•

(\1

MEMORANDUM

TO:

FROM:

SUBJECT:

FEDERAL ELECTION COMMISSION

\\ "'SHI~GlON, 0 C 204&3

July 19, 1985

FRED EILAND ~~~ I

PRESS OFFICER ,/."i'fr'O~fA..I~~

ROBERT J. COSTA A~ ~{". ~.I~ ASSISTANT STAFF~Df(ECTOR AUDIT DIVISION

PUBLIC ISSUANCE OF FINAL AUDIT REPORT - JESSE JACKSON FOR PRESIDENT COMMITTEE,

NEW YORKERS FOR JESSE JACKSON,

JACKSON FOR PRESIDENT-CALIFORNIA

•

•

Attached please find a copy of the final audit report of

Jess Jackson for President Committee, New Yorkers for Jesse

Jackson, Jackson for President-California which was approved by the Commission on July 12, 1985.

Informat~onal copies of the report ha~e been received by all

parties involved and the report may be released to the public.

Attachment as stated

cc: FEe Library ,

RAD / Public Record

Office of General Counsel
• FEDERAL ELECTION COMMISSION

WASHINCTON. D.C. 20463

REPORT OF TBB AUDIT DIVISION

ON THE

JESSB JACKSON POR PRESIDENT COMMITTEE,

HEW YORKERS POR JESSE JACKSON

AND

JACKSON POR PRESIDENT COMMITTBE-CALIPORNIA

..

I. Background

'" A. Overview

This report is based on an audit of the Jesse Jackson

for President Committee, the New Yorkers for Jesse Jackson and

the Jackson for President Committee-California, to determine

whether there has been compliance with the provisions of the

Federal Election Campaign Act of 1971, as amended (·the Act W) and

the Presidential Primary Matching Payment Account Act. The audit

was r~nducted pursuant to Section 9038(&) of Title 26 of the

United States Code which states that -after each matching payment period, the Commission shall conduct a thorough examination and

audit of the qualified campaign expenses of every candidate and

his authorized committees who received payments under Section

9037.-

In addition, Section 9039 (b) of Title 26 of the United

States Code and Section 9038.1(a) (2) of Title 11 of the Code of Fed~ral Regulations states that the Commission may conduct other

examinations and audits from time to time as it deems necessary

to carry out the provisions of this subchapter.

The Jesse Jackson for President Committee (ftthe

Committee W

) registered with the Federal Election Commission on

November 14, 1983 and served as the principal campaign committee

of Jesse L. Jackson, Democratic candidate for President of the

United States. The Committee maintains its headquarters in

Washington, D.C. The candidate designated the New Yorkers for

Jesse Jackson on December 8, 1983 and the Jackson for President

Committee-California on February 21, 1984 as authorized

committees. 1/

• 1/ For a detailed discussion of the authorized committees, see

Sections III and IV.
'line auale covetea the peLtOd LIOiii cue eUiWU1ccee s

inception, November 14, 1983, through July 31, 1984, the f~ria1

coverage date of the last report filed at the time of the audit• In addition, certain financial activity was reviewed through October 31, 1984 to verify the Statement of Net Outstanding Campaign Obligations. The Committee reported a beginning cash

balance of $-0-; total receipts for the period of $6,361,696.43:

total expenditures for the period of $6,310,675.33 and a closing cash balance on July 31, 1984 of $52,304.44.2/ However, the

Committee continu~d to receive contributions and make

disbursements. In addition, revised Statements of Net

Outstanding Campaign Obligations were submitted with each

matching fund submission as required by 11 C.F.R. 9034.S(d).

Under 11 C.F.R. S 9038.1(b) (3) and (e) (4) additional audit work

may be conducted and addenda to this report issued as necessary.

This report is based upon documents and working papers which support each of the factual statements. They form part of

the record upon which the Commission based its decisions on the

matters in the report and were available to Commissioners and

appropriate staff for review.

•

-0

B. Key Personnel

The Treasurers of the Committee during the period

audited were:

,.

C. Scope

The audit included such tests as verification of total

reported receipts, disbursements and individual transactions~

review of required supporting documentation; analysis of

Committee debts and obligations~ review of contribution and

expenditure limitations~ and such other audit procedures as

deemed necessary under the circumstances.

Mr. Samuel L. Foggie, Sr.

Ms. Emma Chappell

11/14/83-2/21/84

2/2l/84-present

D. Introduction to Findings

Section II of this report includes Title 2 findings and

recommendations which resulted from our review of the records of

the Jesse Jackson For President Committee. Sections III and IV

include Title 2 findings and recommendations which resulted from

our review of the two authorized committees, New Yorkers for

Jesse Jackson and Jackson for President-California. Section V

contains the combined audited Statement of Net Outstanding Campaign Obligations for the pee and the two authorized

committees•

• 7:/ The totals do not foot due to math discrepancies on the

reports (difference of $1,283.34).
•

<'.-,

•

Recommendation . The Audit staff recommends no further action with respect to

this matter.

B. Other Matters Referred to the Office of General Counsel

Other matters noted during the audit were referred to

the Commission's Office of General Counsel.

III. New Yorkers for Jesse Jackson

Background

New Yorkers for Jesse Jackson (-NYJJft ) registered with the

Federal Election Commission as an authorizea committee for Jesse

L. Jackson on December 8, 1983. NYJJ maintains its headquarters in Brooklyn, New York.

The audit covered the period from the NYJJ's inception November 19, 1983, through September 30, 1984, the final coverage

date of the last report filed at the time of the audit. NYJJ

reported a beginning cash balance of $-0-, total receipts for the

period of $364,208.57; total expenditures for the period of

$364,208.57 and a closing cash balance on September 30, 1984 of

$-0-.

Key Personnel

The Treasu~er of the NYJJ during the period audited was

Mr. George Glee, Jr.

Findings and Recommendations Related to Title 2

of the United States Code

A. Itemization of Contributions from Political

Committees

•

Under 2 U.S.C. S 434(b) (3) (B) each report shall

disclose the identification of each political committee which

makes a contribution to the reporting committee during the

reporting period, together with the date and amount of any such

contribution.

The Audit staff identified ten (10) contributions from

political committees, totalling $874, that were not itemized as

required. The NYJJ officials stated that they were unaware that

these contributions were from political committees.

The interim audit report contained the Audit staff's

rl!commendation that within 30 days of receipt of that report, the

NYJJ file a comprehensive amendment to correct the disclosure

problem noted above.
Section 434(b) (3) (A) of Title 2, United States Cod~ , requires a political committee to report the identification oi

each person who makes a contribution to the committee in an

aggregate amount or value in excess of $200 per calendar year

together with the. date and amount of such contribution.

The Committee's contribution records were reviewed to

determine whether all contributions aggregating in excess of $200

per calendar year were itemized as required on the Committee's

disclosure reports. The results of testing contributions on a

sample basis indicated that 14' of the itemizab1e contributions

were not itemized as required. The explanation provided by Committee officials was that (1) contributions deposited into

state accounts were not forwarded to the Committee until well

after the disclosure reports were submitted to the FEC and (2)

Committee report processing errors.

As of the close of audit fieldwork in December 1984,

the Committee had received updated contribution files from their

data processing firm for January and February 1984. Our review

of these updated files indicated no material problems for January

and February 1984 with respect to itemization. At the exit

conference on December 21, 1984, Committee officials stated that

because of the large processing costs involved in amending the

Schedules A-P"" they were awai ting an official recomme.l~ation from

the Commission before preparing amendments.

The interim audit report contained the Audit staff's

recommendation that within 30 days of receipt of that report, the

Committee file amended Schedules A-P to correct the itemization

problem noted above for the period November 14, 1983 through

October 1, 1984.

On June 26, 1985, the Committee filed amended Schedules

A-P which materially corrected the deficiencies noted above.

The Committee also provided the following explanation

in its June 26, 1985 reponse to the interim audit report:

These errors were made by our contracted computer firm due

to edits not occurring in a timely manner to be reflected on

the monthly financial disclosure reports. If the edits did

not occur prior to the time for filing that month's report,

it would not be itemized in any future report, however, it

would be included in the aggregate ~otals•

•

•

•

II•

A. Itemization of Contributions from Individuals
·'

•

On June 26, 1985, the Committee filed amended Scpedules

A-P for NYJJ which materially corrected the deficiencies noted

above.

Recommendation

The Audit staff recommends no further action with respect to

this matter.

B. Other Matter Referred to the Office of General Counsel

A certain other matter noted during the audit was

referred to the Commission's Office of General Counsel.

IV. Jackson for President Committee-California

Background

The Jackson for President Committee-California ("JPC-CA")

registered with the Federal Election Commission as an authorized

committee for Jesse L. Jackson on February 21, 1984. The JPC-CA

maintains its headquarters in Los Angeles, California.

The audit covered the period from the JPC-CA's inception,

January 25, 1984, through November 30, 1984, the final coverage date of the last report filed at the time of the audit. The JPCCA reported a beginning cash balance of $-0-, total receipts for

the period of $689,512J total expenditures for the period of

$689,487; and a closing cash balance on :;ovember 30, 1984 of

$25.00.

Key Personnel

The Treasurer of the JPC-CA during the period audited was

Mr. Julius Glazer.

Findings and Recommendations Related to

Title 2 of the United States Code

A. Itemization of Contributions from Political

Committees

Under 2 U.S.C. 5 434(b) (3) (B) each report shall

disclose the identification of each political committee which

makes a contribution to the reporting committee during the

reporting period, together with the date and amount of any such

contribution.

JPC-CA's contribution records were reviewed to

determine whether all contributions from political committees

were itemized on the disclosure reports. During this review, we

noted lS contributions, totalling $1,084.50, from political committees which were not itemized as required. JPC-CA officials

provided no explanation for this disclosure omission.
•

The interim audit report contained the Audit staff'• recommendation that within 30 days of receipt of that report, the

JPC-CA file a comprehensive amendment to correct the disclosure

problem noted above.

On June 26, 1985, the Committee filed amended Schedules

A-P for JPC-CA which materially corrected the deficiencies noted

above.

Recommendation

The Audit staff recommends no further action with respect to

this matter.

B. Other Matters Referred to the Office of General Counsel

Other matters noted during the audit were referred to

the Commission's Office of General Counsel.

o v. Finding Related to Title 26 of the United States Code

A. Determination of Net Outstanding Campaign Obligations

•

Section 9034.5(a) of Title 11, Code of Federal

Regulations, requires that within 15 days of the candidate's date

of ineligibility, a Statement of Net Outstanding Campaign Obligations (NOCO) be submitted which discloses among other ite~~, the total of all outstanding obligations for qualified

campaign expenses and an estimate of the necessary winding down

costs.

Sections 9033.5(c) and 9032.6(a) of Title 11, Code of

Federal Regulations, states that the ineligibility date for a

candidate seeking the nomination of a party which nominates its

Presidential candidate at a national convention is the date on

which the party nominates it.candidate.

The Commission determined that the date of

ineligibility for Jesse L. Jackson was ~uly 18, 1984. The

Committee submitted the original NOCO on July 23, 1984 and has

continued to submit a revised NOCO with each matching fund

submission.

The Audit staff reviewed the NOCO as of October 31,

1984, the most recent NOCO filed at the time of the audit. We

made necessary adjustments to this statement and have prepared an

audited statement which appears below•
•

Jesse Jackson for president committee

New Yorkers for 3esse Jackson

ana

Jackson for president committee-california

Revised statement of Net Outstanding Campaign Obligations October 31, 1984 (Audited Statement)

Assets Cash on hand (petty cash)

Cash in bank

Accounts Receivable

Telephone Deposits

Capital Assets

Total Assets

Obligations

Accounts payable for

Qualified Campaign Expenses

Loan payable

Estimated Winding Down

Costs 11/1/84 to

4/30/85

,...

-

Salaries

Rent

Telephones

Equipment/Supplies

Audit and Legal Fees

Data processing

Fundraising

$67,987 .. 13

3,750.00

7,800.00

3,100.00

73,791.28

61,000.00

58,418.00

$200.00

( 89,232.40)

30,092.94

44,855.54

1,000.00

($ 13,083.92)

388,397.16 2/

50,000.00

275,846.41

Total Obligations

Net Outstanding Campaign

Obligations Deficit

714,243.57

($727 ,321.49)

51 This figure does not include $18,805 in debts disclosed by

Jackson for president-California for which no records were

made available to review•

•
•

•

•

Committee 0

audited NOCO•

Conclusion

Between November 1, 1984 and December 31, 1984, the above

named Committees reported receiving individual contributions

totaling $267,710.22 and matching fund payments totaling $154,636.89. Therefore, as of December 31, 1984 the Committee

has not received matching fund payments in excess of entitlement•

----- ------- -- -

• .~ 1

•I,,, "1 I, ,

.JJ2/011488

MEMORANDUM

TO:

FROM:

SUBJECT:

FEDERAL ElECTION COMMISSION

WMtUNC1ON IH 11144,1

January 15, 198A

FRED EILAND

CHIEF, PRESS OFFICER

ROBERT J. COSTA

ASSISTANT STAFF D;~CT~ AUDIT DIVIS ION

ADDENDUM TO THE FINAL AUDIT REPORT -

JESSE JACRSON FOR PRESIDENT COMMITTEE,

NEW YORRERS FOR JESSE JACRSON,

JACI<SON FOR PRESIDENT - CALIFORNIA

o

"

Attached please find a copy of the Addendum to the Final

Audit Report of the above subject committee which was approved by

the Commission on January 6, 1988.

Informational copies of the report have been received by all

parties involved and the report may be released to the public.

Attachment as stated

cc: FEC Library

RAD

Office of General Counsel

Public Disclosure
-- -- -

. . . ..

JJ2/121687

FEDERAL ELECTION COMMISSION

WASHINCTON 0 C 20463

ADDENDUM TO THE

FINAL REPORT OF THE AUDIT DIVIS ION

ON THE

JESSE JACKSON FOR PRESIDEtn' COMlo1ITTEE,

NEW YORKERS FOR JESSE JACKSON

AND

JACKSOO FOR PRESIDENT COMHITTEE-CALIFORNIA

I. Background

A. Overview

On July 19, 1985, the Federal Election Commission ("the

Commission") released the final audit report on the Jesse Jackson

For President Canmittee, New Yorkers For Jesse Jackson and

Jackson For President Committee-California ("the Committee") • That report was based on an audit of the Committee pursuant to 26

U.S.C. S 9038(a). The audit covered the period November 14, 1983

through JUly 31, 1984. In addi ti on, certai n f inanci a1 acti vi ty

was re viewed through October 31, 1964 to verify the Statement of

Net Outstanding Campaign Obligations.

This Addendum is based on the follow-up audit fieldwork

conducted pursuant to 11 C.F.R. § 903B.1(b) (3) which states that

the Commission staff may conduct additional fieldwork after

completion of the fieldwork conducted pursuant to paragraph (b) (1) and (2) of the section.

In addition, 11 C.F.R. S 903B.1(e) (4) states, in part,

that addenda to the audit report may be issued from time to time

as circumstances warrant and as additional information becomes

available. Such addenda may be based, in part, on follow-up fieldwork conducted under paragraph (b) (3) of this section.

The follow-up fieldwork covered the period August 1,

1984 through December 31, 1986, the last day covered by the most

recent report filed with the Commission at the time of the

follow-up fieldwork. During the period under review, the

Commi ttee reported a beginning cash balance on August 1, 1984 of

$18,844.71, total receipts of $1,858,014.56, total disbursements

of $1,874,918.83 and an ending cash balance on December 31, 1986

of $1,940.44. In addition, certain financial activity was

reviewed through February 27, 1987 to determine the Committee's

Net Outstanding Campaign Obligation position.

This Addendum is based on documents and workpapers

which support each of its factual statements. They form part of

the record upon which the Commission based its decisions on the

matters in the Addendum and were available to Commissioners and

appropriate staff for review.
2

B. Key Personnel

The Treasurer of the Committee during the period reviewed was Ms. Emma Chappell.

C. Scope

The audit included such tests as verification of total

receipts and disbursements: limited reviews of individual

transactions and required supporting documentation: analysis of

debts and obligations (including winding down costs) and such

other procedures as deemed necessary under the circumstances to

determine whether the Committee received any matching fund

payments in excess of the amount to which it was entitled and

whether any amount of any payment made from the matching payment

account was used for any purpose other than to defray the

qualified campai gn expenses of the Commi ttee.

II. Findings and Recommendations Related to Title 26

of the Uni ted States Code

A. Post-Ineligibility Campaign Expenditures

Apparent Unauthorized Salary Payments .

Section 9032(9) of Title 26, United States Code,

and Section 9032.9 of Title 11, Code of Federal Regulations, in

part, define a qualified campaign expense as a purchase, payment,

distribution, loan, advance, deposit or gift of money or anything

of value incurred by a candidate or his authorized committee in

connection with his campaign for nomination for election from the

date the individual became a candidate through the last day of

the candidate's eligibility.

Furthermore, included in the examples of

disbursements that are not qualified campaign expenses under 11

C.F.R. S 9034.4(b) (3) are "post ineligibility expenditures" or

expenses incurred after a candidate's date of ineligibility, to

the extent that they do not qualify as winding down costs.

Section 9034.4(a) (3) of Title 11, Code of Federal

Regulations, defines winding down costs as (i) costs associated

with the termination of political activity, such as the costs of

complyi ng wi th the post-election requi rements of the Act and

other necessary administrative costs associated with winding down

the campaign, including office space rental, staff salaries and

office supplies, or (ii) costs incurred before the candidate's

date of ineligibility, for which written arrangement or

commitment was made on or before the candidate's date of

ineli gi bli ty.
3

Committee

the payroll checks

According to the

which were then

It should be noted that although the

considers the overpayments to be unauthorized,

in question were all signed by the Treasurer.

Treasurer, she signed a number of blank checks

given to the comptroller.

On July 16, 1987, the Audit staff received copies of

the comptroller's final payments (plus $600.27 in interest)

satisfying the debt, and a copy of a notarized affidavit, signed by the Treasurer, stating that the obligation has been repaid in

full.

The Committee did not respond within the provided time

period, nor has any additional information been received to date.

Recommendation

B. Determination of Net Outstanding Campaign Obligations

Section 9034.5(a) of Title 11 of the Code of Federal

RegUlations, requires that the candidate submit a Statement of

Net Outstanding Campaign Obligations ("NOCO"), which contains,

among other items, the total of all outstanding obligations for

qualified campaign expenses and an estimate of necessary winding

down costs, within 15 days of the Candidate's date of

ineli gi bili ty.

In the Interim Report the Audit staff recommended no

further action be taken, but noted that the committee could offer

additional information relative to the transactions noted above.

The Audit staff recommends that no further action be taken

in this matter.

Section 9038.2(b) (2) (A) of Title 26 of the United

States Code provides, in part, that the Commission may determine

that amounts of any payments made to a candidate from the

matching payment account were used for purposes other than to

defray qualified campaign expenses.

The Committee reported on Schedule C-P (LOans) a

$9,692.34 loan to its comptroller, and considered this loan as an

employee advance, incurred on April 30, 1985 and due (repayable)

on December 31, 1985. The repayment date su bse quen tly changed to

August 31, 1986.

The Audit staff reviewed the circumstances surrounding this loan (advance). It appears that for the period January 10,

1985 through May 31, 1985 the comptroller who normally was paid a

bi-weekly salary of $1,384.62, was instead paid $1,384.62 weekly. As a result, the Audit staff calculated that the comptroller was

overpaid $9,692.34 (see Attachment 1).

-,-

,...

o

...'"

I .......
..... ' " .

----- ------- -- -

.

4

Further, 11 C.F.R. 5 9034.5(d) requires that a

candidate submit a revised Statement of Net Outstanding Campaign Obligations with each submission for matching funds payments filed after the candidate's date of ineligibility, reflecting the

financial status of the campaign as of the close of business on

the last business day preceding the date of submission for

matchi ng funds.

Pursuant to 11 C.F.R. 5 9033.5, the Candidate's date of

ineligibility is July 18, 1984. The Committee submitted its

original NOCO Statement on July 23, 1984, and has continued to

submit revised NOCO Statements with each subsequent matching fund

submission.

During the initial fieldwork, the Audit staff reviewed

the NOCO Statement dated October 31, 1984. This review was

limited to the verification of cash on hand, loans payable,

accounts payable, estimated accounts receivable and estimated

winding down cost. During the follow-up fieldwork, the Audit

staff updated the Commi ttee' s October 31, 1984 NOCO Statement

using actual expenses paid in lieu of the estimates presented in

the final audit report. This NOCO Statement as amended appears below.
5

Jesse Jackson for President Committee,

New Yorkers for Jesse Jackson

and

Jackson for President Committee-California

Revised Statement of Net Outstanding Campaign Obligations

October 31, 1984 (Audited Statement)

As Determined on February 27, 1987

-,-

...()

r

Assets

Cash on hand (Petty cash)

Cash

Accounts Receivable

'reI epho ne Deposi ts

Capi tal Assets

Total Assets

Liabili ties

Loans Payable

Accounts Payable

Total Payables

Winding Down Cost

Salari es

Data Processi ng

Legal and Accounting

Fundraising

Equipment/Supplies

Rent

Telephones

Accrued winding down cost

Total Winding Down Cost !/

Net Outstanding Campaign

ObI igati ons Def ici t

$ 200.00

(84,699.69)

11,965.44

50,806.57

1,000.00

($ 20,727.68)

(50,000.00)

(370,729.95)

($420,729.95)

(153,369. 50)

(40,474.14)

(28,282.67)

(54 , 141 .08)

(17,186.32)

(7,153.50)

(5,481.34)

(24,645.15)

($330, 733. 70)

($772,191. 33)

1/ The Audit staff did not calculate estimated winding down

cost, due to the lack of certain information. However, it

should be noted that this calculation does not affect the

auditors determination regarding entitlement.
....Mi.. ;" _I' . " of , ..·C..., ...•• "JO.lte 1..I.te uta,\,• ..: ,,~'I:'~:':'~ D, lIl'. UifeII- "reb II,

1.1. , .. c-Wil· ~_I" nM,"2.lt III ••'r''''I_ fr. 1••I....a1 , r...~.u ,otalla. nl','.1.3'.

.... •• , .. d __tl.... aad,.l. t" C....I..' ••Ia .. ..I.. an, .at.l.. f ... to wid... _ BOt entltlea.
7

Attachment 1

Schedule of Payroll Disbursements

'1'0 Linda H. Moody (Comptroller)

(1/10/85 - 5/14/85)

Check

Number Amount Canment

4836 1/10/85 $ 1,384.62 Authori zed

4851 1/16/85 1,384.62 Unauthor i zed

4873 1/28/85 1,384.62 Authori zed

4875 1/18/85 1,384.62 Unauthori zed

4893 2/8/85 1,384.62 Authori zed

4947 2/11/85 2,769.24 Authori zed

4954 2/18/85 1,384.62 Unauthori zed

4958 3/1/85 1,384.62 Unauthori zed

4964 3/8/85 1,384.62 Unauthori zed

4968 3/18/85 1,384.62 Unauthori zed

4977 3/22/85 1,384.62 AQthori zed

4978 3/28/85 1,384.62 Unauthor i zed

4980 4/5/85 1,384.62 Authori zed

4989 4/12/85 1,384.62 Authori zed

4991 4/19/85 1,384.62 Authori zed

4996 4/26/85 1,384.62 Authori zed

5008 5/14/85 1,384.62 Authori zed

Total $24,923.16

Less Total Authori zed 15,230.82

Amount Unauthori zed $ 9,692.34