FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 204&3

•

April 4, 2000

MEMORANDUM

TO: RON M. HARRIS

PRESS OFFICER

PRESS OFFICE

FROM: ROBERT 1. COSTA ~. ASSISTANT STAFFD~ AUDIT DIVISION

SUBJECT: PUBLIC ISSUANCE OF THE AUDIT REPORT ON

LINCOLN DIAZ-BALART FOR CONGRESS COMMITTEE

Attached please find a copy ofthe audit report and related documents on the

Lincoln Diaz-Balart for Congress Committee which was approved by the Commission on

March 24, 2000.

Informational copies ofthe report have been received by all parties involved and

the report may be released to the public.

Attachment as stated

cc: Office of General Counsel

Office of Public Disclosure

Reports Analysis Division

FEC Library

Information Division
REPORT OF THE AUDIT DIVISION

ON

Lincoln Diaz..Balart for Congress

Committee

Approved March 24, 2000

FEDERAL ELECTION COMMISSION

999 E STREET, N.W.

WASHINGTON, D.C.
TABLE OF CONTENTS

LINCOLN DIAZ-BALART FOR CONGRESS COMMlTTEE

:f

l'i), Page

bdl

f~~ Executive Summary 1

W Final Audit Report 3 ru

w Background 3 •

~":;

U Findings 5

•

r~ Transmittal to Committee IS

ru

Chronology 17
FEDERAL ELECTION COMMISSION

WASHINGTON. D.C. 20463

REPORT OF THE AUDIT DMSION

ON

LINCOLN DIAZ-BALART FOR CONGRESS COMMITTEE

EXECUTIVE SUMMARY

•

The Lincoln Diaz-Balart for Congress Committee (LDC) registered with the Clerk ofthe

U.S. House ofRepresentatives on April 2, 1992, as the principal campaign committee for the

Honorable Lincoln Diaz-Balart (the Candidate), Republican candidate for the U.S. House of

Representatives from the State ofFlorida, 21'I District.

The audit was conducted pursuant to 2 U.S.C. §438(b), which states that the

1"11 Commission may conduct audits ofany political committee whose reports fail to meet the

ill threshold level ofcompliance set by the Commission.

The findings ofthe audit were presented to LDC at the completion offieldwork on May

14, 1999 and later in the interim audit report. LDC's response to those findings is contained in

the audit report.

The following is an overview ofthe findings contained in the audit report. The Audit

staff's testing ofdisbursements was limited because LDC did not maintain externally generated

documentation, such as invoices,bills or receipts for about 50% of its disbursements. The lack

ofthese third party records limited the testing for the proper reporting ofdebts and obligations

and the disclosure ofinformation, such as payee address, for disbursements

APPARENT EXCESSIVE CONTRIBUTIONS- 2 U.S.C. §441a(a)(I). LDC received 24

apparent excessive contributions from 15 individuals totaling $20,700. No evidence was found

that LDC attempted to contract these contributors for the purpose of obtaining reattributions or

redesignations. In response to the interim audit report, LDC provided copies of22 checks,

totaling $18,700, it had issued to refund excessive contributions. LDC also submitted one

redesignation letter to resolve an excessive contribution. To date, LDC has not provided copies

(front and back) ofnegotiated refund checks.

APPARENT PROIDBITED CONTRIBUTIONS- 2 U.S.C. §441b(a). LDC received 23

apparent corporate contributions totaling $10,630. In response to the interim audit report, LDC

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provided a copy ofa refund check for each contribution. To date, LDC has not provided

copies (front and back) of negotiated refund checks.

MISSTATEMENT OF FINANCIAL ACTIVITY - 2 U.S.C. §434(b)(I), (2) and (4).

Reported totals for receipts, disbursements and cash on hand for calendar years 1997 and 1998

were misstated. In response to the interim audit report, LDC filed amended disclosure reports.

However, LDC failed to provided an adequate explanation for a $114,000 misstatement ofits

cash on hand balance at January 1, 1997.

DISCLOSURE OF CONTRIBUTIONS FROM POLITICAL COMMITTEES - 2 U.S.C.

§434(b)(3)(B). Receipts from party committees, political action committees, and other political

committees, totaling $9,500, were not disclosed on Schedule A as required. LDC filed the

necessary Schedules A to amend its disclosure reports.

DISCLOSURE OF INTEREST RECEIPTS - 2 U.S.C. §434(b)(3)(G). Interest earned

totaling $35,720, was not disclosed as required on Schedules A, filed as part of LDC's

disclosure reports. LDC filed the necessary Schedules A to amend its disclosure reports.

DISCLOSURE OF DISBURSEMENTS - 2 U.S.C. §434(b)(5)(A). It was LDC's practice to

disclose every disbursement regardless of amount or aggregate value. A review of all

disbursements made by LDC it;dicated that 124 payments, totaling $100,637 were neither

disclosed on Schedule B, nor included in reported activity. LDC filed the necessary Schedules B

to amend its disclosure reports.

DOCUMENTATION OF DISBURSEMENTS - 2 U.S.C. §432(c)(5). For a

material number of disbursements, LDC did not maintain a record ofthe payee's address.

However, Schedules B filed by LDC disclosed the vendor address for nearly every payment,

indicating the information apparently had been available and was either not maintained, or not

provided to the Audit stafffor its review. Additionally, for disbursements totaling $13,982,

LDC failed to maintain the canceled check, a receipt or an invoice. LDC's response to the

interim audit report provided most ofthe requested documentation.

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FEDERAL ElECTION COMMISSION

WASHINGTON. DC. 204&3

AR#99-12

This report is based on an audit ofthe Lincoln Diaz-Balart For Congress

Committee (LDC), undertaken by the Audit Division ofthe Federal Election Commission (the

Commission) in accordance with the provisions ofthe Federal Election Campaign Act of

1971, as amended (the Act). The audit was conducted pursuant to Section 438(b) ofTitle 2

ofthe United States Code which states, in part, that the Commission may conduct audits and

field investigations of any political committee required to file a report under Section 434 of

this title. Prior to conducting any audit under this subsection, the Commission shall perform

an internal review ofreports filed by selected committees to determine ifthe reports filed by a

particular committee meet the threshold requirements for substantial compliance with the Act.

BACKGROUND

REPORT OF THE AUDITDIVISION

ON THE

LINCOLNDIAZ-BALART FOR CONGRESS COMMITTEE

A. AUDIT AUTHORITY

I.

B. AUDIT COVERAGE

The audit covered the period January 1, 1997 through December 31, 1998.

LDC reported a beginning cash balance of$475,460; total receipts for the audit period of

$541,941; total disbursementsfor the audit period of$482,171; and an ending cash balance of

$535,210 on December 31, 1998. 1

C. COMMITTEE ORGANIZATION

LDC registered with the Clerk ofthe U.S. House ofRepresentatives on April

2, 1992, as the principal campaign committee for the Honorable Lincoln Diaz-Balart,

Republican candidate for the U.S. House ofRepresentatives from the State ofFlorida, 21 ,t

District. The Treasurer for WC during the audit period was Ayuban Tomas, who continues

to serve in that capacity. LDC maintains its headquarters in Miami, Florida.

To manage its financial activity, LDC used three bank accounts and, in

addition, purchased and redeemed several certificates of deposit. From these accounts, the

LDC made approximately 500 disbursements. Into these accounts, LDC deposited

Figures cited in this report are rounded to the nearest donar. In addition, these figures do not foot due

to a mathematical error on the 1998 October Quarterly disclosure report (See Finding II.C.).

Page 3 of 18 Approved 3/24/00
2

contributions from individuals totaling approximately $290,000. In addition, LDC received

contributions from political action committees and other political committees, such as party

committees and candidate committees, totaling about $217,000; and, received interest of

approximately $35,700. 2

D. AUDIT SCOPE AND PROCEDURES

The audit included testing ofthe following general categories:

•

1.

2.

3.

4.

The receipt of contributions or loans in excess ofthe statutory

limitations (see Finding IIA);

the receipt of contributions from prohibited sources, such as those.from

corporations or labor organizations (see Finding ILB.);

proper disclosure of contributions from individuals, political

committees and other entities, to include the itemization of

contributions when required, as well as the completeness and accuracy

ofthe information disclosed (see Findings II.D. and II.E.);

proper disclosure of disbursements including the itemization of

disbursements when required, as well as the completeness and accuracy

ofthe information disclosed (see Finding II.F.);

5. proper disclosure of LDC's debts and obligations;

6. the accuracy oftotal reported receipts, disbursements and cash balances

as compared to LDC's bank records (see Finding II.C.);

7. adequate recordkeeping for LDC's transactions (see Finding II. G.);

and,

8. other audit procedures that were deemed necessary in the situation.

Unless specifically discussed below, no material non-compliance with statutory

or regulatory requirements was detected. LDC did not maintain externally generated

documentation, such as invoices, bills or receipts for about 50% of its disbursements. The

lack ofthese third party records limited the testing for the proper reporting of debts and

obligations and the disclosure ofinformation, such as payee address, for disbursements (see

Finding ILG.). It should be noted that the Commission may pursue further any ofthe matters

discussed in this report in an enforcement action.

As presented at Finding II.C., LDC's disclosure reports understated receipts and disbursements.

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Hi

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ll. AUDIT FINDINGS AND RECOMMENDATIONS

A. APPARENT EXCESSIVE CONTRIBUTIONS

Section 441(a)(l)(A) ofTitle 2 ofthe United States Codes states that no

person shall make contributions to any candidate and his authorized political committees with

respect to any election for Federal office which, in the aggregate, exceed $1,000. Subsection

(b) of 11 CFR §110.1 explains that with respect to any election means that ifthe contribution

is not designated in writing by the contributor for a particular election then the contribution

applies to the next election for that Federal office after the contribution is made. A

contribution is considered made when the contributor relinquishes control over the

contribution by delivering the contribution to the Candidate, the political committee, or an

agent ofthe committee. A contribution mailed is considered made on the date ofthe

postmark.

Section 103.3(b)(3) ofTitle 11 ofthe Code of Federal Regulations states that,

the treasurer shall be responsible for examining all contributions received for evidence of

illegality and for ascertaining whether contributions received, when aggregated with other

contributions from the same contributor, exceed the contribution limitations of 11 CFR 110.1.

If any such contribution is deposited, the treasurer may request redesignation or reattribution

ofthe contribution by the contributor in accordance with 11 CFR 110.1(b) or 110. 1(k), as

appropriate. If a redesignation or reattribution is not obtained, the treasurer shall, within sixty

days ofthe treasurer's receipt ofthe contribution, refund the contribution to the contributor.

Section 103.3(b)(4) ofTitle 11 ofthe Code ofFederal Regulations states, that

any contribution which appears to be illegal under II CFR 103.3(b)(3), and which is

deposited into a campaign depository shall not be used for any disbursements by the political

committee until the contribution has been determined to be legal. The political committee

must either establish a separate account in a campaign depository for such contributions or

maintain sufficient funds to make all such refunds.

Section 110.I(k) ofTitle 11 ofthe Code of Federal Regulations states, in part,

that any contribution made by more than one person, except for a contribution made by a

partnership, shall include the signature of each contributor on the check, money order, or

other negotiable instrument or in a separate writing. If a contribution made by more than one

person does not indicate the amount to be attributed to each contributor, the contribution shall

be attributed equally to each contributor. If a contribution to a candidate or political

committee, either on its face or when aggregated with other contributions from the same

contributor, exceeds the limitations on contributions set forth in 11 CFR 110.1, the treasurer

ofthe recipient political committee may ask the contributor whether the contribution was

intended to be a joint contribution by more than one person. A contribution shall be

considered to be reattributed to another contributor ifthe treasurer ofthe recipient political

committee asks the contributor whether the contribution is intended to be a joint contribution

by more than one person, and informs the contributor that he or she may request the return of

the excessive portion ofthe contribution ifit is not intended to be a joint contribution; and

Page 5 of 18 Approved 3/24/00
4

within sixty days from the date ofthe treasurer's receipt ofthe contribution, the contributors

provide the treasurer with a written reattribution ofthe contribution, which is signed by each

contributor, and which indicates the amount to be attributed to each contributor if equal

attribution is not intended.

Section 110.I(b)(5) of Title 11 ofthe Code ofFederal Regulations states, in

relevant part, that the treasurer of an authorized political committee may request a written

redesignation of a contribution by the contributor for a different election ifthe contribution

exceeds the limitation on contributions set forth in 11 CFR 110.1(b)(1). A contribution shall

be considered to be redesignated for another election ifthe treasurer ofthe recipient

authorized political committee requests that the contributor provide a written redesignation of

the contribution and informs the contributor that the contributor may request the refund ofthe

contribution as an alternative to providing a written redesignation and within sixty days from

the date ofthe treasurer's receipt ofthe contribution, the contributor provides the treasurer

with a written redesignation ofthe contribution for another election, which is signed by the

contributor.

Section 110.1(1)(5) ofTitle 11 ofthe Code ofFederal Regulations states that if

a political committee does not retain the written records concerning redesignation or

reattribution, the redesignation or reattribution shall not be effective, and the original

designation or attribution shall control.

The Audit staff's review of contributions from individuals identified 24

apparent excessive contributions, totaling $20,700, from 15 individuals. No evidence was

found that LDC attempted to .contact these contributors for the purpose of obtaining

reattributions or redesignations. Although LDC did not deposit these excessive contributions

into a separate account, it did maintain sufficient funds during the audit period to refund these

contributions.

At the exit conference, the Audit staff provided LDC's representative with a

schedule detailing the apparent excessive contributions. A discussion ensued about options

available to resolve this matter.

The interim audit report recommended that LDC provide evidence

demonstrating that the contributions noted above are not in excess ofthe limitation. Absent

such evidence, it was recommended that LDC refund these contributions and provide

evidence ofsuch refunds (copies ofthe front and back ofthe negotiated refund check).

In its response to the interim audit report, LDC provided copies of 22 checks,

totaling $18,700, it had issued to refund excessive contributions. For one contributor who had

made contributions $5,000 in excess ofthe limitation, LDC had refunded only $4,000. LDC

also submitted one redesignation letter, dated 4/20/98, to resolve an excessive contribution

made by a check which was dated 4/21/98. To date, LDC has not provided copies (front and

back) of negotiated refund checks.

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B. ApPARENT PROHIBITED CONTRIBUTIONS

Section 441b(a) ofTitle 2 ofthe United States Codes states, in relevant part,

that it is unlawful for any corporation organized by authority of any law ofCongress, to make

a contribution or expenditure in connection with any primary election or political convention

or caucus held to select candidates for any political office.

Section 103.3(b)(I) ofTitle 11 ofthe Code ofFederal Regulations states, in

part, that the treasurer shall be responsible for examining all contributions received for

evidence ofillegality. Contributions that present genuine questions as to whether they were

made by corporations, labor organizations, foreign nationals, or Federal contractors may be,

within ten days ofthe treasurer's receipt, either deposited into a campaign depository or

returned to the contributor. If any such contribution is deposited, the treasurer shall make his

or her best efforts to determine the legality ofthe contribution. The treasurer shall make at

least one written or oral request for evidence ofthe legality ofthe contribution. Such evidence

includes, but is not limited to, a written statement from the contributor explaining why the

contribution is legal, or a written statement by the treasurer memorializing an oral

communication explaining why the contribution is legal. Ifthe contribution cannot be

determined to be legal, the treasurer shall, within thirty days ofthe treasurer's receipt ofthe

contribution, refund the contribution to the contributor.

The review of all receipts identified 23 apparent corporate contributions

totaling $10,630. The corporate status ofeach business entity was verified with the Florida

Secretary of State. Although LDC did not deposit these prohibited contributions into a

separate account, it did maint1,lin sufficient funds during the audit period to refund these

contributions. .

At the exit conference, the Audit staff provided LDC's representative with a

schedule detailing the apparent prohibited contributions. LDC's representative reviewed the

schedule and commented only that an attorney was consulted about one ofthese contributions

and LDC had been assured that it was acceptable.

The interim audit report recommended that LDC provide evidence

demonstrating that the contributions noted above are not prohibited. Absent such evidence, it

was recommended that the LDC refund these contributions and provide evidence ofsuch

refunds (copies ofthe front and back ofthe negotiated refund check).

In its response to the interim audit report, LDC provided copies of23 checks,

totaling $10,630, it had issued to refund the prohibited contributions. To date, LDC has not

provided copies (rront and back) of negotiated refund checks.

C. MISSTATEMENT OF FINANCIAL ACTIVITY

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Sections 434(b)(1), (2), and (4) ofTitle 2 ofthe United States Code state, in

part, that a political committee shall disclose the amount of cash on hand at the beginning of

the reporting period and the total amount of all receipts and the total amount of all

disbursements for the reporting period and calendar year.

The Audit staff's reconciliation ofLDC's reported financial activity to its bank

activity for the period ofJanuary I, 1997 through December 31, 1998 revealed misstatements

ofits reported beginning cash-an-hand, receipts, disbursements and ending cash-on-hand.

LDC did not maintain records to show the derivation ofits reported amounts. Absent such

records, the Audit staff could not identify all differences between bank activity and reported

activity.

1. 1997 Misstatement

LDC reported a beginning cash balance of $475,460 on January 1,

1997. The correct cash balance was determined to be $361,384. This amount was overstated

by $114,076, a difference which has not been explained and that carried through the entire

audit period. LDC representatives suggested that at least one additional Certificate ofDeposit

that was not documented in the available records may have been owned by LDC. Records for

any additional investment or other bank accounts were requested during the audit fieldwork,

but none were forthcoming.

LDC reported total receipts of$166,150. LDC should have

reported total receipts of $157,288, an overstatement of$ 8,861. The overstatement

resulted, in part, from LDC'sfailure to report in-kind contributions of$ 759 and the

overstatement ofreported interest by $2,070. In addition, receipts were overstated by $6,550

on the Year End Report; this appears to have resulted from a 12/15/97 deposit having been

considered twice in calculating total receipts. Finally, absent documentation demonstrating

the derivation ofLDC reported amounts, there remained an unexplained difference of $1,000.

Total reported disbursements were $55,016. LDC should have

reported total disbursements of$71,986, a net understatement of$16,970. The

understatement stemmed mainly from LDC's: failure to report disbursements totaling

$17,446; reporting of disbursements totaling $1,229, which were not supported by checks or

debit memos from LDC's bank accounts; failure to report in-kinds contributions of$759; and

an unexplained difference of $6.

Reported ending cash-on-hand was $586,593. The correct cash

balance was determined to be $446,686. The amount was overstated by $139,907 as a result

ofthe discrepancies noted above. Consequently, beginning cash on hand for 1998 was

similarly misstated.

2. 1998 Misstatement

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LDC reported total receipts of$375,791; it should have reported

total receipts of $414,673. Therefore, receipts were understated by the net amount of

$38,882. The difference, for the most part, is the result ofthe net understatement ofreported

receipts during the calendar year by $51,110. Although the amounts by which receipts were

overstated or understated could be calculated by reporting period, absent LDC workpapers

detailing the source ofits reported figures, the Audit staff is unable to explain this

understatement. It is noted that the largest difference ($41,325) appears to have occurred in

the post election reporting period. Also contributing to the misstatement ofreceipts was

LDC's failure to report in-kind contributions totaling $331; its failure to report interest

totaling $102; a mathematical error on its Pre General disclosure report resulting in an

overstatement ofreceipts by $12,395; and, an unexplained overstatement ofreported receipts

by $266.

LDC reported total disbursements of$427,154. The Audit staff

determined that $505,118 should have been reported, resulting in an understatement of

$77,964. That difference is the result ofLDC's: failure to report disbursements totaling

$84,832, failure to report in-kind disbursements of $331; incorrect disclosure ofthe amounts

ofsome disbursements resulting in a net overstatement totaling $6,921; and, an unexplained

overstatement of $278.

The reported ending cash balance on December 31, 1998 was

$535,210. The correct cash balance was $356,240, a difference of $178,970. The

misstatement is the result ofthe discrepancies noted above.

These matters were di.scussed at the exit conference and LDC's representative was

provided copies ofthe Audit staffs bank reconciliations for 1997 and 1998. With respect to

the discrepancy in the reported cash on hand figure that existed during the entire audit period,

the representative maintained LDC was waiting for the bank to provide the necessary

documents. On July 27, 1999, when no records were forthcoming and LDC representatives

ceased communicating with the Audit staff, the Commission approved subpoenas to Ana

Carbonell, the Congressman's District Director; Rafael J. Diaz-Balart, LDC Custodian of

Records; and banks known to have been utilized by LDC. This was an effort to identify any

other certificates of deposits or additional bank accounts used by LDC, whose records have

not yet been made available to the Audit staff, and which could explain the approximately

$114,000 overstatement ofLDC's cash on hand during the audit period. The responses to the

subpoenas did not identify any additional bank accounts or certificates of deposits that were

maintained by LDC. In addition, Mr. Ayuban Tomas, Committee Treasurer, who was not

subpoenaed in deference to his reported ill health, was contacted by telephone and asked ifhe

could offer any assistance. Mr. Tomas explained that without his records, which he had

turned over to Ms. Carbonell, he could be of no assistance. Finally, on December 9, 1999, the

Commission approved a letter to Congressman Diaz-Balart requesting information or

documentation that would help resolve the discrepancy. Any such information or

documentation was to be provided by December 31. Subsequent to this deadline, several

attempts were made by the Audit staffto contact the Congressman's office to inquire about

the lack of any response to the letter. On January 6th, the Audit staffwas able to speak with

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Stephen D. Vermillion, the Congressman's Chief of Staff. He indicated that the letter had

been received and that the matter had been referred to Ms. Carbonell. Further, Ms. Carbonell

advised him that she had discussed the matter with the Congressman. Since no further

response addressing the misstatement of cash on hand was received from either Ms. Carbonell

or Mr. Vermillion; the interim audit report was issued on January 10,2000.

The interim audit report recommended that LDC submit a written

reconciliation and explanation which addresses the overstatement ofits cash on hand balance.

The Audit stafffurther recommended that LDC file comprehensive amended Summary and

Detailed Summary Pages for calendar years 1997 and 1998 which correct all the reporting

errors noted above.

As part of its response to the interim audit report, LDC submitted amended

reports which appear to materially correct the misstatement noted above. However, the

narrative portion ofLDC's response fails to completely explain the overstatement ofits cash

on hand balances by about $114,000 during the period audited. The narrative states that, with

respect to the 1995 -1996 reporting period:

• interest received for a certificate of deposit purchased during 1995 was

overstated by $5,288. LDC also provided a Form 1099-INT for 1996

showing earned interest of $13,650.77;

• deposits in 1995 ($2,200) and 1996 ($4,500) were duplicated in the reports

for those years. LDC provided deposit receipts for the two deposits; and

• the remaining difference stems from disbursements that were not reported.

LDC provided a schedule listing 14 disbursements totaling $12,748.

The Audit staffwas unable to confirm LDC's assertion that interest was

overstated by $5,288. LDC's disclosure reports for much of 1996 did not include

Schedules A identifying the source ofthe reported interest income. It was, therefore, not

possible to verify the amount ofinterest reported from any particular institution. Likewise

LDC's statement that two deposits were duplicated in its reports could not be confirmed,

absent workpapers detailing the source ofits reported figures, or other documentation to

support this explanation. It is the Audit stafff's opinion that, in order to adequately address

these apparent errors, the Audit staffwould require bank statements for all accounts

(including certificate of deposits) and LDC workpapers showing the derivation ofits reported

figures.

With respect to the unreported disbursements, the Audit staff notes that $3,235

ofthe $12,748 was in fact reported. For the remaining disbursements ($9,513), LDC did not

provide needed documentation (such as canceled checks and appropriate bank statements) to

support that these disbursements were in fact made. At best, LDC's response only explains

about $20,000 ofthe $114,000 cash balance overstatement.

Page 10 of 18 Approved 3/24/00
9

Finally, in an attempt to explain the misstatement of cash on hand, the Audit

staff reviewed all disclosure reports and supporting schedules filed by LDC during the period

1991 to 1996. Those reports were reviewed for mathematical accuracy and for any entry that

could explain all or part ofthe $114,000 difference (e.g. a reported redemption ofa certificate

ofdeposit). The review did not yield any explanation.

To date, LDC has not submitted any additional documentation or explanation

addressing the overstatement ofits cash balance.

Section 434(b)(3)(B) ofTitie 2 ofthe United States Code states that each

report under this section shall disclose the identification of each political committee which

makes a contribution to the reporting committee during the reporting period, together with

the date and amount of any contribution.

D. DISCLOSURE OF CONTRIBUTIONS FROM POLITICAL COMMITTEES

Section 431(13) ofTitle 2 ofthe United States Code states that the term

"identification" means: in the case of any individual, the name, the mailing address, and the

occupation ofsuch individual, as well as the name of his or her employer; and in the case of

any other person, the full name and address ofsuch person. Under 2 U.S.C. §431(l1), the

term "person" includes a committee, association, or any other organization or group of

persons.

The review of contributions from political action committees, party committees

and other committees deterrriined that 12 contributions, totaling $9,500, were not disclosed as

required on Schedules A, filed as part of LDC's disclosure reports.

At the exit conference, LDC's representative was informed ofthis matter but

not provided a copy ofthe schedule pending further review. Subsequent to the exit

conference, during a telephone conference the contributions were discussed in detail with the

LDC representative, who indicated that amended Schedules A would be filed.

The interim audit report recommended that LDC amend its reports by filing

Schedules A (by reporting period) disclosing the contributions noted above.

In its response to the interim audit report, LDC filed amended Schedules A to

correct the public record.

E. DISCLOSURE OF INTEREST RECEIPTS

Section 434(b)(3)(G) ofTitle 2 ofthe United States Code states that each

report under this section shall disclose the identification of each person who provides any

dividend, interest, or other receipt to the reporting committee in an aggregate value or amount

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in excess of $200 within the calendar year, together with the date and amount of any such

receipt.

The Audit staffreviewed all interest receipts and determined that interest

totaling $35,720, was not disclosed as required on Schedules A, filed as part of LDC's

disclosure reports.

The interim audit report recommended that LDC amend its reports by filing

Schedules A (by reporting period) disclosing the interest noted above.

In its response to the interim audit report, LDC filed amended Schedules A to

correct the public record.

Section 434(b)(5)(A) ofTitle 2 ofthe United States Code states that each

report under this section shall disclose the name and address ofeach person to whom an

expenditure in an aggregate amount or value in excess of $200 within the calendar year is

made by the reporting committee to meet a candidate or committee operating expense,

together with the date, amount, and purpose ofsuch operating expenditure.

•

•

F. DISCLOSURE OF DISBURSEMENTS

It was LDC's practice to disclose every disbursement regardless of amount or

aggregate value. A review of all disbursements made by LDC indicated that 124 payments,

totaling $100,637 were neither disclosed on Schedule B, nor included in reported activity (See

Finding II.C.). Ofthese disbursements, 96 totaling $98,158 were in aggregate amount or

value in excess of $200. When questioned by the Audit staff, an LDC representative was

unable to explain why these disbursements were not disclosed on Schedules B.

At the exit conference, the Audit staff provided LDC's representative with a

schedule ofthe disbursements that were not disclosed. LDC's representative indicated that

she would amend the reports as needed.

The interim audit report recommended that LDC amend its reports by filing

Schedules B (by reporting period) disclosing the disbursements noted above.

In its response to the interim audit report, LDC filed amended Schedules B to

correct the public record.

G. DOCUMENTATION OF DISBURSEMENTS

Section 432(c)(5) ofTitle 2 ofthe United States Code requires, in relevant

part, that the treasurer of a political committee keep an account ofthe name and address of

every person to whom any disbursement is made, the date, amount, and purpose ofthe

disbursement.

Page 12 of 18 Approved 3/24/00
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Section 102.9(b)(2) ofTitle 11 ofthe Code of Federal Regulations states, in

part, that a receipt or invoice from the payee or a canceled check to the payee shall be

obtained and kept for each disbursement in excess of $200 by or on behalf ofthe committee.

Section 432(d) ofTitle 2 ofthe United States Code provides that the treasurer

shall preserve all records required to be kept by this section and copies of all reports required

to be filed by this subchapter for 3 years after the report is filed.

The Audit staffreviewed LDC's disbursements on a sample basis and

determined that for a material number ofitems, a record ofthe payee's address was not

maintained. It should be noted that the disbursement database file provided by LDC did not

contain vendor addresses. However, Schedules B filed by LDC disclosed the vendor address

for nearly every payment, indicating the information apparently had been available and was

either not maintained, or not provided to the Audit stafffor its review. Additionally, for

disbursements totaling $13,982, LDC failed to maintain the canceled check, a receipt or an

invoice.

At the exit conference, LDC's representative was advised of these matters.

The representative offered no response at that time.

The interim audit report recommended that LDC obtain any vendor addresses

not currently available in its records and provide the Audit staff a complete listing of all

vendors and their addresses. The Audit stafffurther recommended that LDC provide copies

of canceled checks, receipts or invoices for those disbursements ($13,982 ) identified as

lacking such documentation.

In its response to the interim audit report, LDC submitted a vendor list and

canceled checks which materially resolve this matter.

Page 13 of 18 Approved 3/24/00
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FEDERAL ELECTION COMMISSION

WASHIN·CTON. D.C. 204&3 A99-12

..

March 29, 2000

Mr. Ayuban Tomas, CPA, Treasurer

Lincoln Diaz-Balart for Congress Committee

9131 N.W. 41't Street #131

Miami, FL 33118

Dear Mr.Tomas:

Attached please find the Report ofthe Audit Division on the Lincoln Diaz-Balart for

Congress Committee. The Commission approved the report on March 24,2000.

The Commission approved Final Audit Report will be placed on the public record on

April 5, 2000. Should you have any questions regarding the public release ofthe report,

please contact the Commission's Press Office at (202) 219-4155. Any questions you have

related to matters covered during the audit or in the report should be directed to Henry

Miller or Alex Boniewicz ofthe Audit Division at (202) 694-1200 or toll free at (800)

424-9530.

Robert J. Costa

Assistant StaffDirector

Audit Division

Attachment as stated

Page 15 of 18 Approved 3/24/00
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Page 16 of 18 Approved 3/24/00
CHRONOLOGY

LINCOLN DIAZ-BALART FOR CONGRESS COMMITTEE

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IJI Audit Fieldwork 4/26/99-5/I4/99

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Interim Audit Report to :;

itD the Committee 1/10100

Iii .'" Response Received to the U

Interim Audit Report 2/18/00

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a Final Audit Report Approved 3124/00

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Page 18 of 18 Approved 3/24/00
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