Report of the 

Audit Division on 

Biden for President, Inc. 

December 15, 2006 - April 30, 2008 

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.' 

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, an^y^^|^^ 

whether the campaign 

otherwise complied with tni 

limitations, p|6pj^i^s,,^and' 

disclosuj^lquiremibnt^p^^^ 

the election law. 

— 

Futurel^|ion 

The Commissi6^nay 

initiate an enforceinint 

action, at a later tim^^^ 

respect to any of the 

discussed in this reporf 

About the Committe^(P^^ 

Biden for President, Inc. is the p.riheipal campaign committee of Joseph R. 

Biden, Jr., a candidate for the I^^^ratic Party's nomination for the office of 

President of the United State|f The>#|gnimittee is headquartered in 

Wilmington, DE. For mpre i^formatio^see chart on the Campaign 

Organization, p. 2. ^^^ ^ * '^lij^ 

Financial<i&§|t;iidt3i^^. 3) 

• Receipts ^ 

o Contributions r^^mdividuals 

o ^;p^ontributions froniP^|tlitical Committees 

^^pngf^rs from Affiir^l£)ommittees 

^iSifeceived ^Sp ^ 

^gj-u:--r » :—ju ^ Iatchin^Bunds!>Receive# 

0ffs|ts t(^peratuij^Xpenditures 

OtheBg&eipts 

Total Receipts 

^ Disbursements 

.p Operatin^Tcpenditures 

l^^bganjtepayments 

o Transfers to Other Authorized Committees 

ko Contribution Refunds 

^^pi^'otal Disbursements 

Findings and Recommendations (p. 4) 

• Net Outstanding Campaign Obligations (Finding 1) 

• Receipt of Contributions that Exceed Limits (Finding 2) 

• Prohibited In-Kind Contribution (Finding 3) 

• Stale-Dated Checks (Finding 4) 

• Disclosure of Disbursements (Finding 5) 

• Reporting ofDebts and Obligations (Finding 6) 

$ 8,210,947 

166,045 

1,900,000 

1,468,614 

857,189 

270,611 

12,650 

$ 12,886,056 

$ 10,656,525 

857,189 

639,408^ 

578,032 

$ 12,731,154 

' 26 U.S.C. §9038(a). 

^ These monies represent general election contributions subsequently redesignated to the candidate's 

senate committee. 
Report of the 

Audit Division on 

Biden for President, Inc. 

December 15, 2006 - A^ril 30, 2008 
Table of Contents 

Part I. Background 

Authority for Audit 

Scope of Audit 

Inventory of Campaign Records 

Changes to the Law 

Part II. Overview of Campaign 

Campaign Organization 

Overview of Financial Activity 

Part III. Summaries 

Findings and Recommendations 

Page 

Summary of Amounts Potentially Owed to the ci$i^easury 

Part IV. Findings and R^l^mpendatiGrl^ 

Finding 1. Net Outstanding Campaiy^%^itipns ''^^'^''^ 

Finding 2. Receipt of Contributions i^t Ex^p^^units , / 

Finding 3. ProhibitedTnr^ind Contrib^on^ 

Finding 4. Stale-D^^fe|^ks ^ 

Finding 5. Dis^J^^e of Di^ursements % 

Finding 6. Repoiti^^f De ^ and Obligations" 

6 

9 

15 

17 

19 

20 
Part I 

Background 

Authority for Audit 

This report is based on an audit of Biden for President, Inc. (BFP), undertaken by the Audit 

Division of the Federal Election Commission (the Commission) as mandated by Section 9038(a) 

of Title 26 of the United States Code. That section states "After each matching payment period, 

the Commission shall conduct a thorough examination and audit ofthe qualified campaign 

expenses of every candidate and his authorized committees who recejs^^ [matching] payments 

under section 9037." Also, Section 9039(b) ofthe United States " ' TM " ^ — 

of the Commission's Regulations state that the Commission mgyi 

audits from time to time as it deems necessary. 

Scope of Audit 

This audit examined: 

1. The receipt of excessive contributions and loans?e^|j;'^ 

2. The receipt of contributions from prohibited sourcei 

3. The receipt of transfers from other authorized commil^pv 

te and Section 9038.1(a)(2) 

duct other examinations and 

4. The disclosure of contributions and t^|^ s received. 

5. The disclosure of disbursements, debts%hc^^Iipations. 

6. The recordkeeping process and completenpsPo^^^ 

7. The consistency between reported figure^md bam 

8. The accuracy of the St^jem^t^gf Net Outsi^^fig Caniplign Obligations. 

9. The campaign's conn^|iance^^|kspending limitations. 

10. Other campaign opj^k^s nec6|^^ary to the r^levy.-

^Y.>$^Gnaucts^|jnventory''bf campaign records before it begins the audit 

fieldwo^^^FP records w|^^ateri^^y^omplete and the fieldwork began immediately. 

Changt^il^e Lai^^ 

On September i4^jgp7, the Pi^lident signed into law the Honest Leadership and Open 

Government Act of^^^ (HL^GA), which included many revisions to the ethics rules that 

govern the conduct or^p\,i«Senators and members ofthe House of Representatives. One of the 

effects of HLOGA was t^stablish new rules goveming presidential non-commercial travel after 

September 14, 2007. Se'ction 439(a)(c) of Title 2 ofthe United States Code was amended to 

prohibit Senate and Presidential candidates, and their authorized committees, from spending 

campaign funds for travel on non-commercial aircraft, unless they pay their pro-rata share of the 

charter rate. The Commission intends to amend its cunent regulations to implement the new 

law. However, in a press release dated September 24,2007, the Commission Chairman indicated 

that "until regulations are issued, the Commission would not pursue a political committee if it 

operates under a reasonable interpretation of the statute, even if our subsequent regulations reach 

a different interpretation." Since the travel noted in Finding 3, Prohibited In-Kind Contribution, 

occuned before September 14,2007, the new travel rules were not applicable. 
Part II 

Overview of Campaign 

Campaign Organization 

Important Dates Biden for President, Inc. 

Date of Registration January 31,2007 

Eligibility Period December 3,2007 - Jan\j^3,2008 

Audit Coverage December 15,2006 -J^i\ \ 30^2008 

Headquarters Wilmington, 

Bank Information 

Bank Depositories One 

Bank Accounts teking, origj^certificate of deteit 

Treasurer 

Treasurer When Audit Was Conducted Melvyn Monzay 

Treasurer During Period Covered by Audi& '^Melvyn Monzak 

Management Information 

Attended FEC Campaign Finjsurice Seminar 

Used Commonly Availablil 6am^jgn 

Management Softwarg^ckage ^Hia 

• Who Handled Accoanfiii^|RecordkdiBping 

Tasks and Other Day-to-D|l|ppe^Qns„ 

^ The period during which the candidate was eligible for matching fiinds began on the date of certification of his 

matching fund eligibility and ended on the date the candidate announced his withdrawal fix>m the campaign. See 11 

CFR §9033. 

* Limited reviews of receipts and expenditures were performed after April 30,2008, to detennine whether the 

candidate was eligible to receive additional matching funds. 
Overview of Financial Activity 

(Audited Amounts) 

Cash on hand ^ December 15,2006 $0 

o Contributions from Individuals $ 8.210,947' 

o Contributions from Political Committees 166,045 

o Transfers from Affiliated Committees 1,900,000 

o Loans Received 1,468,614 

o Matching Funds Received ,#1^,189'' 

o Offsets to Operating Expenditures M 270',611 

o Other Receipts ^JS'^'^'^s^nij^ 12,650 

Total Receipts m $»|(6,05 6 

o Operating Expenditures $10,g^25 

o Loan Repayments ' 857m . 

o Transfers to Other Authorized Committees A 639,408^':j^^!!j|^ 

o Contribution Refunds ^ 578,032^ 

Total Disbursements $'12,731,154" 

Cash on hand @ April 30,2008 $ 154,902 

' Approximately 33,000 contributions fi'om more than 20,000 individuals. 

^ As of April 30,2008, BFP had made 5 matching fiind submissions totaling $2,016,725 of which $1,992,225 was 

certified by the Commission; however, BFP had only received $857,189. As of June 30,2009, BFP had submitted 9 

requests totaling $2,070,557 of which $2,033,472 was certified and has been received, representing 10% of the 

maximum entitiement ($21,025,000). 

^ These monies represent general election contributions subsequently redesignated to the candidate's senate 

committee. 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Net Outstanding Campaign Obligations 

The Audit staffs review of BFP's financial activity through September 30,2009, and 

estimated winding down costs indicated that the candidate did no|^iej;eive matching fund 

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

Finding 2. Receipt of Contributions %at Elided Limits 

The Audit staffs review of contributions from indiv,i^i4'a|[s1ndicatei^iiM failed to 

resolve a material number of excessive contributjpl^s. Based on a sam]^]^^ 

contributions, the projected dollar value of the^^^^^solved^xcessive contriShtigns in the 

population is $106,216. In its response to th^jjriiLifnJnary |u ^ BF^fated it 

would make a payment of $106,216 to the U.S. Tr^^^^^ner service of the'final audit 

report. 

In addition, the projected amount of ex^esis:i|^^t>tributionslip|p^^^ not resolved in a 

timely manner is $1,092,899. In respon^kto mb^i^||inary a^Sit report 

recommendation, BFP provided several deljlaratrdn^oEriircontributors and staff to 

support that letters had..bge^en| to resolve%cessive colhfributions. No documentation 

supporting these dec||iiil[tions^^^tablishing^i^t the actions were timely was included. 

(For more detail, se&pM] 

'Contribution 

The revpV&f camp'^|i^>|rave'l^entified one flight by BFP on a private aircraft that was 

reinih^sgd using the li^^ t unrefi^c^d and non-discounted first-class commercial 

airfs^^^^^ever, the pll^^utilizediwas certified by the Federal Aviation Administration 

and opersS^in a manner f ^ requfred its use be paid at a charter rate. The difference 

between what^Ff paid anclithe charter rate resulted in the receipt of an in-kind 

contribution of ii^S>,889 fmlli a corporation. In response to the preliminary audit report 

recommendation, iSi^i^mcated that it would make a payment to the U.S. Treasury after 

service of the final auoit report. (For more detail, see p. 15) 

Finding 4. Stale-Dated Checks 

The Audit staff identified stale-dated checks totaling $137,757 issued by BFP. 

Subsequent to the exit conference, BFP made a payment to the U.S. Treasury for staledated checks in the amount of $8,457 resulting in an unresolved balance of $129,300. In 

response to the preliminary audit report recommendation, BFP provided documentation 

which resolved $43,400 in stale-dated checks, leaving $85,900 unresolved. BFP 

indicated that it would make a payment to the U.S. Treasury after service ofthe final 

audit report. (For more detail, see p. 17) 
Finding 5. Disclosure of Disbursements 

The Audit staff identified 49 disbursements, totaling $3,779,976, that were not 

adequately disclosed. Problems noted included incorrect or inadequate purpose as well 

as incorrect addresses. Subsequent to the exit conference, BFP filed amended reports that 

materially conected the disclosure of these disbursements. BFP's response to the 

preliminary audit report provided no additional comments relevant to this matter. (For 

more detail, see p. 19) 

Finding 6. Reporting of Debts and Obligations 

The Audit staff identified debt totaling $870,296 that was noyiiscloseid on Schedules D 

(Debts and Obligations) as required. Subsequent to the exi|f!^^erence, BFP filed 

amended reports that materially conected the disclosure^lOfies^^e^ts. BFP's response 

to the preliminary audit report provided no additionay^mn^fnents remp,nt to this matter. 

(For more detail, see p. 20) 

Summary of Amounts Pot€i|^ally Owed to 

the U.S. Treasury 

Finding 2 Receipt of Contt^jutibhs^matpxceed 

Limits % .4 "~ 

$ 106,216 

Finding 3 Pg^%itgd In-Kind 1|,^Wtribution' 

StaL^tejlfed Checks % 

26,889 

Finding 4 

^ T^l l Due U.S. Tbasury 

85,900 

$ 219,005 
Part IV 

Findings and Recommendations 

I Finding 1. Net Outstanding Campaign Obligations 

Summary 

The Audit staffs review of BFP's financial activity through September 30,2009, and 

estimated winding down costs indicated that the candidate did i^^c^ive matching fund 

payments in excess of his entitlement. 

Legal Standard 

A. Net Outstanding Campaign Obligations (NOC^g^Wjthin 15Til^||| after the 

candidate's date of ineligibility (see definition beli^), th^ candidate ni'^^t^bmit a 

statement of "net outstanding campaign obligati^." Thi&statement mus^ontain, 

among other things: "wsa. , 

The total of all committee assets including ^^sop^hand, amounts owed to the 

committee and capital assets listed at their fairi^^et value; 

• The total of all outstanding obii^||ipns for qualifiel^^paign expenses; and 

• An estimate of necessary windin|pll^^n%,^osts. 11 C]^M9634.5(a). 

B. Date of Ineligibility. The date of ineli^ibiH#is^|^^yer of the following dates 

occurs first: W 

The day on ^jfiiSii the^nldidate ceases^to be active in more than one state; 

The 30th d^ f^Howingllb second cori^^^tive primary in which the candidate 

receives less th^ra^e^^^^fthe populsTr vote; 

The^^i^^^ll^ mal^ ^ payiil]^]^|icrd, which is generally the day when the 

^nbmiji^!B|y[ts csi^ldate for the general election; or 

Jn the case ofWilididate^^ose> party does not make its selection at a national 

^G^vention, the l^f^ay oflas t national convention held by a major party in 

th^lllendar year. mCFRl§9032.6 and 9033.5. 

C. Qualified i^|Si|jpaign pcpense. Each of the following expenses is a qualified 

campaign expensS^^ ^ 

• An expense t^ f is: 

o Incuned by or on behalf of the candidate (or his or her campaign) during the 

period beginning on the day the individual becomes a candidate and 

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

§9033.5; 

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

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

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

• An expense incuned for the purpose of determining 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. 
• An expense associated with winding down the campaign and terminating political 

activity. 11 CFR §9034.4(a)(3). 

D. Value of Capital Assets. The fair market value of capital assets is 60% of the total 

original cost of the assets when acquired, except that assets that are received after the date 

of ineligibility must be valued at their fair market value on the date received. A 

candidate may claim a lower fair market value for a capital asset by listing the asset on 

the NOCO statement separately and demonstrating, through documentation, the lower 

fair market value. 11 CFR §9034.5(c)(l). 

E. Entitlement to Matching Payments after Date of Ineligibilii^h^, on the date of 

ineligibility (see above), a candidate has net outstanding canm^n obligations as defined 

under 11 CFR §9034.5, that candidate may continue to recd^m^tching payments 

provided that he or she still has net outstanding campaignMebts on^e day when the 

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

Facts and Analysis M ^ 

The Candidate's date of ineligibility (DOI) v/as jMsLry 3, J|p . The AudiMaff 

reviewed BFP's financial activity through SeptemM^g|^^09^analyzed estimated 

winding down costs and prepared the. Statement of Net^^Mstanding Campaign 

Obligations that appears on the next pa^. 
Biden for President, Inc. 

Statement of Net Outstanding Campaign Obligations 

Asof January 3,2008 

Prepared September 30,2009 

Assets 

Primary Election Cash in Bank 

General Election Cash in Bank 

Accounts Receivable 

Capital Assets 

Total Assets 

Liabilities 

Primary Election Accounts Payable 

General Election Accounts Payable 

Winding Down Costs: 

Paid 1/4/08-9/30/09 

Estimated Winding Down Costs (10/1/09%tl2/31/09) 

Loan Payable at 1/3/08 

Amounts Payable to U.S. Treasury for: '^i 

Unresolved Excessive Contributions (See Finding 2) 

Prohibited In-Kind Contribution (See Finding ^jl^ ^ 

Stale-Dated Checks (Seejiil^l ^ 

Total Liabilities 

Net Outstandingp,ampaign'^¥Kgat!d¥i|^^ of January 3,2008 

|a] ^yjusted for stale- ^^\checS&|mg $8,457 issued prior to DOI. 

$ 403,900 

1,213,933 

173,184 

f»^'»38.774 

[a] 

[b] 

^^m216^/^ 

00 219.005 

$1,829,791 

4.316.646 

($2,486,855) 

[b] Gra^n^election contribjations revived do not affect the NOCO or matching fiind entitlement. This asset is 

offset by equal^miotunts in the li^lity section. General Election Accounts Payable $1,130,333 plus $83,600 of the 

amount listed as'B^l^to the U.S. Measury for Stale-Dated Checks. 

[c] The Audit stafF^iljplview BFP's disclosure reports to compare actual figures with the estimates and 

prepare adjustments acco0ingly. 
Shown below are adjustments for funds received after January 3,2008, through 

September 30,2009, based on the most cunent financial information available at the 

close of fieldwork: 

Net Outstanding Campaign Obligations (Deficit) as of 1/3/08 ($2,486,855) 

Private Contributions and Other Receipts Received 1/4/08 

through 9/30/09 

358,966 

Matching Funds Received 1/4/08 through 9/30/09 2,033,472 

Remaining Net Outstanding Campaign Obligations 

(Deficit) jfe 

($94,417)' 

It. 

As presented above, BFP has not received matching fund payritents in excess of its 

entitlement. I 

Preliminary Audit Report Recommendation mnd ComiA^^t^e 

Response ^ 

The Audit staff recommended that BFP demc^fi^atj^n adj||]tment(s) is reqliired to any 

component ofthe NOCO statement or provide any^^^^li^^^ents it so de^es. In 

response to the preliminary audit report recommendai[i@%BFP provided no adjustments 

or comments on the NOCO statement^dfe^the Audit staff c5Miusion. 

I Finding 2. Receipt of ContnbuliSn^Qpx Exceed Limits | 

Summary \ 

The Audit staffs r^vf^pf conMbutions from\kdividuals indicated that BFP failed to 

resolve a material numbi^i^i^^^ij^contrib^ Based on a sample of 

contribution$;^:hefMFPiected@Mar vfiiil^^ unresolved excessive contributions in the 

audit report, BFP stated it 

after service of the final audit 

In addition, fhliprojected a£6unt of excessive contributions that were not resolved in a 

timely mannerl^^|yL)92,^^. In response to the preliminary audit report 

recommendation, ^l^pjovided several declarations from contributors and staff to 

support that letters hWbeen sent to resolve excessive contributions. No documentation 

supporting these declarations or establishing that the actions were timely was included. 

Legal Standard 

A. Authorized Committee Limits. An authorized committee may not receive more 

than a total of $2,300 per election from any one person. 2 U.S.C. §441a(a)(l)(A), and (f); 

11 CFR §§110.1(a) and (b) and 110.9. 

' Subsequent to date of ineligibility, BFP incurred and repaid a $161,500 loan. This has no effect on the 

analysis and is not included in the above figures. 
10 

B. Handling Contributions That Appear Excessive. If a committee receives a 

contribution that appears to be excessive, the committee must either: 

• retum the questionable contribution to the donor; or 

• deposit the contribution into its federal account and keep enough money on 

account to cover all potential refunds until the legality of the contribution is 

established. 11 CFR §103.3(b)(3) and (4). 

The excessive portion may also be redesignated to another election or reattributed to 

another contributor as explained below. 

1. Redesignation of Excessive Contributions. The committee jn^ a 

) redesignate the excess portion of the contribution for use in am^^'^ 

ask the contributor 

to redesignate the excess portion of the contribution for use in ai^St^rii>election. 

The committee must, within 60 days of receipt of th^,|^^^ibution, obtain and 

retain a signed redesignation letter which inform^^ji^ co'n^butor that a refund of 

the excessive portion may be requested; or ^'^ ^^}>. 

refiind tiie excessive amount. 11 CFR §§i;rf(fc^(5), 110.1(i)ilfeand 103.3(b)(3). 

Notwithstanding the above, when an authorize^li^ptical committee receivls^n^xcessive 

contribution from an individual or a non-multi-cah^^|e^66im[mittee, the cominittee may 

presumptively redesignate the excessive portion to tHmeperal election ifthe 

contribution: W. '^^^^ 

• Is made befbre that candidate's^i^n^ election; ;s 

• Is not designated in writing fbr 2^%^arfKteEge 

• Would be excessive if treated as a%ima^r'el4^;||Qn^|ph'tribution; and 

• As redesignated^oe,s.ppt cause the^^o^ibutor'&exceed any other contribution 

•limit. ^^^"^^ ^ •%. 

Also, the committee^ma.^ presuii||tively redes%nate the excessive portion of a general 

election contribution Wgk^1[o thjll^rimary electi^ifthe amount redesignated does not 

exceed the committee's pmiia^^lll'debtjipgs 

The comHiittee is requi^d to noti^the contributor in writing ofthe redesignation within 

60 d^y^l^^he treasurer^lejpeipt oi^h^contribution and must offer the contributor the 

option to^^i^jpive a refund^^^tead. jF^or this action to be valid, the committee must retain 

copies of th^btices sent, ^^sumptive redesignations apply only within the same 

)mmittee's primary and general elections. 11 CFR 

W 

D. Reattribution of'Excessive Contributions. When an authorized committee receives 

an excessive contribution, the committee may ask the contributor if the contribution was 

intended to be a joint contribution from more than one person. 

• The committee must, within 60 days of receipt of the contribution, obtain and 

retain a reattribution letter signed by all contributors; or 

• refund the excessive contribution. 11 CFR §§110.1(k)(3), 110.1(1)(3) and 

103.3(b)(3). 

Notwithstanding the above, any excessive contribution that was made on a written 

instrument that is imprinted with the names of more than one individual may be attributed 
11 

among the individuals listed unless instructed otherwise by the contributor(s). The 

committee must inform each contributor: 

• how the contribution was attributed; and 

• the contributor may instead request a refund of the excessive amount. 11 CFR 

§110.1(k)(3)(ii)(B). 

For this action to be valid, the committee must retain copies of the notices sent. 11 CFR 

§110.1(l)(4)(ii). 

E. General Election Contributions. If a candidate is not a candj^te in the general 

election, any contributions made for the general election shall ^j^efi^nded to the 

contributors, redesignated in accordance with 11 CFR §§1 ipjp^)(5) or 110.2(b)(5), or 

reattributed in accordance with 11 CFR §110.1(k)(3), as 

§102.9(e)(3). 

F. Sampling. In conducting an audit of contribj^#6ns, the CommissioB^uses generally 

accepted statistical sampling techniques to qu^i!^i||,the dol ^ value of rel^^^tidit 

findings. Apparent violations (sample enors) iden^^e^ ini^'^ple are use^d^to project 

the total amount of violations. If a committee demotii^^^s that any apparent sample 

errors are not enors, the Commission^jll make a new p^^ction based on the reduced 

number of enors in the sample. Withilffi^days of service^mhe final audit report, the 

committee must submit a check to the t^le^^^ s Treasurpf^he total amount of any 

excessive contributions not refunded, reat|ribu^p^^|i4esignated in a timely manner; or 

ffrespi^iilample-based findings. 11 

CFR § 9038.1(f). TM 

take any action required by^the Commissid^^ 

Facts and Analsrsim. ^ 

The Audit staffs sample^^reviewMiicQntributiorfs'Trom individuals indicated that BFP 

received a ^gfiifijblij^numb'e^ that either were unresolved or 

were noyisoTveH'll^^^ ^Nyner. The projected dollar value of the unresolved 

excessLmcontributioris^P|the sam]pli|^pOpulation was $106,016^. An additional enor of 

$20dw^4pntified as th^^sult o^il^eparate review of contributions not included as ppara t 

of the sanipli^^pulation. ^^mple'enors included: 

Checl^^ttributiormssue - The errors were for contributions from single account 

holder cH^ks,. Si^.n contributions cannot be presumptively reattributed to 

another indiwllu'j^ 

Other Credit^p&rd - Attribution Issue - The documentation provided in support of 

these contributions included credit card authorizations and, if available, 

solicitation response devices. The excessive portion of the contribution was 

reattributed to another individual without obtaining the signature of the second 

individual acknowledging both the contribution and joint liability for the credit 

card used to make the contribution. 

' A Monetary Unit Sample was used with a 95% confidence level. The estimate is subject to a sampling 

error of $91,693 for unresolved excessive contributions. For untimely resolved excessive contributions the 

estimate is subject to a sampling error of $348,491. 
12 

Other Credit Card - Designation Issue - The documentation provided in support 

of this contribution included a credit card authorization and a solicitation response 

device. The response device was not adequate to constitute a designation of the 

contribution to the general election and the excessive contribution was not 

refunded. 

Online Credit Card - Designation Issue - Some of the contributions were received 

through BFP's internet website. The website did not provide sufficient notice to 

the contributor to constitute an attribution of a portion of the contribution to 

another person or to designate a portion ofthe contribution to the general election. 

BFP's online contribution screen stated it could "accept ^^ibutions from an 

individual totaling up to $2,300 per election." It did noj^lrthat an individual 

could contribute $2,300 to the primary election and M^^O to the general election 

or a total of $4,600 to both elections, and failed tQj^|irovid^^ opportunity for the 

contributor to designate a contribution for eacKeflktion. Ifmdition, the online 

contribution screen did not provide an opportumty^for the coh^^utor to attribute 

a contribution to another individual. Accoraingly, it was not discjl^able whether 

a contributor intended to contribute parfi^his or h^^ontribution tb^hei^eneral 

election or attribute that contribution to ani^|r iri^fd^al when tha^cbntribution 

was made during the primary election period^^^ 

The Audit staff also identified excessi^^ontributions thai^ki? resolved but not in a 

timely manner, totaling $1,092,899. Tni^poj^i^dollar valt^!^f such excessive 

contributions in the sample population w%$l,0'^^^^.Addijtional enors totaling 

$37,500 were identified ^^^^result of a separate rev^^^p^'contributions not included as 

part of the sample poppl^lii^^^ll of these l|tessive cohtributions were presumptively 

designated for the g;e^ral elecl,^; however, OTP did not provide copies of letters sent to 

contributors as nottfidaiiipn for tp election desi^ation. However, BFP did provide the 

Audit staff with letters oi^nini^fdesigjnatioi|s^ general-designated contributions 

to the Candid^^^enate ^^aignlli%#e. Citizens for Biden (CFB). The letters 

were alL§;1^^d bi^'il^iontriim^s and mailed after the Candidate's date of ineligibility 

(l-3-j^&vell after the^^^ipt ort|^|,=contributions. Although these letters were not 

pre^mptip[e redesignationf^ spec|iibd in the Commission's regulations, the Audit staff 

considerei^^se letters tol^an adequate, though untimely, substitute to support the 

"general elect^^^esigna^i of these contributions for BFP. 

This conclusion is^^:§^^t with the notice provision of presumptive redesignations. A 

presumptive redesig^tion does not require a written authorization from the contributor. 

Rather, BFP may send a notice to the contributor of the redesignation and inform the 

contributor of his or her option to request that the contribution be refunded. The Audit 

staff concluded that the signed forms authorizing the redesignation of Presidential 

contributions to the Senate election(s) also serve to put the contributor on notice that BFP 

had presumed that the portion ofthe otherwise excessive Presidential primary election 

contribution was redesignated to the Presidential general election. The contributions to 

the Presidential primary election, however, were excessive until the Presidential general 

to Senate redesignation forms were sent. Given that these redesignation forms, serving as 

the functional equivalent of the presumptive redesignation notices, were sent much later 
13 

than 60 days after the excessive Presidential primary contributions, they are untimely as 

to the redesignations from the Presidential primary to the Presidential general election. 

At the exit conference, the Audit staff provided BFP representatives with schedules of all 

the errors for both the unresolved excessive contributions and the untimely resolved 

excessive contributions. A discussion ensued regarding the adequacy of letters used to 

support redesignations of contributions to the general election. 

On September 26,2008, BFP submitted its response to the matters presented at the exit 

conference. The response acknowledged that the untimely redesignation issue arises 

from BFP's inability to provide presumptive redesignation lettej^^l^ough confident 

that such letters were timely sent, BFP staff was unable to loea^the letters or evidence 

that they were sent and believe they were inadvertently lost/whe^^ location changed in 

the spring of 2008. BFP further explained the letter woi^i^have be:^prepared using a 

template on a BFP computer that was subsequently^wipid'' clean" ani^oid when its 

assets were liquidated following the Candidate's^ithdrawal from the presidential 

campaign. 

BFP offered the following circumstantial evidence tOv^j^brt that tiie letters had in fact 

been sent: • 

BFP submitted a complete librs|j^^C^!cure'' letters^^|j^ther for excessive 

contributions or missingcontri^to^S^QFmation contrib^^ii^Fi^tion.. InM|:i!£ibn In alp!£i6n, it, itss Contributi Contributioc n 

Review Procedures make referen6|; to pi^mgtive redesignation and/or 

reattribution letters and templates fi^^iainir^^lBe^ignations and reattributions 

are provided, gpii^^^contained ot^compliajFrce letters sent for problematic 

contribution.^^d thosSl^uesting additional information. BFP noted that it is 

unlikely th#it^mild serif this array of^^pliance letters and omit presumptive 

sending the compliance letters, including 

let^fs to rei^%iexcessp;& contributions, had specific recollection that 

.|ip;esumptive rea^|i|nation:^pi^dr reattribution letters had been sent. However, 

'^l^individual is ^i^^ decekilfd; and, therefore, BFP is unable to obtain a signed 

affiiavjt. BFP sta^bnfirmed her recollections, and that she was meticulous and 

cons^pus in peirming her duties. 

• BFP has^%n contacting recipients of presumptive redesignation and/or 

reattributiofl^^l^' and although some do recollect receiving such a letter, none 

have been abl^o furnish a copy. Should any be located, copies will be forwarded 

to the Audit staff. No such copies have been provided to the Audit staff. 

• Finally, BFP concuned with the Audit staffs position that those letters sent to 

redesignate contributions to Citizens for Biden serve to demonstrate that BFP did 

not fail to resolve a material number of excessive contributions. According to 

BFP, these letters reflected an understanding by the contributor and BFP that the 

excessive portion had been properly resolved and expressed the donative intent of 

the contributor. 
14 

The Audit staff did not believe that BFP's response was sufficient to document that 

presumptive redesignation and/or reattribution letters had been sent. 

Preliminary Audit Report Recommendation 

The Audit staff recommended BFP provide: 

• Documentation demonstrating that the unresolved excessive contributions 

($106,216) were not excessive. Such documentation could have included 

copies of timely negotiated refund checks or timely signed and dated 

reatnibution/redesignation letters. Absent such documentation, the Audit staff 

recommended that BFP make appropriate refunds to ^|;^ributors or make a 

payment of $106,216 to the U.S. Treasury and projgi^l^idence of such 

action (copies of the front and back of negotiated^^und checks). Should 

documentation be presented that demonstrated)^)r§S||gle exceptions were 

not excessive contributions, it was noted that th| Audil^'^[ would calculate a 

revised amount payable to the U.S. Treag^^^^is revise^Wount or the 

unrefunded portion thereof, would bey^yable within 30 cale^oki; days of 

service of the final audit report; an^^^ %^ 

• Documentation demonstrating that exce|^^ c^ri^utions ($ 1 ,Opf ,899) were 

timely reattributed and/or redesignated. Sii||h;;|locumentation was to include 

evidence that timely presumi)tive reattributid^'j^i^redesignation letters were 

sent; copies of timely signei||t^^dated reattribution/redesignation letters; or, 

any other documentation whiish''iii|l^|j^ a timely%|ti^ribution and/or 

redesignation was obtained. m;P wsfs|i|^!pd to provide any other comments 

it felt were relei(,ant to this issu^^^^S^ 

Committee Re|j^nse tdipreliminar^Audit Report 

In its response to the preliminan|Lliudit report: 

BFP provide^MA^^!lk4§!^uni!^^^io'i demonstrating that the unresolved 

^3j§^^^contrib^^ns '(^W^^ were not excessive. Rather, BFP indicated 

^fhat it wbiiUilfmakexS^payments to the U.S. Treasury after service of the final 

•^B^P providedl^ormatiph reiterating its earlier response to this is 

iilelarations wPI submitted from four contributors who recalled 

audit report:^^^ 

^ • * * ' • issue. 

receiving a 

prBi^nptive rec^ignation notice from BFP. The response notes that none of 

these^^i^iyidu^is retained a copy of the notice, because, unlike other "cure" 

letters,1ii^^t^n was required by the contributor unless he or she objected to 

the redesifnation. In addition, a declaration was submitted from a BFP staff 

member who worked directly for the now deceased individual responsible for 

managing BFP's sending and retention of cure letters. His declaration states 

at the direction of his now deceased supervisor he regularly sent presumptive 

designation letters to contributors who made primary election contributions in 

excess of $2,300. The response concluded by asking the Commission to 

accept its contention that presumptive designation letters were sent. 
15 

Audit Staff's Assessment of Committee Response 

The response to the preliminary audit report reiterates points made in BFP's response to 

the exit conference and provides declarations containing the same information that was 

provided in response to the exit conference. No documentation supporting these 

declarations or establishing that the actions were timely was included. The Audit staff 

does not believe the declarations meet the requirements of 11 CFR §110.1(l)(4)(ii) which 

states that copies of all notices must be retained for presumptive reattributions and/or 

redesignations to be valid. 

Finding 3. Prohibited In-Kind Contributip,ir^\ 

Waic aircraft that was 

Summary 

The review of campaign travel identified one flight bYq^F$ on a 

reimbursed using the lowest unrestricted and non-disc&tTnted first-clas'^^gmmercial 

airfare. However, the plane utilized was certifi^d^by the Federal Aviati6n>^<iministration 

and operated in a manner that required its us9;l>i^j|id at a ^^harter rate. Th^^^erence 

between what BFP paid and the charter rate resul^<^in th^@£^ipt of an in-^ind 

contribution of $26,889 from a corporation. In respSf^lS the preliminary audit report 

recommendation, BFP indicated that'^t^^yould make a pa^m^t to the U.S. Treasury after 

service of the final audit report. 

Legal Standard 

A. Corporate Contribu^nis Impermissibl^l\ corp^^ion is prohibited from making 

any contribution in cq^^i^j^t h a feder^pection. 24J.S.C. §441b(a). 

B. Travel by airplaii^^Camp^n use of an ai|^lane licensed to operate for hire by the 

Federal Aviation AdmihtsJ^|ttj|#i° 

by the definiti 

CFR part 121,129, or 135 are governed 

:%contrmution at TF#F#§ 100.52(a) and (d). 11 CFR § 100.93(a)(2). 

C. Q^i|t[ribution definfemk A gift^^sCcription, loan (except when made in accordance 

witli 1 if^fel §§100.72 a^y)0.73^dvance, or deposit of money or anytiiing of value 

made by m^person for the||^rpose of influencing any election for Federal office is a 

contribution. ^@y^term an^^ing of value includes all in-kind contributions. 

The usual and norm^yiiiirge for a service is the commercially reasonable rate that one 

would expect to pay^tfihe time the services were rendered. 

The provision of services at a charge less than the usual and normal charge results in an 

in-kind contribution. The value of such a contribution would be the difference between 

the usual and normal charge for the services and the amount the political committee was 

billed and paid. 11 CFR §100.52(a) and (d). 

D. Contributions by a Limited Liability Company (LLC). An LLC not electing 

treatment as corporation under federal tax law or having publicly-traded shares may make 

contributions to influence federal elections. Such a contribution will be considered as 
16 

having been made from a partnership and govemed by the rules pertaining to partnerships 

and subject to a single election limit per candidate of $2,300. 11 CFR §110.1(b)(1) and 

(g)(2) and (4). 

Facts and Analysis 

BFP reimbursed GEH Air Transportation, LLC (GEH) $7,911 for first-class airfare for 

three people who made a roundtrip flight between New Hampshire and Iowa in June 

2007. This roundtrip flight was on a plane which was certified for commercial service by 

the FAA under 14 CFR part 135 and documentation provided by BFP indicated the flight 

took place under this part; and thus, it was not eligible for this manner of payment. 

Payment for this flight should have been made at a charter r^^hich reflected the usual 

and normal charges for services. Based on the charter ratepSa^^ time noted on 

BFP's internal documentation for this trip, BFP should h^paid^$;^800 ($6,000 charter 

rate per hour x 5.8 hours). By failing to pay a charte^t^ BFP receive^n in-kind 

conU-ibution of $26,889 (tiie $34,800 owed less thtW,911 paid) from"^^' 

The entire amount represents a corporate contribi^^^if ^pB^^lected tax trea^ent as a 

corporation under Internal Revenue Service rules, l^i^^^er, if GEH elected to be treated 

for tax purposes as a partnership, or i^Pj^H did not elecl^e^tment as a either a 

partnership or corporation, the contribi^^^is considered l^^ade by a partnership. The 

partnership would have made an exces^fFci^^i^tion in tn^p|i6unt of $24,589 

($26,889 - $2,300). \ 

Although documentati^^i^i^ted that theHight was fl^ivvn under 14 CFR part 135, the 

Audit staff provided^P wit{^^opportunity|to obtain additional documentation from 

GEH indicating thifl^ight not flown uHl^eps-H CFR part 135 and therefore not 

subject to the charter ra^^^he^uke^ ^' 

the exit confeMnci 

infonnlfion had not been obtained at the time of 

5 ^ 

At the Jxit conferenc^the»AudiFsta rovided information regarding this item to BFP 

repreienMi^es. The repre^tativ^^were requested to provide documentation 

demonstrati||^hat BFP dimnot receiv ;ce e a prohibited contribution or make a payment to 

the U.S. Trell^jj^ The repifsentatives agreed to review the matter and respond 

accordingly. 

On September 26,2Qp, BFP submitted its response. BFP representatives indicated that 

they agreed with the^'finding and would write a check for $26,889 to the U.S. Treasury. 

Preliminary Audit Report Recommendation and Committee 

Response 

Although BFP's response to the exit conference indicated that it agreed with the Audit 

staff analysis, the Audit staff recommended that BFP provide documentation from GEH 

which showed how GEH elected to be treated under Intemal Revenue Service rules. 

Also, if GEH was treated as a partnership for tax purposes, information should be 

provided showing how the contribution should have been attributed to the various 
17 

partners and that only those partners' profits are decreased or losses are increased as a 

result of the contribution. BFP was also offered the opportunity to produce 

documentation which: 

• demonstrated a lower charter rate; 

• established a different minimum flight time requirement; and/or, 

• proved that the plane was not certified for commercial service by 

the FAA at the time the flight occuned under 14 CFR parts 121, 

129 or 135; and 

Absent such a demonstration, the Audit staff recommended th^BFP^ifhake a payment of 

$26,889 to the U.S. Treasury. In response to the preliminaE^^^report, BFP indicated 

that it would make a payment to the U.S. Treasury after s|Fvice^ ^ final audit report. 

I Finding 4. Stale-Dated Checks 

W 

4* Summary '"^^^ 

The Audit staff identified stale-datedjchecks totaling $^i^757 issued by BFP. 

Subsequent to the exit conference, BFi|^m^e a paymentl^|^U.S. Treasury for staledated checks in the amount of $8,457 rlsit^0> in an unresdl^^Lbialance of $129,300. In 

response to the preliminary audit report r^comln^^|K)n, BF^povided documentation 

which resolved $43,400 in stale-dated che%s,jg2m^^^40trunresolved. BFP 

indicated that it would ma^^^^yment to t^U.S. Tre^^ after service of the final 

audit report. .^^'^^"''^ \ 

Legal standard ^kef-=. 

Handling StaUyQiated C^^|^l^)i£!i%%ks^I^^^ committee has issued checks that the 

payees 

Commissibn of its e 

1 ^ 

!^^Mribilii|^Xhave nofcashed, the committee must notify the 

^k| o locat^he payees and encourage them to cash the 

outstin3tng checks. Thl^Bpmitte^i^st also submit a check payable to the U. 

Treasuo%1tthe total amoW of tiiroutstanding checks. 11 CFR §9038.6. 

'^p^. wis 

Stale-dated 

Facts and imldysis ^ 

During our recoi^fatjgnjdf BFP's bank activity, the Audit staff identified 88 

checks totaling $13^57 dated between January 1,2007 and April 30,2008. 

The Audit staff provided a schedule of the stale-dated checks to BFP representatives at 

the exit conference. The representatives were requested to either provide evidence that 

the checks are not outstanding or make a payment to the U.S. Treasury for the amount of 

the stale-dated checks. They agreed to review the schedule to determine whether they 

agreed with the list and respond accordingly. 

Subsequent to the exit conference, BFP submitted a check for $8,457 to the U.S. Treasury 

for the stale-dated checks issued during 2007. The remaining stale-dated checks 

($129,300), were all refunds of contributions to contributors issued during 2008. BFP 
18 

indicated that when it was able to determine the status of these refunds, a final payment 

would be made to the U.S. Treasury for the amount of those checks that had not cleared 

and for which an obligation still exists. 

Preliminary Audit Report Recommendation and Committee 

Response 

The Audit staff recommended that BFP provide evidence that: 

• The checks or a reissued check were not outstanding. Such evidence was to 

include copies of the front and back of the negotiated checks along with bank 

statements; or ^ 

• The outstanding checks had been voided by providing cgpiesbf the voided check 

with evidence that no obligation existed. 

Absent such evidence, the Audit staff recommended ^at I^P m^^payment of 

$129,300 to the U.S. Treasury. ^ 

In response to the preliminary audit report, B^B^^os^ided documentation ^i^ffin g that 

stale-dated checks totaling $48,400 had been resol^^^eiMRi}^ issuance o^a 

replacement check (which had been negotiated), or ^^l^ontributor's authorization to 

transfer the funds to Citizens for Bide^|Lnd/or Unite O^^^es^^. BFP's response also 

indicated it would make an appropriatSM^ment upon servii|^9,f the final audit report. 

Audit staff's Assessment of Coii£j^itll^i]||a[po 

The Audit staff verified that,;|j^ale-dated che'ck^tolalin^ had been resolved as 

fbllows: .f^P^^Sk ^ 

$20,700w^^desig^jd by contri%ors to Citizens for Biden; 

$17,100 was retiiKignatei^by contributofsEtb Unite Our States; 

$5,600 was resolve|||h0if l^^ii^^u ^ of a replacement check (which had 

bee^^^^|d ; and% 

was oifputed by^e^Audit staff. These checks were not included in the 

&le-dated che^ ^ anivigNiHe $129,300. 

As a result]^ 

$43,400). 

re remain unsolved stale-dated checks of $85,900 ($129,300 less 

'° Citizens for Biden was the Candidate's Senate campaign committee and Unite Our States was the 

Candidate's Leadership PAC. 

" BFP submitted redesignation letters from contributors authorizing these transfers to Citizens for Biden 

(CFB). However, based upon previous schedules provided by BFP, $11,900 of this amount did not appear 

to have been included in the actual transfer of fiinds. Therefore, $11,900 is included on the Statement of 

Net Outstanding Campaign Obligations as an account payable. 
19 

Finding 5. Disclosure of Disbursements 

Summary 

The Audit staff identified 49 disbursements, totaling $3,779,976, that were not 

adequately disclosed. Problems noted included incorrect or inadequate purpose as well 

as inconect addresses. Subsequent to the exit conference, BFP filed amended reports that 

materially conected the disclosure of these disbursements. BFP's response to the 

preliminary audit report provided no additional comments relevant to this matter. 

Legal standard 

A. Reporting Operating Expenditures. When operating ex^fjimtur^s to the same 

person exceed $200 in an election cycle, the committee nius^^i^^rt the: 

• Amount; 

• Date when the expenditures were made; 

• Name and address of the payee; and 

• Purpose (a brief description of why the x 

U.S.C. §434(b)(5)(A) and 11 CFR §104 

titbursement was made 

B. Examples of Purpose. 

• Adequate Descriptions. Examffl^s||§adequate descYiplpn^ of "purpose" include 

the following: dinner expenses, mediW^ts^ polling,|fravel, party fees, phone 

banks, travel expenses, travel expose reji^u^^m^ntf catering costs, loan 

repayment, or CQjnitrJ||j^tion refiind. t^F R §lC^^)(4)(i)(A). 

Inadequate Deg^riptibri^The followi|ig descriptions do not meet the requirement 

for reportir^^||^urpose''r^dvance, eleaion^ay expenses, other expenses, expense 

reimbursemenif^ispellaheQus, outside services, get-out-the-vote, and voter 

regist|^atigi|. 11 

FactSigmd Analysra^^. 

The,tV^^|^staff identifiral 

adequatS@isclosed. For|i 

disbu^iplments, totaling $3,779,976, tiiat were not 

)roximately half of these disbursements to its media vendor. 

the purpose ^^;|Jnconect (^inadequately disclosed. For the remaining disbursements to 

its credit card %^or, the spdress of the credit card vendor was inconectly disclosed. 

When questionedl^^J^ representatives responded that the person who had been primarily 

responsible for data had been dismissed for poor data entry and reporting. 

At the exit conference, BFP representatives were provided a schedule detailing these 

items. The representatives were requested to file amended Schedules B to conect the 

disclosure of these transactions. They agreed to comply with the recommendation. 

Subsequent to the exit conference, BFP filed amended reports that materially conected 

the disclosure of the disbursements noted above. 
20 

Preliminary Audit Report Recommendation and Committee 

Response 

The Audit staff recommended that BFP provide any additional comments it felt were 

relevant to this matter. BFP provided no additional comments. 

I Finding 6. Reporting of Debts and Obligations 

Summary 

The Audit staff identified debt totaling $870,296 that was not disdb^ed on Schedules D 

(Debts and Obligations) as required. Subsequent to the exit comerenc^^, BFP filed 

amended reports that materially conected the disclosure oftpsei^debts. BFP's response 

to the preliminary audit report provided no additional comfnentP^leyant to this matter. 

•«3 

Legal Standard # 

A. Continuous Reporting Required. A polit^fconimi^ee must disclb|)^he ^mount 

and nature of outstanding debts and obligations i%^those J.ebts are extingu|§h^ed. 2 

U.S.C. §434(b)(8) and 11 CFR §§104.3(d) and l(S#(aW^=^ 

B. Separate Schedules. A political %©mmittee must fii^|^Darate schedules for debts 

owed by the committee and debts owel^^^e,.committee, t^i^^;,with a statement 

explaining the circumstances and conditi^h^s^iSmj^^hich eacl^ebt and obligation was 

incuned or extinguished. 11 CFR §104.1'l(a). ^^^^^i^.^^^"^' 

C. Itemizing Debts and^S'l^^^tipns .^^Sj^i^aitions.^ 

• A debt of less rh^t be reportei^once it has been outstanding 60 days from 

the date in^urre;dii!(|he (l^j^f^ the transaction); the committee reports it on the next 

regularly schedi^^^^^^_^ # 

A ddbtf^Ming $50teust bi^diHliied in the report that covers the date on 

tiieci^^ in§%d. 11 CFR §104.11(b). 

Fa^ts%|LAnalysi^ ^ ^ 

The Audit^^ff identified dE^ts totaling $870,296 that were not disclosed on Schedules 

D. These deb^^^gnsisted opiine transactions to two vendors, all of which were more 

than $500. The%|%s wer^^pically incuned during the middle of the month and paid in 

full the subsequent i^|ith. However, BFP did not disclose them as debts in the report 

covering the date on^hich the debt was incuned. 

At the exit conference, BFP representatives were provided a schedule detailing these 

items. The representatives were requested to amend the reports to correct the disclosure 

of these transactions. They agreed to comply with the recommendation. 

Subsequent to the exit conference, BFP filed amended reports that materially conected 

the disclosure of the debts noted above. 
21 

Preliminary Audit Report Recommendation and Committee 

Response 

The Audit staff recommended that BFP provide any additional comments it felt were 

relevant to this matter. BFP provided no additional comments.