Interim Audit Report of the 

Audit Division on 

Rightmarch.com PAC Inc 

(January 1, 2007 - December 31, 2008) 

Why the Audit 

Was Done 

Federal law permits the 

Commission to conduct 

audits and field 

investigations of any 

political committee that is 

required to file reports 

imder the Federal 

Election Campaign Act 

(the Act). The 

Commission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold 

requirements for 

substantial compliance 

with the Act.' ITie audit 

determines whether the 

committee complied with 

the limitations, 

prohibitions and 

disclosure requirements 

of the Act. 

About the Committee (p. 2) 

Rightmarch.com PAC Inc is a non-connected, multi-candidate 

committee headquartered in Braselton, Georgia. For more 

information, see chart on Committee Organization, p. 2. 

Financial Activity (p. 2) 

• Receipts 

o Contributions from Individuals 

Total Receipts 

• Disbursements 

o Operating Expenditures 

o Contributions to Political Committees 

o Loan Repayments 

o Independent Expenditures 

Total Disbursements 

$ 684,675 

$ 684,675 

$ 97,888 

14,988 

2,500 

563,277 

$ 678,653 

Findings and Recommendations (p. 3) 

• Misstatement of Financial Activity (Finding 1) 

• Extension of Credit by a Commercial Vendor (Finding 2) 

• Failure to File Notices and Properly Disclose Independent 

Expenditures (Finding 3) 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any of the 

matters discussed in this 

report. 

2 U.S.C. §438(b). 
Interim Audit Report of 

the Audit Division on 

Rightmarch.com PAC Inc 

(January 1, 2007 - December 31, 2008) 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Request for Early Consideration of Legal Questions 1 

Part II. Overview of Committee 

Committee Organization 2 

Overview of Fmancial Activity 2 

Part III. Summaries 

Findings and Recommendations 3 

Part IV. Findings and Recommendations 

Finding 1. Misstatementof Financial Activity 4 

Finding 2. Extension of Credit by a Commercial Vendor 6 

Finding 3. Failure to File Notices and Properly Disclose 

Independent Expenditures 9 
Part I 

Background 

Authority for Audit 

This report is based on an audit of the Rightmarch.com PAC Inc (RMC), imdertaken by 

the Audit Division of the Federal Election Commission (the Commission) in accordance 

with the Federal Election Campaign Act of 1971, as amended (the Act). The Audit 

Division conducted the audit pursuant to 2 U.S.C. §438(b), which permits the 

Commission to conduct audits and field investigations of any political committee that is 

required to file a report imder 2 U.S.C. §434. Prior to conductmg any audit under this 

subsection, the Commission must perform an intemal review of reports filed by selected 

committees to determine if the reports filed by a particular committee meet the threshold 

requirements for substantial compliance witfa tfae Act. 2 U.S.C. §438(b). 

Scope of Audit 

Following Commission-approved procedures, tfae Audit staff evaluated various risk 

factors, and as a result, tfais audit examined: 

1. tfae consistency between reported figures and bank records; 

2. tfae disclosure of individual contributors' occupation and name of employer; 

3. tfae disclosure of independent expenditures; and, 

4. otfaer committee operations necessary to tfae review. 

Request for Early Commission Consideration of Legal 

Questions 

Pursuant to tfae Policy Statement Establisfaing a Program for Requesting Consideration of 

Legal Questions by the Commission, RMC requested early consideration of two legal 

questions raised during the audit. Tfae first asked wfaetfaer certain fees represented an 

extension of credit resulting in in-kind contributions and reportable debt (see Finding 2). 

Tfae second asked wfaetfaer expenses for fundraising communications sfaould be reported 

as independent expenditures (see Finding 3). 

Tfae Commission did not resolve tfaese matters or provide guidance on faow to proceed. 

Tfaerefore, pursuant to tfae Commission's policy on early consideration of legal questions, 

tfae Audit Division included tfaese matters in tfais report. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration April 23,2003 

• Audit Coverage January 1,2007 - December 31,2008 

Headquarters Braselton, Georgia 

Bank Information 

• Bank Depositories Tfaree 

• Bank Accounts Tfaree cfaecking 

Treasurer 

• Treasurer Wfaen Audit Was Conducted William Greene 

• Treasurer During Period Covered by Audit William Greene 

Management Information 

• Attended FEC Campaign Finance Seminar No 

• Wfao Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 

Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand ^ January 1,2007 $ 9,161 

Receipts 

o Contributions from Individuals 684,675 

Total Receipts $ 684,675 

Disbursements 

o Operating Expenditures 97,888 

o Contributions to Political Committees 14.988 

o Loan Repayments 2,500 

o Independent Expenditures 563,277 

Total Disbursements $ 678,653 

Cash-on-hand @ December 31,2008 $ 15,183 
Part III 

I Summaries 

i 

Findings and Recommendations 

I 

Finding 1. Misstatement of Financial Activity 

During audit fieldwork, a comparison of RMC s reported financial activity witfa its bank 

records revealed misstatements for 2007 and 2008. For 2007, RMC understated reported 

receipts and ending casfa-on-faand by $23,940 and $16,750, respectively. For 2008, RMC 

understated reported disbursements by $9,889 and ending casfa-on-faand by $6,625. Tfae 

Audit staff recommends tfaat RMC amend its disclosure reports to correct tfae 

misstatements for botfa 2007 and 2008. (For more detail, see p. 4) 

Finding 2. Extension of Credit by a Commercial Vendor 

I During audit fieldwork, tfae Audit staff identified one limited liability company tfaat may 

faave extended credit to RMC outside of tfae normal course of business by allowing 

I invoices to remain outstanding for a considerable lengtfa of time. Tfais vendor did not 

I appear to make commercially reasonable attempts to collect $ 1,655,327 for services 

i rendered, tfaereby making an apparent excessive in-kind contribution of $ 1,653,027 

i ($1,655,327 - $2,300 = $1,653,027). Tfae Audit staff recommends tfaat RMC provide 

documentation, to include statements from tfae vendor tfaat demonstrates tfae credit was 

I extended in tfae normal course of tfae vendor's business. (For more detail, see p. 6) 

Finding 3. Failure to File Notices and Properly Disclose 

Independent Expenditures 

During audit fieldwork, tfae Audit staff reviewed independent expenditures and noted tfae 

following: 

• RMC did not file 24/48-faour notices for up to $ 139,067; and 

i • RMC did not properly disclose independent expenditures totaling $2,172,135 

made (i.e., publicly disseminated) prior to payment as "memo" entries on 

Scfaedule E (Itemized Independent Expenditures) and $1,892,571 as reportable 

debt on Scfaedule D (Debts and Obligations). 

If RMC believes tfaat tfaese expenditures did not require reporting as memo entiy 

! independent expenditures or 24/48-faour notices, tfae Audit staff recommends tfaat it 

provide evidence to support tfaat conclusion. Absent sucfa evidence, tfae Audit staff 

recommends tfaat RMC file amended disclosure reports to correctly disclose tfaese 

independent expenditures. In addition, tfae Audit staff recommends tfaat RMC submit and 

implement revised procedures for reporting independent expenditures. (For more detail, 

see p. 9) 
Part IV 

Findings and Recommendations 

I Finding 1. Misstatement of Financial Activity 

Summary 

During audit fieldwork, a comparison of RMC s reported financial activity witfa its bank 

records revealed misstatements for 2007 and 2008. For 2007, RMC understated reported 

receipts and ending casfa-on-faand by $23,940 and $16,750, respectively. For 2008, RMC 

understated reported disbursements by $9,889 and ending casfa-on-faand by $6,625. Tfae 

Audit staff recommends tfaat RMC amend its disclosure reports to correct tfae 

misstatements for botfa 2007 and 2008. 

Legal Standard 

Contents of Reports. Each report must disclose: 

• The amoimt of casfa-on-faand at tfae begiiming and end of tfae reporting period; 

• Tfae total amount of receipts for tfae reporting period and for tfae calendar year; 

• Tfae total amount of disbursements for tfae reporting period and for tfae calendar year; 

and 

• Certain transactions tfaat require itemization on Scfaedule A (Itemized Receipts) or 

Scfaedule B (Itemized Disbursements). 2 U.S.C. §434(b)(l), (2), (3), (4) and (5). 

Facts and Analsrsis 

A. Facts 

During audit fieldwork, tfae Audit staff reconciled reported financial activity witfa bank 

records for calendar years 2007 and 2008. Tfae following cfaarts outline tfae discrepancies 

for beginning casfa balances, receipts, disbursements and ending casfa balances for eacfa 

year. Succeeding paragrapfas address tfae reasons for tfae misstatements, if known. 

2007 Activity 

Reported Bank Records Discrepancy 

Opening Casfa Balance 

@ January 1,2007 

$11,070 $9,161 $1,909 

Overstated 

Receipts $481,887 $505,827 $23,940 

Understated 

Disbursements $474,689 $479,970 $5,281 

Understated 

Ending Casfa Balance 

@ December 31,2007 

$18,268 $35,018 $16,750 

Understated 
Tfae understatement of receipts resulted from tfae following: 

• Receipts deposited to operating account not reported 

• Unexplained difference 

Understatement of Receipts 

$ 22,208 

1.732 

$ 23,940 

Tfae $16,750 imderstatement of tfae ending casfa-on-faand resulted from tfae misstatements 

described above, as well as discrepancies in opening casfa-on-faand and disbursements. 

2008 Activity 

Reported Bank Records Discrepancy 

Opening Casfa Balance 

@ January 1,2008 

$18,268 $35,018 $16,750 

Understated 

Receipts $179,084 $178,848 $236 

Overstated 

Disbursements $188,794 $198,683 $9,889 

Understated 

Ending Casfa Balance 

@ December 31,2008 

$8,558 $15,183 $6,625 

Understated 

Tfae imderstatement of disbursements resulted from tfae following: 

• Disbursements not reported 

• Fimdraising fee paid in 2009, reported in 2008 

• Fees reported but not supported by cfaeck or debit 

• Unexplained difference 

Net Understatement of Disbursements 

$ 15,563 

( 5,000) 

(826) 

152 

$ 9.889 

Tfae $6,625 imderstatement of tfae ending casfa-on-faand resulted from tfae misstatements 

described above, as well as discrepancies in opening casfa-on-faand and receipts. 

B. Interim Audit Report & Audit Division Recommendation 

At tfae exit conference, tfae Audit staff discussed tfae misstatements witfa RMC 

representatives and provided copies of relevant scfaedules. 

Tfae Audit staff recommends tfaat, witfain 30 calendar days of service of tfais report, RMC: 

• Amend its reports to correct tfae misstatements noted above; and, 

• Amend its most recently filed report to correct tfae casfa-on-faand balance witfa an 

explanation tfaat tfae cfaange resulted from a prior period audit adjustment. 

Fiu^er, RMC sfaould reconcile tfae casfa balance of its most recent report to 

identify any subsequent discrepancies tfaat may affect tfae adjustment 

recommended by the Audit staff. 
Finding 2. Extension of Credit by a Commercial Vendor 

Summary 

During audit fieldwork, the Audit staff identified one limited liability company tfaat may 

faave extended credit to RMC outside of tfae normal course of business by allowing 

invoices to remain outstanding for a considerable lengtfa of time. Tfais vendor did not 

appear to make commercially reasonable attempts to collect $1,655,327 for services 

rendered, tfaereby making an apparent excessive in-kind contribution of $1,653,027 

($1,655,327 - $2,300 = $1,653,027). Tfae Audit staff recommends tfaat RMC provide 

documentation, to include statements from tfae vendor tfaat demonstrates tfae credit was 

extended in tfae normal course of tfae vendor's business. 

Legal standard 

A. Contribution defined. A gifr, subscription, loan (except wfaen made in accordance 

witfa 11 CFR§§ 100.72 and 100.73), advance, or deposit of money or an3^ing of value 

made by an person for tfae purpose of infiuencing any election for Federal office is a 

contribution. Tfae term anytfaing of value includes all in-kind contributions. 

Tfae usual and normal cfaarge for a service is tfae commercially reasonable rate tfaat one 

would expect to pay at tfae time tfae services were rendered. 

Tfae provision of services at a cfaarge less tfaan tfae usual and normal cfaarge results in an 

in-kind contribution. Tfae value of sucfa a contribution would be tfae difference between 

tfae usual and naormal cfaarge for tfae services and tfae amount tfae political committee bill 

and paid. 11 CFR§ 100.52(a) and (d). 

B. Contributions by a Limited Liability Company. An LLC not electing treatment as 

corporation imder federal tax law or not faaving publicly-traded sfaares may make 

contributions to infiuence federal elections. Sucfa a contribution will be considered as 

faaving been made from a partnersfaip and govemed by tfae mles pertaining to partnersfaips 

and subject to a single election limit per candidate of $2,300. Tfae contribution is 

considered a contribution from a single individual if tfae LLC is a single-member LLC 

tfaat faas not cfaosen to be treated as a corporation under IRS mles. 11 CFR §§ 110.1(b)(1) 

and (g)(2) and (4). 

C. Definition of Commercial Vendor. A commercial vendor is any person wfao 

provides goods or services to a candidate or political committee and wfaose usual and 

normal business involves tfae sale, rental, lease or provision of tfaose goods or services. 

11 CFR §116.1(c). 

D. Extension of Credit by Commercial Vendor. A commercial vendor, wfaetfaer or not 

it is a corporation, may extend credit to a candidate or political committee provided tfaat: 

• Tfae credit is extended in tfae vendor's ordinary course of business (see below); 

and 
• Tfae terms of tfae credit are similar to tfae terms tfae vendor observes wfaen 

extending a similar amount of credit to a nonpolitical client of similar risk and 

size of obligation. 11 CFR §116.3(a) and (b). 

E. Definition of Ordinary Course of Business. In determining wfaetfaer credit was 

extended in tfae ordinary course of business, tfae Commission will consider wfaetfaer: 

• Tfae commercial vendor followed its establisfaed procedures and its past practice 

in approving tfae extension of credit; 

• Tfae commercial vendor received prompt, full payment if it previously extended 

credit to tfae same candidate or political committee; and 

• Tfae extension of credit conformed to tfae usual and normal practice in tfae 

commercial vendor's industry or trade. 11 CFR §116.3(c). 

Facts and Analysis 

A. Facts 

During audit fieldwork, tfae Audit staff identified a limited liability company tfaat may 

faave extended credit to RMC outside tfae normal course of business by allowing invoices 

to remain outstanding for a considerable lengtfa of time. In addition, the terms of tfae 

contract between RMC and tfais vendor, states, *tfae client sfaall only be obligated to pay 

tfae contingency fee stated on PoUtical Advertising's invoice to tfae extent of tfae 

contributions that are actually received by Client as a result of the program. If tfae funds 

generated as a result of the program are less tfaan tfae contingency fee stated on Political 

Advertising's invoices, tfaen tfae cHent sfaall only be obligated to tfae extent of tfae 

proceeds received from tfae program." 

On August 20,2007, RMC entered into a contract for fundraising services witfa Political 

Advertising (PA), a division of Political Call Center, LLC, an Arizona limited liability 

company, whicfa files it taxes as a partnersfaip. During tfae period of August 13,2007 

tfarougfa December 31,2008, PA invoiced RMC a total of $2,223,370 for fimdraising 

services such as telephone calls and tfae printing and mailing of follow-up letters. RMC 

paid $568,043 of tfae total invoiced. As of December 31,2008, tfae Audit staff calculated 

tfae outstanding balance owed by RMC to be $1,655,327. Based upon its understanding 

of tfae terms of tfae contract, RMC only reported amounts paid against invoices. RMC did 

not consider tfae majority of tfae outstanding amounts reportable as debt owed because tfae 

terms of tfae contract state tfaat RMC was responsible only up to tfae amounts raised by tfae 

fundraising service. RMC provided no evidence that this vendor made commercially 

reasonable attempts to collect tfais debt. Tfaerefore, it appears tfaat $1,653,027 

($1,655,327 - $2,300 = $1,653,027) may be considered an excessive m-kind contribution. 

B. Early Commission Consideration of Legal Questions 

Pursuant to tfae Commission Policy Statement EstabUsfaing a Pilot Program (July 20, 

2010), RMC filed a Request for Early Commission Consideration of Legal Questions 

(Request). In its Request, RMC asked tfae Commission to consider wfaetfaer tfae terms of 

tfae contract resulted in an extension of credit, an in-kind contribution and reportable debt. 

Specifically, RMC requested tfaat tfae Commission consider tfae following: 
• First, tfae weekly contingency fees do not constitute reportable debt and neitfaer 

tfae Act nor tfae Commission's regulations define tfae term "debt." Based on 

Advisory Opinions, tfae Commission "faas long held that State law govems 

whetfaer an alleged debt in fact exists, what tfae amount of tfae debt is and wfaicfa 

persons or entities are responsible for paying a debt." As sucfa, RMC believes 

tfaere will be no debt to report until tfae termination of tfae contract between RMC 

and PA. 

• Second, RMC mentions a fundraising contract at issue in MUR 5635^ 

(Conservative Leadersfaip PAC) and contends tfaat it was substantially different 

dian tfae contract between RMC and PA. Specifically, according to RMC, tfae 

contract in MUR 5635 was tmly "no-risk" since it provided tfaat if sufficient 

funds were not raised, that committee would not be responsible for the debt. 

However, the contract between RMC and PA provides that RMC would become 

obligated for all unpaid contingency fees if RMC terminates tfae contract prior to 

August 15,2012. 

• Tfaird, tfae Request explains tfaat tfae contract between RMC and PA was made in 

tfae ordinary course of business and tfaat tfais type of contract is a fairly standard 

contract in tfae political industiy. 

Tfae Office of General Counsel (OGC) considered RMCs position and in its 

memorandum to tfae Commission^ concluded tfaat tfais is a "no risk" or "limited risk" 

contract at issue tfaat may result in in-kind contributions to RMC from PA. OGC also 

concluded tfaat fees and expenses resulting from sucfa a contract are reportable as debts. 

However, OGC notes tfaat tfaere is little information at tfais time about tfae presence or 

absence of tfae safeguards^ tfaat tfae Commission faas identified in relevant enforcement 

matters or advisory opinions and tfaat RMC may yet be able to demonstrate tfae contract 

did not result in any in-kind contribution. 

Tfae Commission did not resolve or provide guidance on faow to proceed witfa tfais matter; 

tfaerefore, pursuant to tfae Commission's policy on early consideration of legal questions, 

tfae Audit Division included tfais matter in tfais report. 

C. Interim Audit Report & Audit Division Recommendation 

Tfae Audit staff discussed tfais issue witfa RMC representatives at tfae exit conference. 

Tfae representatives expressed tfaeir disagreement witfa tfae Audit staff and subsequently 

filed tfae Request noted above. 

^ The Commission has specifically addressed "no risk" or "limited risk" fundraising agreements like the 

one at issue here in enforcement matters and advisory opinions throughout the years. The Commission has 

consistently applied 11 C.F.R. §§ lOO.SS and 116.3 (or their regulatory predecessors) to determine whether 

such arrangements were extensions of credit that resulted in in-kind contributions. 

^ See Request for Early Commission Consideration of Legal Questions Arising in the Audit of ' 

Rightmarch.com PAC, Inc. (LRA 842) Memorandum to the Commission dated March 14,2011, page 2. 

^ Safeguards proposed by the Commission have included requiring advance deposits by a conunittee to 

reimburse vendors for potential shortfalls, limiting the term of the contract, or allowing vendors to 

terminate the contract early and demand Ml payment as a result of poor fundraising performance. 
I Since tfae Commission did not resolve or provide guidance witfa respect to tfais matter, tfae 

I Audit staff recommends tfaat, witfam 30 calendar days of service of tfais report, RMC: 

I • Provide documentation, to include statements from tfais vendor tfaat demonstrates 

! tfae credit extended was in tfae normal course of tfae vendor's business and did not 

! represent an excessive in-kind contribution by tfae vendor. Tfae information 

provided is to include examples of otfaer non-political customers and clients of 

similar size and risk for wfaicfa similar services faave been provided and similar 

billing arrangements faave been used. Also, RMC sfaould provide information 

conceming presence of safeguards sucfa as billing policies for similar non-political 

clients and work, advance payments policies, debt collection policies, and billing 

cycles; and 

• Amend its reports to refiect all debt owed to PA. 

I 

Finding 3. Failure to File Notices and Properly Disclose 

Independent Expenditures 

Summary 

During audit fieldwork, tfae Audit staff reviewed independent expenditures and noted tfae 

following: 

• RMC did not file 24/48-faour notices for up to $ 139,067; and 

• RMC did not properly disclose independent expenditures totaUng $2,172,135 

made (i.e., publicly disseminated) prior to payment as "memo" entries on 

Scfaedule E (Itemized Independent Expenditures) and $1,892,571 as reportable 

debt on Scfaedule D (Debts and Obligations). 

If RMC believes tfaat tfaese expenditures did not require reporting as memo entry 

independent expenditures or 24/48-faour notices, tfae Audit staff recommends tfaat it 

provide evidence to support tfaat conclusion. Absent sucfa evidence, tfae Audit staff 

recommends tfaat KMC file amended disclosure reports to disclose tfaese independent 

expenditures correctly. In addition, tfae Audit staff recommends tfaat RMC submit and 

implement revised procedures for reporting independent expenditures. 

Legal standard 

A. Definition of Independent Expenditures. Tfae term "independent expenditure" 

means expenditure by a person for a communication expressly advocating tfae election or 

defeat of a clearly identified candidate tfaat is not made in coordination witfa any 

candidate or autfaorized committee or agent of a candidate. 11 CFR § 100.16. 

B. Disclosure requirements - General Guidelines. An independent expenditure sfaall 

be reported on Scfaedule E if, wfaen added to otfaer independent expenditures made to tfae 

same payee during tfae same calendar year, it exceeds $200. Independent expenditures 

made (i.e., publicly disseminated) prior to payment sfaould be disclosed as "memo" 
10 

entries on Scfaedule E and as a reportable debt on Scfaedule D. Independent expenditures 

of $200 or less do not need to be itemized, tfaougfa tfae committee must report the total of 

those expenditures on line (b) on Scfaedule E. 11 CFR §§104.3(b)(3)(vii), 104.4(a) and 

104.11. 

C. Last-Minute Independent Expenditure Reports (24-Hour Notices). Any 

independent expenditures aggregating $1,000 or more, witfa respect to any given election, 

and made afrer tfae 20^ day but more tfaan 24 faours before tfae day of an election must be 

reported and tfae report must be received by tfae Commission within 24 hours after tfae 

expenditure is made. A 24-faour notice is required eacfa time additional independent 

expenditures aggregate $1,000 or more. Tfae date tfaat a communication is publicly 

disseminated serves as tfae date tfaat tfae committee must use to determine wfaetfaer tfae 

total amount of independent expenditures faas, in tfae aggregate, reacfaed or exceeded tfae 

tfaresfaold reporting amount of $1,000. 11 CFR §§104.4(f) and 104.5(g)(2). 

D. Last-Minute Independent Expenditure Reports (48-Hour Notices). Any 

independent expenditure aggregating $10,000 or more witfa respect to any given election, 

at any time during a calendar year, up to and including tfae 20tfa day before an election, 

must be disclosed witfain 48 faours eacfa time tfae expenditures aggregate $10,000 or more. 

Tfae notices must be filed witfa tfae Commission wi^in 48 faours afrer tfae expenditure is 

made. 11 CFR §§104.4(f) and 104.5(g)(1). 

Facts and Analjrsis 

A. Facts 

RMC disclosed independent expenditures, totaling $563,277, on Scfaedule E. Tfaese 

disbursements were for fundraising pfaone calls and follow-up letters and were disclosed 

in opposition to Hillary Clinton, Hillary Clinton and Barack Obama, or Barack Obama. 

Tfae Audit staff reviewed tfaese expenditures to determine if tfaey were properly reported 

on Scfaedule E. It sfaould be noted tfaat RMC did file 24/48-faours notices, but tfae notices 

were filed based on payment date ratfaer tfaan tfae date of dissemination. As a result, tfae 

notices did not cover amounts invoiced past September 2007. A review of tfae pfaone 

scripts,^ follow-up letters and invoices for tfaese independent expenditures revealed tfae 

following: 

• RMC did not file 24/48-faour notices for independent expenditures amounting to 

as mucfa as $139,067 for tfae period December 24,2007 tfarougfa November 3, 

2008; and 

• RMC reported independent expenditures wfaen tfae invoices were paid, eitfaer in 

part or in full. However, RMC made most of tfaese payments weeks or montfas 

afrer tfae dissemination or pfaone-call dates. For expenditures totaling $2,172,135, 

RMC sfaould faave disclosed independent expenditures as memo entries on 

' Four scripts were utilized. Of these, three contained express advocacy. The fourth contained no express 

advocacy (Generic) and per RMC was used after the 2008 General Election. 
11 

Scfaedule E, filed witfa reports covering tfae dates wfaen tfae materials were 

disseminated, and reported $1,892,571^ in corresponding debt on Scfaedule D. 

B. Early Commission Consideration of Legal Questions 

In its Request, RMC asked tfae Commission to consider if expenses relating to a 

fundraising program, wfaicfa identified one or more federal officefaolders, but did not refer 

to tfaem as candidates or mention any election, sfaould be reported as independent 

expenditures ratfaer tfaan operating expenditures. 

Coimsel for RMC stated tfaat tfae contract between PA and RMC is a fairly standard 

fundraising contract in tfae political industiy and tfaat tfae puipose of tfae contract is for PA 

to individually contact members of tfae general public by telepfaone and follow-up mail to 

identify voters, advocate issues and/or tfae election or defeat of candidates for federal 

office, provide political information and ".. .at tfae same time, combine tfae function of 

donor acquisition and/or donor renewal as to advance tfae goals of Rigfatmarcfa." RMCs 

Counsel also points out tfaat tfae entire cost stmcture of tfae contract to Rigfatmarcfa is 

based on tfae funds raised by tfae telemarketing and mail program. RMCs Counsel 

discusses tfae content of tfae four telemarketing scripts and indicated tfaey were typical of 

fundraising scripts used in tfae political industry. According to RMCs Counsel, tfae 

scripts: 

• Ask tfae listener to express an opinion on a public issue (in tfais case, tfae 

seriousness of illegal immigration); 

• Repeatedly ask tfae listener to donate money to a campaign to stop illegal 

immigration; 

• Tell tfae Ustener tfaat tfae Committee is working to defeat politicians like Hillary 

Clinton and Barak [sic] Obama; and 

• Ask tfae listener to tell tfaeir friends to oppose Hillary Clinton and Barak [sic] 

Obama. 

RMCs Counsel furtfaer explained tfaat tfae scripts do not: 

• Mention any candidacy, party affiliation, public office, voting or any election; 

• Refer to anyone's cfaaracter or fitness to faold office; 

• Run in close proximity to any election or were targeted to any particular state;^ 

' This amount differs because RMC did acknowledge debt of $279,564 and filed Schedules D for this 

amount fi-om the 2007 Year-End report until the 2008 Year-End report ($2,172,135 - $279,564 = 

$ 1,892,571). RMC stopped reporting this debt balance starting with the 2009 April Quarterly report. RMC 

did not provide the Audit staff documentation to explain how this debt was calculated and why it was 

dropped from reporting in 2009. 

^ RMCs Counsel points out that, according to RMCs calculations, 93% of the calling scripts were used in 

2007, a non-election year. 
12 

I • Make any comparison between candidates; or 

j 

I • Repeat any candidate's slogans or messages. 

I RMCs Counsel also explained tfaat tfaese scripts were fundraising scripts designed to 

raise money by toucfaing upon faot-button political issues and informing listeners wfaicfa 

side of tfae issues prominent officefaolders are taking. 

In closing, RMCs Counsel said tfaat RMC faad reported some of its fundraising expenses 

as independent expenditures witfaout tfae advice of counsel. To compoimd the problem, 

RMC was inconsistent witfa tfae classification of expenses on reports as operating 

expenses or independent expenditlires. 

OGC considered RMCs position, and in its memorandum to tfae Commission,^ 

concluded tfaat to tfae extent tfaat tfaese solicitations expressly advocated tfae election or 

defeat of a clearly identified candidate, tfaey must be reported as independent 

expenditures; and, tfaat appropriate 24/48-notices must be disclosed. Tfae memorandum 

noted tfaat tfae tfaree scripts at issue include tfae word "defeat" followed by tfae name of a 

clearly identified candidate: Hillary Clinton, Barack Obama or botfa, tuming tfaese 

messages into express advocacy under 11 CFR § 100.22(a). 

' Tfae Commission did not resolve or provide guidance on faow to proceed witfa tfais matter 

tfaerefore, pursuant to tfae Commission's policy on early consideration of legal questions, 

tfae Audit Division included tfais matter in tfais report. 

C. Interim Audit Report & Audit Division Recommendation 

Tfae Audit staff discussed tfaese issues at tfae exit conference and provided appropriate 

scfaedules to RMC representatives. Conceming tfae reporting of 24/48-faour notices. 

Counsel for RMC stated tfaat tfaese mdependent expenditures were intended for tfae 

' General Election and not for tfae Primary Elections. Tfaus, RMC representatives indicated 

tfaese notices were not necessary. 

Tfae Audit staff recommends tfaat, witfain 30 calendar days of service of tfais report, RMC 

take tfae following actions: 

• Provide any documentary evidence tfaat would demonstrate tfaat tfaese 

disbursements were not independent expenditures and tfaerefore did not require 

24/48-faour notices; 

• Submit and implement revised procedures for reporting independent expenditures, 

as well as for tracking dissemination dates for sucfa expenditures to allow for 

timely filing of 24/48-faour reporting notices; and 

j • Amend its reports to disclose independent expenditures properly as "memo" 

entries on Scfaedule E and report corresponding debt on Scfaedule D. 

' See Request for Early Commission Consideration of Legal (^estions Arising in the Audit of 

Rightmarch.com PAC, Inc. (LRA 842) Memorandum to the Conunission dated March 14,2011, see page 

10.