SHARON SNYDER

PRESS OFFICE

MEMORANDU~

TO:

FROM:

'-....... ' ' ...

ROBERT J. COSTA '----

ASSISTANT STAFF 01 ECTOR

AUDIT DIVISION

SUBJECT: PUBLIC ISSUANCE OF THE FINAL AUDIT REPORT ON

COMMITTEE TO RE-ELECT SUSAN MOLINARI

Attached please find a copy of the final audit report

and related documents on Committee to Re-Elect Susan Molinari

which was approved by the Commission on Karch 16, 1994.

Informational copies of the report have been received by

all parti-es -involved and the r_eport_ may be released to the

public ..

Attachment as stated

cc: Office of General Counsel

Office of Public Disclosure

Reports Ana:ysis Division

FEC Library
REPORT OF THE AllJIT DI\lSIO'

Committee to Re-Elect Susan Molinari

Appro\'ed March 16, 1994

FEDERAL EL£CTHJ' C()\I\II5SH)'

qQq E STREET. ".\\'.

\\ .\~lI I~G Tt)'. D.L.
REPORT OF THE AlJDIT DIVISION

ON

)-~ Committee to Re-Elect Susan Molinari

Approved March 16~ 1994

. r

FEDERAL ELECTIO~ CO'tMISSIO~

999 E STREET, ~.\\'.

\\~ASH~GTO~,D.C.
-r

... - ... -

Furthermore, Audit staff noted that the Committee routinely

telephoned doncrs of undesiQnated contributions to find out the

intended election designation rather than requesting written

designations from donors, as required by FEe regulations at 11

erR 110.1(b).

In response to the interim audit report, the Committee

submitted copies of canceled checks to verify that it had

refunded $18,691 of the excessive amounts, although the refunds

were made after the 60-day limit specified at 11 eFR 110.1(b).

The Committee did not provide canceled checks for the reaaining

excessive contributions.

Itemization and Disclosure - Section 434(b). Because of an

inadequate systea for aggregating year-to-date contributions,

the Committee's reports contained errors regarding the

disclosure and iteaization of contributions from individuals and

political coaaittees. Errors were also noted in the iteaization

of disbursements, generally failure to provide co.plete

addresses.

The Co..i t tee fi led amended reports which cor recte_d the

disclosure errors.

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; t .. ' i R·\ it, :

AK004417

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REPORT OF THE AUDIT DIVISION

ON

COMMITTE! TO RE-ELECT SUSAN MOLINARI

I Background

Ae Audit Authority

This report is based on an audit of the Coamittee to

Re-elect Susan Molinari (the Committee), undertaken by the Audit

Division of the Federal Election Coaaission in accordance with the

provisions of the rederal Election Campaign Act of 1971, as

amended (the Act). The audit vas conducted pursuant to Section

438(b) of Title 2 of the United States Code which states, in part,

that the Co.-ission aay conduct audits and field investigations of

any· po-l.i.tical coaaittee required to file a report under section

434 of this title. P·riorto conduct-in9--any audit. ux\d.e.r. this

section, the Coaaission shall perfora an internal review of .. reports filed by selected coaaitt••• to deter.ine if the reports

filed by a particular coaaitte. aeet the threshold requireaents

for substantial coapliance vith the Act.

The audit covered the period from January 1,1991,

throu9h Deceaber 31, 1992. The Coaaittee reported a beginning

cash balance of $16,013; total receipts for the period of

$527,563; total disburseaents for the period of $511,773; and an

ending cash balance of $31,803.

B. Caapaign Organization

The Coaaittee registered with the Clerk of the u.s.

House of ~.presentative. on Auqust 9, 1990 as the principal

caapaign coaaittee for Susan Molinari, Republican candidate for

the u.s. Sou•• of Representatives, District 13, fro. the state of

New York. The Committee maintained its headquarters in Staten

Island, New York.

The audit indicated that 54\ ($285,585) of the Committ~e's receipts ~ere from contributions from individuals, 44\

I, S232 I 888} fro. Pol i tica 1 Act ion Co1IUI itte e sand the rest from

offsets to operatin9 expenditures, interest and contributions from

political committees.

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Page 2

This report is based on documents and vorkpapers 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 report and were available to the Commissioners and

appropriate staff for review.

c. Key Personnel

The Treasurer of the Committee during the period covered

by the audit was Mr. Michael Petrides. The current Treasurer is

Mr. Anthony J. Maltese.

D. Scope

The audit included testing of the following general

categories:

1. The receipt of contributions or loans in

excess of the statutory limitations (Finding

II.B.);

2. the receipt of contributions fro. prohibited

sources, such as those fro. corporations or

,laQQr._or;9anlzations;

3.

4 •

---

proper disclosure of contributions from

individuals, political cosaitt••• and other

entities, to include the iteaization of

contributions when required, as well as, the

completeness and accuracy of the information

disclosed (Finding II.C. and II.D.);

proper disclosure of disburseaents including

the it••ization of disbursements when

required, as well as, the completeness and

accuracy of the information disclosed (Finding

II.E.);

s. proper disclosure of campaign debts and

obligations;

6. the accuracy of total reported receipts,

disbursements and cash balances as compared to

campaign bank records lFinding II.A.};

7. adequate recordkeeping for campaign

transactions;

8. other audit procedures that were deemed

necessary in the situation.

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Page 3 I

Unless specifically discussed below, no material

non-compliance was detected. It should be noted that the

Commission may pursue any of the matters discussed in this report

in an enforcement action.

11. Findings and Recommendations

A. Misstatement of Financial Activit!

Sections 434(b) (1), (2) and (4) of Title 2 of the

United States Code require a political committee to report the

amount of cash on hand at the beginning of a reportinq period and

the total amount of all receipts and disbursements tor the

reporting period and calendar year.

Calendar Year 1991

The Audit staff's reconciliation of the Coaaittee's bank

activity to reported activity revealed that both receipts and

disburseaents were understated in the amount of $2,763. The

understateaents were primarily the net result of earned interest,

service charges and in-kind contributions not reported.

---Calendar. YeA.r .1992

The Audit staff'. reconciliation of the Coaaitt••'. bank

activity to reported activity rev••led that the coaaittee'.

receipts were overstated $7,848 and disburseaents were overstated

$8,148. Ending cash on hand was understated in the aaount of $300

caused by the discrepancies in receipts and disbursements.

The over-statements were priaarily the net result of

over-reporting of contributions, earned interest and service

charges not reported; the reportin9 of returned contributor checks

as both contributions and disburseaents and several mathematical

errors.

Subsequent to the commencement of fieldwork, the

Committee filed amendments which aaterially corrected the errors

noted above.

B. Apparent Excessive Contributions

Section 441a(a)(1)(A) of Title 2 of the United States

Code states that no person shall make contributions to any

candidate and his authorized political committees with respect to

any election for Federal office which, in the aggregate, exceed

$1,000. -

Section 110.1(b)(2) of Title 11 of the Code of Federal

Regulations states, in part, for purposes of this section, with

respect to any election means in the case of a contribution not

designated in writing by the contributor for a particular

Page 5

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election, th~ next election for Federal office after the

contribution lS ~ade.

Section 431(11 1 of Title 2 of the United States Code

defines the term person to include among others a partnership or

committee.

Section 100.S(e)\3) of Title 11 of the Code of rederal

Requlations defines a aulti-candidate co..ittee as a political

committee which (i) has been registered with the Commission, Clerk

of the House or Secretary of the Senate for at least 6 months;

(ii) has received contributions for Federal elections fro. more

than SO persons; and (iii) (except for any State political party

organization) has made contributions to 5 or more Federal

candidates.

Section Sl03.3{b)(3} of Title 11 of the Code of Federal

Regulations states, in part, that contributions which on their

face exceed the contribution limitations set forth in 11 C.F.R.

110.1 or 110.2, and contributions which do not appear to be

excessive on their face but which exceed the contribution limits

set forth in 11 C.F.R. 110.1 or 110.2 when Aggregated with other

contributions fro. the saa. contributor aay be either deposited

into a campaign depository under 11 C.F.R. 103.3(a) or returned to --- the contr-i-butor.- Ifany__ su_ch contribution is deposited, the

treasurer .ay request a written redesic;nation or--re--attrihuti_on _of

the contribution in accordance with 11 C.F.R. SllO.l(b), 110.1(k}

or 110.2(b). If a redesignation or re-attribution is not

obtained, the treasurer shall, within sixty days of the

treasurer's receipt of the contribution, refund the contribution

to the contributor.

1. Contributions fro. Individuals

A review of the comaitte.'s records relating to I ~1 contributions, identified 22 individuals and one partnership who

exceeded their contribution limitations by a total of $22,974. The

Committee's records contained a letter from one contributor whose

contribution was excessive in the primary election which

re-attributed $50 to the general election, however the letter was

dated 94 days after the contribution was deposited. The Committee

also refunded $3,316 to 4 contributors, however the refunds were

all made on June 11, 1993, well outside the 60 day period provided

by regulation. The final result is $19,608 in unresolved

excessive contributions ($22,974 - $50 - $3,316 - $19,608) and

$3,366 in untimely resolved excessive contributions.

The Committee supplied a number of solicitation

devices which had primary and general election designations

handwritten on them. A Committee representative informed the

Audit staff that generally when contributions were received

without designations, the contributors were phoned and asked how

the contributions were to be designated. A Committee

representative then added the designations to the solicitations.

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,

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i
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Final Audit Report

Page 5

It is the opinion of the Audit staff that the

designations do not satisfy the requirements of 11 C.F.R.

SllO.ltb} since they ~ere not signed by the contributors.

2. Contributions Received From Political Committees

The review also identified 4 contributions totaling

$3,400 made with respect to the primary election from the

Republican Pro-Choice PAC. According to inforaation supplied by

the Commission's Reports Analysis Division, the Republican

Pro-Choice PAC did not qualify for multi-candidate status until

June 2, 1992. All of the contributions were received prior to the

Republican Pro-Choice PAC meeting the qualifications for

multi-candidate committee status. Since Republican Pro-Choice PAC

did not satisfy the multi-candidate requirements under 11 c.r.R.

SlOO.S(e}(3), it was limited to $1,000 in contributions per

election.

The Committee refunded $1,500 on August 10, 1992 in

response to a letter fro. the Republican Pro-Choice PAC dated

August 7, 1992; however, the refund was made well outside the

sixty day period prOVided by regulation.

Comaittee representatives were provided with a list

of the apparent excessive contributions at the completion of

fieldwork.

In the interim audit report, the Audit staff

recommended that the Committee provide evidence that the $20,508

of unresolved contributions noted above were not excessive.

Absent such evidence, it was recommended that the contributions be

refunded to the contributors and that copies of the front and back

of the canceled refund checks be provided to the Audit staff.

c'

During the interim response period the Committee

provided copies of canceled refund checks for 16 contributors and

the partnership totaling $18,691.00. To date, canceled refund

checks for the remaining 5 contributors and the Republican

Pro-Choice PAC have not been provlded.

c. Contributions from Indlviduals - Itemization and

oisclosure

Section 434(b)(2)(A) and (3\{A) of Title 2 of the United

States Code states that each report under this section shall

disclose for the reporting period and calendar year the total

amount of all contributions from persons other than political

committees; and the identification of each person (other than a

political committee) who makes a contribution to the reporting

committee during the reporting period, whose contribution or

contributions have an aggregate amount or value in excess of

$200 within the calendar year, or in any lesser amount if the

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COlla! tt.>."··~TO R.":.l.ct~ uSan "ollna~l

Final Audit Report

page 6

reporting committee should so elect t together with the date and

amcunt of any s~ch contribution.

Section 431(13)(A) of Title 2 of the United States Code

states that the term ftidentificatiQn" means in the case of any

individual, the name, the mailing address, and the occupation of

such individua:, as well as the name of his or her employ_c.

Section l04.3(a){4) of Title 11 of the Code of Federal

Regulations states, in part, the identification of each

contributor and the aggregate year-to-date total for such

contributor shall be reported.

The Audit staff reviewed contributions from individuals

on a sample basis. The review indicated material probleas

regarding iteaization and disclosure of contributions. The

disclosure errors were primarily the result of the lack of

aggregate year-to-date totals.

Prior to the commencement of audit fieldwork, a

Committee Representative informed the Audit staff that they were

aware of itemization and disclosure probless and that they were

the result of the lack of an efficient aggregation 5YSt... In

order to alleviate this problem, the Committee prepared a

-coaputerized _c('tnt:r_il:>~~or list frail copies of contributor checks.

The list was organized-first---by-deposit batche. and datea__ a_nd_t_h,~_

was sorted alphabetically to enable the Committee to determine

which contributors required iteaization. In addition, the list

enabled the Coaaittee to easily determine correct aggregate

year-to-date totals.

During the course of the audit, the Coaaittee filed

a.ended reports to correct the ite.ization and disclosure errors.

These reports aaterially corrected the i.temization and disclosure

problems noted above.

D. Contributions From Political Coaaittees - Disclosure

Sections 434(b)(2)(D) and (3)(8) of Title 2 of the

United States Code state that each report under this section shall

disclose for the reporting period and calendar year the total

amount of all contributions from other political committees and

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 reviewed contributions from Political

Action Committees on a 100\ basis. Since the Committee had filed

amendments as of the date the reVlew was performed, the Audit

staff reviewed both sets of reports, amended and non-a.ended, for

disclosure errors. The review revealed that the Committee still
Committ•• To Re-elect Susan Molinari

Final Audit aeport

Page

had a material problem that stemmed for the most part f:om the

disclosure of no aggregate year-to-date cr incorrect ag;regate

year-to-date totals.

At the Exit ccnfer@nc~, the Audit staff provlded the

Committee with a list of all remaining disclosure problems noted

during the review.

Subsequent to the co.pletion of fieldwork, the Committee

filed a second set of amended reports which materially corr@cted

these problems.

E. Disbursements - Disclosure

Section 434(b)(S){A) of Title 2 of the United States

Code states that each report under this section shall disclose the

name and address of each person to whom an expenditure in an

aggregate amount or value in excess of $200 within the calendar

year is made by the reporting committee to meet a candidate or

committee operating expense, together with the date, amount and

purpose of such operating expenditure.

A sample review of the Committee's disburseaents

identified a material nuaber of disbursements which were not disclos~d properly. The errors generally were the lack of or

incomplete add resse-s.

Prior to the coapletion of the audit fieldwork the

Coamittee filed amended reports which materially corrected the

disclosure errors.
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FE DE RAL ELE CTI()~ CO>\1.\lISSJO~ AK004778

March 29, 1994

M~. Anthony J. Maltese, Treasurer

Committee to Re-Elect Susan Molinari

1911 Richmond Ave., Suite 200

Staten Island, NY 10314

Dear Mr. Maltese:

Attached please find the Final Audit Report on the Committee

to Re-Elect Susan Molinari. The Commission approved the report

on March 16, 1994. ,

-1

.

The Commission approved Final Audit Report will be placed on

the public record on April 4, 1994. Should you have any questions ;.-,'

regarding the public release of the report, please contact the d

-Commission's Press Off~~~_at (202) 219-4155. Any questions you

have related to matters coverea---dutlnq the -audit orin the report f~

should be directed to Rhonda Simmons or Ray Lisi of the Audit .-

Division at (202) 219-3720 or toll free at {SOO} 424-9530.

Assistant Staff Director

Audit Division

Attachment as stated

cc: Julie Wadler

Page 11

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. ---~•.:--_ r --~.
Page 12

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Chronology

Committee to Re-Elect Susan Molinari

-i- ,

c

Audit Fieldwork

Interim Audit Report to

Committee

Request for Extension of

Time for Response to Interim

Audit Report

Approval of Request for Extension

of Time to Respond to Interim

Report

Response R-eceive-d _toIJ\t,_r_~_.

Audit Report

Final Audit Report Approved

Page 13

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5/25/93 - 6/15/93

9/24/93

10/12/93

10/18/93

11/29/93

3/16/94
.~--j

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