~(1)I.RAL ELECTION C6MMISSll)~

\'\'\',IlI,<,10N Dr .!04hl

FeL ...uary 27, 1980

MEMORANDUM

TO:

THROUGH:

FROM:

SUBJECT:

FRED EILAND

PRESS OFFICE -Ii, .

BOB COSTA t,.iG'

JUDY HAWKINS?L

PUBLIC ISSUANCE OF AUDIT REPORT - AMERICAN PARTY OF THE UNITED STATES

(NEW CARROLLTON, MARYLAND)

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Attached please find a copy of the final audit report

of the American Party of the Unit~d States (New Carrollton, M~r?land) 'Nhich was approvec. by .n~ Conunlssion on February

lir, 1980.

Informational copies have been received by all parties

involved and this report may be released to the pUblic as of

today, Febru~ry 27, 1980.

Attachment as stated

cc: FEe Library

RAD

\.~ ·Public Record
:,

f·EDERAL ELECTION COMMISSI()'

\\ "'ttlNGTON, () ( 204h'

REPORT O~ THE AUDIT DIVISION

ON THE

AMERICAN PARTY OF ~HE UNITED STATES

I. Background

A. Overview

This report is based upon an audit of the American

Party of the United States (lithe Committee"), undertaken by

the Audit Division of the Federal Election Commission in

accordance with the Commission's audit policy to determine

whether there has been compliance with the provisions of

the Federal Election Campaign Act of 1971, as amended (tithe

Act tl ). The audit was conducted pursuant to Section 438(a)(8)

of Title 2, United States Code, which directs the Commission

to make from time to time audits and field investigations with

respect to reports and statements filed under the provisions

o [ the Ac t.

The American Parcy of the United ~tates. a fundraising

affiliate of the A~erican Party (national committee), regi~tered

with the Office of the Secretary of the United States Senate on

Al1~ust 15, 1975. For the period covered by the audit, t1le

American Party of the United States was located in ~ew Carrollton,

Haryland while the American Party (national) was headquartered in

Pigeon Forge, Tennessee.

The audit covered the period August 18, 1975, the

date of the Committee's first financial transaction, through

December 31, 1976, the final cut-off date of the bank statement

containing the last significant financial activity of the

Committee. The Committee reported a beginning cash balance at

August 18, 1975 of $-0-, total receipts for the period of

$55,199.97, total expenditures for the period of $54,986.74,

and an ending cash balance at December 1, 1976 !/ of $213.23. ~/

l/ Our review of Committee records revealed that the Committee's

termination report (covering the period October 1, 1976 -

D~cember 1, 1976) did not disclose the Committee's final

financial activity. Two (2) expenditures totaling $250.00

were made subsequent to December 1, 1976 that were not

reported by the Committee. (See footnote ~/ and Finding D).

• 2/ For the period August 18, 1975 - December 31, 1976, the

Committee overstated total receipts by $1,586.36, total

expenditures by $1.394.77, and cnding cash on hand by

$191.59, see Finding D.
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This audit report is based on documents and working

papers supporting each of, its factual statements~ They form

part of the record upon which the Commission based its decisions

on the matters in this report and were available to Commissioners

and appropriate staff for review.'

B. Key Personnel

The principal officers of the Committee for the period

covered by the audit were: Mr. Thomas Anderson, Chairman; and

Mr. Alan MacNeil, Treasurer (Committee inception - April 12, 1976)

and Ms. Mary Ellen Gardner, Treasurer (April 12, 1976 - Committee

termination). Mr. John L. Henderson was an authorized agent of

the Committee and served as de facto treasurer for the period

covered by the audit (i.e., handled financial "transactions,

recordkeeping and reporting for the Committee).

The audit included such tests as verification of

total reported receipts and expenditures and individual

transactions; review of required supporting docum~ntatiJn

and analysis of Committee debts and obligations; and, SUCll

othe~ audit procedures as deemed necessary un\'er the

circumstances.

II. Audit Findings and Recommendations

A. Contribution in the Name of Another -

Corporate Contribution

Section 44lf of Title 2, United States Code, states,

in part, that no person shall make a contribution in the name

of another person or knowingly permit his name to be used to

effect such a contribution. Section 43l(e)(l) of Title 2,

United States Code defines a loan as a contribution.

Section 44lb(a) of Title 2, United States Code,

states, in part, that it is unlawful for any corporation to

make a contribution or expenditure in connection with any

Federal election to any political office and unlawful for

any Federal candidate, political committee, or other person

to knowingly accept or receive any contribution from a

co." p 0 rat ion •
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Our review of the Committee rcpurts revealed that

the C,)mmittee disclosed a loan from, and repayment to,

Constll t ing Research and Deyelopment Corporation, on August

18 , 1(J I 5 and Se ptembe r 29, 19 7 5 res p e c t i vel y, in the a rna u n t

of $"J,OOO.

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Discussions with a COlllmittee official disclosed that

thl~ Committee was loaned $3,000 hy an incorporated lobby group

to open the Committee's bank account and initiate direct mailing

to solicit contributions. A Committee official statl'd that the

check was deposited into his personal business account, Consulting

Research and Development (C.R.& D.), and later transferred as the

initial depnsit in the Committee's account. The Committee reported

the loan from and repayment to C.R. & D., interpreting the loan

as from the lobby group to the Committee official personally and

then to the Committee, rather than directly from the lobby group

to the Committee.

In a letter of notification of audit findings and

recommendations, the Audit staff recolllmended that the Committee:

a) attempt to obtain and provide copies of or the l) ,- i gin ale'-1 C c k s (' 0 cume 1 tin g the:

1. deposit of the lobhy group's check into

the C.R. & D. account;

2. transf~r of $3,000 from C.R. & D. to the

Committee's account;

3. repaym~nt of $3,000 from the Committee

tt.) l:.R. & D.

4. repayment of $3,000 from C.R. & D. to

tlat' lllhby group; and

b) file amended reports disclosing the loan from,

and rl'l)ayment to, the lobby group.

In response, on S~ptember 25, 1978, the Committee

011 i,' LIt provided a stat~r.l~nt that he either misstated the

seqll,'nce of events or was misinterpreted and that the $3,000

Clll~l'k from the lobby group \~as deposited directly into the

Committee's account. On October 19, 1978, the amended reports

r l~ L' l) 111 til l' n d c dab 0 v ewe refi 1 e II dis c losi n g t his t ran sac t ion •
Th in'c 0 r p 0 rat e d s tat u s 0 f t h .. 0 b by g r 0 u pat the

time the loan was madl" was confirmed with the appropriate

Secretary of State's C.,rporate Division on June ~9, 1978.

The matter was referrt'.' to th~ Commission's Office

" f General Counsel on November i, 1978, where Matter Under

Review 886 was initialed. The ".:>mmission found reasonable

cause to believe that the Committee violated 2 U.S.C. 44lb(a)

by accepting a corporate contribution. A conciliation agreement

was signed and on November 8, 1979, the Commission voted to

close the file on the matter.

B. Retention of Supporting Documentation

for Expenditures

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Section 432(d) of Title 2, United States Code, in

part, requires the treasurer to obtain and keep a receipted

bill, stating the particulars, for every expenditure made by

or on behalf of a political committee in excess of $100.00,

or for expenditures aggregating in excess of $100.00. to the

same person within a calendar year.

Section l02.9(c)(4) of Title 11, Code of Federal

Rl.~ g u 1 ~l t i 0 l' :.;, in par t, P r 'v ide s t"l a t when arec e i pte d b i 11 is

not available, the treasurer may keep: i) the cancelled check;

and ii) the bill, invoice or other contemporaneous memorandum

to support the expenditure.

Our examination of the Committee's records revealed

t hell it did not main'_ain supporting documentation (a receipted

hill or a cancelled eheck together with the bill, invoice, or

" t 11 e r con t c mpo r a 11 C 0 us ml.~ m(l randum), for 5 4 ( 8 7 • 09 %) 0 f 6 2

expenditures, each in excess of or aggregating in excess of

$100.00. These 54 expenditures totaled $40,760.75, which

r~presented 88.73% of the dollar amount ($45,936.62) of

~xpenditures requiring supporting documentation.

On September 25, 1978, the Committee provided

d\l~uml.~ntation for 51 of the 54 expenditures mentioned above.

F,'r the remaining thrl~C (3) undocumented expenditures, the

C0mrnitlec provided copies of letters sent to the vendors!

payees in an effort to obtain the missing documentation.
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Recommendlltion

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I\aseu nn tl.. · Committee's efforts outlined' above, the

Au d i t Ht a f f r e c () 111 ttl t' tllls t hat the Commission r. t e r min e t hat

the Committee ha:; dpmonstrated its best ef' : s to comply

wit h 2 u. S •r.. I. 'L! ( d) and t hat xl 0 fur the r a ~, _0 n bet a ken

on thiH matter.

c. Record~«('eping for Receipts

Section 432(c)(l) and (2) of Title 2, United States

Code, in part, requires the treasurer of a political committee

to keep a detailed and exact account of all contributions made

to or for such committee and the identification of every person

making a contribution in excess of $50.00, and the date and amount

thereof and, if a person's contributions aggregate more than ~lOO.OO

the account shall include occupation, and the principal place of

business (if any).

0\1 r rev i e w 0 f t h l' Commit tee's (0 n t ributi 0 n r e cor d s

revealed that the Committf'p retained docl\m(~ntation (name,

amount, and for some, date of contribHti0n) for only ~l4,539.50

(f a total of ~51,613.61 (27.l2~~) in ~'lntribltions received by

t 11 e C. 0 .11m itt e c • A COf.lm i :: tee 0 f f i cia 1 ex p 1a inc d t hat a po r t ion 0 f

the Committee's contribution records h[.d inadvertantly been

disposed of while in storage.

I nthe 1e t t e r 0 f not i f i c a f~ ion 0 f «l U d i t fin din sand

recommendations, the Audit staff recommended that any additional

records that could be assembled ;hould be presented to the staff

for rev i e 'v • 0 n (l (' t 0 b e r 1 7, 19 7 8, the Commit t pep r 0 v ide d

r e con t r u c ted c () n t ributi 0 n r e cor d s doc umen t i 11 g 4 6 , 96 7 • 6 1 ( 8 7 • 6 0 ~' )

of the Committe("s total receipts.

It is the opinion of the Audit staff that the Committee

has provided sufficient documentation and has complied with

the staff's recommendation. This opinion is based on the fact that

the Committee's avera~e contribution was less than $50.00

(approximately ~14.00) and thnt the Committee would not have been

required to keep a detailed and exact account of the identification

of the contributions for the majority of the remaininr. S6,646 in

It ndoc umen ted r e c e i p t s (1 2 . 4~: 0 f totaIr e c e i p t s) .
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Recommendation

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1\0 I S C U l)nthl"' Co t1lmit tee's e f for t sout 1 ine dab0 v e, the Au d i t

star I recommends that the Commission determine that the Committee

haH dl.'11lollslratl'd its best efforts to comply with 2 U.S.C. 432(c)(1)

and (2) and that no further action be taken on this matter.

D. 9Vl.'~_~;.tatemcnt of Tl)tal Rl.:~'~iptH,

~l~ 0 tal. Ex pend i t u res, and Ca H 11 - () n - Hand

Sect ion 434(b) (1), (8), and (11) of Title 2, United

States Coue, in part, requir~s a eommittce to report the amount

uf l:ash-on-hand at the b~ginning of the reporting p~riod and

thl~ total sum of all receipts and expenditures by or for such

t'ommittee or callll idatu during th~ reporting period.

Our r l' vie w 0 f the C U Inmit tee's r e cord s dis c losedthat

for the period August 15, 1975 through December 31, 1976, the

Commit t e 0 v e r Hl ated t (1 tal r l.' l: C i p t s b y $ 1 , 5 8 6 • 3 6, tot a 1

e x pen d i t \1 r l\ S b Y $ 1 , 3 9 4 • 7 7, 31'1 dendin g casIt- 0 n - han d by $ 1 9 1 • 59 •

The Committee's uv~r8tatement of receipts was the net

effect of th~ followin~:

( 1 ) two (2 ) c h l' C k s w r itt en'... y t h L' Commit tee, but not iss u ed,

totaling $2,00U.00 wer~ reJ~p~8iteJ and reported as receipts

(2) in-kind ~ontributionH totaling $353.14 were not reported

as r~cl.'ipts

( 3) 0 n e (1) d l.' po sit 0 f $ 1 7 7 • 00 was rep 0 r ted as $ 11 7 .00 and

one (1) of $8bO.50 was rcport~d as $860.00.

Thl: Committee's overstatemenl of expenditures was the

11 etc f f L' C t 0 f til c f 0 11 ow i 11 g :

(1) thl.' Commitll.'c's termination report covered October 1,

1976 - necembt.~r 1,1976. T\.;o (2) expenditures totaling $250.00

w~re mad~ subs~qucnt to necemb~r l, 1976 that were not reported.

( :! ) the t W,,) (2) c h e c k H tot a 1 in g $ 2 , 000 • 00 wr itt en by the

Committee lhat were not issu~J were redeposited (cashed)

alld reported as expcnditur~s.

( \) t h L' i n - kill d con t rib II L i 0 :1 s tot a 1 i n g $ 3 5 3 • 14 we r e not

r,,' p (' r t l'J a s ~' :.ql L' 11 Ui t u r L' S •

( 5 ) l \.,,' l) (~) t.' X P C 11 J i tu r l' S t \..) t .1 1 i n b $ l , 5 7 6 • lOwer e i t c mi zed

as $l,::>7.J.()().
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On October 19, 1978, the Committee filed amended reports

\~It I (~h corrected the coverage dates of the termination report (and

ell nc]osed the $250.00 in previously unreported expenditures) and

corrected all the misstatements noted above.

'~l' commendation

The Audit staff r .. commends that no further action be taken

on these matters.

E. Itemization of Expenditures

Section 434(h)(9) of Title 2, United States Code,

in part, requires a co~mittee to disclose tIle identification

of each person to whon expenditures have been made by such

("ommittee which in the aggregate exceed $100.00 within a

calendar year, together with the purpose, amount and date of

the expenditure.

Our review of Committee records revealed that eight

(8) expenditures of a total of 64 itemizab1e expenditures

(12.5%) were not ite~izcd by the Committee. These expenditures

totaled $900.40 and represented 1.88% of itemizable expenditures

($47,936.62).

On October 19, 1978, the Commitlee filed amended reports

which itemized the eight (8) expenditures.

Rt"l commenda t ion

The Audit staff recommends that no further action be taken

on this matter •
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FEDi-R/\l ELECTION COl\1,\\lSSION

lJ,.!'ll\ ",I~:I t 1 \V

\ \ .\'" tI'.f I I< )".[) l 204h

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