• rl:DERAL ELECTION C(}/\1MISSION

\\ \ .... 11I'\,{ • 11 l'- () ( ~O·ltd

October 16, 1980

MEMORANOUr-l

'ro:

THROUGH:

FROM:

FRED EILAND_A

BOB COSTA '7l

~1UDY HAWKINS

PUBLIC ISSUANCE OF THRESHOLD AUDIT REPORT - rrHE REJ\GAN FOR PRESIDENT COMMITTEE

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Attachca please find a copy of the threshold audit report

of the Rc~q~n For President Committee, which was approved by

the Commission on September 16, 1980.

IIlform~tional copies of the report have been received

by all parties involved and this report may be released

to the public.

J\ t taC"h:1IL~n t l1S S ta ted

C'c: FFC Library

R,\l1

Public Records ~.,
...

FF.DERAl ELECTION CO,\l,\lISSION

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'l'HRESHOLD AUDIT REPORT OF THE AUDIT DIVISION

ON

REAGAN FOR PRESIDENT

I. Backaround

Overv ie" ..;

This report covers an audit of Reagan For President

(lithe Committee"), to determine whether there has been com!-""liance

with the provisions of the Federal Election Campaign Act nf 1971,

LiS ar.'.cndcc.1 (" the ;\ct"). The audi t toJas conducted pursuant to

Sectio~ 9039(b) 0: Title 26 of the Internal Revenue Code "hich

st~tcs, in part, that the Cornmis~3ion is authorized to pr~~crite

ru10s ~nd regula tions in accordCl J1Cl~ '.vi th the provisions 0 f subscc:ti'):) (c), to co~c1uct eX.:lminati.cns and audits (in addition :'0

eX~i::1i ::\1 tions and audi ts required b~~ Section 9038 (a) ), to conduc t.

i n'·:·:-,s tiq.:l tions, and to require the keeping and subr.1ission of a~y

bo()~:s, records, ar.d information, '...·hich it determi nes to be

ncc~s~ary to c3rry out the responsibilities undor the cha~ter.

In addition, Section 9038.1(b) of Title 11 of t~c

~o::·:: of Fcder~l EcqulCltions states that the Commission rn.:ty

c(':-:.l·.~\~t. other exa::-.inations and auai ts fror.1 time to time as

i~ d~0~S necessar~ to c3rry out the provisions of this subch~~~or.

The Com~ittee rcqistcred with the Federal Flection

Cr~1ission on February 28, 1979 as the principal campaign

co~~ittee of the Honorablv Ron~ld Reagan, candidate for the

RL'>'.lbl iC:ln nomin'1 tion for Pr.esident of the Vni ted States.

'r:~·-: rc::uni ttee m~intains i t~) headquarters in Los ]\nqelc~,

C.)li:-orni3.

The Audit covcre~ the period from February 26, 1979,

tl-:· ... .i ~cpption d.:l tc of th...""' Cammi t tee, throu<]h DC'ccmbcr 31, 197'j.

D~l!-.i.r.':~ this period, the C(~mmittce reported an opening cash b:..l,}::~L'

o~ S-O-, tot:ll receipts of $7,210,953.66, total ex~enditurcs

of S~,0S6,378.CS, anJ a closin~ cJsh b~l~ncc of $554,~7·1.9S.
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Thi~) report is based on documents and working papers

~~UPI)ortinq ea~h of the factual statements contained herein.

'rhcy form pdl-t of the record upon which the Commission based

i ts decisi()n~; on the matters addressed in the report and were

av"i 1.Jble to the Commissioners and appropriate staff for revie\v.

The principal officers of the Committee during the

perio(! audited were Senator Paul Laxalt, Chairman and Ms. Bay

nuchan~n, Treasurer.

c. Sco1?~_

The audit included such tests as verification of total

rcpol.- t()d recc ipts, expenditures and individual transactions;

review of required supporting documentation; analysis of Committe~

dt~bts and obligZltions; review of contribution and expenditure

limit~tions; and such other audit procedures as deemed necessary

ur:dcr the circumst.:lnccs.

J\.. Int~O(1uction to Findinqs ----~--~ ----- ------ --

The objective of the threshold audi t i!": to rcvie\v the

C0r!~;:1i t t:..:-e' S 'lccounting pol icics and procedures in order to

de:. c r mine no ton1y the ireu r r ent but illsoth e i r poten t i a 1 '"1h iIit ':"

to co~~;l '1/ \-:i th Ti tIc 2 of the Uni ted States Cede and Ti tIC' ::6 of

t he In Lcr:1al PC'."cnue Code, and to vcr i fy the accuracy of r0i'0rts

d:1J. st:ltc:ncnt:-; filed during the audit period.

· J H. Audit Findings ~nd Recomrnen2~tions

The Cornmi ttee rL':.-~ponse to the Commission approv(~d Inter::'

1'h~·::sh()1\..1 Audit Report W:lS due on Augu~t 6, 1980. However,

on l\U\~~J~-;t 8, 1980, the Com:11ission received a written request froD

tho C-.J::::ni t tee for an extension of time from August 6, 1980, unti 1

;',:...:(11.::3:: 25th to f.i Ie their \·ie\vs in response to the Interim Thres::,,- :.:

Au.:~it Pc-port. On August 19, 1980, the' Commission voted to deny t:-.-,-,

c,-;:":·~~it·:t.:'\L"S c:·:tl.... nsion reqth"'st, and aqr 0 cd that any amendments or

d\~,:~:':~:1..._)nL ..1tion prl-·gented \..;ith respect to the findings contained i::

t:~:~: l"t'::'(:l:t will be acknoKlcd<)ed in the post-prim~lry audit report.

Inc1 UdL'\d be 10\\" .:l1·1..~ the findin(Js and recommendation;.

.-~:-~ ;, ~··.=·~0n tcd to the COI1'~li t tee on Jul~' 7, 1980. As of .:\ugust 6,

10~~, t~:0 Committ0c did n~t present any document~tion to indicato

". :~ :"- ._::, ":" hZld cO~:::' 1 icc1 \·:i:;1 any of the recommcnda tions set for t~l
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1. Contribution Limitations

Sl'ction 441a(a) (1) (A) of Title 2 of the United Stat.c:-:

(\\d~" states th.lt no person sh311 make contributions to an~i candidr:lt r ;

<111d his authorized political committees \oJith respect to an":, electiG~.

til T·'edcrLll office which, in the aggregate, exceed $1000.

1,1) r~: 1r in:] th0 rev ic\·; of contributions, the

l\lhlit st..1ff noted 1:2~~ persons made contributions which exceeded,

or '.oJhC:l Clq~Jrcq.J.tcc1 \'Jith other contributions from the same person

were in excess of, the SI,OOO.OO limit. The total value of the

e:·:ccssivc portions \oJ3S $75,820. l\ccordiner to CommittC'f" records,

tht ':~f_' con tribu t i ODS h.:l:} not bC'c~ rc funded to the con t r i butors.

Ib) ()l~: reviL'·...· 31so indic<ltcd 48 contributions

t, tIt. l t i:l i t i \.1 1 J_ i' cJ. D D C t~ J ~-, : f : exc e s s i \1 e, but h d 1)('0 n br 0 U(J h t with in

the 1i:;1its b.::lsod UiJ{i:: lc·ttcrs from contributors authol-izing the

CO!:1~1i t tC'0 tn attrihu +-:.(; '-1 portion of the cont r i bution (s) to

d no t:1l?r i n... i v id U~ 1, ~: u~h as husband and t·;i f e apporti onmen t s . The

t ()t_~il ~:,illh~ 0: these :Jc:-tions a!??eari:10 3S c·:-:ccssive in tr.e repor+:?

i ~; $ 2 , 0 -:- 0 . 0 0 . f..r: 0 t :-: 0:'; r- sit-'..l a t ion enc; n U !~ t ':: ~- t.'d d uri n q the rev i e \o.l

'..J:1 ~) t::.:l t bee:lt.:s C 0 f ._~ :-r; l"" ;:; (i. Cit' in:-u t, c c c1 i nq, etc.) in the

Cr; m~: i ::~, t:: I.:; d.:1 t -J b:1 S i, 0 ~- c c :; t ~- i b II t c : s 3 0 con t ributions h 3 d been

du:'l~.:',l:-:·:I.~ on t::o t'(':-:::-:':"~ (i.c. th~' S::1::10 cC~:1tribution itc::,~ized

t ..... i c.;). r:' ::''; t c :'.::1l \.-:. :. ''': t.' '::':: t (: sedtl::': 1 i c.::. '::' (: n t r i e sap::>ear ing

ir: t.r.-:-' l·(':·I.'-'~-:'s is S2?,~S~.2S. T:1C rr:r:::ort~~ h.:1-:o not bee:) ar.1ended

to CG~~-·~oct t~c pu;)li:: ~cccrd ·.·.ri t:1 rc:;::-,·~c:' to th~ contributions

mc~~tic:"'.,.-~(~ i:-: this I;'-~:':: -,~!-01:.:;i1.

': :-.r_, Cc:nmi t ::Ct..: d':: ~~('d to rfiV ic\oJ the ap!J':lrcn t

l':·:(·')~~~-~~·:L'" ...~2:-:t.~it-'...1:'is:-.:3 ,"1:1...1 recti::: this situ.ttion by obt3.ining

l·,t.t,,::~~:~ frc~, co:-~:'~ib·,:·,:,('"\~-s ~luthol:i::i:;~r .3~~:·~()~-t i ollmcnt of the

l·l~:1··~·:;-·::'iC'::(s). 1: ·-::1"' l('tte~s C.3!::;O::' t'c· (IL f dincc1, the Committ0'.'

d\:~'t'C<~ :'c ~-c:'...:r..~ :':1'. :·:':C't.."'ssi\~c p,,)rtio~s t.::' thf\ contributc~(5) .

i"tll·~~::.::~, tl:.t? CO;'~:-:1itt··{.. ,"1(_~1·0ed tc affic:--:d its rf'jJorts to correct thl..'" ~\u:"I1.i~ r(,~02,,""I~:d for crj:-.~ributions th.3t .:1;~~::-I..'"'I:11-t\d t'o bc cxcessivc, FI.."I~­

tht' r.-·: 'il-l but dr'..:, i=-: f~ct, documc:::'c'd i:1 C( lImn i ttcc files as bci:--. ...

'..... it:1 i:-; t 11'~ 1 i mit ;-~ .

r~:-:I.' :\... :~:i t stZlf: ~-l'~C:-:~l1c·r::ls that \·:i t~:in 30 da~·s of receipt

\\,' l::~:' :~~"::i~ic.J.ti(-';l, the CO:7';'!l tt-l"\.... rL":t:~:d thp C'xccssivc portion~

• t. j:'0:".::-_~·iL·_:::i(;!::: ;.ntl..-~,-1 jn },1) ;1!;'-! I~!-0\·idl' "viacncc of the

: ',::.':. (i. c. ::':10 ~.( _:.: .:1 :-:d C·~lC~: (..Jf PLiC:1 e.l Ill'" 11 eel check used to

j:~,l'·~" t_:.,_,· r'C~==-~::-:~~), ()~ :~rl~\"i(1e c':i(10::CC C10,11-1'/ demonstrating th.:1::

::(. (- 1-" : . 7~ :- :. '.~ •.:. : ~:-: .~ '- !- .- - , i:1 f .](" ~:, not. .:; x('" C S.3 i 'J I • • Fur t 11 c r, i tis

~'t.',,' :',::,. :"~':"~ t::-;·· :,::;,_, ·~.':·::::':'tt.~_L itl..---ri',it:c" t:1C rf'~-\1nds in its nc:-:t
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rL'\qulClr1y scheduled rpport to the Commission. If the Committee

C~ln dcmonst ra tc to th.' Commission' 5 satisfaction that certain

contribution~J l1re not C'xcessive, it is recommended that an Clmended

report (s) bt") filed t'() correct the public record. Further, it is

reeom:nc'ndt.'\d th.:ll til" ..mended report,(s) include the contributions

out1in,'d in 11:) th,lt tlolve been corrected on the Committee's data

b~lSC' but (~urr~"'nt1',: oIi'i'(' ..lr 35 excessive on the Committee's reports

as f i 1t'd •

Section 4·11,1(b) (1) (A), and 441a(c) of Title

0:: the TJn i tt'l: St,1tC~~ ('()d(~ providc:s that nf) c~ndidLltc for the

o:ficc of Prc=idcnt ol the t 1ni tt!u St.:1tcs who hClS received

m...1 tchincr fun~i:,; m'::.lY mdkf' exp(,!1f~ i tures in anyone state t~HJCJre(}~ltinn

i n ("\:-: C t.'\ S 0 f t 11 (' ~l r C', It (' ,- 0 f 1 () C t: n t s mu 1 tip1 i e d by the s tatc

vf)ting 3C0 po!'ul.:ltiGll ()14 $200, 000. 00, adjusted by the Consumer

P r- icc I n d (~X •

S t -: ',":, t i (); 1 lOb. (d ) 0 Tit 1 c 11 0 f the Codc ofFcde r C1 ::.

p·.~~~'...ll,it.io:1s st:itos th:it c;,:!'~'nditu~cs made by a Presidential

C.:i:ld iJ,llc 's ~n~ t::,} 1- i zed ccmUll i l teo wh i ch seck to in f 1ur:ncc the

n C ::1 i :1:1 t. i C':1 ():~ t ! ...... C :1 did ~1 t in,l p.:1 r t j cuI a r s t t C' h .- 11 1 be a t t r i -

b'-.:tcd to t:1:1:: ~~t:ltt·. rl'hi~~ ~~I.·Ct. inn furt~;.cr rcquirl")~ that the

.:.l1102,::1tic':1 0: t):'::'t;:i,-~itul-C'S ~-;hd 11 be reported on FEe form 3Pc .

nt !- i :~ (: t h c, t' I ' t' i (),'1 0: ZlU d it, Soc t ion lOG. 2 (b) 0 f

r:'i:l·.,: 11 of ::'L~~ C(:,d\.~ of Fcdt.::t-;ll Rc(]ul.:1tions statcLl, in part,

t::..l: l~:,q}t':1dit::~-t..""s for st.lff, m(lc1i.:l, printinq, and other goods

a~",,-l ;,j....:r\"ic...::~~ 1J~~t ... \l in (l C:lffi!':ilQn in J spcci fie stZlte shall be

.::l:.:::.-ibutc~~i to t:l:1t St(tt(~. Fllrth0!.-, Section 106.7. (c) (1) and (2)

s·~\-::c·~~, i:: r~',"11-'_-, th.lt~ (,XiJ('!11!ltll~·~~~ for ptlblictlti('1!1 and distriL ',: :. i (}:-: 0:' nC' '..: :~ : '.1 .., t....r, In:1 \ .1 i tl t " t (~ 1,_·'v 1;; i O!1, and 0 t 11 L:r t y pes () :-

a(:·:t;::-:'is"-·::~t.'nt:--: distributed in mo::-c th'::ll1 OIh~ state shall bc

':'it:.~i:::ut·~,.i to l'.!\-~h st'ate in jJr();~Drtion to the estimated vic\.... inq

..1l.:.l i.1~::'CI') or r0Cldl'rsh i [J of vat i n0 ;1(:0 \.;hiLh CZln r(,\ ..lsonably be

L·:·::::'t~CtCl1 to br; in:l~l(;nced by thc:.:>:-~ Zlc1vcrtisemcnts. Expenditures

0 1- t ::- :1 vel \.: i t h i Ii 11 S t .-1 t c s h:1 11 b (. a t t ributed tothat S t.:l t (\ .

S:·::-·~·r;.(iit:'lrcs :r)1- tr:i~/cl bct\.;c'cn St:ites need not be' attributed to

t .~. • i nd i -.: i d U 11 S t ~l t .

t" 1 r r (' ~! i C\-.' 0 f e ;.:r' c r. c: i t u res for t h to'\ aud i t peri 0 d

j !lC~ uc:cc1 tC~jti:1q to dpt-erminc t:-:e Commi ttC0' s compl iance 'vi th

t~:I" rccol·,.1~:i·C·~.i:ll~, l-('~)()l-tinq a~c1 ~11oc.ltion reqUil'(~ment~ of the

.:'\ct. Bas0d u~Jon our ~('vic\·.-, \-lhich consisted of an e:-:Llmination

C';~ ~-;cl~ctccl d'i~;bur~~t'rn('nts on a lOQr. basis plus an unrestricted

l'~'l:l,:-':'l S,-1~1!Jlt' -:!~-,v.,:!; :!'"OI!1.:l Sl\!':ll~.:1t(:~ pOpu1 ..1tinn of 3pproxim:ltcly

r = ... : i .~:-.,~:~-;-~._:~. '~~~~-', ~:J(-' (h:tl"'r~:11 :1l::~\.~ :110 fCIllc)\·!i 11<1:
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Seventy-eight expenditures totaling $237,586.75

\-Jere not ,I! II >C,l t ,.,! to the proper sta tes, in conformance wi th the

provisions f 'u t 1 i III 'd above. These expend) .. ures represent approxiIn,ltely 26. oq ol the tot.:ll number of and 17.12?J of the totc:ll dollllr

dmoun to!' ! ::':i )l..~l1d i t \lres wi thi n thi 5 rev io'.-; ca tegory:

1\PP r ():-: i m, 1 t.ely 2 2 • 9 0 the tota 1 q U."1 n tity c:l n d

38:) of thl.'1 lOt~ll dollar amnl1nl of cxpendi tures review('d in the

samp it:, \-:crl.' not ~11 lOCZl t0d tc l the appropr i':1 tc stato (s) •

r;t.'"") n l ' r:l 1 1'/, the rea f' (lnsf0 r t h(l all ()(~.::l t ion discrep..l~1cies not\.·d in both of the ~bove categories appelll-pt! to be a

time dt.:l:1·/ in rt'ct'lvinq thc' expenditure i:1formation from the state'

off i c l.' s, an(1 t r d '/l ,1 and S (11 ~l ryex r t: nc1 i t u r (. S rna d e to i nc1 i v i d u a 1 s

l.r;n,"l'll':':l,-~ ,1 Ild,,'nl- d:'siqnt'c! wit.hin IJ.:n-tic1111r stiltcs and/or region.:ll

The CC':.uni t tc:l.: c11 c1 nCl' n:·:ceed the 5 tc:l to spendi ~(:

limi t:'lti-:.'::~-" i.n an-.: one st3tc durin(_r 1970. Ho\vevcl.-, the Committee

\~·d~:; i:... ~~(:·~~~·_·,-~ that i:1C~-t.:ClSC·,~ ~lcti'.-i.~~· du~-~.;:': 198011\..1,/ C.:luse some

s t ..l t(~ l. i ::'..i .~ :.~ t 0 be t"):·:C(:C'dL~...1 i f P racedl11:"L'. :1 r(~ no t. ch3 nqcd .

~·:i.t:: 1-t··:;:'\'ct to the' ~11oc:ltic~1 dis("~-·"'pancies noted in

(::"1.) ~l:'.-'·:~_\, tht.' llu(:it st~1f~ roc0::1:11t"1nc1s t<-:.1t \vithin 30 da,:,~~ of

l:t..:I."I'i~d. C\:- thi~; noti:=ic3tion thl..'"") Cnmm-itt\··... amend its st'::lt.C by

~; t :1 l·.' :"" 1 1. (~ .: .. 1t ion Sc h C'd u 1c (FEe For::1 3Pc) .1110C .:ltinSf the

t..::'::·l":.::':-~::"-f':"s t·o th'_" ~PP:-C'F~:-i...itc St3tC(':~).

\':i L:: ~0spect to thL"1 discrcp3~cies ~()tcd in (2b) ~bovc" the

:\u:..l i:: s~:-~:: r0Comn'J~:1ds th:1t \ali thir: 30 c1 ..1";·S nf receipt of this

not :- ~c'::ltio:1 the CrJ:nr:1i tt0t'" rC'Jic\-; its di ~~burscmcnts and include

\.;! t-:1::-' tl"'.c an~t'ndm(nt to fEe Form 3rc thL' L1011c:1r v.:11ue of any

1-",11 1·" 2 'i:' io:-: () r t ':-:i.J'--.:nd i ttl r"C'S to t~(; ,lnrlr·..... nriato states. Further,

t h·· \"--:":~itt~I.'" :;huJ11d !,~-o~:idc' th0 ,::-"",ldit' st~1ff \vith copies of the

dt"'~_.t: It:,-l ~.·:(lr;~ i nq rJ ,·q.'I..'rs s\.:~·'rorti.~-: ... the r0.:l11ocation (b.:lnk

:lCC('~::;- :l::J \.... :~ ......... (.. ~: ~un~:"'t"'r, cL1te, 3!:10unt, ;~.:1y(~C, original alloc,lt ll.:: .l: ..: :~,l ;'..L~tt'd 1] l':'L"'::l~ion). C~-:-on rL·\..... t.~i:Jt of the amended FEe

l'\"!-:-- .< .: .1:-:\.1 ,l~;:"rJl~L_l~~\.l \.:('1i..~: 1'.:1:'1.... ;..::, tht'" :\~lJit st.:lff \vill rcvict....

t::t' : : ::::. ::>~..-.':- d,:~'..lStl'l\~ ,:11t'C-1t io:: t~) d·_.... :J~rminl ... the ad("'qu:lC'':
• 3 • FinLl n c i.3 1 Act i v i l'/ ::() t- i\C C U l~ ~l l t' 1Y St:l l. c d

t:"

During the period audited, Sl~ct ion 434 (b) (1), (8),

(11) dlld (l,l) uf Title 2 of the Vnitcd St:ltc~~ Code required the

~!i:~l'l{):;I1~'" uf t :'C' '-lmount of cash on h:1nd ~lt t-hc\ beqinninq of the

rl';)()}-t il;': ~H,t-il;d; the tot31 sum of ~ll rC'ct"\ipt~~ and expenditures;

, 1 i (: ~; U t • : : (1 t h.. !- i!l formd t ion assh:1 1 1 be' r c q \1 i 1" l"\d by t h (' Cort'lr.'Li s ion.

UUt- rcconcili.3tion of thc"' CommitteC"s bC:Ul}: Cl('Count~~

trJ it~; ,:i:;cl('):~\l~-l"\ repol~ts inc1icatcd t.h....lt (.1) total r<'}lort('c!

rl'"'Ct-' 1pt·:; ',';t'l'(, urh.!.--'rst:ltC'd $11,n02.1G, (b) tot~l reportc'(l c':':;J0ndil~l~-t_)~; \.;(,!-,. \111,:l'!:;LatJ'd $37,404.13, ~nc1 (c) C'ndinq ca~:h at- Dl:cemb("\t" 31,

1 () 7 «) \oJ il : ; ()•.' t • 1- : ; t ,1 t t, 'd $ 2 ::-, , 8 0 1 . 9 7 • t l ...l IJ r)(,d 1- :.:; t h.:1 t t h (\ ;(' cl i '; C r (,p (1 n c iI's

\.; t. ' 1- t.: C. I' : . : • .,! h ': i IH' 1\ld i !1 q sea s h 0 n h;l n c1 t h (, Vel 1 U 0 of" un::; n (~ n t "

f~::~l..i~; t-:- l:l:',lt11 t~t.'d fror.t n~ltionl'll he~(hplclrl('r~; bank uccounts- to vt:lri()u~~

;; : ..1 t ("\ (): : It'(~ c C () 11 n t s • T11 0 s e " uns pc 11 t" f U I H1~-' w(' r C~ C ] d ! ~; i fied c:l S ~.; 1C h

b',: th·.; ("(I::,::litt·.'t~ until tho expenditurc\ lnfo1"m.:ltion WliS received from

t :;.... st,l~." ()~'fic·~)~·; and ~CCOU:lts. In sov(·r.,l instances the detailc:.:

i =::()r:~I,J·_:':: (i .C'. 1 i~:;tir;(}s of dj sbursc'n1('nts m.'1(10) v.·u~~ not· rcccivc:'~

{':: .-1 t: :.... :.: bLi;-; 1 :-~ f(lr inc] :'lsion in the d i~)closu~-e rcpnrt- c"overinc..:

t :~" t i ::;t: ;-·,·r i c: i n \~'hi ~h thea funds \.;erc cxponded. ThcrL'! f )!~C, (1

:.'{I:"ti~':l .;: 19"7,) .1cti.·:it'/ \";:i~~ included in the 1980 di;,cl():;\l~-e rcp("1-:':~~.

:.,::-~_:1t_:~-, t::·.' f·\:-:::litt,,-"\~."\ h,1.~ nnt ~:l·t. 1-('CC;'\" ... ·(1 on~"" (1) :,('t 1,1- b;lnk

~-:::'.ll~·!n·,::::·,-~ .1:".: C~l!H.~l~llt.:(i C:h.:C~:~~ :~-C1m .::l stolLe bClnk dccnUIlt ~~or

1)t'~-::l'!~1~"t~~- l~)~·q. Tlh"\~I":~""!4C, thi.;~ ...1cti'lity could not b(' ~lC'l·tl~-.1te1'.:'

~lC',·,,):.l:L:": :-,)!" i:: thl..~ rcco:".2ili:lt10!1 pr()l..... l'~~~~.

The CC!:-:lr:1 i. t tC(' cn::'C''..1 r rt. \d \.; i t h our vi C\\' t h, It the ILlS

t ~:.:-' \';d,~ 1.::-'~1=~1":, rC's::o:1sil'1l' :nl" t lit." l1~ ff\_'14(,l1CO and aCjr("L' ... to

:' • ":T' n 1- ',! '.1'1 C \.,' t 11 I -. 1.:.l d t i (' f 0 ~- f u t U 1" t:. rep <.) r t .

::::,::- ic :-,

"' ..\ tld i t:.. s t:l [:- r ...:~ c c :~"':Ih "\ 11 d s t h ~l t w:i t h i n 3 0 d..:1 Ys () f t ..." I..... \. ' i i )t

t :I~.·. ::.()~.i i edt i.on thL'"' C\.;I;1;1l1 t..tC(· mLlke ~lV'::lil~lbl(' to tl1l' :\u...1i t.

," t ::: t:1'-' l;IC~:.i nq b:1:1:: St..lt t'f.lent CHh.1 cLl~1ccl]cd ch(.'c}:~~ t t'l"

r·····I:h.~: 1 :',lti():~ purpo;:cs. Furthc~-, it is rccommt"'lHled th:ll thl....

\ '::'.:'1 itt. .:".:' end· ',l\'or to rc,-: :"lC0 tho l':1<J t imp involved in recL.... i v i nq

.: i:1~-()!-::1.1tj()!1 fr(lm tho 5 t ..lt.. (' ()~:~iccs Llnl1 accounts, thl'"'rt..:by

i:.'·:-t·,!:·.~:-.\j thl.: ~lcctll~.::lC·:" cf l-C·P()1.~t~;a fin~llH~i~l ~ctivit,/ in the

•

D'.l~" i :1

':':t !., t:-;. l·nit~,

:11t.... ,1t:\.~i t :'\:·l.-jnd St.... ctiol~ ·1:.·\ (b) (I :~) of

S~- ~:"._ ;~ t't' .. ~·" .... rL'\tp.1i 1.4\'<1 tl:. ........ d i :;c1t,:~tlrt' of

\.:\'l~:':; ..1:~(: nbliq.lt1.(lns ()\,.1(~d by tht'
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a continuous reporting of their debts and obligations until they

are e:·:t i.nouishcc1, together wi th a statement as to the ci rcumSttl11C.':; ~lrhl condj tions under \vhich any such debt or obI i IJdtion

i~ e:~t'inqt1i~hed .:lnd the consideration therefore.

Fu!.-thcr, the Commission has included within the

Fi I1d11(' i ..ll <:ontrol lln(1 Compl i~lnCt' Manual For Presidential

C'..1'nci i(i.lt--·L·~ ·'~(,-Ec-i·.ri-I1~:1-·pub'ric F-:Cn.lIH~-ing (Primary Election' Fina!1cing),

j)-ubl i ':;h-c'd - j'u·(·..;·-1-9-7 9 ,a' s'U(~TC-s-tl"d format for the d{sclosu-t:.e-0: ---. 1e t t C' 1- :-; 0 [ ered it.

·L1) D1 SC 1051..1 rc () [ Loans

'r:1L'" l'\u(1it st',lff noted a bank 10.::1n r('cci\·ed on

St.~p tcmbcr (), 1 C) 7 ~~ f or which the rl"portcd na ture (detai 1~3 of the

debt) on SchcJu1c c-p consisted ~,f anI? "Bank Loan." The

Committee did not disclose the r;\te, d~ration and collateral (if

any) used to secure t~e 10~n.

i.. let. t~'''r of ,'red i t in the amount of $ 30,000 \';:J.S

C'st.:lbl ished \o,Ji::.h ,1 b:l:".~: on ~'::lrch S, 1979 \vhich was subs("qucr.':l~/

incr- (:: :1 :>-:d to $ (, () , 'J () 0 ·..n: d t ~1 t • :'1 t () $ 9 0 , 0 0 0 d uri n 9 col end'::lrye 2.. ;:

1979. Thtl 11.."tt~::~- 0: .~:-\ldjt, st.... curcd with monev market ccr-ti.:iCCltcs,

\.J.:l~~ it: :,1':or of ::~:(' !)-:·~~i fie Tclt."phon·:: and Telegraph Company as

securi t~' for a nCl~ior.,11 tclcphol1l" agreement. The Committee did !10~

disclo.:,: thL: $30, :JOO i~1ili:11 incl-emcnt, but disclosed the subseque!'1t

inCr0:.1.),'~ to $60, \JOO .:lnd 590, 000 as addenda to its reports filed

with th(: Commiss':on. The' rc'cC'::mh.'1ndc'c1 format specifics that lettel-s

orer c' \. i t be c1 i ~; ;: : n s. -(: 0;) s C :1C'L1ll 1c C- P, Linc 1 3 0 f the r e 0 r t .

\';i th rcspcc:. to :.11"." 1("),'111, l he" i\udit staff recommends that,

\\'ithi:: 30 d3yS 0: l.-cc·?iI"t' of thi~~ notific3tion, the Committee

fill"" ,-1:1 ....lmended rcpo~~ full":' c.:l,t' ..liling on Schedule CP Line 13

t:1C n,1 turc of th0 10::':-:, t0t~ ..: tht,t- \o,Ji th the securi ty, collatel:" ~l,

.111:1 cr.dorsements (i: '1!1~') 1l~~;,,1 tn secure it.

\.; j t:1 respect tu t:l(' 1t':- Lt'l- ("\ f credi t, as noted abo\yc t::c

( \.) n~:~l ittC L: did f i t. • a :-. II \.11.L :1,: um d i [; C losi n q a por t ion 0 f the

intor:;1:1tion co:~cc~ni:v= t1h" l·:·t-tl'l- of credit, however tht.~ fi2i:-.~~

\\'~1:; d·_'~il'icnt in ~~...r() r ..... ~~: .. \.. ,,~~~~-;: (1) an 3ddcndllm \..'.:1S used in lil:'-.1

uf FEe' SchQc1ule ~"-i) a:'ll: lhv di.I.. 1unt, as reported, \0135 not inc:'jj(:"i

i n t.O·~'-l! .:iebt.s o'.·:·~"',J t·.. the' C()r;,:~1i t-tec (FEe Form 3P, Line 13); a:--..:l

(~) t::-..· i:~f()r~::,-~t':,--n c·:'_:1t ..1i~-:t .._l in the ~ddendum W.:lS incom~lct(.: i~

t;1::~' ~_~:t" :~.:1tu~-<: ........ :- t:-:,·, ("'Iblil.:.1L:l"n (terms, ccllatcr31, dcfaul:.

C::1U.··· .l:~.~ !)C'l!,~::: ._." !1!4 r ·:i~· i,-':::', j f .:lny) \o1as not discloSt~d.
.-

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,...

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-8-

Tlh_" 1'. \ 1() n~, i tis recommcndc'c1 t h3 t, Ll t Cl mi n i::lum, the Commi t tOt:~\

~m0nd t:1I. ' ,Ippropri ~:.c report (5) to disclose the ntlture of the

oblig.:1tl()n. The dr:1o:~dmcnt may be' effected by filing a letter with

the CC\:::::li:;:~i()n di:"('~osing the required inforrnutio:1. For reports

fill"d i:1 Illdf), t~lf' C"):71rnittt-~e shot11J adjust its filing practices

t 0 in~~~::·\·.l h,lt- ,'11! t~:·=, rclov~nt information rcl.:lting to debts

d n c.l 0 b l i,; I lin: :: i: dis c los L:don d time 1y b S 1s .

5. rrr,~~,,::'·.:l-~~ Rc:-cciv0d Fl-om Non-Affi 1 i.\.ltcd Committces --------- ... ---_._--- --- ~.--- -- ------_._- .._--

Sl'C~: in .t 14 (b) (4) ()f Ti tIe 2 of tho llni ted Stutcs

Code rL",~tllr'~,,~, fo!- ~_:-.,=..' pet-iod uudit.t:d, the disc1osur("\ of the

n.:1me .:.1:: ...1 ,ldd:-(:,ss f.l:' ',<lch po1itiCdl committoo or c,,1ndidatc from

\·.rhich t:h" rc!)()rt.i!.I': r~rJ!Thllittcc rcct'ivec1 an~' transft."rs of funds,

tOl;~thL'~- ·.... i:1': th(' ·l~rl'.'lnts ,tnc: (l.-lt t\~~ of el11 tr.:1nsft.~l-S.

Duri:-.': tlh..\ receipts rcvic·...·, the Au1it staff noted 17

t r.\ns:e~~~ tO~,-11i!:'~ :::.~, 755.79 roccived from non-a::ilitatcd

(·o:"'.:ni t ~20S \·;hich :--'_~~: :10t bl~cn i tc.'mi zed on t:-:e Co~.::1i ttc' s disclo-

~;\lrc rc;.-ort;:, <lltl~\J'_:'~:L tho dollar \·a1uc \..TClS rc!:'or~2d as

U!~':'tcr.ti:~·~·~~ c():1t.r-i;:''...:":::'0n~:;. The tr.J.:1sfC'Irs cited he~__ cin rl.'present

(1!~:.~-o:·:i:""~ltl'~:: 50' ',-:- the- tC'1t:l1 nu::-.bcr .:1nc1 29' of :hc tot.:11 dollar

Z1~,O'..:~ t ():- t:-:U::-:; f ,- ~-:~ ::'...'Ct-'.l ':C'11 by th~~ Corrun i t ::'r~(~.

T:--.·-.. ·=·:-\..!,-~surcr sta tc~ thZl t th s ·~·;as 311 l1pp.:1rcnt

()·:I..-~t-si,::-:::. or; tnt':" ;: :~':_ of the Commi:.t(~t~, and ac;reC'.:i tn ~lmL'nd its

t- L" :'c :- t i t~: I:l i :-: i !". 1 :. :....~; t r .:l !~ S f co 1- S •

r:'~:(; :~u(:i:: ~~t ;:-:' r0c0r.:~1('nds t:-::~t \vitl:i:': 30 da':"s of ,-,,'ccipt

0:' :::11:--' :~~t-~:iC:l::',: .•..:.:;,~) C'on'.r:1itt0C· :ilL~ elf: ,_tI:1('~c!t_~ rcpol-t(S)

\·:i --:: t:~t_~ CO::::-:l.issi',;-. itC'mi::inrj tht.: tr~nsfc:·r~-:.

D... :~::-,: the pf.?riod o~ ..tudit, Sr:·ctic:~ 110.6 (e) (3)

.'1:.: (.~~ :..~r Titl\.~' ~: 'Jf tlh? Code of Fodera] P.'(1'..11:1:ions required

t i::+ t :." ~-(~C'i!""i(:!~"~ ::~sclost..? on the ne:·:t rl'~)(Jrt C::,:':1 conduit

t'::t·(_;~~.::: ·,·;hich the 2',::.trjbutio:l p:lsseL1.

().:: ~-·:"'·:.it.""'~,,; of tl-~1ns::(~r~~-i~1 iIlC1ic,,1Lt'd th~t 49

l\,II~·d!~~.~\.l .;O:1::.1-.i; __.... :.:.:·1~· tnt'...l]inc S·1,870.0() \·;(-,r\! r ..... r01v("d by the

l'C:':~:: :::: ':-':... ~~ '...1 ~~ 1::': ,. HC'·..:,··':nr, t :-h." Cor.lr:l i ~-. t- 0(" LL.: -or ted thost..:

l".~~-~~.1 ::-.\.i C():1t~-:i :-_~·.:L.J ,,'is t::r;qq!~ th,":" \';('1'; i:'h~i'::dU..11

C(·,,::~:- ; ':: :(1::~-: (~ .... , :1(1:~~"",1:-::;:~-}:t.·1.~) tind dil: !l(lt di?~los() the

~-".':-: :.: : !~'.) t;".~--..·.: ':-. '.::-::,':: t-:... ,·· \_'n:1~:~-ibutil""\n~~ p:}SSl.... ~: •
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The Committee officials stated that the conduits

\'w'l'rc not d i ~;~loscd because thev \""ere informed bv a former

ConuuisslU:1 l'rnployee that discl;sure of the cond~it was unnecessary. II, '\';1 'ver, the Commi ttee agreed to amend its report (s)

to disc 1<J:;.' t: he condui ts as required.

The /·.\ld it- staff rcconunen(1s that t.aJithin 30 days of rcc(~ipt

of this n()t i ~- i c:1tion the Corrmi ttee file an amended report \ali th

the Commis:~ i ()tl disclosinq thr~ earmarked contributions in

conformar:cc ....: i th the pro~J i ;~ i f)n~~ outlined ahove.

7 . r-'a t tors p(_" f 0 rrcd to the Off j ~c of r;ener:l] COl1nse 1 ---------------------- - ---------

Certain other matters r:oted during the ~udit were

referred to t h., Corr:.!7tis~~ion·s Office of General Counsel for

furthe reon:-:; i d •.ration 0 n r·, a,:, 1 2, 19 8 0 .