 'l'Ii;;K .... v~~ ••--.----

. CONVERSATION 0

TO 92535011 P.ll/1S

E~':'ITY: N:JC

PAGE: 7

DESCRIPTION-SCREEN BALANCE

Check 143,585.61

Check 142,985.61

Check 142,475.07

Check 141,971.13

Check 141,694.09

Check 141,615.64

Check 141,585.79

Check 141,561.34

Check 141,344.34

PRD: BUS TYPE: FABC SEARCH DATA: ITEM ':Y?E. {C:, IS;

DATE (5)

AMT(S}

CK/SER#(S)

85,129.16 TRAN CODE

ITEM AMOUNT CHECK/SER# REFERENCE

400.00 16196 83210759623

600.00 16184 83110045496

510.54 16204 83210608883

503.94 16200 83210608879

277.04 16210 83110366351

78.45 16203 83210608882

29.85 16201 83210608880

24.45 16202 83210608881

217.00 16198 83210095364

:OUNT: 001933064772

",.uINTON GORE 96

GENERAL COMMITTEE OPERATING

LEDGER BALANCE:

Tic DATE

1101*072799

1101*072899

1101*072999

nj 1101*072999 :F~

,=,' 1101*072999

;j), 1101" 072999

" 1101,1,072999

(j1 1101*072999

i1dJ 11 01-07 3099

"_ H_ ADDITIONAL TRANSACTIONS *** ,'

F< FILE DATE 080999 '=f'

• PF9=TH MENU PF10=PAGE FORWARD PF11=PAGE BACK PF8=CLEAR SEARCH DATA

PF4=MAIN MENU PF5=HELP PF6~NEW CONVERSATION PF7=OLD CONV8RSATION PF12=LlNE 24
• AUG 1111 1999 1111: 1111 FR NATIONSl3AI-I< BOO;, THSR .. - OV,hJ "''''..... u ••_. .•__ :- _ _ TO 92636011 P.12/15

.CONVERSATION a EN':.':T:': ~EJC

PAGE: 8

DESCRIPTION-SCREEN BALANCE

Check 139,951.84

Check 139,766.68

Check 139,582.22

Check 139,567.75

Check 139,545.71

Check 139,45B.30

Check 131,710.16

ACCOUNT TRA 381,710.16

0002902 NBKOS45

PRD: BUS TYPE: FABC SEARCH DATA: ITEM TYPE (e,j),S)

DATE(S}

AMT(S)

CK/SER#(S)

85,129.16 TRAN CODE

ITEM AMOUNT CHECK/SER# REFERENCE

1,392.50 16197 83510472788

185.16 16208 83210623990

184.46 16209 83210623991

14.47 16206 83210735480

22.04 16212 83210046487

87.41 16211 83310455848

7,748.14 16207 83210097554

250,000.00 00094500806

9020023

ACCOUNT: 001933064772

CLINTON GORE 96

GENERAL COMMITTEE OPERATING

LEDGER BALANCE:

Tic DATE

1101*080299

1101*080299

1101*080299

1'1

:i'~ 1101*080299

w 1101*080499 \W

r'"~ 1101*080499

• 1101*080599

u1 4005*080699

*** ADDITIONAL TRANSACTIONS *** FILE DATE 080999

Pf9=TH MENU PFIO~PAGE FORWARD PFll=PAGE BACK PF8=CLEAR SEARCH DATA

PF4=MAIN MENU PF5=HELP PF6=NEW CO~NtRSATION PF7=OLD CONVERSAT!ON PF12=LINE 24
~G 10 1999 10:10 FR NATJONSBANK ~uu~ ln~n - __ .

CONVERSATION 0

TO 92636011 P.13/15

i::NT::::-Y: !\L1L

,COUNT: 001933064772 PRD: BUS TYPE: FABC SEARCH DATA: ITEM TYPS (C/~/SI

CLINTON GORE 96 DATE(S)

GENERAL COMMITTEE OPERATING AMT(S)

CK/SER#(S)

LEDGER BALANCE: 85,129.16 TRAN CODE PAGE: 9

TiC DATE ITEM AMOUNT CHECK/SER# REFERENCE DESCRIPTION-SCREEN BALANCE

4005*080699 12,427.00 00094500806 FUNDS TRANS 394,137.16

4460179 FDES NMD 5018446 NBKBISP

9011 080999 309,008.09 00094500809 ACCOUNT TRAN 85,129.16

9020001 0002902 NBKOS45 ~",".A'

•

tu

\It:I'~.~',,,,

*** NO MORE TRANSACTIONS ***

FILE DATE 080999

PF9=TH MENU PFIO=PAGE FORWARD PFll~PAGE BACK PF8=CLEAR SEARCH DATA

PF4=MAIN MENU PF5=HELP PF6~NEW CONVERSATION PF7=OLD CONVERSATION PF12=LINE 24
Exhibit 4
CLINTON/GORE '96 GENERAL COMMITTEE

PAYMENT DUE TO TREASURY FOR INTEREST INCOME NET OF TAXES PAID OR PAYABLE

!"-"

A

,"";; .

ill

i'i.l...... ,~ ..".- ...

Income Year

1996

1997

1998

Interest Income

$ 28

663

$3,986

Federal Tax

$ 0

97

$ 590

State Tax

$ 0

4

$ 155

Net Due

$ 28

562

$ 3,241
JUN-29-99 TUE 09:39 AM . . .

~or", 1120-POL

Oep:u In'IOI'I\ olU'l1 T,e:l~\uy

Internal f1~C'"ue S",..,..CCI

BAIRD KURTZ DOBSON FAX NO, 5013721250

U.S. Income Tax Returr

for Certain Political Organizations

p, 02

OMS No. 1545-0129

1996

For calondor year 11196 Qrother ta. yoar beginning ,1996, and ending . 19

Note' If you arc a secllon 501 (c) organirallon or a eeparate ~regated fund described In section 527(1)(3) check hem ....••.........•...... r

Nnmo Dt org,nlzolion Employer Idllll\lI1C1l1on numtMlr

CLINTON/GORE '96 GENERAL ELECTION COMMITTEE 52-1988597

Number, .rr...l, and room o<su110 no. or a P.O. boJc, .o.p~" or inllruello<ls.) CMlclkllln tor U.I. CMlJle•• OIlIy

i. P.O. BOX 19100 ~~~=:'~~.~.~~~Y.o = C\l., or lawn, S1:r&a. and ZIP code WIhlI.I' aprincipU~.,comlNrrM. bwrll NOT .. 1h.00000_............ Clloct< • 0

;;: WASHINGTON. D. C. 20036 .""",;;,;;;;_1_1_...-... _.2.1 ......... Check if: (1) r 1 final return (2) 0 Change aladdress (3) n Amended ",tum

1 DMdencls(aUachschedule) " , 1-::-1+ ---,=<=

% Interest , , , 1-::.2+ -..:2:::.:::.8

3 Gross rents , " , , . , .. 1-73+------_

4 Gross royalties , , , , 1-4::-:r----- _

6 capilalgain net income (altach Schedule 0 (fonn 1120)) 1-:.5+ _

6 Net gain or 005S) from Form 4797, Part 1I,Iine 20 (atlacl1 F0lI1'I4797) , 1-6~ _

7 Other Income and noncocempl function elq>lJndilures (see inslrIdions) ..•••••. ,••..•.•.......••...... , t-~7+ --:::-:-

8 Total income. Add lines 1 through 7 , .. . .. . .. .. .. . . .. . • 28

8 Salaries and wages , " , 1-""+ _ '0 Repairs and maintenance ..• , .•...... , , '" 1-""'0+ _

" Renls, , , , • f--o=1,:..'+ _ 12 Ta~esandlicenses , j---J1"'Z+ _

13 Inlerest , , , '" , , \-""'3-1- _

14 DepreciatiM (attach Form 4562) , , \-',,:..'-1--------

15 Other deductions (attach schedulej , , j---J'i::.'+ _

l' Tolal deductions. Add lines 9 through 15 , , , f--'1'"-if-- _

17 T"""blelncome belore specific deduclion at S100 (see InstNcUons). Section 501 (c) organizations show:

a AmClUnt of not investment income. , , " .. _

b Aggregate amount txpended lor on uempt funcUcn (allacllllChedulc) •...... , " 170 •

18 Specific <loduclion Of $100 (not allowed for nlWi5lellor funds denned under section 527(g» , I--!,.=if-----~•.,

l' Taxable Income. Subtraclline 1BIrom line 17e (If line 191s zero or lese, do not file Form 112o-PO!..) ......• f-"""'+ ~u

ZO Income lax (see instrucllons) , r-=-Z0"--'ll- -;;.O

21 Tax credits (AU.ch all applicable forms.) (see instructions) 1-"2'''-11- 0

22 Total lax. Subtract line 21 from line 20 , , ~22~f__-----~O

23 Payment.: a TaxdepositodwilhForm7004 1-"233=1'- --1

....- b Credil 'rom regul.ted Investment companies (altach Form 2439) ...2:;;3;;;b-t- -t

c Credillor Federal tax on luel$ (attach Form 4136) l.-Z~3~c'-l.. -j

d Tetal. Add lines 23illhr.ugh 23c , t--:'23::.:d=t- --;:::

24 Tax due. Subtract line 23d from line 22. See Instruclions on page 3 for deposltory method of payment .....•. p24=:--,1- .;<-0

25 Overpayment. Subtract line 22 trom line 23d . . . . . .. .. . . 25 0

_ c

IQ 0

o

c=ca

.z; E

:a 0 "0 ...

~.E

Please

Sign

Here

1 AI any Ume during \he 1996 calondary.... c>d Iha arganiz.li"" have on inlll~1 in or a ';9n.lur. or olher IlUlharily rml a

rlll3ncial81:GOUllt (~lIdla: 8 bank =unl secutil~ =unl, or other llnar<:i;)1 :ICCOOnt) in a!ot.ign """nll)'1 (S•• i""lruclian•.) ....0 Y.~ 00 No

II "Yes; entarlhc nllme 01 the foreign eounlry~ . _

2 During the Inyear, did the organization receive. distribution from, or tho grantor 01, orIran,faror

la, a foreign 1nJst? , , , .. , ..0 Yes 00 No

II "Yes:see page " for other forms Ihe organization may have III fil•.

Enter the amount or laX_pIlnte~ received or Qccrued dUring the tax yerJI ,...... ,_s=-- N-.,;O_N,.;;Eo.

4 Dale organizalion formed .:n.....1..0", ''19 (P

Sa The bool<s are in care of Stt~NON Tf\NNER b Enternameofcandidale ..WILLIAM J. CLINTON

c The books are Jocated III .. 410 vJ. 3Ab LITll..t Rr;c( AAK.d TelephOneNo.~ 501-375-1290

Und.r p.nalUos 01 p...jll1y, IdOGb,. Jh&II h.....""mined Ihisreturn. including acccmponylng o<hcdlll..Ond oI.1"",cnl~, and 10 tho bool ormy llnowIodg.

.nd llCli.r. II I. INc. corroel, Ind compille. Docllrallon 01 ",opa"" (0''''' Ihln I_I) J:i ......don oIIln1ormalion of .....h prqwothi' any knowl.dge.

1","=,"",,_- Signalu,. 01 alf"",r ColD Till.

Paid Prop""",_ I 0-.1. lchcclc Pllpll1Of·' 50Cial ~c'

olgn>wr. .ell-e,.,ploycd 432- 8 e- 62C Preparer's t--;;,=~~~----r;;~~-~"",;;:;-;;...-c=-,==~c;------~.::.c~:':<:=~"'":fr-m~~'?'7~'="'" Use Only Firm·.nom.(o< BAIRD. KURTZ I> DOBSON I EIN ~4( -UlbU:lbU :~r~~,~'QlTIfJlayacl) -=p;;;'.:::O;;.=:B'::-=O~X;'::":;3;':6:-:6~7=-=-,':::;L';:I':::T:'::'r:'::L:':E';"""R::-O"'-C""""K:-::-AR~--~ Iz::':;IP';",~oda"":"'~~7-'::2:;'2':'0~3-:'-;";3::::::6~6:-;7:---

For PapelWork Reducbon Acl NotICe, see Indructlons on page 2. ISA

STF FCDo1, 1'1F
JUL-26-99 MON 03:55 PM BAIRD KURTZ DOBSON FAX NO. 5013721250 P. 02

FT· • ... r

FOR OFFICE USE ONLY

L

State of Arkansas

'996 CORPORATION INCOME TAX RETURN

AR1100CT

01/01 . '9 .!lP_ .nd "nding __'.....2"-,-1,,,,3,-,',- .,i ~.

-

·n po FEIN • Check if SinD" W.i"htlnQ Soalas F~or

52-1988597

It FEDERAL BUSlNt!lS CODE NAME Type of Colllor.tilln

8980 • CLINTON/GORE '96 GENERAL ELECTiON ~Ot.'MITTEE • 6 00 Domaltic

it DATE OF INconPOnATION ADDRESS

Ju..l.'f ''11:1 (c, 6 nForeign

- P.O. BOX 19100 • _ DATE BEGAN BUSINESS IN CITY STATE ZIP TelEPHONE NUMBER

AR~~'; \q"j ""

- WASHINGTON • DC • '0036

FlUNG STATUS (Check Only One BolC) • 3U MULTI-STATE CORPORATION· DIRECT ACCOUNTING

• ~.~ CORPORATION OPERATING ONLYIN ARKANSAS (Prio. wrillon approval reqund for Dnct Accounling)

• 2 MULTI-STATE CORPORATION ·APPORTIONMENT - 40 CONSOUDATED RETURN. OF CORP. ENTITIES IN An

NOn· AlluA ~.IOlu1.'IttI-.N .tt ..",aJ R.ruIn uri &1tM """-rN RftiWft.IA• ., ID ""_fUItI n.ffIfind-. .." _1.11-' 21¥4 3. c:..o--•...,. TN 80GJIWf I ARKANSAS

7. Gross 5:)18$; (Less rerurns and .Uowant:e~J . · 0

· ·. · · · 7. 00

B. leiS Coat 01 Goods Sold: · · . ·. · · · · e. 00

B. Gro.. Profit: (Uns 71su Lins 8) . · ·. · · 9. 00

10. Dividendi: (S"e Jn~tI'ucrionlpDtJO 6) · . ·····. · ." 10. 00 ...

:;; I 1. Inlo.o.1: (U.S. Obli,p.ion$· S..,ln$rrucrions psge (I) . I 1. 00 · · ·. 0 12. Olhor Interest:. (Se~ In~rrlJdiDn~ p.ge 6) · 12. 28. 00 u

13. Gran Rent': .. · · . 13. DO

'4. Gran Royalties;: · · . · ·· · 14. 00

15. GOI;nli or Lossos: · ·. . · · ·· IS. 00

lG. Othe, Income: la. 00

17. TOTAl. INCOME: IAdd Line$ 9. /6J •

· ·. '7. 28. 00

18. Compenution of Cffie.re: · ·.· · · 18. 00

19. Other Sal,,.,i.,s and Wages: 19. 00

20. RopOJirs: · · . · · 20. 00

21. a.d Dobts: . · ·. · ··· 21. 00

22. Rent on BUlinBu Property: •

· · . ·. · 22. 00

23. T..xe,: . · · .. · · ·. 23. 00

'" 24. Ime'8&1': 24. 00 i!: . ·. · ·· · 0 25. Contributions: · . ·. · 25. 00

G 28. Ocproci::ltion: .. · ·· 26, 00

;)

0 27. Doplolion: 27, 00 · · . ·. w · ·· · · Q 2B. Advertising: . 28. 00 · ... 29. Penlion Profit ShJring: •

· · .. · ·

29. on

30. Employoe Benefit Programs: · ·. ··· · 30. 00

31. O\hor Doduction&: 31. 00

32. TOTAL DEDUCTIONS: (Add IJnl:$ 18.31). · . . ··· .· ···· · 32.· 00

33. T:ul:;)blelnco".,. a.rON N., Op.rating Lo...a: (Lin. 171"u U,.. 32) • I I • .. • •

· ·. · 33. ~~-' Pst

a4 No' 0 ••,.,;". ' ....r fM;u.rforNo'.·..".bleln"""'.-SH>fn$lfUCnOn$ n.... 7Cl •

· 0

··· 3.d,- 00

36. N., T...bls Income: (Urnt 33 Mu Lin. 34 Of Schedul. A C4 ~ge 2) •

· · · ·· · 3511 28. 00

38. T.x from Toblo: (IMtflICtion Book/c/ p./JI18 75 and '8)

· · ·. 3611 NONE 00

37. Busino" & fncantiva C,.odit~ (AtttH:h III origin.' ccrtmcl1tcs)

· ·· · · · 37.- 00

:2 3B. Tox L;"bmty: (Lin~ 36 len U"., 37) · . 36.- NONE on 0 39. EstimOltod T.3x P~id: (Including e5ritn61c r:mryIoIWDrd from pn'or yc.rJ . 00

· · 39.-

40. Paymont With Exronlion Roquo..: (1IolJCJ>et 5. ARI10OfSC7) ·. · · · 40.· 00

;)

c. 41. Overp.ymonC (Line 39 plus Line 40 les. Line 38. en'Of' h~lO) 41~ 00

:a 42. Amount Appli_d 10 1997 Ect'mlllOd Tox: 420 I 100 .. .. '.

0 . " .' . " u 43. AmounT Applied To United 5,,,.. Olvrp;c >::. :... ,. .. .' : ,~' .... "

100J

, .. , "- ;f<· "

'.:::,: :>- .; . Comminee Program: ••••• 43. • <

44. Amount To 80 R.fundod: (Une 41 ",..line 42 IVId 43) R~flJND 44.• Inn

45. T~x Duo (Li". 38 ku~ lJnt1~ 39 lind 40; .••••••• 4 •••••••••••••••••••••••• 45.• NONE100 1-.46. Ponol1y Fo. Und~rp.ymonl.~E'limo,od T.x: (Atloth AR2220) LiS! oxcoplion choekod in Part 3. • 0 46.• 'on

1n~~crp,U1tl&o:1lWf 45 "Iu, W- 41l'J '" •••••••••••••••••••••••• AMOUNT DUE In NONE 00

.. -", ., \ 7

"
1)_II."m"nl of Ihe ft",ur',

Int.rn,,1 1I....nll. ';.",IC.

bhlrtu ~UrtIL UUb~UN rhX NU, bUljlilcbU u.-. 1I1\,;UIIICJ • CiiI"" • , ..... , .......

10....en,din Political Organiz8.__.JS

r.an 112D-POL 1\.,.111

'~11lI ..,,.,,, 1'J!J1 ," '11'~":.':""':":'~I:••::''''::''''~Q!.:,::.n":''::":;Q -:-_-:--:--_.__:..'.:.19=:9:::7::.:::::.nd=-..:.;;;n~d.:.in::g--: .:.~._,

For P',porwork Roductlon Act NotlC:•• Qua In:ltructton:1 on p4CJO 4.

Not.: If rn II JIlt ~f1'''l)" !1~QM""'lon u, II ".pAf." "'Qr.""lad I~nd dllterlb,d 1ft uc1tDn 5271IX3L chode ill" ·. .. .-, N..,'" f,' oro:ltuLilhon ItIlIpI_ iIl.m,'lc."on numc.,

..•

I: CI.IIITON r~r.,p.E ' ~J~ 'jElTE?AL t;OMMI'rTEE, lHe. 52-1988597

• "Numbet. :,lfUl. :",d Il)Om 01 ~II. no. In • P.O. boX, I" plgi 4 of ~1,ucuon'\,) ... u.s. c....••• o"'y .. • IN ..»...--, CMl~ CDft'nuU". IrwJ It It lIM LJ 'C ".0. BOlo 1'H 1)1) ONLY ,...icol CO"-". _ Iml •••••••

; CHV Of \D"Nn. -:.Ial., .nd liP cedo WUNJ • a pMClINI e.aMPHII" calftM'U", bed e NOT

i - 1M 0fiItrw' poiticM Cllfl'll'ftll". dMIc¥ "....1tCS :Urach a

WAS1HNGTCU. D.C. 21)1)36 I CoOPt ai ~".tiD" -is•• Iftd'uttio"" an D~. 21 ... n

Cheer 4: 111 Fiul '''''''n f2) I Chongo 01 odd,... 13) : Atnefldod _n

1 Oivitknds (Oll.ch ,chodulol 1 · · · ·· · ·· · · % Im.,.st

· · · · % 663

· . · · · · · ···.· ··· · • 3 Gloss lents . · · · · · · · · 3 · · · ·. E · ·· · · · · · · 4 Gloss rD'{:'ltnlls 4

0 ·······.· ··. u · · · · · ·· · · · 5 CJ:pit.1 oatn net income (anKh Sdlldule o IFot," t 12011 5 .: ·· ······ ·. ·· ·· 6 Nil Olin 0' /lDu) I,om Form 4"7. POI1 1I.lino 18 (.\llch F.,m 47971 · · 6

· ·· · ·· , · · 7 OIh.. inctlim. 'tnd noncsempl 1_ D.lplru:lnur'C' ISlII ,"S11UC\Jon~1

· · · · · ···········. 7

8 TotBl incomo. Add lines I through 7 ·· · · ·· · · · ·. ·.·.· ·.··· 8 663

9 ~II,io~ Ind w:agrs .. · · 9

· ··· , · ,

'0 Repairs iand milln'~n.nce ·· ·· ··········· · · · · ·· ·· · · · ······ ·· · 10

" Aents .. . · · · · · · · · · · 11

12 T!Il:cs 3na ticcftses · · · ·· · · · · ,

·· · · ·· ········ · ·· · 1% .. · <: 13 1n1.C,,",t 13 .. .. · · ·· ·.·· , · · · ·· ·· 0 · · ·· .£ '4 O~prlu:ialiDn t.n.ch Form ~562)

· · ·· · · · , ·· ··· ·· 14

:l 15 Other deduclions (."och ""hedu", ... • ~T1l-'I,<;II:\F~.-r. .~~. 15 265

0

.. 16 To...' d.-dLletion:.. Add lines 9 through 15 · · ···· · · 16 285 ·. . . . .. .. . ., .... .. ...... t .. · ··· · · 17 TUlb11! Income boafcrc Spoc;frlC: d.duetion 01 S100 (sec irtstruC\lon$). Seelien 5011c) oroO\niuricrns "'- a Amounl 01 nat Investment lncome ·

.- · . ...... ·.. ·.. · · . · b lIgarog"• .lIYlDunl expended for an eltempt fvnt1lon tOl'l'bch schedul.) 17c 378 · . · . '8 Specific deductiDn ot S100 tnol .110_ for OIW'Sielior lunds. derinod under 3ection 5271g11 ....... 18 100

19 T~.bl. irtcem•.o SubtfACl - ltne. 1a hom lin. 17c ~I fino 19 is zero or ":c, do not 1i1e Form 11200P0L1 ·· ·· · 19 2'" . 20 'rw:omo t•• /:;ee ;1'IIIructiDns) · . · .·..... · · · ·· ·· ··· · 20 · · · - 21 TD:lt c:redit4 (Ana ~h .111 applicable fClfml.1 (Soft: iI"lSlIlJCllon:) · · 21 · · · ·· · · · 22 Tot.11 tax. Swbuar:t line 21 from lina 20 .... ·.. · · · · ·· 22 97

" 23 Payment::.: a T~.. depo:l;led with FOfm 7004 23. 100 ...." ·. · · · b Credit rQf lu p:»id on undis.tributed capi~1 gaj~ t:mach Form 24391 %3b

c C,edit for Fedefill Ullil on rucb (an.aeh Farm 4136, 2Jc: · . · d T•••1. Add nno. 23. ""oUOI> 23c · .23<1 100 · . · .. ·.· .. ·. · .··.. ·. 24 TIX due. SUb'H1C1 line 23d hom Ii". 22.. See in&UUCUOM on P.:lge 1 10 r depository m.,hod 01 paymen' · ·· 24

25 Qvorpsym.nt. SublrJC'l lina 22 ham line 23d ·.. ·... · ...... · · . • •• I · .. · · 2S 3

1 ~, :.ftv tim. dun~ lM r997 Rkf'4"r V-M. oiJ rM Dr9"ftlUfiQn h..... lit') in'orl'l in or ,igl'l'«UfO or ether ,au1tloril'y (Wet ,.

lin.."c~1 Account IlI:uch .H • ~nk ICCDUftl. 'Ku,ilie1. aCCOunt. or othllr litlanoa1 ,ccount) in a lonliyl\ COUIItry? (Sn insttuction,.) .. OVos WNo

II 'V...' enter tho nAme or d\I loreign country .- <: .. ...... .... ...................... , ....

a .g 2 Du,ing 'hI!! \Ill 'VGlr, did the crganiDltlon recGive " dflll1bul'Oh "om. or was IE th. grantOf ot or Ir.nsloror

C

0 10. ;a lo,,'gn. 1_1 OVos WNo '" ....... · ·. • ..... I I · . ·. ·.· .. • • t • .. ...... , .. ·.. . ... ."

:~ E If '"'Vn: Ie. page 4 '0' D\Mr I.nM lM o,ganiz.lIMl" m~ kavl 10 lilt• 0 ...

0<{ :5 3 Ent., lhlt .,mounl of .......mpt ime"'" ","'ived or Ktrued during the MJI ve~r t ........ I I .. I t · . '-1 S NONE L

4 DiCe' org"nilOlbolt 'ormood ~/22/96

5" Tho bcok. ~. in c::ar. Df .sHANNON"TNmER'" .... b Enle r nam. 01 Clndid..,. ~~J:.g.I.J.'l:l... J..•. CLINTON

c The books ar. located It ~4lii.~: '~ii"i> "i"'I'';;;'? QOr~ Af( 7Zl.CI d T.t.pIIo... w•. .-501-375-1290

Unct.r 1'.11'01111.' 01 pot,.,,.,. ) ~Laf. th~ I h.........mll'lfld U'lil Ill\lm. ItICI\ldll'\g aeeon'p.:lInVlnQ :chodu", oft\J 1U,torMfllt. "ftd \II nIl b." 01 ":tV knowliDdO.

P10"SIl ~md buh.,l. It l~ tru•• c:elnlct" ,lftd COIllp!lll. Oac:UrJlion of pC'D",.r lOI~.r tl\ol1l\ t~J.P ..ver) II bu.d on wMOrmal:.etn.ttI ""uch P'~'fl1 ltn Iny Ill'low\cldOI.

Sign

S,TJI~~"lht.r I Hero O"to Tit"

P"id "(ttf),llll"'~

_______.__..1 0.'1.

ICho,k d ..II· II Prop.....', ,0CI.1 ,"c""ly ".1.

..nployod .- rli 432-89-620·1 _ Prop.for':::r '1I1911.t11l10 .- "1;;m'~ nomn (or UI\!RO. Kua'r7..' {)O!3:'iON I FIN ·1-\-0\60260 U~n Onlv VI1UI\ II :,.1lI1l l1Inltll1V~un ..- .1111( .'lftlrll:\~ f'l C. p;,.Jx 3,-~, ./ -L\ n \£ a,(){.K A~ ...,2).0," I !.IP CQtl~ 1:~2\)3-.lo6·1

.. - r,:,\

lW',\·'" ' .......1
jUN-29-99 rUE 09:40 AN BAIRD KURTZ DOBSON , ,

CLINTON/GORE '96 GENERAL lMMtTTEE. INC,

FAX NO. 5013721250 P. 04

b2 - 'J ~:H:I~b~ ,

~IlM lito.. 1'Oi-) L..tNc 15 t:>~'J""AI /...

:::==--==--=.=:==:-__-=.=1::11==::::- -- -_==--.==rc:----==

Line IS - OthQr deduotions

ACCOUNTING FEES

Total

---~~===----=======~~~==~==

285,

285.

---=====a::--===

Statement

."
JUL-26-99 HON 03:56 PH BAIRD KURTZ DOBSON FAX NO. 5013721250 P. 03

FOR OFFICE USE ONLY

L

State of Arkansas

'997 CORPORATION INCOME TAX RETURN

AR1100CT

a1/a1 .15 97 .n<I.ndl.;_......:''-=2...1''''3::...,:.1_. t~ 97 • ·§Chock 1/ Filial Arl<.1...... Ro"""

• Cttnclc. I' I-Illng U FiNincial tna'rinrnon

• P~IN • Chock if Singkl WD~h!ino Sale. F;ctor n I

52-19BB597 • f-:::~-::-::=~=:--~~----------------------,-=----:--:----:-L_..l-I • FEDERAl. BUSINESS cepe NAME Type "f C",po,otion

8980 • CLINTON/GORE '96 GENERAL COMMITTEE INC. • 5 CKJOom.,.tic

• OATI! Pf INCORPORATION ADDRESS

b;i0;;8r.:/:.:;2;:;;2:;;.i;;/m:9i::6=-;;;;--+..;:n:;;P~. O=....:..--=B~O:.:.X:.....1.:...;9;.'.:.;O:.0:.... =n- -=-..-- -I.--..<.i.8dn~i+.Fi::0"'~.i::i:n.:;-_ • DATE BtGAN BUSINeSs IN CITY STATE ZIP . TELEPHONE NUMBER '

ARK6"§t22/96 • WASH JNGTDN • DC .20036

FlUNG STATUS (Ch.ck Only DnD So><) .3U MUL1'J.STATE CORPORATION· DIRECT ACCOUNTING

• , CORPORATION OPERATING ONLY IN ARKANSAS (Prior wrll10ln npprowl required far Di",ct Accounting)

• 2 MULTI·sTATE CORPORATION - JlPPORTIONMENl' .40 CONSOLIDATED RETUnN • OF CORP. ENTITIES IN AR J.,:--:.~"":'::'=:=:':::;':''::::;'::'''::;;::'=:'''':''::'':''':::'':'~=:'~~'':::::::''::::=':':''::::;';';:~::''''':::'''':::::'::':'':::':':':';':':':;':':'::':':''r====f=.~:':':-;'==- I

NOTE: Attach camDiotod CODY of Foderol Aeturn bnd .sian AtkDnsD,'J R-,:urn. fSot frutnlf:tions. JrMon.nr Rtlrnin~1'S. 3. "f'fm 2 .nd 31 ARKANSAS

00

00

00

00

00

00

00

663

7. Gro~ Sala~: (LcU/'CtClrTJ$ Itnd .'Jow."ce~). .".... •• .. .. .. .. .. 7.

8. Less CO$! of Goods Sold: • .. .. .. • .. • • .... """ ,.. .. .. 8,

9. Gress Profit: (line 7 less LinD B). • I • .. .. .. .... ....,.. •• 9.

'0. Dividends: (Se.'n$tnJction~. pil$70 6). • • • .." , • .. .. .. • "" 10.

1 1. Intc"c~t IU.S. ObligArjol'l~" s•• Jn~uUl:rion.r. p;ItJ. 6). ... .,. .. .... "" .... .. ,1.

'2. Olh.r Inlor••t: (Sec InslfllClItmS .p.ge 6t 12.

13. Gro:\s Rent.:.... ••••• I •• I • ... .. .. .. • •••• I .... 13.

,"'. Grc33 ROYQlliCS: ...... .. I • .. 1". 1--------" 1lI''';''-~~'''''Q2

, 5. Gains or Lo$so~; ••••• .. .. .. ...... • .. •• 15.

16. Other Cneome: 10. 00

17. TOTAl. INCOME: IAddLinos9· 761.. • • •• •• • 17.. 663.00

Q:

lB. Compensation of Offieor~: .... ......, • ...... •••• 18. 00

19. Ollter S~I.ri..s and W'e." 19. f-----------llq

20. Rapair.: •• .., _.. •••• •••• 20. t-__.. pD~O

21. Bad D.bt.: • •• • " • • •• 21. 00

22. Renl on Dua;no.s:s. Proporty: • .. .. .. .. .. .. .. • f" "" ... 22. f-----------. p~

23. T8X~~... •••• I • • • ... .. .. • • • .. 23. f-----..,.------f9-C!

U) 24. IntCfo..~,t; .. .. .. • I • I .., .... I 24. 00

25. Contribution:s:.......... • • • .. .. .. .. .. • .. .. 25. 00 t 26. Doprcci:nion:. • • .. I • I • 26. 00

E 27. Deplo\ion:.. "" • • ••• I • .." f .... 27, 00

28. AdVflni!.ing~. ...... .. .. .. .... ........ • .. • ... .. 28. 100

29. Olh.rDoduclions: Stmt 1 29. _ .._. ~2".:8~S=-'.¥ln~'0

30. TOTAL DEDUCnONS: (Add Un"" 18· 29t. •••••• • • • • • • • • •••• 30.• ..:::2;.:B=,S~.l""'00

31. T..abloln.omoBeforeNetOp.....~ngLo....:(Un.,71••• Un.jOJ • • • • 31. 378.Il'ltl

32. N.t Ohar••in" I h,.~ fA.II,LOt fa"W.".ro>mblo In""",,, . S•• '""r~~; ;.:..'7C~ . . . . 37.. 00

33. NolT8J<:lbl.ln.ome: (~31J.u Un. 32 evSch.doJ.A C4 p.g<>2t. • • • •• ." •• 33.. 378. 00

34. Tu from T.ble: Ill>ItnIl:tiorlS""kIlrlpnga 15 end /(1).. • • • • • •••••• ••• •• 34.. 4. 00

35. BusinQ::::i; & I"ce",ive Crecltts: (Arr.d1 .11 Qrigin~1 ~I'tificatu). ••• ", .. I '" .... 35.. on

311. Tax Uability; (Una 34103$ Uno 35). • • •• • •••••••••••• ••• ••••• • • 36.. 4 . 00

37. Eatim""l':d Tft,)( Paid: (Including e.ttinl.r. ~rrylcrw.rd/rom prior)"(ttl,). ,........ ....... .." # • •• 37.. :00

5 38. Poymant Wi tit blonsion Raque.r. (VOur:lJOf 5. AR 1700ESCTJ. •••• •••••• 38.. 00

... 39. Ovarp;rymenr. (UnG j 1 pfus Lin. 38 feR Li"" 36. ontCf ""'-t • • • . . . 39.• e-- .. . . 00 B40. ArncunlApplied to '998 EatimatadTi1X: •• • I I • ,. 40.-1 00 ,j];.;~~..::...::I.i:i:;':·~f.:.-:'l~· '::/.

4 1. =:~~~~::Pi. Cammin•• Program.. '" 41.... 1 00 ::;~t:;~·:",,:'.~::~:t\:;:.:". '0L 42. ~':~,::~ ~i:"~-:':~:::;::':9 ·1.:;L;n. 40:47~ .nd of ;8t • • 41

D. •I ATT_,~~ ~]{,; ~F:t::~ ~'..."~~.'"~~ ~.:: '".;;"~ • . .. • .•.•• tAL .. IlJ. ra. Ouu (Unc31iId$"£I""" 37.nd38j. • _ • •• • ..Pa9"-9143 " '1 of ......'> 4.0.0.

44. P.n.ltv For Unc;crp.vmon, 01 E.,im~l.d To" IAnoc~ AR22201 U.. ""ccption chccked in Port 3. • •• L.J 44. • '09..

45 Amaunt nun: 1/ In" 43 ,,/0",In" 44t • AMOUNT DUE 45. 4 . 00
BAIRD KURTZ DOBSON

.....

JUN-29-99 TUE 09:40 AM

1120-POL

lnC ur tne Tn::,l:',;ury

.C'wl8nuCl S~Mc.e

.'

FAX NO, 5013721250

U.S. Income Tax Return

for Certain Political Organizations

'.,.....

p, 05

olAe No. 1545·0129

~®98 =or calendar year 1998 or other tax ye~nnln9 • I998. a~n~d~e::n~d~in~Q . ~19L-,--,

10101.0: If YOU are a section 5011c\ organization or a soparate segregaled fund llesaib<:d in sedlon 527tfl/31 check here.. • •• ,........ •• I I

1 Name of organization Employer IdentlllCllIon number

CLINTON/GORE '96 GENERAL COMMITTEE. INC. 52-1988597 i Number, olreet, and room or suilQ no. (If a P.O. box. see page 3 of InsttuetJ0n5.) CUdld.1oO lor U.S. Cone..... Only

a• P.O, BOX 19100 ONLY Illhili"Principolesnp;li{JncommiUe poU,ioI commilloo, Chock here......• • • • • • ndRI$1II0 0

;; City or town. slate. end ZlP code If tHis I~ • princlpftl camp3l;n commmu, bul " NOT i. W~SRING"ON, no 4 PC 20036 COn", tho onlypoh,icol 01 d.siltonmJanoommill 'S"" JnS1tuetJons ... _heroOndOlla<ha on f'\~ 2 \ • • n

Check If: 11) I I Final r~urn (2' I I enaMeof address 131T T Amended retum

1 Dividends (attach schedule) • • •• ......,..,....., •••••• ,.......,.... •••1--!1'-i-----=--=-=l--

2 Inlete$l.......... ••••• , ••••.••.••• , •••••••••••••• , ..•.• , •• 2 3,295

3 GlOSS rentG •• • .. .. • • .. • .. • • • • I • • .. J • • • • • .. • • • • • • • .. .. • .. • • .. • • • .. .. .. I .. .. • • .~3=--t-----""'::.!..::':::=+-- 4 Gross royaIUes ••••••••••• ,. • .• , ••••• , •• , •••••••••••••• , ••••••••t---:4~l--_- -I-__

5 CapItal gain nellncome (attach SChedule D (Form 1120)) • • , , • • • • • • • • • • • . . • • • • • • , • • ., i--=5'-j ~_

6 Net gain or (loss) from Form 4797. Part II. line I 8lattach Form 4797) • • • • • • • • • • • . • • • • . , • • . • •f-'6:.....f- -1._

U'l 7 Ol11er Income and nonexempt funclion expenditures (sea lnstruc:lions) . • • • • • • • • • • • • • • • . • • • • . •~T~I- -l-__

1~;-~a~_T:':D:2Ia~lwl~nco=m:!le::..!:M=d~lin!.::e::s:..1:.th~rO~U~"lh:.:7....:.. •...:.....~'"':'_':...:.'~':..:.' ":'~':..:.' ..:'~'~' ~.":'~':..:.' ":''';':..:.'..:•..;•..;.:...:.. ..;•..;.:..:,.';''';':..:..'":";';",:..'..:.'.,:·-=-+-=98-+ ...::3~•.:2:.:9:.:5:.t-_

9 Salaries and W39K " • • • • • • • • • • • • • • • • • • • • • • • • • • • • • , ' • • • • • • • • • • • • • •fo-"':c-'f-------_+--

\:j 10 Repairs and rnalnlenance. • • • • • • • . • • • • , • • • • • • , • • • . . • • • • • • ••• , • • • • , • , • ,~1O~f-_' _+-_

, 11 Rent••••••••••. , ...• , .•• .., ••••••••. , •••••••••.. , ••• " •••)-!1.,:'_I- +._

l"~" 12 T;axes and Uc.en'e5. • • • •• ,., ••• ,.",., •••• , ••••••••• , •••••••••••1-1~2"_1:-------_+-- =~. 3 bJ g 1 Interest I .. .. • • .. .. .. .. .. • .. • .. .. .. • .. .. .. • .. .. .. • .. • .. I .. .. .. • .. .. • .. .. .. .. f • • • • • • .. .. • • .. • f-:.'1~"-------_i_-

;; 14 DQprecJalion (attach Forrn 4562). • • • • , , • • • • • • • • • • , . • • • • • • • • • • • . , , • • . • • • • •f-1"'4:!...1!- _i_--

rfJ~ 15 Other deductions (attach schedule).. SiE .S7ATEKER'l. 1 , ••••••..••....••••.•...1-1.:,:5=-t ..;l;:.!.""7;.8;,6;j._

!t~D 16 TQIlII ded..cIIon~. Add lines 9 through 15•••..•••••.•••••••••••••••.•.•••••. , .~16~i- -=1:.!,,,,,7:.:8::..:::61-_

,_. >. Taxable income before "pecine deduction 0' $100 (see inslrucfjons). Seclion SOl(c} organizations show:

• ","ount of net Inveslmenlincorne • . • • • • • • • • • • • • • • • • • • • • •• ...

b Aggregale amount ellpendBd !Of an exempt function (anech schedula). , • • • •. f.!'W1~e,+ ..:1:.!,:.:5~0~9~_

18 Soecific doducl/oll of S100 Inolallowcd ror n~sle\ler funds defined under section 52710\\. . , • . 18 100

19 Taxablo Incomo. SublraCllina 18 from line 17e (Irtine 191s zero or less, do nol file Form 1120.POL) • • , . . " f-1~9~f----....;:1:.J:._1:..0=901--

20 Inco,"e tOlt (.ea In'\rucUons), • . . . •• ......,.,.,............,......... f-2"O,.-1f- 4:..:.:: 9 301-_

21 Tax credits (Altach all applicable form•.) (see InslrucUons), ••••.•••••.••.• , ••• ' , ...•..•""'2.:.1-+- 01-_

=22 Tolallall. Sublract line 21frorn line 20 •• , •••••••••• , • • • . • , ., "..... r-2

=.2=..-f- 4:..::;.3=+_- 9

I- 23 Payments: a Ta.depositedwith Form 7004 •••• , ••..•••••••• , 23a 200

b Credil for tax paid on undistributed capital gains (attach Form 2439) ~2~3~b~ ---4

e Credillor Fcderallaxon rtJels (attach Form 4136)•••••• , , ' • ~2:.:3~C:J- ---4

d Total. Add lines 233 through 23c.•• , .••• , ••••••••... , •...•••.••••.f"2"'3"'d"l-- -:2=.O=.0=+_

24 Tax due. Sublraclline 23d from line 22. See inslructions on paoe 3 for depositO!)' method of payment . • • , • • • f-2...4~f- ....:3::;.O::;.7..:.+__

25 OveroaymenL Subtraclline 22!rom line 23d. , • • .. , •• , •••• , ••.•.•.•••••••••.• 25

DYes !KJNo

-.. '- 0:-

0"

=E :g~

<E

1 At Dny Umo during tho 1liJg8 e3lcndaryvar; did the orgMizatlon haoJI at'1lnunsr W\ or. sign:nuIlI orotnerauUl0tNyowrB

llna"~ ..1CCCunl (such N a bMk iltcount.. &CCUrit1K account, or other fin~1 account) In • Ibroign country7 (Selil in~1ructlon:;..) .. ..

If "yes,' enler the name of the foreign counlly • _

2 ~~;f=:'~i~ ~h~ ~~~~~~ic:" ,r~~i~ ~i~~ib~t~o~ r~,:": ~~s ~t ~~ ~~r:".of: ~n:'~rC>" •••••.• , 0 Yos 0 No

If "Yes,' the organlmUon mllY have to file Form 3520.

3 Enter the amount or tax'ellempl inlefeSlfecelved or lICQlled during the ta>c)'8lll ••••••••• , , • , .~ ~.:N.:.:E"- ..JI_ .. Dale organization formed ~~~~~~~~-- _

5a The books are In caroof ~~~~l:!l:!Q~_~~t!l!~~____ b Enler name 01 candidate ~~!~~;~ _~:. _c:.I:,~T_O~ _

c Thebookssralocale<lat ~1l0 W 3rd. LT'M'T.E TlOCll All dTeleDhcoeNo. ~501-375-1290 Una.r pon;)tue. or perjury. , dcclar. that 1...--. eQm~ thi: I1Ilum. w.eluding ilCtOn'Ipanying sd1etiule$1U'\d :elouunems, and to tile DeS\ or my tel"lQ'llAcdoo Please 3nd balief. It is true. correct. and complete. Oecl."atlon at preporcr(ctMl' th", t:lwp8)'8l') It bastKl on aM inSOtm:tUon of 'fo4'\lcPl pn.:p::trer hlA ony knooMcclgo.

-:qn

re Sign-lure 0' ollie«

L~__ 0:.10

PaId Preparer's .... IDalll jCheck Wself· n. 1Preparer', sodaIsccurily no.

slgnalure ., emDJoved~ 11432-08-6204 prepllror'sI-i~~:-:=:::-:-:_:'------=__-=_--.,_-......,_=___.,...-J'-,..-----..L!:!!.!l~~.::::--LJJ..~::...~~~::..::.- _ Finn's name (or BAIRD, KURTZ & DOBSON IEiN H-0160260 Uat Only yours. If sett-employed) -.;;.::.;.;.-----

"ndoddtcs. P.O. BOX 3667. LITTLE ROCK, AR 72203 IZIPcode~ 72203-3667

~:: Paperwork Reduction Act Noties s•• lnstructions on page 4. ~: .. .~- .-,.. ~. y.z:;L~~-~~1~20.POLI199B
·~UN-29~99 TUE 09:40 AM BAIRD KURTZ DOBSON

CLINTON/GORE '96 GENERAL COMMITTEE, INC.

Form 1120. Page 1 Detail

FAX NO, 5013721250 p, 06

52-1988597

Line 26 - Other deduetions

ACCOUNTING FEES

Total

1,786.

--------------- 1.786,

Statement 1
·.....

.}UN-29:99 TUE 09:40 AN BAIRD KURTZ DOBSON

CLINTONIGORE '96 GENERAL COMMITTEE, INC.

FAX NO. 5013721250 p, 07

52.-1988597

Form 112.0, Page 1 Detail ~=====~=========c==--==_---===~===~==# =-==~~==_==,= --3~==a__==_~====e=~=

Original due date of return: 03/15/1999 Date return filed: 07/15/1999

Extended due date of return: 09/15/1999

Late filing penalty:

Mo nth s f i I j ng I a t a . Late fIling penalty rate %

Amount subject to penalty . Amount of late filing penalty . Late payment penalty:

Mo nth $ pay i ng I at 0 4 . 0

Late paymant penalty rate , ,....... 2.0 %

Amount subject to penalty.. 293.

Amount of late payment panelty ..............•..............

Amount of lato payment Interest Isee detail below) .

Amount of additional penalty and/or Interest .

6.

8.

Totel penalties and/or interest............................. 14.

b) ============~==:;;;=

Revised tax dUe including late penalties and/or interest:

tU Total tax. Page 1, line 31.................................. 493.

'1.·.-.··'Less: Payments, Page 1. Ii ne 32h 200.

Plus: Underpayment penalty, Form 2220 .

Plus: Late payment end filing penalties and/or Interest 14.

Less: Backup withholding .

Total tax to Page 1, line 34 . 307.

~====::=:==a====;;;;;;,===

De t a i I of late payment interest

Amount subject

to Interest From To Days Rate Interest --------------- -------- -------- ------ ----- -------------_ ...

293. 03/16/1999 0313111999 16 8.00 1-

2.94, 03/31/1999 06/30/'999 91 8.00 6.

300. 06/3011999 07/15/1999 15 B.OO 1 .

Tot~1 lete payment interest , , .. , . 8.

==================:::11-

, ATTACHMENT C\ P'~"8 _YZ- of_L

Statement 2
JUL-26-99 MON 03:57 PM BAIRD KURTZ DOBSON FAX HO, 5013721250 P, 05

-

'-

I

lYPEOiiiiusiNESs-----

f10lITIr.AL nAR,

o-2O·..·-·-----·---1-9-9-8-.,I-~-*-*--D-IS-T~R-I-CT-O-F-C-O-L-U-M-B-IA-G-OV-E-R-N-M-E-N-T------,,.----- --_..

~orll.tion_fran(:hiseTax ReturnlJ_--'-==-_O=-F'-F'-IC...:E::....;::O.:..F_T~AX_=_.:..A.;;.N.:..D'__'_R...;;E.:..V"'E.:..N...:..U=E - - DA1'E"RECEIVED<'----

T::IX3blc year beqi"ni,,~ Q 1101 J 1 DS _..;.::n-"d,--e""n-"d~Jn'.:J'OL.. __T __-,I,<,>,:,;",_,',,:,I':''''''''''.I-------J-:-------_ ~~~~~*",.----'-'-'-~~---- NAME OF CORPORATION J ~~...~NES5 TAX #lfPLI et>.fO~ CLINTOH/OO'U! 'fa (J!lt.~~tF.'?!.l!'..!.ll.E"'E"-'!.!"!!>C~--_fc;;~'DA"n1-.....!~~~---....:....:----_----_.

P.o. 00' Ill.. FEDCRAl.I.DI'1 NUMBER

___ •• .. .~ ...._.. _._!"ASHIHurON DC 2.003' - lSz-Uaeen

MAlUNGADDRESS p.o. 50.11100 NUMBER OF BUSINESS LOCATIONS

In tho oUlrcjdo Ih/l WASHINliTbN. OC 20036 Di51rict NON! DhiWct: 1

ID,C. ADD~E5S

Ji_

READ INSTRUCTIONS BeFORE PREPARINCl RETURN -. (t:!e!~!...-~U=SI::;N"'E'-=S:.::S:..:I..:.T:::E:.::M:.::S"T:.;o~e,.E..::A::L:.::L=O=C"'A"Tl!:O:3l-1 , -,._-{

1. GROSS RECEIPTS, LESS RETURNS AND ALLOWANCES ,

2. COST OFGooDs' SOLD "rom Schedule A) AND/OR OPE~.I!9:.::N:.::S,,(J":Att=ac=:h'-'."'I;d"'e::;m-"'c""nt:L....)-------_j---------_l_'2L...j w r-L~o~:;.~QE!!~ SALES AND/OR OPERATIONS .. (Line 1 minus Lin. 2) _. _. -.-----__f-3_

;:! 4. DIVIDENDS (from Sch.dul. C) _ • o

!i 5. INTEREST IAltach .t:ltcmcnl)

;;; 6. GROSS RENTAL INCOME e

7. ROYALTIES (Alt:\ch ..t3t.m.ni)-- ---....-------------I----:-------Jf-7y

CI 8. (al NET C~e!!t..b..Q!.".!~UAttachcopy 01 completed Federal Schedule 0) --1------------1-!!.l!5111

(b) ORDINARY GAIN (LOSS) FROM PART II FEDERAL FORM_."4.7~!J,,,7~',"cA-",lla",c""h-=c",oo=vo,-,'c::;o:::m=ollcl:.::e::.d.:::Fo~r~m"'4t.!.7::.971'-'- _ _j---------+Je!l!"b!!lj

.Jl....9.D:lsR INCOME (Attach clalemont} ---.-------1-------- -=--1-...9--4

10. TOTALGROSSINCOMEIAddLlno.3IhrouQh9) 3 295,10

LO

1.8-...

__ ..... -.__ .. ..._._....__ ~. 1.....

15

. -i -f-!1!.,7_ _. -_.- --.--------------i-----------f-!'~G

11. COMPENSATION OF OFFICERS (from Schedul. E) I' 1-'-'-'-===":===:""':;''='':'='==->-====-=-------------------t--------f!..!-l

12. SALARIES AND WAGES ----••- •.•--------------------------:!------ -4"''-!2-l t-1:..:3"_.-':R"'E"'PA"'I:.:.RS"-:: • . -+__-------f."'.,:!3-i

14. BAD DEBTS (Sec Instructions)

15. REf>IT

D( 16. TMES {(ram Sch;dui;i;-'-'--

We '7. INTEREST II: 1II - •• o 18. CONTRIBUT\ONS.l~~~b..~~\!!!!!!!!l, +-

> t; 19. AMORTIZATION IAt/och coov at comole/ell F.d.rel Form 45gL_....• _. ..••- --_•• - ~.

5~§£·.!l!~!!\TION (Attach copy 01 comple/ed Fedcrnl Form 4562)

21. DEPLETION (All3Ch sl.t.m.nll ,_ -+ -'- 4!.2l.'_

;;: 22. ADVER'nSING ' -.---.------------I- -l£24,2_

23. PEN~J9l:H·J3,.::O"_F:I"Tc·;S::H-" ..."'R"'IN:.:.G=P_"LA=N,.S -----=---:::o-:---: :--;:--j. -:_----::=~-+=-23::....

U 24, OTHER DEDUCTIONS IAlCach .t.t.m.nt) _ ..... __._•._ _ See S tat em e n t 1 1 , 7 B6 . 2.

,5 TOTAL DEDUCTIONS - Add Line. 11 through 24 _ 1 • 7B6 , 25

U ~~~.!.~~COME (Llne'O mlnu. Line 25) .• .1..J...§..~~ __ :

13 27, NETOrERATING LOSS DECUCTIoN 27

28. NET INCOME AFTER NETOPERATING LOSS·DEDUCTION.(~in.26 minus Line 27} 1 509. 2&

<t ~.~,_(~ NON-BUSINI!SS INCOME (Attach .!alemcnl) .. ,. .,.. . '. .~

lbl EXPENSE RELATEO TO NON~SUSJNESSINCOME /Attach ctOltcmcnl) . ." ',' ;'.':' !.....;< ", 20tb

-~!---"(l.::CC=\29::l~(.::'a)l.m=ln:.::u:.:s..:2;::9:l:(tb::l·\-l,:;IIA~it:::a:::;~I~'.::d::::eta::.i:::ied:::.::s:::t.:::l.~me=n:.tlll -+ ~_42!.lQ!lS."c'

130. NET INCOME SUBJECT TO APPORTIONMENT (line 28 minus 29(~))_. 1 5 0 9 . 30

~~ 31. O.C.APPORTIONMENT FACTOR (from LineS. Schedul. K, If none, .nt.r"zero·). 1 .000000"

~5 32NETINCOME FROM TRADE OR BUSINESS APPORTIONED.!.C?.!tt.IU2ISTRICT (Line 30 mulliDlied b'I L1n'-;';' ••- .------1-:50"9-: ~;-

,!~ ;i3. PORTlON OF LINE 29(c) ATTRIBUTABLE TO D.C. (Attach statem.nt) 33

~d TOTAL DISTRICT TAXABLE INCOME· IU"" 32 oIu5 or minus Lin. 33) 1 509.,.

35. TI'.X (9,97~% a' LI~:..!' I.... than S'OO enl.r Sloo 151 . 35

;}~.._(~).:r·M PAID, IFANY. WITH REQUEST FOR EXTENSION OF TIME TO FILE .. .. ...' ... .M.lJ

(b) 1998 EST. TAX PAYMENTS . .. . .. :wtt

(c) ECONOMIC OEVELOPMeNTZONE INCENTIVES CREDIT (from Sch.dul. D) '. : "'.,' " .. , . 3Gce

37 ADD LINES 36(a), 3SJE).c!!1~~~ENTERTOTAL 137

138. TAXDUE(Lin.35minu.Li".37,i'Line35i.gr"'lerthanLine~lL- 151.11~

..~.9,.!''!?;'i~1;l)' 1 INTEREST ITOTAL PENALTY A!:1!1JtLTFREST J.q••

40. TOTAL DUE ADD LINES 38 AND 39 PAY IN ~Uu. 15 1 '9-

4,. OVERPAYMENT (Line 37 min;;;:i~-;35ifLin.37 ;s Qrc:ller lh.n Line3S1 '_

42•• mrnlT TO , 999 ~STII"'ATED TAX I I ~2b, T(; ;;E-;;;~DEO.L". ~1 ""nllO Clno .,. ....:lUJ ~~d~~:\ll,e:; 01 bW, ",CIII~I~~I~ri",I"~ p.,..ltln fcrhiisl ,tal,mlnl, .,.d'u pt.....' p.n.I\I•• Whl" D,C. CQ(I~.!.~a-2I14 and !J~~~1G1••'~Iq..' d,cl:w.lh::at: I hlrll u::llf1ll"Mt 1M, ,"urn Vld.lO "UL!,\U!JL r;o,,,c:L~ . .,' Ot_UulQU'WUD" avauiltll~~ the "'.CpMef. _ SIONI\T\JR~ 01' OIflc:l::n Tln.E , .. ' .'" c', ;•••b. _~_.. , OAY"

Ct.JFII':TE SICNAT\!RE OF PIlEPARER (~OUIClIII;l(I T."P.1yot) IlOORESSp . o. cox '"" : __......'::12. c.c .Y1'__ DATE

O.,RO XURT'. 00.'00 LITTLE ROC~, AR 1.,.,-,GG' MAILING lH!m'UCT'ION!\; M;'Ili:o CMC'Ck or money otClIrJ»fatMe ~el o.c. m:u...,. (includt! a.e. b","'n..,., ,... nllll't/>ef'. D_2;;;.--=... =-·";;":CY:::';;";-:"'=_='t,P'=~=_'::":;;.lf.. ..<i,:-J,,'.C:,.:C,==..;:;um;;:-:!.::n.;-:,:::,::,m:::.:::"''''=-'''''=-'--- 1lr'l'!\'l.I3f\() b C OIl1eo ell Tu :lnd Fl..e....".

'Ul•• etl'l F'''I'l)(11n :;to~n. p 0 eO'll: . __Fi01. vn'''In~rnn •. • 0 c: 2004&.QG01 __ .'__on or b!ronllhe••1St" O:a1 01 tn. !J'lirrJ .. 1TI01'lO'l

__ 1'oItow'ln, ........ 11\0 __efQ$l) .......Oflho ~blfl.,r.:I'