• FEDERAL ELECTION COMMISSION

WASHI'lGTON. [) ( 204fd

April 28, 1981

HEHORANDU:l

TO:

FRO}l:

SUBJECT:

FRED EILAND

PRESS OFFICE

~r j

BOB COSTA ~/~

PUBLIC ISSUANCE OF FINAL AUDIT REPORT -

1930 DEMOCRATIC NATIONAL CONVENTION

C0:1HITTEE, INC

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Attached please find a copy of the final audit report of

the 1980 Democratic ~ational Convention Committee, Inc., which

was approved by the Commission on April 21, 1981.

Infornational copies of this report have been received

by all parties involved and this report may be released to

the public as of tOd3y, April 28, 1981 .

Attached as st3tcd

cc: FEC Libr.:.1ry

Rv. D

~ll h 1 i eRe C 0 r d
• FEDERAL ELECTION COMMISSION

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REPORT OF THE AUDIT "DIVISION

ON THE

1980 DENOCRATIC NATIO:~AL CONVENTION COMHITTEE, I~\C.

I. Background

A. Overvie'\v

This report is based on an audit of the 1980 Democratic

National Convention COr:1rnittee, Inc. ("the Committee"), to determine

whether there has been compliance with the provisions of the Federal

Election Canpaign Act of 1971, as amended ("the Act"). The audit

was conducted pursuant to Section 9008(g) of ?itle 26 0: the United

States Code which directs the Corrmission to cODduct an exa~ination

and audit of the pay~ents for presidential no~inating conventions

no later than Dccer:-~el.- 31 0: the cale:1dar yea!' i:; '....1hic~ the

convention is held .

In acditio~, Sectio~ 90D8.9 of Title 11 of ~~e Code of

Federal Re~~la~icns states, i~ part, that the Cc~~iss~c~ shall

conduct an exa~ination and audit of the convention cc~~ittee no

1 ate r t a:-: Dec c ~b c 31 0 f the cale nd a::c yea!' 0: t:: ceo:-;::en t ion.

l.':1C Co;-:':~i:':'C2 regist.ered \·."it~ the Fc.:lc::.::.l ~:ection

COffi.l1ission on Au~";ust G, 1979, as the designatc'd con\"c:1tion

cO:-:'.:nittec of t;-:c DC;::'Jcr--::ltic Party.. The CO:7.:-:;ittee :':'.J.':":"".~Z1ins its

hcadquart2rs in ~~shi~gton, D.C. The audit cove~cd ~~e period

July 19, 1979, the i~cor?oration date of the Cc~~:ittoe, throus~

Dcc0;-:,ber 31, 1980, t:),c final coverage date: 0: the late5~ repor~

f i 1(~d at:' :--. c: t i ::',co:: ::. :-: .-:; at.::: it.. Duri n g t r: i :; per:' cd, t. e Co!:'...··n i tee

rep0 r tee: a b·:? c..~ i i :1 ':: C .:1 S :; b a 1 anceof S - 0 -, tot 201 r c c C: :. ~:- t: S 0 f

$4,480,138.43, tc~al c~?en~it~res of 53,303,792.36, a~j an cndi~g

cas h b <3 1 anceo;1 Doc c ::-.~ c; r 3 1, 1 9 8 0 0 f 5 1 , 1 7 6 , 3 4 6 . 0"7 . I ;1 add i t ion ,

certair. fina~~cial ac:.i\"ity has been rcvic'..:ed t:-l~c'~:gh ~·:..J.~c~ 13,

1981.

rl~:-:i.s ':l~~:::i.~ ~c,:~'\(:,~~ is based 0=1 dOCt:~,·~~rlts ~1n:": \·.~01.. }~ins

pCl~-cr3 ~.·:~ic~ su::-:>:)r~- C.:1c:: of its fact~~al slJ.·..:o:::e~·.:.s. T:;,cy for::'.

Pl1~::' 0: ::....-.:: r0C'~:::~~ ...: a:: ·..;:1':'C~ the CC:~':::issi-:,:: D.:lSe':': its (:ecisions

0:1 t.:.hL~ :~'::l~<:'~!:::~; 1.:1 L:: s ropc::t ~nd \.;e:-o a":c1il.:lolc: -:0 CC:-:~:':"'.issio:1ers
• B. Key Personnel

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The principal officers for the period audited were:

Mr. ,John C. White, Chairman; and ~r. Peter G. Kelly, Treasurer.

c. Scope

The audit included such tests as verification of total

reported receipts and expenditures and individual transactions;

review of required supporting documentation and analysis of

Committee debts and obligations; review of contribution and

-expenditure limitations; and such other audit procedures as

deemed necessary under the circumstances.

II. Findings and Recommendations

A. Unspent Portion of Fund Payment

Section 9008(h) of Title 26 of the United States Code

st~tes, in part, that the Commission shall have the same authority

to req~ire repayments fro~ the National Committee of a major party

as it has with respect to repay~ent from any eligible candidates

under Section 9007(b).

In additio:1, Section 9008.10(e) (1) of Title 11 of the

Code 0: Federal Requ1atio~s states that if any portion of the

p(lY:7lcn~ under 11 C.F.R. 9003.3 remeins unspent after all convention ex~enses h~~e been ?aid, that portion shall be returned to

tho Sec~etary of the Tre~sury.

i\lso, Section 9002.10(g) (2) of Title 11 of the Code 0: I'C'd{:'~~l R00ulCltiol~s states, in part, t~at the nutional committee

s h Zi 11 r' e 9 ClY toth eSc c ret r:.r ..;i t h i n 90 day 5 0 f the not ice, the

Zlm0 1,.1 :) t 0 f t 11 erer:: Zl ':':-:i c· n t .

0:1 Febr-tElr': 4, 1981, the Co~mission approved the Aud.i~

s t "1 :- :: 's d c: t e r min t1 t i 0 !~ t h .~:: t h C' ConDitte e 's un s pen t po r t ion 0 f

its cr:-::t.lc:-:"en:' ClS o~ D·.::<>:::~;:or S, 1980 \\ins $1,149, G50. 56 (sur:)l'~:s).

,\s 11 r,~s"-11 t of .J'lL'.i t. '.-;0:'-:': pC'Y":ol.-rncd ufter the.: 10 du':' response

T)c~iod tc the i~tcri~ ~~jit re~ort, our re~ic~ of the Co~~ittee's

Of; - ..."-;"I-'~ '-.. l .. "'- -. "11..- ct-c"-~ \".... "l' • t,·4' l::r;,-

....... .J _ t~••.. t...:.: 7) >'0)·-l· :./ _ .L- cd• ) Dpc,..,~l)'Jr· .J _ "-- ••• "- (, I ]~.f)QI"'\ '-.J I) th'l'-O" • _ "L.4. '-....t "l• •

\' """.....1 l·C~"I - ...

13, 1021 indicatec1 t:;::t t~e unspent Do!--tion of its entitlement,

tiS 0; >::1rc:-:. 13,1921, is S73G,2·13.00~. The Cn:n::littc"e's fi:l.:lnciC1}

~)r;':~'::'~:l, a::: 0: ~,:,,-~~·c:; l~, lCl31 is (1cr~ct(~r11,,·)1()'..::
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1980 DEMOCRATIC NATIONAL CONVENTION COMMITTEE, INC .

FINANCIAL POSITION AS OF MARCH 13, 1981

Assets

-~ ----

Cash on hand

Accounts Receivable

Capital Assets

Total Assets

Obligations

Accounts Payable for

Qualified Convention Expenses

$7.53,396.05

10,193.99 !./

-0-

$763,590.04

($ 17,377.04) '1:../

$763,590.04

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Estimated Winding Down

Costs 3/ (Through June 30, 1981,

Projected Termination Date)

Total Obligations

Net Vnspe~t Po~tio~ of E~title~e~t

10,000.00)

($ 27,377.04) (5 27,377.0~)

$-:-36,213.')0

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T~is a~au~t includes outstandi~g security deposits, ;ortic~s

of ~hic~ could be ~ithheld for damages, cleaning, e~c.

:':ot incl...:Jcc2 in this araount is .1 paynerit due !Jer cc:"'.::ract

of 55,3~4.11. Ko Co~mittee action will be taken cO:1cernins

this watter duo to non-performaGcc of contract. To date,

t:--:e '.1C:1-:lo~ ~~S not co~tClctcd the COf."l...--:ii::. tee cancer:! i :;.~

p a:::-;', c :; t 0 f t::,.:; ()\.1 t s t.:l ;;:1 i n C1 a:To 0 U n t .

I~ ac.c:':i. tior: I thi~ :i1::()Unt does not inc 1 u:~r: bi] Is roc::? i vee:

b ~. t :"'. c: C0 ~.!~ i ': t ()Cit0 t .J. 1 i n (] S G , .:1 C) (; • 7 3, !":: -.1 ';TV:': n t S 0:- \.: i c;1

t:-:;-· CO:-:l~i :'to!=: is co~t'~Sti:1-'J.
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The figure for estimated winding down costs does not

include an additional $10,000.00 requested by the Committee

for an independent audit. The Committee's Deputy Treasurer

stated that the Democratic ~ational Corr~ittce and its affiliated

committees are audited on a regular basis and added that the

cost of an independent audit of the 1976 convention co~nittee

had been defrayed \.;i th Federal funds. Dcspi te the Commi ttee' s

point regarding the 1976 convention, such an expenditure is not ..supported by the regulations applicable to the 1980 con~ention.

l~ C F.R. S~ction 9008.l0(e) (2) provides that an interi~

repayment of unspent funds allow for a "reasonable amount as

determined by the Commission to be withheld for unanticipated

contingencies." An independent audit to be conduc-:.ed subsequent

to the Co~~ission's audit should not be considered a contingency

for which unspent funds ca~ be withheld.

Reccmmendatio!1

Based on our review o~ the Cc~mittee's fina~c~a1 position,

it is the reco~mendatio~ 0: the Audit staff that t~2 unspent

~o~tio~ o~ the e~title~e~t ($736,213.00) 4 I be re~a~~ tc the

C~itej States 7~easu~~' p'J:-s~a~t to 11 C.F-:R. 9003.::'0(e) (1)

wi thi n 90 da~1 s of receipt 0 f thi s rc!)ort. Furthe:-, the COTIuni t tee

is afforded 30 da~'s rrO:-:1 receirt 0;: this rCI)ort t~ s'~l:::-::::':' T,·;rittc:1

l c: ~::..1 0 .: c ''':' ::-. 1 r:1 ':~ t e ria::' .s t 0 d C::"~ C :-:s : :- ::.. :..::; t hat a E::': :l ':-:-.~::: :-'. tis

net rc~uired (ll C.F.R. 9CJ03.11(ci)) .

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th·.:; :JC:::ls2~.)tic ::;:~:ic,:~-~l CO:~·:·2:;:.:Qr:, I:IC., c1i:: :"'.0:' 2..::",:'",;dCt

U~-::(':-. t:-10 Cc:-:"'.:-:;it:'·2'~'S rep':-l:·:-".·-·:I:' 3mO'..1nt. The '::.'.:~::: st.uff

\':111 rc·:ic...':: the: CC:"'.~:-"'.i :.:tcc: I s rc~""'~~:'s '::lnc: or r(-'::='~·;-:.3 in

01-:':''::- tc i?st.'!:--:.i::-.:": t::-::: :lcc',:::::c':' I:'~-: t:-:,-, rjsti:-",.:~·.>:-:~ i~-: the

be':·"? .: i :-; ::-: r: c i ': 1 :t :-: -~ J "? is .
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Apparent Non-Convention Related Expenses

Section 9008(c) of Title 26 of the United States Code

stutes, in relevant part, that such payment (made under 26 U.S.C.

9008(b» shall be used only to defray expenses incurred with

respect to a presidential nominating convention by or on behalf

of the national committee receiving such payments. Further,

Section 9008.6(a) (4) of Title 11 of the Code of Federal Regulations

specifies that convention expenses shall include all expenses

incurred by or on behalf of a political party, national committee

or convention committee with respect to and for the purpose of

.conducting a presidential nominoting convention or convention

related activities. .

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In addition, Section 9008.l0(d) of Title 11 of the

Code of Federal Regulations states, in relevant part, that if

the CCrrtl11ission determines tha t on'/ arr,ount of any payment to

the convention comrni ttee \.;as used fot any purpose other than

those authorized at 11 C.F.R. 90~3.6, \t shall notify the

ccr:-~"":1ittee of the amount i:n~)ro~c:-l': us~d und such cor:l:-:1ittee s~<J.ll pa~' to the Secret~~~:: of' t:~·.::· ~rC'asur': un amount equal

to the a~ount specified.

Also, Sectio:i 9·~,,)2. 2C '::\ (2~ 0: Title? 11 0: tte Code

of?c ::. era 1 Re 9l.l1 a t i 0:1 S s:' .: :..:s, i:-: :~ a~·:. , t;'~.:t t t e nationa 1

c 0 w~ i tee s hall rep a y tot:-: c: Sec :- c :. J. :-'.:' ',,; i t i n 90 days 0 f the ;; 0 :. :. c e, t e a:i!C U nto:: t ..: ~. ,,", :"" ';' :-' -:. :--: -: .

Our revie~ o~ c~~o:--:di~~~c rcco~ds indicated that the

CG:-.~::' ~tee paic: lodgi:10 e:·::>~::-:S(~~:: ',,:;;i c~., accordi:1C} to a listing

0: :-:C':.(.-:1.. room reser·_-.::~~i2:"'S ::~-l':- '--"~-'-"':: ::":' :':--.c CO::'.::'ii t.tec, \';e~c for ~1~::r:-.:~·.::~~2tio:J.s for m~iTl::-':::~-~ :::=- :::",_, f:t:".,il':· ()~ t::c CO;:'_iittee Chai~:-:;:l~.

T:... ·:: ccst of this loc'::ji:;0 ',':-.~ S 1}, :55. 0~. It ~,~"'.ould be noted th:lt

t:-:-:' Cc:-~~ittee did not r,..=I..""'-:":·:·.-' ::.:.....: ::r:':'=~:"-' cor;:'~ibutiC'ns, thus t:lis

0:-:::::;.sC' ','::1S defrayed ',·:i -.::-: :'c'~:'-=:~-~~: :',,::".::s.

r' Tr:c Corr.:nittc·,:' 2 :',.~,>-,~~':' ':'rC:~::;I"'::'I~:~_' "':~lS Lid·,-i:;·::d 0: this

::~::._::.,,:::-- <irld oro·.?ided ·,·:it:". t~·---, :i~~':~_<-~ G~ th·..: inc1i':i'-~'--l~ls. Durin0

:::-: i!-...~c:~-i::1 ~o:1::crencc, s:... ·:' i:... ::c~·~·,:,'-: :':".t2 ....·.:J~:it stoff th.:lt !10t all

C\:- l~::--;S'::: inc2i':i(1~31s '..:i?~-',; ::'::~: l~' ::'I:':-'.:'''':'~-::- CI!ll: 0C~-CC<~ to :~~-ovidc

t.:.... ......:~:":::::. st::.:: \·.'it:-: i.:~::.,~.~. :~~i(':·. t,CJ C:'0C~1;~·.t..:::l~':' t:~::~ t:-:,:·il- ~('tivit~·

r':1 :·~:.lrc=-: ~#4.," :-:"'.~~ c:--.. ~~~::~..:.::.~·-,-, !)~-( '.:'_:':)~~ :':~t~~ .:-·.:"l,-:i~

~-~'.. -::: '..:i.::':"'l c1oC'_;:~1C~~=::'~(':~ ...::.!~~:;:~~ ..::~:: ... : t;"'.~· C0:1j~~·:... tic<: o~ sL''.'C'r.:ll

c:. .. " :.... :::~.l.~~cnt :.','~)~'.:_:'~'.- ,.': ,,~~~,_, C'.:-~~~':'... :Ct_ (':l::i.r:~~.·::;ls ::1:"1i.~':· to

. ,.. ...._ , : ~_..-.

., -..=.:.... :.:: c:: .

~;-.'-- , - , L :: C "--: ~- ..'- .. : : '.

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, "1 _ _'1. '-.... { 'to: (. ~-

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Recommendation

Based on our review of the documentation submitted by the

Committee, it is the recommendation of the Audit staff that

the value of the non-convention related expenses ($4,131.24)

be r(~paid in full to the Uni ted States Treasury pursuant to

11 C.P.R. 900S.10Cd) within gO days of receipt of this report.

Further, the Committee is afforded 30 days from receipt of this

report to submit wrltten legal or factual materials to demonstrate

that a repayment is not required (11 C.F.R. 900S.11(a».

A recapitulation of the recommended repayment amount

.appears below:

•

Unspent Portion of Fund Payment

(Finding II. A. )

Apparent Non-Convention Related

Expenses (Finding II.B.)

Total Reco~wended Repayment Amount

$736,213.00

4,131.24

$740,344.24