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November 10,1997

MEMQRANDUM

TO: RON M. HARRIS

PRESS OFFICER

PRESS OFFICE

FROM: ROBERT J. COSTA

·ASSISTANT STAFF D1RlCTOR

AUDIT DIVISION

SUBJECT: PUBLIC ISSUANCE OF THE FINAL AUDIT REPORT ON

DENNIS NEWINSKJ FOR CONGRESS

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

Dennis Newinski for Congress which was approved by the Commission on November 3..

1997.

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

the report may be released to the public.

Attachment as stated

cc: Office ofGeneral Counsel

Office ofPublic Disclosure

Reports Analysis Division

FEC Library
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REPORT OF TIlE AUDIT DIVISION

ON

DENNIS NEWINSKI FOR CONGRESS

'Approved November 3, 1997

FEDERAL ELECIlON COMMISSION

999 E STREET, N.W.

WASHINGTON, D.C.
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TABLE OF CONTENTS

DENNIS NEWINSKI FOR CONGRESS

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Executive Summary 1

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Final Audit Report 3

5 Background 3 ..

a Findings S

Transmittal to Committee 11

Chronology 13

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FINAL AUDIT REPORT

ON

DENNIS NEWINSKI FOR CONGRESS

EXECUTIVE SUMMARY

Dennis Newinski for Congress registered with the House ofRepresentatives on

September 29~ 1993 as the principal campaign committee for Dennis Newinski,

Republican candidate for the U.S. House ofRepresentative from the state ofMinnesota,

4th District. Mr. Newinski filed a Statement ofCandidacy for the 1996 election on June

13,1996.

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

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

threshold level ofcompliance with the Commission.

The findings ofthe audit were presented to the Committee at the completion of

fieldwork on July 9, 1997 and later in an interim audit report. The Committee's response

to those findings is included in the final audit report.

The following is an overview ofthe fmdings contained in the fmal audit report.

The Audit staff's testing ofdisbursements and reporting ofdebts and obligations was

limited because more than halfofthe records provided were generated by the Committee

and we were unable to verify disbursement recordkeeping from external documentation.

ApPARENT EXCESS'VE CoNnuRtrrlQNS - INDMDUAI $ - 2 U.S.C.

§441a(a)(l)(A). The audit identified 16 contributors who exceeded their contribution

limitations by a total of$14,775. The Committee responded that it would refund 53,125

to six contributors as soon as funds were available. No valid documentation was

provided relative to the remaining S11,650 in excessive contributions.

IlEroRDNG Of'rrElnsROM PaLmeA'e CoMMon!s • ITEMIZADON - 11

CFR §104.3(aX4Xii). The Audit statTreviewed all receipts from political committees and

organi7JItions and determined that the Committee failed to itemize 12 contributions

totaling $6,400 from 8 political committees and 3 unregistered political organizations.

The Committee filed an amended report disclosing both these contributions and the

correct totals ofreceipts from individuals and political committees.

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DlsaDSIJRI OfO<xtJpADON AND NAME or EMPLOYER - 2 U.S.C.

§§434(bX3)(A) and 431(13XA). The audit identified a material Dumber ofmars

regarding the Committee's disclosure ofcontributor's occupation and name ofemployer,

and the Committee was unable to demonstrate that it had exercised best effortsto obtain

this information. The Committee filed amended reports which materially corrected the

public record on discloSlD"e ofthe contributor's occupation'and name ofemployer.

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REPORTOF THE AUDITDlVlSION

ON

DENNISNEWINSKI FOR CONGRESS

This report is based on an audit ofDennis Newinski for Congress (the

Committee), undertaken by the Audit Division ofthe Federal Election 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 ofany political committee required to file a report under Section 434

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

perfonn an internal review ofreports filed by selected committees to detennine ifthe

reports filed by a particular committee meet the threshold requirements for substantial

compliance with the Act.

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I. BACKGROUND

A. AUDIT AUTHORITY

B. AUDIT COVERAGE

The audit covered the period from January 1, 1995 through December 31,

1996. The Committee reported a beginning cash balance of51; total receipts for the

period of5316,032; total disbursements for the period of$315,414; and an ending cash

balance of5319. I

c. CAMPAIGN ORGANIZATION

The Committee registered with the Clerk ofthe House ofRepresentatives

on September 29, 1993, as the principal campaign committee for Dennis R. Newinski,

Republican candidate for the U.S. House ofRepresentatives from the State ofMinnesota

for the Fourth District. Mr. Newinski filed a Statement ofCandidacy for the 1996

election on June 13,1996.

The Treasurer ofthe Committee for the period is Mr. Richard C. Riener.

The totals do not foot because ofan arithmetic discrepancy on the Committee's reports. All

amounts in this report have been rounded to the nearest dollar.

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To handle its financial activity, the campaign used one savings account

and one checking account. From the checking account the campaign made approximately

410 disbursements. Approximately 3,720 conttibutions totaling roughly 5248,100 were

received from individuals and 70 contributions totaling $60,360 were received from

political committees and other committees.

D. AUDIT SCOPE AND PROCEDURES

The audit included testing ofthe following general categories:

1. The receipt ofcontributions or loans in excess ofthe statutory limitations

(see Finding II.A.);

2. the receipt ofcontributions from prohibited sources, such as those from

corporations or labor organizations;

3. . proper disclosure ofcontributions from individuals, political committees

and other entities, to include the itemization ofcontributions when

required, as well as, the completeness and accuracy ofthe infonnation

disclosed (see Findings II.B. and II.C.);

4. proper disclosure ofdisbursements including the itemization of

disbursements when required, as well as the completeness and accuracy of

the infonnation disclosed;

s. proper disclosure ofcampaign debts and obligations;

6. the accuracy oftotal reponed receipts, disbursements and cash balances as

compared to campaign bank records;

7. adequate recordkeeping for campaign transactions; and

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

Unless specifically discussed below, no material non-compliance was

detected. It should be noted that the Commission may pursue any ofthe matters

discussed in this report in an enforcement action. Although in maintaining its records the

Committee satisfied the minimum recordkeeping requirements of 11 CFR §102.9, the

Audit staff's testing ofthe Committee's disbursements was limited due to the lack of

invoices, receipts and other third party documentation. In its review ofdisbursements,

the Audit staffwas able to locate external documentation for only 40010 ofthe items

tested. Therefore, for most disbursements, no documentation was available for the Audit

staffto independently verify items such as vendor addresses, purposes ofdisbursements

and reporting ofdebts and obligations.

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D. FJNDINGS AND RECOMMENDADONS \,,~

A.. APPARENT ExCESSIVE CONTRIBUTIONS

.. Section 441a(aXIXA) ofTide 2 ofthe United States Code states, that no

person sbaIl make contributionsto any candidate and his authorized political committees

with respect to any election for Federal office which, in the aggregate, exceed SI,ooo.

Subsection (bX2Xii) of 11 CFR §110.1 explaiDs that with respect to tIllY election means

·that ifthe contribution is not designated in writing by the comnDutorfor a particular

election then the contribution appliesto the next election for that Federal office after the

contribution is made. A contribution is considered made (subsection(6) ofthis section)

when the contributor relinquishes control overthe 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 110.1(bXS)(i) and (ii) ofTide II oftbe Code ofFederal

Regulations states, in part, that the treasurer ofan authorized political committee may

request a written redesignation ofa contribution by the contributor for a diffenmt election

if:

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the contribution was designated in writing for a particular election, and the

contribution. either on its face or when aggregated with other contributions

from the same contributor for the same election, exceeds the limitation on

contributionsset forth in 11 CFR §II0.1(bXI):

the contribution was designated in writing for a particular election and the

contribution was made after that election and the contribution caDDOt be

accepted under the net debts outstanding.provisions of II CPR

§110.1(b)(3);

the contribution was not designated in writing for a particular election, and

the contribution exceeds the limitation on contributions set forth in 11

CFR §IIO.1(b)(I); or

the contribution was not designated in writing for a particular election, and

the contribution was received after the date ofan election for which there

are net debts outstanding on the date the contribution is received.

Further, a contribution shall be considered to be redesipated for another

election ifthe treasurer oftile recipient authorized political committee requests that the

contributor provide a written redesipation ofthe contribution IDd informs the

contributor that the contributor may request the mund ofthe contribution as an

alternative to providing a written redesignation and within sixty days &om the date ofthe

treasurer's receipt ofthe contribution, the contributor provides the treasurer with a written

redesignation ofthe contribution for another election. which is siped by the contributor.

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Section I10..1 (k) ofTitle II ofthe Code ofFederal Regulations states any

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

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

other negotiable instrument or in a separate writing and ifa 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.

Ifa 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 II CFR §110.l(b), (c) or (d), as appropriate, 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 of

the 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 ofthe excessive portion ofthe contribution ifit is not intended

to be a joint contribution, and within sixty days from the date ofthe treasurer's receipt of

the 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 ifequal attribution is not intended.

Section 110.9(a) ofTitle 11 ofthe Code ofFederal Regulations states that

no candidate or political committee shall accept any contribution or make any

expenditure in violation ofthe provisions of part 11O. No officer or employee ofa

political committee shall accept a contribution made for the benefit or use ofa candidate,

or make any expenditure on behalfofa candidate, in violation ofany limitation imposed

on contributions and expenditures under this part 11O.

The Audit staffreviewed the Committee receipts data file, available check

copies, deposit tickets and disclosure reports relating to contributions from individuals

and identified contributions from 16 individuals which exceeded the contribution

limitation by S14~77S. Ofthis amount~ 53,500 from four individuals was excessive for

the General Election; the balance (511 ~275) was excessive for the Primary Election. In

12 instances the Committee apparently reattributed or redesignated contributions without

adequate documentation.

A schedule ofthe excessive contributions was presented to the Treasurer

at the exit conference. The Treasurer stated that he had thought there was only a slim

chance that any receipts were excessive. He understood the requirement that the

excessive amounts must be refunded. Subsequent to the conclusion offieldwork, copies

ofthe relevant contributor checks were provided to the Treasurer.

In the interim audit report recommendation the Committee was requested

to provide evidence that these contributions were not in excess ofthe limitation or to

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demonstrate that the excessive amount bad been resolved by timely reattribution to

another contributor or by timely redesiguation to another election. Absentsuch a

demonstration, the Committee was to refund the contributions and provide evidence of

the refund (photocopies ofthe front and back ofthe canceled check). Ifsufficient' funds

were not available for refunds, the Committee was to report debts owed to the

contributors, and refund these contributions ftom the next available funds that it received.

In the Committee'sresponse to the interim audit report, it did not provide

evidence that these contributions were not in excess ofthe limitation and did not

demonstrate that the excessive amounts ($14,775) had been resolved by timely

reattribution to another contributor, by timely redesignation to another election, or by

refunding the excessive amoWlts to the contributors.

With regard to excessive amounts totaling 53,125 from six contributors,

the Treasurer stated that these amounts will be refunded as soon as funds become

available and that, until refunded, the am01D1t will be listed as debts on the Committee's

n~ disclosure report (Year End 1997). According to the July 31 Mid-Year report filed

August 12, 1997, the Committee reported cash on hand of$11,807 and debts owed of

52,500 (loan ftom the Candidate). Therefore, funds to make the necessary refunds appear

to be available and the reftmds should have been made as recommended in the interim

audit report.

For excessive am01D1ts totaling 510,650 from nine contributors, an internal

memorandum dated Oct. 1,1997 to the Treasurer. from a person apparently associated

with the Committee, indicated that reallocation statements had been obtained, but that the

fonns were not within her records at this time. The message also indicated that

reallocations could be obtained again ifnot found within the Treasurer's records. The

Treasurer did provide copies oftwo reattribution documents relating to two ofthe nine

contributors which were neither prepared timely nor signed by both contributors. The

documents were dated either as ofthe contributor check date or the deposit date (October,

1996); however, both reattributions were faxed during June 1997, eight months after the

conuibutions were made. One document was faxed from the business ofthe contributor;

the other was faxed from a Committee consultant. These documents were reviewed by

the Audit staffduring fieldwork and were the only reattribution or redesignation

documents made available at that time. The balance ofthe excessive amounts included in

the interim audit report ($I,000) was not addressed in the response.

B. REPORnNG OF REcEIPTS FROM PounCAL COMMITTEES

Section 104.3(aX4Xii) ofTitle II oftile Code ofFederal Regulations

requires that each report include the identification and the agrep1e year to date total for

all committees (including political committees and committees which do not qualify as

political committees under the Act) which make conUibutions to the reporting committee

during the reporting period, together with the date ofreceipt and amount ofany such

contribution..

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The Audit staffreviewed receipts totaling 560,359 from political

committees and unregistered organizations and detennined that the Committee failed to

itemize 12 contributions totaling 56,400 from eight political committees and three

unregistered political organizations. These omissions occurred dwing the period 9/09/96

through 11/21/96. Further, the amounts were not included in total contributions reported

from political committees; rather they appear to have been included in unitemized

amounts from individuals.

At the exit conference, the Audit staffprovided the Committee with a

schedule ofthe contributions not itemized. The Treasurer agreed to file any necessary

amended reports.

In the interim audit report recommendation the Committee was requested

to file an amended Schedule A for the year 1996 disclosing the contributions noted

above. The Committee was also to file an amended Detailed Summary Page for the year

1996 to report the correct totals ofreceipts from individuals and political committees by

adjusting the respective line totals for the amount ofthe receipts from political

committees included within unitemized receipts from individuals.

In response to the interim audit report, the Committee filed amended

Schedules A disclosing the contributions noted above. In addition the Committee tiled an

amended Detailed Summary Page for the calendar year 1996 to report the correct totals

for receipts from individuals and political committees.

c. DISCLOSURE OF CONTRIBUTIONS FROM INDIVlDVAlS

Section 434(b)(3)(A) ofTitle 2 ofthe United States Code requires a

political committee to report the identification ofeach person who makes a contribution

to the committee in an aggregate amount or value in excess of$200 per calendar year

together with the date and amount ofsuch contribution.

Section 431(13)(A) ofTide 2 ofthe United States Code defines the tenn

"identification" to be, in the case ofany individual, the name, the mailing address, and

the occupation ofsuch individual as well as the name ofhis or her employer.

Section 104.7(a) and (b) ofTitle 11 ofthe Code ofFederal Regulations

states, in part, that when the treasurer ofa political committee shows that best efforts

have been used to obtai~ maintain, and submit the infonnation required by the Act for

the political committee, any report ofsuch committee shall be considered in compliance

with the Act. With regard to reportina the identification ofeach person whose

contributions(s) to the political committee and its affiliated committees aggregate in

excess of5200 in a calendar year, the treasurer will only be deemed to have exercised

best efforts to obtain, maintain and report the required infonnation if: (I) All wriuen

solicitations for contributions include a clear request for the contributor's full name,

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mailing address, occupation and name ofemployer, and include the following statement:

"Federal law requires political committeesto report the name, mailing address,

occupation and name ofemployer for each individual whose contributions aggregate in

excess of$200 in a calendar year"; and (2) For each contribution received aggregating in

excess of$200 per calendar year which lacks required contributor information, the

treasurer makes at least one effort after the receipt ofthe contribution to obtain the

missing information. Such effort shall consist ofeither a written request sent to the

contributor or an oral request to the contributor documented in writing. The written or

oral request must be made no later than thirty (30) days after receipt ofthe contribution.

The written or oral request shall not include material on any othersubject or any

additional solicitation, except that it may include language solely thanking the contributor

for the contribution.

The Audit staffreviewed contributions from individuals 1000" and

detennined that the occupation and/or name ofemployer was not disclosed as required

for 93, or 36%, ofthe contributions requiring itemization and disclosed on the

Committee's reports. Some ofthe infonnation was available in the Committee's records

on or before the contribution date but was not on its disclosure reports. The solicitation

and response devices available all requested the infonnation; however, two ofthe

response devices did not inform the contributor that the Committee was required by law

to report the infonnation. Further, the Committee did not document any attempts to

obtain the infonnation subsequent to receipt ofthe conbibution.

At the exit conference, the Audit staffprovided the Committee a schedule

ofthese disclosure errors and advised the Committee to document all future attempts to

obtain any required information. The Treasurer concurred with our recommendation and

agreed to file any necessary amended reports.

In the interim audit report recommendation the Committee was requested

to file amended Schedules A for calendar years 1995 and 199~, disclosing as memo

enbies the occupation and name ofemployer for the contributors discussed above or to

provide evidence ofcontacts with the conbibutors attempting to obtain the missing

infonnation.

The Committee materially complied with the Audit recommendation by

filing Schedules A disclosing the occupation and name ofemployer for most ofthe

conbibutors for whom the information was lacking in the reports as originally filed.

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November S, 1997

Richard C. Reiner, Treasurer

Dennis Newinski for Congress

3468 Rice Street

S1. Paul, MN 55126

Dear Mr. Reiner:

Attached please find the Report ofthe Audit Division on Dennis Newinski for

Congress. The Commission approved the report on November 3. 1997.

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

on November 10. 1997. 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

Cornelia Riley or Russ Bruner ofthe Audit Division at (202) 219-3720 or toll free at (800)

424·9530.

Sincerely,

Assistant StaffDirector

Audit Division

Attachment as stated

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CHRONOLOGY

DENNIS NEWINSKI FOR CONGRESS

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Audit Fieldwork

Interim Audit Report to

the Committee

Response Received to the

Interim Audit Report

Final Audit Report Approved

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10/16/97

1113/97
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