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REPORT OF' THE AUDIT DIVISION

ON

FOUNTAIN FOR CONGRESS COH:-IITTEE

I . Ba_clq~rounj_

A. Overview --_.-

This report is hased upon an audit of the Fountain

for Conr,l:(,ss Committ~c ("the COllunittce") , undcrt~kcn by the

Audi.t divi.fiion o[ the Federal Election Commi.ssi.on in accordanc(~

with the COlllll1ission' S <ludit policy to dctcr1&linc whether there

hns he('n eomplial1ce '·li.th the provi~ion5 of the Federal Election

Campaign Act of 1971, . as aUlcnded ("the Act"). The audit was

conducted pursuant to Section /~38(a) (8) of Title 2 of the

United StntcB Code which directs the Commi~sion to lnake from

time to time audits and field investigations with respect to

reports an<.1 stat('mcnts fill·d under thQ proviHions of the Act.

The Commi.t t(~C rC:iJ,is l('red Hi th the Clerk of the House

of Rppl-esent[~livC8 on April 1ft, 1972, in support of the Honorabll'

L. H. FOllllt-ail1, ('[J}1clidnle for re-election to the office of U.S.

Reprcspntntive from the' f-iccond (2nd) Congressi.onal District of

l\c.n:th Carolina. On t-1nrch 25, 1976, the Comurittt'e \-las designated

as the principal campaifin cOllllnittec for the 1<)76 election. The

Committt'c 1:1<lintnins itt; hcac1qunrters in Rocky .Hount, North C~lrolin(1 .

Thl' tludit covercll the' pericHl fronl JallU.:1ry 1, 1975

thrOl1.l~h October. 12, 1977. The Commi t. (l·e rt'pol-tcd [J hvginuine

ca~;h bnlnnce at January 1, 1975 of ~~1,993.75, total l:l'ccipts

antI CXIH'l1tlitures for th(" period January 1, 1975 throup,h

nl'Cl'mbl_'l- 31, 197(, of !.l117, 51). O~ nnd ~;116, (,] ~. 90 rcspe(·ti.vely,

:In<1 a cl'J:~in;; C'LH:11 b':'llnllct- at DeCl:l:~h.. ·r 31.1.976 of $2,b97.87. ).:,./

.1,1 'J ;1(' C(l:.:!':; t t (~L' \\Y~l~ l':-:C"_lpt: fl-Ol~1 f 1] int', ui~;closurc reports for

t 1:1' f i r~) t 1·\':0 qUill'" t ! 1-:' (l r 'j 977 . FEe Fl))'l::" 3'1 \·!crt' filed ('11

tLtl·'.' 11 ] 1) J 9"17 ~nld ..1 ta~ lL' ~n) l~) l i . The 1'( pOl: te<l l':~pcnditur,,·:

fail vd ('0 inl'ltHlc ,1 ~;:'. 06 h:~:l~~ ('1t:!1·1~(' \-.'It l('h \vc'l~~ reflected

i.ll tIlt' ('lo~,i.ll~J. CiiSh •
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'rhis :luui.t report is based on docunlcnts and working

pap('rs fiupporli.nlj each of ~ts factual ~ta~cmcnts. They form

p:u·t. of lhl~ record upon wh~ch the Comm1ss1on based its

dl'l"ir,lotl5 on th(~ nlatters in the report: and were available to Cot~lt!li :;~ioncrn nnd appropriate staff for review. .

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The princi.pal officers of the Conlolittee during the

}'It"l"iu(! of tlH~ auuit \vcre Chairman, tvtr. W. \·1. Shaw, January 1, 19l~) through July 9,1976 and 11r. L. L. Gravely, July 10,1976

through the P)·(~Bcnt and Treasurer, Mr. Charles T. Lane.

c. ?c<?l)(!

The iludit included such tests as verification of

rCI'ortcd receipts and expenditures and individual transactions;

rt'vi.c\v of required supporting documentation; analysis of Comr.litt PC

dl'bt~; ,lnd obligations; and, such other ~l1dit procedures as deemed

lleC"'f~ sdry undL'r the cir:cums tances .

II. ~\1ditor '~:. Statcll~)nt and Descripti.on of Findincs

It if; thL' opinion of the Audit stnff, based upon exarnin-

,I t ion () f t.he r(·po)~ts ,1lH] s t[ltemen ts filed nnd the records pre5('nL('d, that, l~xcept for the deficiencies noted below, the

r<:'pol·ts and !;tatcm('nt~ of the Fountain for Congress Conunittec

faj rl y pr('Bcnt the fin:n1cial activilic~ of the Cotnlnittce for

tht, pc'riod ("(lv(.'r(.1d by the audit. Further, except as noted

hca],()\·.', no 111atf'ri.1] prLlblcm~) in c(lmplyi.n1~ '\jith the Federal

Ell'ct.ion CHlllp,t"ign Act: \...'0rp di scov('rcd during the course of

Lh (,. i P.t d it.

Section 4ltlb(a) of Title 2, United Statcs Code,

proh ihj t's co)"porations [roll} conLrihutinr, to the poli.tical

(,(l1'~P;1 i ~·.n of ;1 redern1 candidate ancJ prohibits any candidate,

pul j t i ~"ill (,o~:.m i.t tC(~, OJ" other' pcr!;on froni 1,nO\alinel y acccp tiub

(lr r "' ,,~ l" i v illg :;\.1 c 11 co11 t r 1.b\1 t. i ellS .
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Our exanlination of the Commit ll'~c's contributor

records revealed that one (1) corporate contributi.on of $100

was accepted by the Comrni t lee. 'I'he 'l'reusurcr advised this had

been accepted inadvertently since all other corporate contributions were returned. .

We recommended that the Comnlittec refund this contribution and provide lhe l\udit. ula[[ with documentation of the

refund. On October 21, 1977 the Committee refunded this contribution.

Hecol\nncndatioll

Since the Committee has refunded this contribution, it is

the rf'colnmendat JOB of the Audit staff that no further action

be taken.

B. ~ommj ngling (~f~ Committee Funds

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Section 432(1.» of Title 2, United States Code, requires

that all funds of a Co~nittee be scgrated from, and not comminglr"ld \~ith, any personal funds of officers, members or associates

of the Committee.

Our examination of the contribution records revealed

that one (1) individu"ll who r~i:-.;ud funds for the Committee apparclltly for\'Jardcd pcrson~1 chcc]~s for these contributions to

the COllul\i t tee's bookk(~C"per. 'rhc~a~ appnrcnt conmling led contributions t.otaled $1,512.37.

\-Jc r(:,commPTH.1('d lhat the Commit.tee obtain a statement

from thj~; fUlhlrai s(!r cpr l i fying that the funds transmitted did

not rC'pJ:'l-'[;('nl hi s p~~r~;OJltl] funds, but incluued only funds col-·

lcct('c1 on b(~h~11f of t-he: Committee. On Dc'ccmucr 29, 1977, the

CamnLi t Lt.'(~· ddvi.~;c:d that l:h.i~; fundr~i.scr had not deposited the

funds in his pl~rson~1 account but rat.her in his "trustee"

account, cstabl ishc<.l under the ] <l\oJS of North Carolina and used

in the fundrili~~l.·rs la\oJ practice. Although the Commi ttee docs

not", fel'l this is com:~lin(.l) in~l, thl' Trcasurl~r advised that this

would llOt be clone! ilJ the fUlure.

Rcco:,uncnda ti on

] t is the r(~CCi:l :~I'Hd,l t ion of lll(' l\\H.1i t ~1taff t.hclt no

f 11 r t 11 ~~ r Cl G t i ()!l bet. k <. n •
Cand;dJ~e/Ccmmittee:

E

L. H. Fountain I Fountain for Congress Committee

CONGRESSIONAL AUDIT REPORT

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State: North Carolina

District: 2

Locaticn: Uurham

- Political ?arty Affiliation: Democrat

Votes Cas'~: General Election -

Primary only - Russell ~irby, Bert Rudasill, Major Cpponent(s): Henry Thorpe

Other Candidates Audited: Kirby, Thorpe, Rudasill

FounlJin - Unopposed

Primary El~cticn - Fountain 38,274

Thorpe 6,B65

t:irby 24,639

Rudasill 4,381

Tot~l R~ceiptS for Period: $117,515.08

Tota1 E;(~:~!1~i tures far Peri cd: ~116,G13.90

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