FEDERAL ELECTION COMMISSION

August 12~ 1996

MEMQRANDU~-1

TO:

FRO~1:

RON M. HARRIS

PRESS OFFICER

PRESS OFFICE fi;;' '/,'

ROBERT J. COSTA

A.SSISTANT STAFF: CTOR

.~lTDIT DIVISION

c

c

c

SUBJECT: PLTBLIC ISSUANCE OF THE FINAL AUDIT REPORT ON

REPUBLICAN PARTY OF DADE COUNTY

.~nached please fmd a copy ofthe final audit report and related documents on the

Republican Party ofDade Counyt which was approved by the Commission on

August 1. 1996.

lnfonnational copies ofthe repon have been received by all parties involved and

the repon may be released to the public.

Attachment as stated

cc: Office ofGeneraJ Counsel

.. Office of Public Disclosure

Repons Analysis Division

FEe Library

't'ifl..:'-\\ T11!)-\\ -\,rl1(J\.,()Io'Jo«I\\

:)~:, .. J.,~::l iI' ... ~~P"(. Hi! Pl ihi( 1,f(lJ.,:",£:)
o

• "":="""'~' ~'""...,_. ", ... ·>·~'·'"y""n .;;:;.;.:gb%hH"''''''''H''I';f'd'''fi'I~''''-i<'ij¥Jif#~

I

I

I

REPORT OF THE AUDIT DIVISION

OS THE

Republican Party of Dade County

Approvrd August l~ 1996

FEDERAL ElECTIO' CO\1:\1ISSIO!"

999 [ STR£ET. ~.\\'.

\\ ASHI'iGTO'. D.C.
TABLE OF CONTENTS

REPUBLICAN PART'r OF DADE CO~T\'

Page

Exccuti\*c S~·

Final Audit Rcpon 5

'J)

Background 5 0

Findin~s 7

C Legal Analysis 21

!J)

N Transmittal to Committee 25

Chronolog~· 27

-,

C

:"...

"-""" '
FEDERAL ElECTIO~ COr\'~\ISSI():\:

a

c

FINAL AUDIT REPORT

O~

REPUBLICAN PART\' OF DADE COUNTY

EA'EClJ7/J'£ SUAfAL4Rr

The Republican Pany ofD3de County (the Comminee) registered \\ith the

federal Election Commission on July 9. 1984.

The audIt "'as conducted pursU3llt to 2 U.S.C. Section 438(b) ,,·hich states. that

the CommIssion ma~' conduct audits of an)" political comminee whose repons fail to meet

the threshold level of compliance set by the Commission.

The findings ofthe audit "'·cre presented to the Comminee at an exit conference

held on March 17. 1995 and later in an interim audit repon. The Committee·s response

to those findings are included in this final audit repon,

Apparent (b·fr.funding In' .be ~oD·(rd'tllA"Qunt - 11 eFR Sections

106.S(d)JO.(~){~)(ii) and (iii) The Audit stafTreviev.-ed expenses paid from federal and

non-federal accounts and identified S:! 1.498 in shared administrative and event expenses

funded Impermissibly by the non-fedet'31 account In calendar year 1991. The federal

account did not stan reimbursing the non-federal account until Jul~' 1991. At year·s end.

S1.35; In expenses rcm;uned unrclmbursed In calendar ycar 199~. the federal account

overpaid ItS share of admlnlstratl\'e and c\'ent expenses in the amount of$15.014. In the

Intenm audit repon. the Audit staff recommended no funher action.

Disclosure or Shared federal and "'oo-federal Acth-jtjcs . 11 CFR Sections

104 IOtbU I )(1). C:!). and (~). I06.5(3)(~)UI), cd" I). (0. and (g)(l). For calendar year

1QQ 1. the Comm~nee did not file Schedule H I dIsclOSIng ItS federal allocation ratio or

Schedule H·~ disclOSing Information related to Its Lincoln Day Dinner event.

Also for calendar year )QQl. th(" Committee dId not file Schedules H4 to disclose

approximately $7.000 in shared admlnlstr:ttl\'C and event expenses paid from its federal

account Funher. In calendar ycar 1QQ 1. the non-federal account paid dIrectly to vendors

$50.837 In shared administrative e'Cpcnses and S~4.774 In shared event expenses not in

accordance \\sth 11 CFR I06.5l~)( 1)

In calendJJ yeJ1 IQ9~_ pJymcnts for shared admInistrative ($ 16.389) and shared

event 'S3.:31 ) expenses "erc mad~ from the non-federal account The maJority of these

e'penses "ere reponed on Schcduk t I~ as 1f made from the federal account

...... ' ......
""' \, ,.

o

'n

C'J

In response to the intr:rim audit repon. the Committee filed amendments which

materiallv corrected the public record. The Comminet: also stated that it has instituted

procedur~s to ensure that all shared administrative and event expenditures are paid out of

the federal account. and that transfers from the non-federal account to reimburse .the

federal account occur on a ~gular basis. not less than monthly.

Rcceipt or,4,pp.rcot Prohibited Contributions - 2 U,S.C. Section 441 b(a). 11

CFR Sections J03 J(b)( ~) and 110.1 (e)( 1) The Comminee received three contributions

from corporate entitleS loultng S3,OOO Although refund checks "'ere not issued during

the audit penod. the Commlnee maIntained suffiCient funds In Its federal account to make

such ref1J1lds In response to the Intenm audIt report, the Comminee refunded the

contributions to the contributors and pro\'lded copies of the canceled refund checks.

Further. the Commlnee leased office space for its Victory ·9~ headquaners at a

cost of S21.300 The office space "as leased for the period July 1. 1991 through

November 4. 199~ from a partnershIp The Comminee paid S1.598. The remainder of

the cost. S19.70:, represented an In-kind conulbution from a pannership. the Figueredo

Center Ltd (FCL). The Commlnee onglnally reroned the In-kind contribution (S19.70:!)

as receIved from FCL. then amended Its reports to dIsclose the in-kind contributions as

being from Carlos Salman. a partner" nh FCLSince the Commlnee's \'Iclory '9:! program \I:as designed to suppon the entire

Rcpubhcan tickeL the Audit staff determined that the in-kind contribution should ha\'c

been allocated bet\\'een the federal and non-federal accounts based on the ratio derived

from the ballot composition (370/0 fedC'raJ!63~o non-federal), As a result. the federal

accoun(s share \\ould ha'\'e been S7.:!90 (S19.70~ x 37~o). The Audit staffalso

determIned that the In-kind contribution \\'35 from FCL. and that FCL consisted of

Indl\".dual and corporate pmners

Based on additional documentation submined in response to the interim audit

report, It ",-as determined that the profits of the J0 corporate (~ general and 8 limited

panners) and 7 IndiVIdual panners "'ere rfduced hy the In-kInd contribution. As a result.

the In-kind contnbutlon ($7 .~jO) "-as from prohibited sources The Comminee filed an

amended Schedule 0 "hath renected debt due to the FCL for $7.:!90. the federal

account's ponlon of the In-~Ind contn~utJon

Apparent Prohibited Contribullons IQ Busb/Qua)'le '92 General Committee -

:; L.S C Section 4~la(d)( 1. and I J CFR Sections 1107(3)( I} and (~l. 100.8(b)(16)(i).(i\')

and (18)( 1) Although the CommIttee h.:ld not demonstrated It had been allocated a

portion of the national pa.rt~ 's coordInated e'pcndlture ilmlutlon, It apparently made

expenditures totahng S~.) an connection lth the Bush-Qua~ Ie '92 General Committee

(Bush-Qua~ Ie General) The e~pendlture). made In September October 1992 pursuant to

ItS \'actor: '92 program In\ohed

a letter from Jeb Bush to Fc:I10\\ Republicans ($8201 V.hlCh discussed the reelecllon of PreSident Bush and lnstru~tlons for Obt.11nln~ an absentee ballot.
c

a radio advenisement (5550) for "'hich the vendor invoice indicated the ad was to

hre-elecl Pres. G. Bush~·· this ad aired bet"'een October :!8. )992 and November ~.

1991; and.

invitations ($794) for the opening of a campaign headquaners In Hialeah. The

postcard-type invitation contained the "Bush Quayle '9~n logo on both sides.

The Comrninee"s response to the Intenm audit repa" d;d not demonstrate that the

expenditures \'"ere not made on behal f of Bush·QU3~Ie General nor exempt from the

definition of expendIture purslLmt to I I CFR §§100 8(b)( 16) or ( IS).

Misstatement Q(fjnancial 4,(lj\'iO -: C.S.C. Sections ~34(b)( 1). (:!) and (4).

Reponed totals for receIpts and dIsbursements "'ere overstated b~ S11.658 (net) and

S) 4.942 (net) respectlvel~" for the audit penod covering calendar years 199] ..9::!. Ending

cash "'as also mIsstated In response to the Intenm audit repone the Comminee filed

amendments for each reporting penod In 199t and 199~. \\'hich materiaJJy corrected the

reportIng defiCIenCies
FEDERAL ElECTIO' CO:\'~\ISSIOI\:

REPORT OF THE AUDITDIVISION

0/\'

REPUBLICA!'; P#-4RTJ· OF DADE COUNT}"

AK FARIlIf96

AR.93-92

I. BACKGROlfND

A. AUDIT J~lrrHORJT\"

This repon is ~d on an audit ofthe Republican Pany ofDade Coun~·

(the Comminee). undertaken by the Audit Di\"ision ofthelfederal Election Commission in

accordance ",ith the provisions ofthe Federal Election Campaign Act of 1971. as amended

(the Act). 1"he audit ,,-as conducted pursu.:mt to section 438(b) ofTitle ofthe United

St3tes Code which states. in pan. that the Commission may conduct audits and field

Investigations of any political comminee required to file a repon under section 434 ofthis

title Prior to conducting any audit under this subsection.. the Commission shaU perform an

internal re\'iew ofrepons filed b~· selected comminees to detennine ifthe repons filed by a

p3f1lcuJar comminec meet the threshold rcquimnents for substantial compliance ",-jth the

Act

B. Al'OIT CO'·£RAC[

The audit co\·ered the penod Jaluw'y 1. 1991 through December 31. lQ9~.

Dunn~ thiS penod.lh~ Commltt~e reponed a bcf:IMlng cash balance ofS6.J15~ total

receipts for the pcnod ofSI~5.684~t0131 d,~bursemcnts for the period ofSl::!7.931: and an

ending c3Sh b31ancc of S6.J91 I

The Comm1ttc~ rt~lstercd ""uh the Fedcral Eleclton Comnllssion on July 9.

199..; and maintains ItS headqU3ttcrs In Cor31 G3ble~. Flonda The Treasurers ofthe

Commlnee dunn~ thc penod co\'ered b~ the audit ""crc DaVid Southwell from Jan~ 1.

1':~91 through ~1arch :!8. 1991. LUIS AmzuncLJ from ~1arch ~9. 1991 through August ::.

Total~ do not fOOl dut 10 rtponln~ tnol"\ I\tt FIndln~ II ElFIgures In thiS repon are rcunded i0

the nearest dollar

......... ,. ".'

Paa~ ~, ~~~nveC B/l/St
2

1991.. Emesto Maninez-Gil from October 28.. 1991 through December 9. 1992 and Jorge

Rodriguez-Chomat from December 10. 1992 through the end ofthe audit period. The

Committee's current Treasurer is Mr. Andre'" E. Grigsby,2

To manage its financial activity.. the Comminee maintained £\\'0 checking

accounts Comminee receipts were composed of contributions from individuals and

transfers frorn its non-federal account.

D. AU£,.T SCOPE A~D PttOCEDl'RES

The audit included testing of the follo\\ing general categories:

o

o

c

I.

3

4

5

6

7

8

The receipt of contribullons or loans in excess ofthe statutory limitations:

the receipt of contribuuons from prohibited sources (see Finding II.C,):

••

proper disclosure of contributions from individuals. political comminees

and other entitles. to Include the itemization of contributions when required..

as well as.. the completeness and accurac~' ofthe infonnation disclosed;

proper disclosure of disbursements including the itemization of

disbW'Sements ""hen required. as well as. the completeness and accuracy of

the infonnation discloscd~

proper disclosure of commsnee debts and obligations:

the accuracy of total reponed receIpts. disbW'Scments clnd cash halances as

comp31ed to bank records (see Finding II.E.)~

adequate rccordleeplnt of committee transactions.

proper ~ponln~ and fundln~ of allocable ex~ndltures(see Findings j l.. '.

and B.). and.

9 other audit procedures th.Jt '"'ere deemed necess~ In the sltuat~(i~, '';'.::

Flndlnt 11.0.)

~1r Grt~S"~ \4 not the 1 r~a.surtr dUflnl= the audit per IDC tnercfofe he \4 a~ unablt to comment

\4lth r~s~ct to Ctrutn man~n nOltd dur,n~ tile audl~ f unher. for the ~raod August ~3. IQQ I

throu~h OctOber :--. ,QQ I thert a\ no trt~ur('r of r('cord

Pa:J€ t. A;;::J~OVeC. 8/1/9E
c

c

3

Unless specifically discussed belo\\". no material non-compliance was

detected. It should be noted that the Commission may pursue an)' ofthe maners discussed

in this report in an enforcement action.

II. AUDIT FINDINGS AND RECQl\f~'ENDATIQNS

A. APPAJU:!'i O\"ER-flT~DI'CBY TH£ 1'iO~·F[DERAlACCOllST

Section 106.:'{d)( 1) of TItle 11 of the Code of Federal Regulations states.. in

pan. that all Slate and local pan~' commlnees except those covered by paragraph (d){2) of

this section shall allocate their admtnisuau\'e expenses and costs of generic voter drives

accordin~ to the ballot composition method

Section 106.5(0 ofTitle 11 of the Code of Federal Regulations states.. in

part. if federal and non-federal funds are collected by one comminee through a joint

acti\OIt). that commlnee shall allocate ItS direct costs of tundraising according to the funds

recei"ed method.

Section 106"5(g)(~)(iii)of Title 11 of the Code of Federal Regulations states

any ponlon of a transfer from a comminee"s non-federal account to its federal account or

ItS alloc3t1on account that does not meet the requirements of paragraph (g)(2)(ii) ofthis

section shalt be presumed to be a loan or contribution from the non-federal account to a

federal account.. in \'iolation of the Act.

Section 106.5(~)(~)(ii)orTnle 11 ofthe Code of Federal Regulations states..

In p3tt. that for funds transferred from a commlnee's non-federal account to its federal

account or Its allocation account. the committee must Itemize in its repons the allocable

actiVities for ",·hlch the transferred funds are Intended to pay and that such funds rna)' not

be transferred more than 10 d3ys before or morc than 60 days after the payments for which

the~ are desl~nated are madc

Shared fundQJS1Di: E\"CDl

Receipts from the LIncoln DJ~ Dinner. held on May 7.. 1991. totaled

S..;~. !~.; The Committee deposited S13.300 or 31 ~o of total receipts Into ItS federal

account HO\Aoever. thc federal account p:ud onl~ 56.98: or ~~0/0 of total expenses

(S31.755) assOCiated "'1th thiS event As 3 result. the federal account underpaid ItS share of

the fundralslng expenses by S~.86~ CS31.755 ). 31(,/0 - 6.Q8~)

The Audit ~urr calculated S51.ll: In admInistrative expenses for

calendar e:u 1Qq 1 The federal account p:l:d S~ 7S { 5~~ o. and the non-federal account

p:ud S50.83i (Qq 46~o) The correct allocation percentage for administrative expenses.

based on the ballot compositIon method. "'as 37°'0 federal and 63°10 non-federal.
c

t.f'

c

4

Therefore. the federal account should have paid S18.911 (S51.112 x 37%) and the

non-federal account $32.201 (551.112 x 63°~). As a result. the federal account underpaid

its share of administrative expenses by SJ8.636 ($ 18.911 . 275).

Accordingly. $21.498 ($ 18.636 from A.2. + 2.862 from A.t.) in

federal expenses ....'ere funded impennissibly by the non-federal account.

The federal account did not stan reImbursing the non-federal

account 'Inti! July 5.1991. Dunng the penod July 5. lQQ1. through December 31.1991.

the Comminee made transfers from its federal account to the non-federal account. totaling

520.. 141. At yearts end. 51..357 (S~1.498· :!O.141) in expenses remained unreimbW'Sed by

the federal account

During the period Jan~' 1. 1Q9~ through August 1. 199:!. both

fcderal and non-federal accounts made payments. dIrectly to vendors. for shared

administrative expenses Subsequent to August 1. 199;. the federal account paid all such

expenses. In the calcndar ycar (199:!). the federal account o\'erpaid its share of

adminisuatl\'e cxpensc by SI:!.389 as .... ell as ItS share of event expenses by S:!.6:!5.

It \\'as explained to the Comminee that all shared expenses should be

initially paid by a federal account pursuant to 11 CFR §106,6(e)( 1)(i) and (ii), The

Treasurer stated hc ,,-as not a\\1lre ofthc above. but the' fcderal account currently pays all

shared expenses and recei,,·cs rcimbursements from the non-federal account. The

Commiuec ""'as pro"'ided copies of all related \\·orkpapers.

In the Intenm audit repone the Audit staff recommended no further

action. since the federal account o"'crpaid its share of 199~ administrative and event

expenses by S15.014 and underpaid such expenses by only $1.357 in 1991.

B. DISCLOSl'RE or S""RED FEDERAL "'0 NO'-FEDERAL ACT1\'ITIES

Bjlck~rQynd

Our revle'" cncompassed acu\"lt~ related to t""o bank accounts: one of

",,'hlch "'as a federal account and one a non-fedefal account DUrIng the audit period. the

Committee did not estabhsh an allocatIon account. nor did It Initially pay all shared

expenses from the fcderal account and receIve relmbufsements from the non-federal

account Funher. the Committee did not fale Schedules H t. H~. H3. Of H4 during calendar

year 1991 In calendar year 1Q9:. the Commltlee fi led all Schedules H

AUOC;UIOO for Sb;ucd Feder;}l and 'oo-federal :\dmlolstrnu\,e

Espeosc:~ • Schcdul= HI

Section ICW lOCb)(l)(l) of Title 11 of the Code of Federal

Regulations states. In pm. that In the farst repon In a calendar year dIsclOSIng a
c·

5

disbursement for administrative expenses or generic voter drives. the comminee shall state

the allocation ratio to be applied to these categones of activity and the manner in which it

~derived.

Section 106.5(d)( 1) ofTitle 11 of the Code of Federal Regulations

states. in pan. that all state and local party comminees except those covered by paragraph

(d)(2) ofthis section shall allocate their adminIstrative expenses and costs of generic voter

drives. as described in paragraph \a)(~ l of thIs section. according to the ballot composition

method.

Tne Commsnee "'as required to fiie Schedule HI disclosing its

federal allocation ratio. Using the ballot composition for the 1992 general election. the

Audit staff calculated the correct allocation for admlnisL~tive expenses as 37% federal and

630/0 non-federal As previously stated. the Comminee did not file a Schedule HI for the

calendar year 1991. The Commlnee cOrTectly filed Schedule HI for calendar year 199~.

AllocatloD Ratios for FUDdraisin~ Events Exempt Pam' Activities

and Shared DltCct Candidate SUJ2pon - Schedule H'"

Section 106.S(a){:!)(ii) ofTitle 11 of the Code of Federal

Res;ulauons states commlnees that make dIsbursements in connection \\ith federal and

non-federal elections shaH allocate expenses according to this section for the direct costs of

a fundraislng program or event including disbursements for solicitation of funds and for

plmrung and administration of actU31 fundraising e\·cnts. \\"here federal and non-federal

funds are collected by one commlnee through such program or event.

Section 106-5(0 ofTule 11 ofthe Code of Fcderal Regulations

states. In pan. If federal and non-federal funds are collected by one comminee through a

J01nt aCl1\"at) . that commlnee shall allocate ItS direct costs of fundralslng. as descnbed in

p3.r3graph (a)( ) of thIS section. 3ccordln~ to the funds receIved method. Under this

method. the commanee shall allocate Its fundralslng costs based on the ratio of funds

received Into Its federal account to Its total receipts from each fundralslng program or

event

Sectlon 10.; 10(b)(~) orTatle 11 oflhe Code of Federal Regulations

states. In part. that In each Tepan dlsclosln~ dIsbursement for the dIrect costs of a

fundralslng program or an exempt actl\ lt~, the commlnee shall assign a unique identifying

title or code to each such program or act,,, It~ and shall state the allocatlon ratio calculated

for the program or activit)

As pre\'lousl~ sl.Jted. on ~13~ "7. 1QQ 1. the: Commlnee held shared

fundralstng e\ en~. the LIncoln DJ\ Dinner ReceIpts for thiS e\ ent totaled S4:.;~·l The

federal accoun: s share of receipts totJicC S13.300 or 31 °'0 Expenditures for thiS event

"ere made dunn~ the penod ~13!ch:= 1QQl throu~h ~1J~ 10. 1QQl Therefore. the

Commlnee should have filed a Schedule H2 for each rcportlnf; penod v..hereln an event
6

expenditure occurred. disclosing the Lincoln Da}' Dinner event. the associated 31/69

allocation ratio and a wrique identifier.

3. Rcponjne of Shared Activity ... Stbcdu1c H4

Section 106.S(g)(I) ofTitle 11 ofthe Code of FederaJ Regulations

states. in part. comminees that have established separate federal and non-federal accounts

under II CFR 102.5(a)(1 )(i) or. (b)( I)(i) shall establi~' a separate allocation account into

which funds from its federal and non-federal accounts ,hall be deposited solely for the

purpose of paying the allocable expenses ofJOint federal and non-federal activities: or pay

the entire amount of an allocable expense from its federal account and transfer funds from

its non-federal account to its federal account solely to cover the non...federal share ofthat

:\Ilocable expense.

Section 104.1O(b)(4) ofTitle 11 ofthe Code of Federal Regulations

states. in pan. a political comminee that pays allocable expenses in accordance \\ith 11

'q- CFR 106.5(g) or 106.6(e) shall also rtpon each disbursement from its federal account or

separate allocation account in payment for a jOint federal and non-federal expense or

activity

c

..!)

a- As ple\'iously Slated. in calendar year 1991 the Comminee

did not file an~' Schedules H4. The federal account paid 527S in shared administrative

cxpenses and 56.982 in shara! e\,-ent expm5CS. The Cvmminee reponed these transactions

on Schcdule Binstead ofSchedule H4.

b. In calend3r ~'car 1991 the non-federal account paid dirtttly

to ' ..endors S50.837 in shared adminisuati\'c expenses and S24..774 in shared event

cxpenses Funds expended from the non-federal account to pay shared administrative

and.:or c\,ent cxpenses ~"'Cre not reponed

c. In calcnd¥ ~'car I99:!. payments for shared administrative

($ 16.38Q) and cvcnt (53..:!31 ) expenses "'cre made from the non-federal account. The

maJont~ of these expendItures ""cre rcponed on Schcdule H4 as if made from the federal

account Although the cxpendltures "ere: not made from a federal account as required b~

II CFR §106.5(g)( 1). for dlsclosu~ purposes such payments should be itemized as memo

entnes on Schedule H4.

Workpapers det3lhn~ the abo\'e "'ere prOVided to the Comminee.

The Treaswer ""as not a'-'.art' of thiS maner but agreed to file amended repons

Pa:1e , r .. ~,
7

In the interim audit report. the Audit staffrecommended the

Committee:

v.ith respect to Section 1.. file Schedule 1-11 for the first

reponing period in 1991. disclosing. the 37% federal/63°/0 non-federal allocation ratio for

shared administrative expenses;

,,;th respect to Section .. file Schedules H~ for the period

~1arch 1991 through ~1a: 1991. disclosing the Lincoln Day DUUler event. the 31~o

!~jera1.'6c}o/0 non-federal allocation ratio. and a unique event identifier~

""th respect to Section 3.a.. file amended Schedules B for

1991. deleung the prevIously reponed expenditures for shared administrative and event

expenses. and file Schedules H4 to dIsclose such expenditures including their respective

allocation ratios and unIque identifiers~

'f) ,,;th respect to Section 3.b.. file memo Schedules H4 for

1991 to I"clude all shared expenditures made from the non-federal account. including their

respective allocation ratios and unique identifiers~ and.

c

\\1th respect to Section 3.c.. file amended Schedules H4 for

199:!. convening the Schedule H4 report entries related to shared expenditures made from

the non-federal account to memo entries.

Lastl~. the Audit staff recommended the Committee detail in

\\Tlung the ch311£es it has Implemented to compl~ \\ith the requirements of 11 CFR

§106.5(g)( 1) as ,,"ell as any other comments it bcheves relevant to this maner.

c In response 10 the Intenm audit report. the Comminee filed amended

reports dlsclosln~ on Schedule HI ItS aUocauon ratio of:; 7~o (federal) for shared

administrative expenses and dIsclosing on Schedule H::: the allocation ratio of j I~D

federal'6Q°,-0 non-federal. and a unique event IdentIfIer for the Lincoln Day Dinner.

The Committee :llso amended Schedules B and H.+ and filed memo

Schedules He: fo~ 19Q 1 and 1QQ:. all of \\ hlch matenall: corrected the reportIng errors

noted abo\e

Further. the CommHtee suted

... Pa:JE- .. -,

"the part: IS Instltutlng procedures to ensure that all expenditures for

genenc part: busldln~ and or \Oler re~lstratlon actiVIties are paId out of the

federal a~count pnmanl~ through educatlon of the treasure: Transfer of

funds from the stale account Ithe CommIttee reiers to then non-federal

account as the state account) to reimburse the Federal account for the state's
c

:.f)

I

ponion of expenditure is being conducted on a regular basis, not less than

monthly, for these regular administrative expenses and on an as appropriate

basis in connection with fundraising acti\'i~', The requirements for

maintaining proper expenditures and reimbursements will be reduced to

writing prior to a change in treasurers this fall."

c. RECEIPT OF ApPAR[,\T PROHIBIT'EIl COSTRIBlTIONS

Section 4~ 1b( a) of Title:! ofthe United States Code states. in part.. that it is

unlawful for any corporation to make a contribution or expenditure in connection "ith any

election to any political office. and that a candidate. political comminee or any other

person is prohibited from acceptin~ a contribution from a corporation.

Section I03.3(b)(4) ofTitle 11 ofthe Code of Federal Regulations states

any contribution "'hich appears to be illegal and ""hich is deposited into a campaign

depository shall not be used for any disbursements by the political comminee until the

contribution has been determined to be legal. The political comminee must either establish

a separate account in a campaign deposito!")· for such contributions or maintain sufficient

funds to make all such refunds,

Sections IIO.l(e)(l) and (2)(i) of Title 11 oi'Lhe Code of Federal

Regulations state a contribution by a pannership shalt be attrib~~~d to the pannership and

to each paJ1ner in direct proponlon to his or her share ofthe pannership profits. according

to instructions "'hich shall be pro\'ided by the partnership to the political comminee or

candidate: or by agreement ofthe panners. as Jon~ as only the profits ofthe panners to

"'hom the contribution is anributed are reduced (or losses increased).

DUccI ContribUtion"

The Audit suO's reVIC\\ of contributions indicated that the

Committee recel\'ed three contribullons from apparent corporate entities totaling 53.000.

The corporate status and current sund,ng of the bUSiness entities \\'ere verified ,,'ith the

Flonda Secreta.ry of State

Although refund checks h3\'e not been Issued. the Comminee

maintaIned suffICient funds In Its federal account dunng the audit penod to make such

refunds The Treasurer "'as prOVided a schedule of the above contributions and ?greed to

take correctl\'e action

In-kind CODrobutlaD

a The COmmltlee leased office space for Its \',ctory t9~

headquaners at a cost of $2 1.30u The office space ,-,as leased for the period July 1. 1992

through November 4. 199:. from the FI~ueredo Center Ltd (FCL). a pannershlp. The

PaoE'
c

:;

........

9

Committee paid $1.598. The remainder of the cost. SI9.702. was originally reponed as an

in-kind contribution from FCL. The Comminee amended its repons to disclose an in-kind

contribution from Carlos Salman.3

Based on infonnation developed during field\\'ork FCL had

at least three panners, CSR Inc. is its general panner. Frascate Inc. is its managing general

panner. and Carlos Salman is its hmited panner. Further. it appears CSR Inc. stands for

Carlos Salman Realty. Inc 4 The corporate St3tus and current standing of both entities "'ere

verified \\ith the Florida Secretary of State

Absent documenution \\'hlCh demonstrates that the personal

profits and/or losses of Carlos Salman. as pJItner. or any other individual partner "'ere

affected. and the profits and/or losses of any corporate panners were not affected by the

above transactions. the In-kind contribution \\'as made from prohibited sources. CSR Inc.

andJor Frascate Inc

•

According to "nnen procedures relative to Victory '9:!

actlvittes. \:IctOf) '9:! is a project of the Republican Pany of Florida designed to support

the entire Republican ticket. It is a volunteer effon that helps all GOP candidates through

the use of genenc messages. p~' building programs and legally permissible non-allocable

projects

Accordingly. tht' value of the in-kind contribution should be

allocated bet""een the Commlttee's federal and non-federal accounts based on the ratio

denved from the ballot composition (37~o federal/63~0 non-federal). As a result. the

federal account's share "ould be S7.::!90 ($ 19.70~ x 37% ) .

In AdVisory Opinion 1992-33 the Commission addressed the

m~tter of a commlnee accepting In-kind corpoo;ate cionauons for allocable administrative

............. and event expenses The Commission concluded that

"natIonal pan~ committee m3~ 3ccCpt l~rporate In-kind donauons In

connectIon ",th fundralslng activities. but onl~ If one of t\\·o conditions is

me: (1) the amount of the Fcder:lt sh:ue of goods or servIces IS paid to the

non-federal account In advance or on receIpt. or (~) suffiCient funds to pay

for the Federal share of goods or sen'lces hJ\'e been transferred to a

.3 Th~ Rrpons Anal~sls DIVI\IOn feQut\ttd that tht Commln~e dl~close the names of thr partners

""ho contributed In r .. crs\ of S~OO Th~ 1 rta.surer made a 'Afln~n r~Quest to Carlos Salman an an

rfTon to otnaln the na."'r\ of the pJnne~ Ac:ordln~ to the 1 rea~ure~ the lO-"'md contrabutlon was

no: from FCL bu: from M~ Salman A.) 3n tn\]!"IOua:

lntormJtlor prO-'lded b\ Dun A. 8rad\trett Inlormattor Sen. Ice) . BUSiness Infonnatlon Report
o

II)

c

10

non-federal account in advance under the following circumstances."

(emphasis in ori~~r ~n

"To meet the laner condition. :he comminee must. in essence. prepa~' or

escrow an amount offunds that corresponds to the value ofthe Federal

share ofthe expenses associated \\ith in-kind donations that \\ill be

received. The comminee must make (!ood faith estimal~~ ofthe amount of

such in-kind donations tha~ are expected and trWtsfer a sufficient amount of

funds from the commlnee's Federal account to a non-federal account to

cover the Federal share of the expenses associated "ith the in-kind

donations actually received 00

As pre\'iously state~ in Finding II.A.. the federal account

overpaid its share of administrative and event expenses in calendar year 199.2 by 515.014.5

The Audit staff considered the \'alue (S7.~90 - approxqnately S1.779 monthly) ofthe

federal account"s share of the In-kInd contribution to have been received on the first of each

month (July through October). Accordingly. the Audit staff calculated the federal

account"s position \\tith respect to o\'crpayment ofshared expenses as ofthe first of each

month. Our analysis indicated that the federal account did not pay its share ofthe in-kind

contribution in ad\Oance and. therefore.. did not meet either ofthe conditions set forth in

Advisory Opinion 1992-33.

b. It appeared. based on infonnation available during audit

fieldv.·orL.. that Mr. Salman (a Dade Count~· Co-chair for Bush/Quayle '92) paid additional

\-o.ctOf) e9:! expenses totahnG ~.058 The Comminee reimbursed Mr. Salman and/or FCL

for these expenses Hov.·e,,·er. It "'as nOI clear if these expenditures were originally paid

from ~1r. Salman"s personal fund:; or from funas controlled by FCL.

These m~tters "·ere discussed \\ith Comminee officials at the

exil conference and on Octo~r : i. 1QQ; A schedule of the apparent prohibited

contributions "'as provided

In the Intenm audit repon. the Audit staff recommended the

Committee

demonstr:llC that the contributions. noted In C.1. above. were

not from prohibited sources or refund tht: contnbutlons.

pro\ Id~' documentation to demonstrate that the In-kind

contribution. noted In C .~.a abo\e. ".1.) not from prohibited sources ThiS documentation

The ma,orlt~ of the o~t"'1>a\mt"nl did nOl occur unlal October I QQ: '" hen all administrative

expenst"s ~t"re paId b~ tht" feot"r31 accoun:

., .

"... ,. ,,~

,- ......- C'~ IQ!" C • t
c

C'

11

should include the pannership agreement for the Figueredo Center Ltd. in order to

determine the nature of the entity and to identify all of the general and limited panners.

further, the documentation should include Infonnation on the pannership status ofthe

individual(s) to "'hom the in-kind contribution v.as attributed. and documentation to

demonstrate ho'" the profits or losses of both individual and corporate panners "'ere

affected~

demonc;trate that the contrihutions. noted in C.:.b. above.

"'ere not from prohibIted SQurces. to Include documentation that \'ictory t9~ expenses.

totaling $4.058.. were paid from personal funds of Carlos Salman as opposed to funds of

Figueredo Center Ltd.~

The Audit staff also recommended that absent a demonstration that

the above contributions "'ere not from prohibited sources. the Comminee refund the

contribution and provide evidence (front and back ofthe negotiated checks) for all

payments: and. if funds are not available to refund the prohibited contributions. disclose on

Schedule 0 a debt owed to each contributor

In response to the interim audit report.. the Comminee Slated that the

dIrect contributions. noted in C.1 .. consisted of three checks. each in the amount ofS1.000..

\At'hlch did not appear to be corporate checks on their face. but rather. referenced the

individual's profession. such as architect.' The Comminee also stated the checks were

deposited Into the federal account by mistake.

The CommIttee refunded the contributions to the contributors and ...

pro\·ided copies (front onl)·) of the refund checks.'

\\~lth respect to the In-kind con!ribution from the pannership.

discussed at C.~.a .. the Commlnee provided a copy of a Depanment ofthe Treasury

Internal Re\"enu~ Service Form 1065. l!.S Pannershlp Return of Income \\;th supponinS

schedules penalnlns to FCL for u.., ~eM lQQ~ The Commlnee also provided a copy of

FCl·s At;rcement and Cenific3te of LImited P~u'nershlp

Based on the Information prOVided. the Audit staff detemllned that

FCL "'·as composed of t""·o General P31tners ~'hlch are corporatIons and 15 Limited

Partners (eIght corporations and seven IndiViduals I The documentation demonstrated that

6 1"0 of thr thrr~ chrckos conUlnrd a bUSlnrss namr folto\4ed t" eltner In::: or Corporation On the

third check.. a.., andl\ tdual S namr tollov. ed b~ Architect and uenerai Contractor

Pd:J~ ,: A::=:-aveC 8,' 1 /9f.
o

12

the profits of all corporate panners (general and limited) were affected by this transaction.'

Consequently. the in-kind contribution ($7.290) ""as from prohibited sources (see Advisory

Opinion 1980·132),

The Com.'1linee filed an amended Schedule 0 "\'hich reflected a debt

due to FCL for $7.190. the federal panion t)f the In-kind contribution.

\\'lth respect to the expenses noted in C,:.~. ($-+.058). the

Comminee provided an affidavit from ~1r Salman. ",'herein he stated that he paid Judy

Sable $1.500 for a Victof')' '9:! consulting fee and ""as later reImbursed by the Comminee,

Copies ofthree checks from t\1r. Salman's personal checking account used to pay Ms.

Sable ""ere also provided Mr. Salman further stated that he paid additional expenses on

behalf of the Commlnee. totaling $960. from his personal account ",'hich ""ere also

reImbursed by the Comminee. Mr. Salman slated the rental payment of S1.598 was paid

d:rectly to FCL by the Comminee. thus the contribution [initially "ie""ed as $4.058] should

be adjusted by the S1.598.

The documentation demonstrated that the above contributions.

totaling S~.460 (S-t058 • 1.598). ""ere not from prohibited sources and did not exceed Mr.

Salman's contribution limit.

D. ApP4BE:ST PROHIBITEQ CO:SYRIBlTIOSS TO BttSH/Qt!A)"LE '92

GE:SEB.41 CO",""TIEE

'-

Section 441 a(d)( I ) ofTatle :! ofthe United States Code states

not\\'lthstandlng any other prOVIsion of )3\\ ""th respect to hmitatlons on expenditures or

limItations on contributions. the national comnlltlee of a pohuca! party and State

commIttee of :l pohucai P3n~. Inciudln~ an~ subordinate comrnlnee of a State comminee.

m3~ make expenditures In COMecuon "'1th the ~encral election campaign of candidates for

Federal office. subject to the hmllaUOnS cont.;uned In paragraphs (~) and (3) ofthis

subsection

Secllons 1107(3)( I) and (~t orTltle 11 of the Code of Federal Regulations

state. In pm. that the nauonal committee of a pohtlcal p3I1~ ma~ make expenditures In

connection "'1th the general election C31T1pJll;n of an~ candIdate for PreSident of the United

States affihated "1th the pan) The ~llon31 committee of a pohucal party may make

expenditures authonz.ed b~ thIS section through an~ deSignated agenL IncludIng State and

subordInate party commtnees

8

Tht documentation al\o tnd.C~lt\ that ont Ind.,-.dual appear; to be a foreIgn national and that three

cOfl'Orate partner) appear iO b<' fort't=r: p.anne~
c

c

13

Sections IOO.8(b)(16)(i) and (iv) ofTitle 11 ofthe Code of Federal

Regulations state. in pan. that the payment by a state or local comminee of a political party

ofthe costs of campaign materiais (such as pins. bumper stickers. handbills. brochures.

posters.. party tabloids or newsleners. and yard signs) used by such comminee in

connections wlth volunteer activities on behalf of any nominee(s) ofsuch party is not an

expenditure. provided that: (1) such payment is not for cc -~s incurred in cOMection \\ith

any broadcasting. ne""spaper. magaZJne. billboard. direct mail. or similar type of general

public communication or political ad\,entstng and (~) such matenals are distributed by

volunteers and not by commerCial or for-profit operattons

Section 100 8(b){ J8)(1) of TItle 11 of the Code of Federal Regulations

states. in pan. that payment b~ a state or local comminee of a political party ofthe costs of

,'oter registratIon and get-out-the-vote actiVities conducted by such comminee on behalf of

the President and Vlce·Presldenual nomlnee(s) ofthat party is not an expenditure for the

purpose of Influencing the eJectton of such candidates provided that such payments is not

for the costs Incurred In connection \\ith any broadcast~r.e;"ne\\1spaper.magazine.

billboard. dIrect matI. or Similar type of ~eneral publtc communication or political

advenlslng

The national pany's coordinated expenditure limitation for the 199:! general

election for the office of PreSident ","as $10331.703. The Republican National Comminee

reponed. as of December 31. 1993. spendln~ SI0.330.965 to\\'ards the limitation.

Although the Committee h3d not demonstrated i! had been allocated a

ponlon of the national pany's coordln:ned expenditure limitation. it made expenditures

lot.1hng S3.653 apPJ1entl~ In connection ,,-uh the Bush-Quayle '9:! General Comminee..

Inc (Bush-QU3~ Ie Gener:1I)' The cxpendnwes. made In September/October 199:!

purSU3nt 10 ItS VictOr: '9~ pro~ram. ""ere n-poned on Schedules H4 for priniing. postage.

radiO and pnnt medIa advenlsements and Me discussed ~lo\\

The Commlnec paid for 3t\ 3dvenlsement placed in the m~gazine De

Frente The cover of the ma~;wne plcture~ Bill Chnton and George Bush. The inset stated

"'e announced that Perot IS not atn\ In~ and th:u "e bche\'e that Bush ""ill \\'In by a

comfortable marl;ln The te\1 of the: ad "'~ n01 a\ atlahlc for reVlev.

A lener from Jeb Bush to Fello" Renubltcans Initially discussed

re-electlng PreSident Bush It further suted. If ou are unable to go the polls November

3rd. an absentee ballot could obulned t"1~ ret":rT','1f !;.~ ,--nclosed card The vendor's

InVOice (Global Pnntln~ Co ) lasted char~es fC'T th~' lener _tvldlng letters. envelopes and

cards !\;o addltlonallnfonn:ulon relatl\ c to:; :. ;nalhn~ "'as made available

InCluded IS a n~lo ad at \l'\e CO\t of Si JJu T"," \. }1T. •....,tt"!'=: ~JiJ S ~CJ .• he Audit ~laff could not

determine If the remalnln~ S8QO haj ~en C.. '.;
o

14

The text of a radio advenisement y.'as not made available. ho'N:ver.

the vendor invoice indicated the ad "'as to "re-elect Pres. G. Bush" and aired from October

28t 1992 through November 2. 1992.

Invitations \\'e~ printed and mailed for the opening of a campaign

headquaners in Hialeah. The postcard-type invitation contained the "Bush Quayle '92"

logo on both sides.

As prevlousl~ stated. \'tctory '9:! programs ,,'ere desIgned to suppon the

entire Repubhcan tIcket by cn~agtng In exempt actiVIties. Ho\\"ever. it appeared that the

expenditures noted above "~rc made tn connection \.\lth Bush-Quayle General and did not

qualify as exempt actIvitieS pursuant to 11 CFR §lOO.8(b)(16).

The Commlnett ~present.1ti\'es ""ere Informed ofthe apparent prohibited

nature of the expenditures and prOVided \.\1th a schedule ofthis activity at the exit

conference The Tre~urer \\'as not a~'are of thIS maner Pl\1 agreed to take the necessary

corrects\'e action

In the intenm aud.t repon. the Audit staff recommended that the Comminee

pro\'lde cvidence ",·hich demonstrated:

the expenditures \\'e~ not made in connection \\ith Bush-Quayle

GencraL to include docwncntauon to suppon the payment ofthe additional $890 cost made

"'lth resJ)(ct to thc radiO ad noted abo"'e. In addition. thc Comminee should provide the

text of the radiO ad. as \\'ell as. the text of the adventscment placed in the magazine DeFrente:, and.

the expenditures for the act! \"lt~ described above "'cre exempt

C' pursu31lt to ) J CFR §100 8(b)( 16 t

,

In response. the Committee pro\'lded :.! copy of the magazine De Frenlc and

stated that the anacle concemed the pe~on31 eITons of Doctor Albeno Cardenas. The

CommIttee did not conSider the cost of the 3J11clc to be an expendIture on behalf of

Bush·Qu~~Ie Gener~l

\\'Ith regards to the Jeb Bush letter. the Commlnec stated "The FEe has

taken a position that the letter \\3.5 not ~cnenc and reImbursement of thiS amount is being

sought from Busn'Quay Ie ..

\\.'lth regards to the radiO ad. the CommIttee pr0\"lded an affidavit from ~1r

Cardenas. '" ho statec

PaO-E:
15

"On or about October 27.. 199~ .. a contract ""as negotiated \\ith Carlos

D'Amant Public Relations & Advenislng for the broadcast of generic

political ads to be broadcasted by \\'SU:\. Radio Suave in Miami. Florida, tl

Mr. Cardenas further stated th3t the Comminee agreed to pay $550 for the

4ds. The invoice for S1.440 ""as incorrect. and the Comnllnee only paid the initially

agreed amount. A transcnpt "'as requested 3t the tlme payment "'as tendered but it \\'as

never provided Lastl~. he stated. "R3dl0 SUJ\"e IS no longer In business and it has been

Impossible to procure 3 transcnpt of the ads aired b~ them In October 199:."

\\'tth regards to the to\"lutions concerning the opening of a campaign

headquarters In Hialeah. the Commlnee responded that the invitations "'ere "inaccurately

described as Bush/Quayle Headquaners". The Comminee further stated "The committee is

anempung to have this sum reimbursed by Bush'Quayle should the FEe determine that

such IS appropriate".

II

It appears that the artIcle In the magazine De Frentc: "'as not made in

cOMection "-lth Bush-Quayle Gener31. The magazine featured a picture of an individual

and a caption merely stating he "'as "'orkln~ for the re-election of President Bush and to

become a state comnunee officlaJ Ho",·tver. the Comnllnee did not demonstrate that the

e~pendltures for the Jeb Bush lener (S8~O). the radiO ad\'enisement ($550). and the

Invitations/postage related to opening ofthe: Haileah office ($794). all totaling S:!.. l64.

"ere not In connection ",th Bush-Qua~'le Gener:!l nor exempt pursuant to 11 CFR

EI00 Be b)( 16) or ( 18)

The Jeb Bush letter discussed the ~-election of President Bush and

Instructions for obulnlng 3n absentee b3110t The \'endor In\'Olce for the radio ad indicated

tht: 3d ,,~ te' ··re-elect Pres G . Bush·· Neither e'pense IS exempt from the definition of

e,pendtture because they are not campal~n matc:na}s used In connection "'jth volunteer

actl\"ltles In the case of the lcner. It Jppc3rS the letter "as produced by a commercial

\ -:ndor and dlstnbuted by dIrect mati (II eFR 100 8(b}( 16)(i)). The radio ad\'enisement

\\35 broadc3Sted on radIO dunn!.= the rcnod I0 '~8 'Q: through 1J ':! '9: .o\s a result. neither

e,pense IS exempt from the definition of C',pcndlture under t 1 CFR § 1OO.8(b)( J8).

Lastl~. the postc:lrd-t~ pc In' IUtlon fo~ open1nf a campaIgn office contained

the "Bush'Quayle '9:·' logo on both Sides Since the In\'Uatlons "ere not distributed b~

'olunleers. the~ are not exempt from the definitiOn of expenditure pursuant to 11 CFR

100 S( b)( J6)

E, ~tISSI4T['Jt~I Of fr' ,-,Cl\L 401\ IT\

SectIons ~~~(b)( 1). (:) and (.: )or Tttle : of the: lO olted States Code state. In

PJI:· thJ! J political committee shJII dlC\close tne amount of clsh on hand at the beginnIng
o

16

ofthe reporting period and the total amount of all receipts and all disbursements for the

reponing period and calendar year,

The Audit staff's reconciliation of the Committee's reponed activity to its

bank activity revealed that material misstatements occurred Y.;th respect to repons filed

covering calendar years J991 and 1992.

Receipts ,,"'ere understated by S7.266. due to not reponing

contributions/receipts totaling $7.366 and not reponing properly as) 00 contribution dray.ll

on non-sufficient funds.

Disbursements "'ere understated by $5.177. due to not reponing $5.141 in

transfers to the non-federal account and also not reponing $36 in bank service charges.

. . Endlns cash on hand ""as understated by S:!.089. resulting from the

reponing errors noted abo\'e.

BegiMing cash on hand "'-as understated by S2.089, carried forward from

the I q91 reponins errors.

Receipts ~'ere overstated by S18.924. primarily due to reponing transfers

($ 18.951) from the non-federal account ~'hlch \\'ere never made,

Disbursements ""ere overstated b~ S~O. J 19. pnmarily due to reponing

C S18.913 In dIsbursements made from the non·federal account.

Ending cash on hand "-as understated b~ S3.:!84. resulting from the

reponing errors noted above

The Committee "as pro\ Ided schedules of the above reponing errors at the

exit conference The Treasurer stated he "as 3\\·:11e the repons ,,",'ere Incorrect. The

reponed uansfers from the non-federal account ,",ere andiclal and were his anempt to bring

the repons Into compliance "'lth reponing requirements

In the Intenm audit report. the Audit staff recommended that the Comminee

file amended reports for 19Q I and 1QQ: to correct the reponing errors noted above.

In response. the Committee filed amendments for each reponIng penod In

1991 and 199:. "'hach malenall~ corrccted the reponing defiCIenCies
FEDERAL ELECTIO:,\: CO.\\"ISSIOi'-

\\ "SHt~CTO"" 0 C 1u",,'

TO: Robert J Costa

AssIstant Staff Director

AudIt Division

Ju~e 26. 1996

THROCGH: John C. 5urina

Staff DIrector

n

fRO\1:

......

0 BY:

N

-..

-

, SCBJECT:

LJ\\TenCe ~1. Noble

General Counsel

I "r

KIm Bright-Colemm U" L..-'

Assocl~te Gener31 Counsel

Proposed F.n.J1 Audit Rcpon on Republtc.Jn P311Y of Dade Count~ (LR.~ := ":8-)

Tn~ Ofrl~C' of Gf:n~r:J1 Counsel h.JS fC"\ If:\'ed the proposc:d FsnJl ~udlt Report on

R~:,,~b;I:J..~ P.J~~ of DJdc Count~ r'Conlmlth~t"') submlttcoC to this Office on \1:1: I":". 1QQl'

Tn~ follo\\ In;: m~mo~ndum summJrlZCS our comments on tile proposed repor: This Offl':::

\.~"r.:u:,s Volth tn: findIngs of the proposed repon not discussed sepJ.rJtel~ In the folkl\\"ln;

mC:ilO:'Jn~l;rr: If you hJve ~ny questions conceman; our comments. please contJc: ~1Jt1r.e\\

Ta.P) IeItJr.

S'r::~' tr':- fHOPO\CC F,nJI Audit RC'f"')~ Co\.\ nu' '~:l ... ':. rr.J'~:~') c\cmp: trorr. PUOIIC Cl~:'(')"·~ .• r ... ·

: F F: ~: \\e recOnlmtnd Ih~' Comn"\\I\J~ \ J'\:"\\IO' c' n'l~ dO:o;mcnl b~ conou:tc:::: I" c:-,::r s... :.~.

\ .. " I ''\' ..... I,

...., • I ... ' .. '
M.....dum to Roben J, Costa

Proposed Final Audit Repon on Republican pany or Dade Count)

Paae2

I. RECEIPT OF APPARE~T PROHIBITED CO~TRJBUTIONS(II.C.)

The proposed Final Audit Report addresses an in-kInd contribution of S19.702 made b)'

Figueredo Center. Ltd. C'FCLU). a limited pannershlp consisting of corporate and non-corporate

panners. ~,e in-kind contribution v.'as in the form of office space leased by the Comminee from

FCL. The Office of General Counsel concurs v.1th the proposed repon's prehmin:u:· finding that

$7.290 of the contribution should have been allocated to the Comminee's Federal .-\ccount. See

11 C.F.R. § 106.5(d)

In-kind contributions by lImited p3rtnerShlps are permIssible if 1) the contribution IS

an:ibuted onl\' to individual non-corporate panners. and 2) :he profits of the non-corporate

panners are reduced (or losses incre:lSed) In the amount of the contnbutlon. leaVing no effect on

the profits or losses of any corpor;lle pJJtner. Se~ II C.F.R. § 11 0.1 (e)..-\d\'lsory OpInion

r·AO··) 1980-132 Thus. no panlon of:3 pJ.nnership contribution may be made from the profits

of J corpor,3tion thJt is a partner. 1J C.F.R. § 110.I(e). The Interim Audit Report recommended

the COrTUTUnee provide inform3t1on to demons~te FCL·s contribution "·as not from prohibited

'0 sources

In response to the Intenm Audit Repon. the Comminee provided FCL's limited

p~..nershlp agreement and FCL's 199::! p.mnershlp tax returns Based on a reVle\\' of these

documents. the Audit D.vls.on identified two general panners that arc corporations. eIght hmited

o p:L..,ners th.:u are corpor:1t1ons. and se\'cn Ilmncd pmners that are individuals. The documents

tf) :llso pro\·ldc :lddlllonJI relc'·:lIU infonnJllon concerning the status ofthe p:lrtners" Enrique Nieto

N Gomez.. identified as an Ind.vidu:l1 hmllej p.mner in the proposed report. appears to be a foreign

nJI10:1J: : L.S C §.:.: Ie. 11 C.F.R SIlO 4(J) Also. three ofthe corporations. ~1ont3lcino

.:.. !' \" . Zom.J Corpor:ltlon V .. :JJld SJlsdolie Corpor3t.on t' V .• appear to be foreign p:mncrs.: Id.

~'" Tnls Office recommends the proposed rcpon be amended to include these facts.

r Tne CO~u-nlnee InltlJII~ ~ended liS rcpons to Indicate that the In-kind contribution was

~f:om CJrlos SJlm:ln. J.,~ .ndlvldLUI pmna:T an FCL ) ThiS amendmen~. nov.'ever. did not cure the

prohlb.ted n3ture of the contnbutlon bccJus(" the office space "'hlch mJd~ up th~ In-kind

~>-contnbutJon"35 o\\ned b~ FCL. no: ~t: SJlm~ Indl\ Idu.:lll~ The documentation supplied by

th~ CommIttee sho\\"s no eVidence thJt tht: profIts or losses of either ~1r SJlm3n or the other

lnOI\'lduai pJ..'"tners \'ere effected b~ the contnbutlon Thus. thiS OffIce concurs "1th the

cor.:iuslon of the proposed rcpon lholt thl: profits of ,311 CorpOf;lte p.:L"1ners "'ere effected by thiS

trJ.nSJcuon and therefore the In-~lnd contnbutlon of S-:- .~90 appears to be from prohibited

sources

A COf'l)OfJllon O';Jnlze~ unOer &rho l,Jn\ 0' J f",re,;r. co ... nl~ I) In=IU';:~ ,r U:~ ~~·I·lnI\IO~ CO lor~!;'

nJtlonJ~' : L' S C JJ Irfbii I J

The ~mended rcpon "~~ rllc'~ In r(\pon\C' 10 J Re;'\on~ AnJI~SI~ DIlflslo!" JnOUI~ concemJn~ tne IdentitIeS

0" tn: F:~ pJ"ner~
o

C.'

Memorandum to Robc1t"J. c~

Proposed Final Aud.t RqtOf1 on Repubhcan Pany of Dade Count)'

Pale)

II. APPARENT PROHIBITED CO:'iTk1Bl~TIO~STO BUSH-QUA\'LE '92

GENERAL COl\1J\IITTEE (II.D.)

The Interim Audit Report addressed J senes of Committee payments ""hich appe3l'ed 10

be made in cOMection ""ith the Bush-Qu;Jyle '9~ gene~l election campJlgn The Interim Audu

Repon concluded that the Committee ""~s not ;Juthonzed to make expendItures in connection

\\'ith Bush Quayle. '9:! under the nauon.)} pJn~ .s coordInated expenditure hmltatlon,~ and

recommended the Commlnee demonsttJte tha: the pJyments "'ere not made on be'hJIf of BushQuayle ·96 or ""ere exemp: from the d~flnHlon of e~pend1ture pursuant to I I C.F.R

§ 100.8(b)(16).s In response to the Intenm Audit Report. the Commlnee argued that the

pJyments ""ere in3d\'enent or for genenc pJJ'ty buildIng activities

In a presidential C3mp31~n. a n3uon31 p3J'ty comminee may make coordinated

expenditures in COMe-Clion ,,'uh the l;ener31 election campaign of a candidate for President

subject to the monet~' limit set forth.n:! L'.S.C. § ~~la(d)(~). 2 U.S.C. § 441a(d)(l)..A. state

O~ local commlnee may make :l coordInated expendnure In connection ",'nh a presldenual

campaIgn. but only if It is authonzed b~ th~ n3uonal pany and charged agaInst the national

commlttee·s coordanJted e"pendlture IamltJtton AO 1980-8i~ see L'.S C §§.;..; 13td)( 1) and

(~). 11 C.f.R § 110.7(3)( 1) ~.,d (~) In delermtnlns ""hether a party expenditure for

communl:JUVe activity is m3d~ ·'In connection \\ nh·· J generaj election c:unpalgn for purposes

of L' .S.C §~.: la(d). the CommISSion 3Sks \,'hether there IS depiction of a cle3fI~' defined

c:JndldJle and communic3t1on of 3n clccuoneenn~message. See AO 1985-14; AO 1980-119,6

ThIS Office concurs \\ llh the proposed repar:'s conclUSion that the ad\'enisement In the

rr:J~:1Z:n~ Dc Fr"ntr \\':1S not 30 expendnure b~ the Commlnee In COMcctJon \\"ith Bush-Quayle

-9: b;::Jus: It concerned a IOCJI pJ:"t~ me~bC'=- Jnd contJlns onj~ a p.Jsslng reference the Bush

TnlS Office also concurs \\'un th~ proposed repo~'s conciuslon th3t the Committee dad

no: demons:.::ue thJt the .nvltJtlons to In::- op=nln~ 0: tn: Hlaie3.h C311lp31gn headquaners were

no: mJde In connection \A Ith the Dush-QL:J\ 1(" '9: C3mp3lgn The In"ltatlons cle3IJy identified

tn~ Bush-QuJyle ·9~ cJ.n'pJI~n uSln~ th: c.Jmp.Jl;:n s logo on both sloes of the Invitation. and

f'U1'\uJn: Ie : L' S C ~.J I JI d h =J tnt ktthlDl1:Jn ~J(lonJI (ommlnee coorOmJted e,pendlture Inuit tor

t:":' I or:: p·t'~ICe~tIJI ~tne~1 eleCtlO'" "J~ S I 0 j. -0: A'l or De:emce" ~. !QC: Ine rlJlIOnJI commmcc= reponed

s~enOlr; S I C,3 jO q6~ ConseQuer.t" ~IaOCJlIO~ t"\ 1,..:- r.,l:IO"':,). com~lr.e:- of tne pJ\ ments an Question \\ould IlJH'

re~uIH:: m tne nJIlonJI commmee- t,ceeoln;: 11\ .1.,t"O'lltO coorOlnJie: e,penallure IIr:H: : L S C ..1-: IJtdh I,

TntS Office notes thJ: the prOPO\tC reoo- u\e\ tn:- P"PJSC . 0" oer.J!~ ot" Ii J:iJl\Zln~ "hetntr tnt'

Commmee !. ~'(pendl,ures "ert JnrlDulJDte 10 '''co Du\f\·Qu)\ Ie "c;: :J~~.)l:=~ e re:ommenC the phr=sse ' on

oer..)!~ 0: oe replJ:ec \\ It~ • 10 connr".of" '" I(P" 10 'O"C'\Pon~ 10 l""~ l;r- ;~J:::' 0:" : L S'::' ~J loll d HI}

......r.: 2t. lQ(;,t> I TnlS Orf.:C' t\ f'fC'\C'r.ll, rc"(',,."'. PI .. u~.nlO'" Jr.~ \\,' rpO\OIO:- sup:'lem::.-ntJ! H:~JI comment:; e!

n~=eS~Jr",
Memorandum to Roben J. Costa

Proposed Final Audit Repon on Repubhcan P:sny of Dade Coun~

Page 4

appeared to be for the purpose of opening;l Bush-Quayle ·92 campaign office. The Commjtte~

did not provide any documentation to prove ItS assenlon that the invitation uinadvenently and

inaccur:uely·' u::.ed the name and logo of the Bush-Quayle '92 campaIgn ~1oreover, this Office

agrees th:1t the anvitations ,,-ere not exempt from the definition of expenditure because the

invitations were not distributed by volunteers J I C.F.R § 1aO.B(b)( J6)(iv)

This Office further a~rees thJt the Commtnee dId not demonstrJte that the lener from Jeb

Bush to "Fello\\' RepubiJcJns" or the r:ldro advertIsement purchased by the Committee \\'ere not

made In connection \\'ith the Bush-QuJyle '9:! campaIgn The Jeb Bush letter exphcnl~

dIscussed the re-election of President Bush. and the Comminee has represented that it is seeking

reImbursement from Bush-Quayle '9~ ior the lener Tne invoice of the Comminee's radio

advenlsement speclfic311y noted th:u It \\'~ for '-re-elect Pres G Bush.,. The affidavJt of Albeno

R C:lrden~, stating that the expenditure "-as for "generic political ads·' and that the text of the

ads could not be located. does not demonstrJte th:u Bush-Quayle '9~ "'as not pan of the

advenlsement. nor does it expl31n the dlscrep3nc~ "1th the Invoice. f\1oreo\'er. neither of these

Items is e~empt from the definition of expenditure bec3use they are not ··campalgn matena!s ..

:=0 1I C F R § 100.8(b)( J6)

In 3ddltlon. thIS Office notes th31 the Jeb Bush lener and the r;ldio advenlsemcnt

pur=hased by the Commlnee :lTe 31so not exempt from the definition of expenditure as voter

C registrJtlOn and I;ct-out-lhe-vote dn\'cs for presidential nominees. See 11 C.F.R. § 1OO.8(b)( 18)_

The Jeb Bush letter. follo,,'jng :l dISCUSSIon of the ~-election of President Bush, requested the

If) reClplcn~ to complete the enclosed absentee b3110t apphC3tlOn if he or she could not go to the

N polls on !\ovember 3rd Because th~ lener "-as processed by a direct mail vendor, it IS not

~,e~~: 11 C F.R § 100.8(b)( 18)(li SlmliJri~ th~ CommIttee's radiO advenlsement \\as

'- b~o~d:~s: on rJolo. and thus It does not qUJlaf~ for e,~mptlon Jd The Office of General

-, Counsel recommends the proposed repon b~ reVIsed to note thJ: the Jeb Bush k~~~r :ln~

Co:-n~ ltle~ f.JjlO 30\ ~nlsemen: :l:~ not e,empt from tne Cefln1tlOn of e:\oendnure under

C' I C F.R 100 Sf bH 18) .

"'-...
FEDERAL ELECTIO' (()\,,\."SSIO,\:

\\ ,..."', It., fl' :. -4'

c

Au~ust 5. 1996

f\1r. Andrev-' Gngsb). Treasurer

Republican Pa.rty of Dade Count~

36~ ~1lnorca .A\ ve., # 1O~

COfal Gables, Fl 3313~

OeM ~1r Gn~sby.

Attached please find the Final Audit Repon o~ tpe Republican Party of Dade

Count~ The CommIssion appro\'cd thc repon on August 1. 1996,

The Commission appro\'ed Final Audit Repon ""ill be placed on the public record

on Au~ust 1~, J996, Should you ha\'e any questions reparding the public release ofthe

repan. plcasc contact the Commission's Press Office at (202) :!19-41S5 or toll-free at (800)

4~J.95jO Any questions you ha\'e related 10 ~ners covered during the audit or in the

repan should dlfCcted 10 Sam O\\l1SU or Tom Nunhen ofthe Audit Di\Oision at (20:!)

JQ.:; 7~O or 3t the abo\'e loll free number

Slncerel~ .

~0L.If~ , I,

• / I -!- /Y/

Roben J Costa

ASSlst3l11 Staff Director

-\udll 01\ ISlon

A tt.Jchmcnt as stateG
CHRONOLOGY'

REPUBLICAN PARTY OF DADE COill'T"

o

c

!./)

N

Audit Field"'ork

Interim Audit Repon to

the Comminee

Response Received to the

Interim Audit Repon

Final Audit Repon Appro\'ed

Pa~e ...-4:. ••

~/16'95 - 4/14/995

1123196

4/11/96

8/1/96
o -