FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

February 1,2010 

MEMORANDUM 

To: Judith Ingram 

Press Officer 

From: Joseph F. Stoltz / 

J\ssistant Staff 

r()

Audit Divisionl 

Subject: Public Issuance of the Audit Report on Mike Gravel for President 2008 

Attached please find a copy of the audit report on Mike Gravel for President 2008, 

which was approved by the Commission on January 22, 2010. 

J\11 parties involved have received informational copies of the report and the report 

may be released to the public on February 1,2010. 

Attachment as stated 

cc:	 Office of General Counsel 

Office of Public Disclosure 

Reports Analysis Division 

FEC Library' 

ITDWeb/ 
Why the Audit 

Was Done 

Federal law requires the 

Commission to audit every 

political committee 

established by a candidate 

who receives public funds 

for the primary campaign. I 

The audit determines 

whether the candidate was 

entitled to all of the 

matching funds received, 

whether the campaign used 

the matching funds in 

accordance with the law, 

whether the candidate is 

entitled to additional 

matching funds, and 

whether the campaign 

otherwise complied with the 

limitations, prohibitions, and 

disclosure requirements of 

the election law. 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, with 

respect to any of the matters 

discussed in this report. 

Report of the Audit Division on
 

Mike Gravel for President 2008
 

March 29,2006 - December 31,2008 

About the Committee (p. 2)
 

Mike Gravel for President 2008 is the principal campaign committee ofMike
 

Gravel, a candidate for the Libertarian Party's nomination for the office of
 

President ofthe United States. The Committee is headquartered in Arlington,
 

VA. For more information, see chart on the Campaign Organization, p. 2.
 

Financial Activity (p. 3) 

• Receipts 

o Contributions from Individuals $ 505,983 

o Contributions from Political Committees 1,038 

o Loans Received from Candidate 72,616 

o Matching Funds Received 100,000 

o Other Receipts 540 

o Total Receipts $ 680,177 

• Disbursements 

o Operating Expenditures $ 552,093 

o Loan Repayments to Candidate 72,616 

o Total Disbursements $ 624,709 

Finding and Recommendation (p.4) 

• Net Outstanding Campaign Obligations 

I 26 U.S.c. §9038(a). 
Table of Contents 

Part I. Background 

Authority for Audit
 

Scope of Audit
 

Inventory ofCampaign Records
 

Part II. Overview of Campaign 

Campaign Organization
 

Overview of Financial Activity
 

Part III. Summary 

Finding and Recommendation 

Part IV. Finding and Recommendation 

Net Outstanding Campaign Obligations 

Page 

2 

3 

4 

5 
1 

Part I 

Background 

Authority for Audit 

This report is based on an audit ofMike Gravel for President 2008 (MGP), undertaken by the 

Audit Division ofthe Federal Election Commission (the Commission) as mandated by Section 

9038(a) of Title 26 ofthe United States Code. That section states "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 [matching] 

payments under section 9037." Also, Section 9039(b) of the United States Code and Section 

9038.1(a)(2) of the Commission's Regulations state that the Commission may conduct other 

examinations and audits from time to time as it deems necessary. 

Scope of Audit 

This audit examined: 

1. The receipt of excessive contributions and loans. 

2. The receipt of contributions from prohibited sources. 

3. The receipt oftransfers from other authorized committees. 

4. The disclosure of contributions and transfers received. 

5. The disclosure of disbursements, debts and obligations. 

6. The recordkeeping process and completeness of records. 

7. The consistency between reported figures and bank records. 

8. The accuracy ofthe Statement ofNet Outstanding Campaign Obligations. 

9. The campaign's compliance with spending limitations. 

10. Other campaign operations necessary to the review. 

Inventory of Campaign Records 

The Audit staff routinely conducts an inventory of campaign records before it begins the audit 

fieldwork. MGP records were materially complete and the fieldwork began immediately. 
2 

Part II 

Overview of Campaign 

Campaign Organization 

Important Dates Mike Gravel for President 2008 

• Date of Registration April 21, 2006 

• Eligibility Period 2 January 10,2007 - May 25, 2008 

• Audit Coverage March 29, 2006 - December 31,2008 3 

Headquarters Arlington, VA 

Bank Information 

• Bank Depositories One 

• Bank Accounts Two checking 

Treasurer 

• Treasurer When Audit Was Conducted Mike Gravel 

• Treasurer During Period Covered by Audit Gregory FossedaI (4/21/06 - 8/1/06) 

Mike Gravel (8/2/06 - present) 

Management Information 

• Attended FEC Campaign Finance Seminar No 

• Used Commonly Available Campaign 

Management Software Package 

Yes 

•	 Who Handled Accounting, Recordkeeping Paid staff 

Tasks and Other Day-to-Day Operations 

2 On January 10,2008, the Candidate submitted a Letter of Candidate and Committee Agreements and 

Certifications. A threshold submission was submitted on August 4,2008 and the Candidate was certified eligible 

to receive matching funds on December 10,2008. The period during which the Candidate was eligible for 

matching funds, was determined to have begun on January 10,2007 and ended on the date the Libertarian Party 

nominated its Presidential candidate at its national convention. See 11 CFR §9033. 

3 Limited reviews of receipts and expenditures were performed after December 31, 2008, to determine whether the 

candidate was eligible to receive additional matching funds. 
3 

Overview of Financial Activity 

(Audited Amounts) 

Cash on hand @ March 29, 2006 $0 

a Contributions from Individuals 

a Contributions from Political Committees 

a Loans Received from Candidate 

a Matching Funds Received 

a Other Receipts 

Total Receipts 

$ 505,9834 

1,038 

72,616 

100,0005 

540 

$ 680,177 

$ 552,093 

72,616 

$ 624,709 

$ 55,468 

a Operating Expenditures 

a Loan Repayments to Candidate 

Total Disbursements 

Cash on hand @ December 31, 2008 

4 Approximately 7,300 contributions from more than 5,200 individuals.
 

5 As of December 18,2008, MGP received matching funds of$100,000. An additional $115,967 was received
 

January 22, 2009, for a total of$215,967.
 
4 

Part III 

Summary 

Finding and Recommendation 

Net Outstanding Campaign Obligations 

The Audit staffs review ofMGP's financial activity through June 30, 2009, and 

estimated winding down costs indicated that the Candidate did not receive matching fund 

payments in excess of his entitlement. (For more detail, see p. 5) 
5 

Part IV
 

Finding and Recommendation
 

INet Outstanding Campaign Obligations 

Summary 

The Audit staff's review ofMGP's financial activity through June 30, 2009, and 

estimated winding down costs indicated that the candidate did not receive matching fund 

payments in excess of his entitlement. 

Legal Standard 

A. Net Outstanding Campaign Obligations (NOCO). Within 15 days after the 

candidate's date of ineligibility (see definition below), the candidate must submit a 

statement of "net outstanding campaign obligations." This statement must contain, 

among other things: 

•	 The total of all committee assets including cash on hand, amounts owed to the 

committee and capital assets listed at their fair market value; 

•	 The total of all outstanding obligations for qualified campaign expenses; and 

•	 An estimate of necessary winding-down costs. 11 CFR §9034.5(a). 

B. Date oflneligibility. The date of ineligibility is whichever ofthe following dates 

occurs first: 

•	 The day on which the candidate ceases to be active in more than one state; 

•	 The 30th day following the second consecutive primary in which the candidate 

receives less than 10 percent ofthe popular vote; 

•	 The end of the matching payment period, which is generally the day when the 

party nominates its candidate for the general election; or 

•	 In the case of a candidate whose party does not make its selection at a national 

convention, the last day of the last national convention held by a major party in 

the calendar year. 11 CFR §§9032.6 and 9033.5. 

c. Qualified Campaign Expense. Each of the following expenses is a qualified 

campaign expense. _ 

•	 An expense that is: 

o	 Incurred by or on behalf ofthe candidate (or his or her campaign) during the 

period beginning on the day the individual becomes a candidate and 

continuing through the last day ofthe candidate's eligibility under 11 CFR 

§9033.5; 

o	 Made in connection with the candidate's campaign for nomination; and 

o	 Not incurred or paid in violation of any federal law or the law ofthe state 

where the expense was incurred or paid. 11 CFR §9032.9. 

•	 An expense incurred for the purpose ofdetermining whether an individual should 

become a candidate, if that individual subsequently becomes a candidate, 

regardless of when that expense is paid. 11 CFR §9034.4. 
6 

•	 An expense associated with winding down the campaign and terminating political 

activity. 11 CFR §9034.4(a)(3). 

D. Entitlement to Matching Payments after Date oflneligibility. If, on the date of 

ineligibility (see above), a candidate has net outstanding campaign obligations as defined 

under 11 CFR §9034.5, that candidate may continue to receive matching payments 

provided that he or she still has net outstanding campaign debts on the day when the 

matching payments are made. 11 CFR §9034.1(b). 

Facts and Analysis 

The Candidate's date of ineligibility (DOl) was May 25, 2008. The Candidate was 

determined eligible for Matching Funds on December 11, 2008. The Audit staff 

reviewed MOP's financial activity through June 30, 2009, analyzed estimated winding 

down costs and prepared the following Statement of Net Outstanding Campaign 

Obligations: 

Mike Gravel for President 2008 

Statement of Net Outstanding Campaign Obligations 

As of May 25, 2008 

Prepared June 30, 2009 

Assets 

Cash in bank $ 2,165 

Total Assets $ 2,165 

Liabilities 

Accounts Payable for Qualified Campaign Expenses 

Outstanding $ 181,358 

Winding Down Costs: 

Actual Winding Down Expenses Paid 

(5/26/08 - 6/30/09) 26,606 

Estimated Winding Down Costs 

(7/1/09- 12/31/09) 10,773[a] 

Loan Payable at May 25, 2008 44,616 

Total Liabilities $ 263.353 

Net Outstanding Campaign Obligations (Deficit) as of May 25, 2008 ($ 261.188) 

[a] The Audit staff will review MOP'S disclosure reports to compare actual figures with the estimates and 

prepare adjustments accordingly. 
7 

Shown below are adjustments for funds received after May 25, 2008, through June 30, 2009, 

based on the most current financial information available: 

Net Outstanding Campaign Obligations (Deficit) as 

of 5/25/08 

($261,188) 

Receipts through 6/30/09 4,756 

Matching Funds Received through 6/30/09 215,967 

Remaining Net Outstanding Campaign Obligations 

(Deficit) as of6/3 0/09 

($40,465) 

As shown above, MGP has not received matching fund payments in excess of its 

entitlement. At the exit conference MGP representatives were provided copies of 

relevant workpapers to support the NaCO statement. 

Preliminary Audit Report Recommendation and Committee 

Response 

The Audit staff recommended that MGP identify any adjustment it believed was required 

to any component of the NaCO statement and provide any other comments it desired. 

By email, MGP's counsel responded that since there were no findings [other then the 

NaCO statement], there would be no written response.