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FEDERAl El [l~TION COI\1,\\ISSI()~ ..

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February 14, 1979

!w1EMORANDUM

Attached please find a copy of the final audit report

for the Harrison Schmitt Senatorial Committee and Democrats

for Schmitt «NM-SEN) which was approved by the Commission

on January 31, 1979.

As of this date, February 14, 1979, all informational

copies of the report have been received by all parties involved

and this report may be released to the public.

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TO:

THROUGH:

FROM:

SUBJECT:

FRED S. EILAND

PRESS OFFICE

BOB COSTA J..t~

JUDY HAWKINS

PUBLIC ISSUANCE OF AUDIT REPORT - HARRISON SCHMITT SENATORIAL CO~~ITTEE

AND DEMOCRATS FOR SCHMITT (NM-SEN)

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Attachment as stated

cc: FEe Library

RAD

Public Record

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FEDERAL ELECTION COMJ\l11SS10N

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REPORT OF THE AUDIT DIVISION

ON THE

HARRISON SCHMITT SENATORIAL COMMITTEE AND

DEMOCRATS FOR SCHMITT

I. Background

A. Overview

This report is based on an audit of the Harrison Schmitt

Senatorial Committee and Democrats For Schmitt ("the Committee(s)"),

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 (lithe Act"). The audit was conducted pursuant to Section 438{a) (8) of Title 2 of the 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 of the Act.

The Harrison Schmitt Senatorial Committee registered with

the Federal Election Commission on October 28, 1975 as the principal

campaign committee designated by the Honorable Harrison H. Schmitt,

the Republican Candidate for the United States Senate from the

State of New Mexico.

Democrats For Schmitt registered with the principal

campaign committee on October 19, 1976, as an authorized committee

of the Honorable Harrison Schmitt, and terminated its activities

on December 31, 1976.

The audit covered the period October 28, 1975 through

September 30, 1977, the final coverage date of the most recent

report filed by the Harrison Schmitt Senatorial Committee at the

time of the audit. During that period, the committees reported

the following activity:

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Be9i~l"ing Total Total Ending

Cash Receipts Expenditures Cash

Harrison Schmitt

Senatorial Committee -0- $541,793.73 $540,778.86 $1,014.87

Democrats for Schmitt -0- 21,510.63 21,510.63 -0-

Total Combined

Activity -0- $563,304.36 $562,289.49 $1,014.8i

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 committees during the

period audited were: '. COIMlittee

Harrison Schmitt

Senatorial Committee

Democrats For

Schmitt

C. Scope

Chairman

William J. Donohoe

Cleo Montoya

Treasurer

Randall P. Sullivan

3/23/76 - 9/30/77

~aureen Reid Viseant

1/12/76 - 3/23/76

Diana R. Griffin

10/28/75 - 1/12/76

Brenda Mansker

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The audit included such tests as verification of total

reported receipts and expenditures and individual transactions;

review of required supporting documentation; analysis of the

Committees' debts and obligations; and such other audit procedures

as deemed necessary under the circumstances•
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TI. Auditor's Statement

I~ is the opinion of the Audit staff, based upon examination

of the reports and statements filed and the records presented,

that, except for the deficiencies noted below, the reports and

statements of the Harrison Schmitt Senatorial committee and

Democrats For Schmitt fairly present the financial activities of

the Committees for the period covered by the audit. Further,

except as noted below, no material problems in complying with

the Federal Election Campaign Act were discovered during the

course of the audit.

1. Description of Findings with Respect

to Harr1son SChm1tt Senatorial Committee

A. Contributions in Excess of Limitation

Section 44la{a) (1) (A) and (f) of Title 2 of the United

States Code states, in part, 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. In addition, no candidate or political committee

shall knowingly accept any contribution in violation of the provi~ions of this section.

Section llO.l{a) (2) (ii) of the Commission's Regulations

states that: "With respect to any election" means, in the case of

a contribution not designated in writing for a particular election,

for a primary election, if made on or before the date of the

election, or for a general election, if made after the date of the

primary election.

An analysis of the contribution records disclosed that

nine (9) contributions from eight (8) contributors, each aggregating

in excess of $1,000 and totaling $10,825.00, were received after

the date of the primary election. Information contained on the

Committee's contributor record cards indicated that the contributions

in excess of the limitations ($2,825.00) were designated for the

primary election.

Although the treasurer stated that the Committee's

records contained written documentation from the contributors to

support the primary election designation of the excess contributions,

he was unable to provide such doc~~entation for the Audit staff's

review .
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In our letter dated April 24, 1978, we recommended that

the Committee refund the excessive contributions ($2,825) or obtain

the required documentation from the contributors and submit it

for our review. The Committee submitted the required documentation

for five (5) of the eight (8) contributions, totaling $2,225. For

the remaining three (3) excessive contributions the Committee

submitted copies of second request letters, sent to the contributors

on July 3, 1978.

Since the Committee did not comply with our recommendation

this matter was referred to the Commission's Office of General

Counsel on July 17, 1978, where Matter Under Review (MUR) 654(78)

was initiated.

On September 13, 1978, the Commission, found reason to

believe that the Committee violated Section 441a(f) of Title 2 of

the United States Code by accepting three (3) contributions in excess

of the contributor's contribution limitation of $1,000 per election.

On September 15, 1978, the Committee submitted the

required documentation for the three (3) excessive contributions.

The General Counsel, therefore, recommended that the Commission

take no further action on the matter.

Based on t~lese facts, the Commission voted on November

21, 1978, to close the file on MUR 654(78) with no further action.

B. Contributions of Currency

Section 441g of Title 2 of the United States Code

states, in part, that no person shall make contributions of

currency to or for the benefit of any candidate which, in the

aggregate, exceed $100, with respect to any campaign of such

candidate for nomination for election, or for election, to

Federal office.

In addition, Section 110.4(c) (2) of the Commission's

Regulations states that a candidate or committee receiving a

cash contribution in excess of $100 shall promptly return the

amount over $100 to the contributor•
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Information contained on the contribution records

indicated that the Committee accepted four (4) cash contributions

each exceeding $100 and totaling $900.00.

To date, the Committee has submitted copies of three

(3) cancelled checks totaling $700.00 used to refund the excess

portion of the contributions to the contributors. The treasurer

stated that one (1) remaining check for $200.00 has not cleared

the bank, and he will contact the contributor to determine the

disposition of this check and take the appropriate action.

Recommendation

Since the Committee has submitted copies of three (3)

cancelled checks used to refund the contributions and is in the

process of clearing the one (1) remaining item, we recommend no

further action on this matter.

C. Itemization of Transfers

Section 434(b) (4) of Title 2 of the United States Code

states, in part, that each report shall disclose the name and

address of each political committee from which the reporting

committee received any transfer of ~unds, together with the

amounts and dates of all transfers.

During the audit, it was determined that the Committee

did not itemize 14 transfers from political committees which

totaled $920.00. These transfers represent approximately 14%

of the number and 1% of the dollar amount of all transfers received.

Recommendation

Since we received the Committee's amended schedules on July

8, 1978, disclosing the required information, we recommend no

further action on this matter.

D. Disclosure of Occupation and Principal Place of Business

Section 434(b) (2) of Title 2 of the United States Code

requires a committee to disclose the occupation and principal

place of business, if any, of each person who has made one or

more contributions to such committee within the calendar year

in an aggregate amount or value in excess of $100 •
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It was dete~ined that the Committee did not disclose

the contributors' occupation and/or principal place of business

for 114 contributions which, in the aggregate, exceeded $100,

and totaled $28,97S.00. This represents approximately 16% of the

number and 17% of the dollar amount of itemizable contributions.

We were informed by the treasurer that he attempted

to obtain the information, but such attempts were not always

documented, however, he agreed to make additional attempts to

obtain the required information.

Recommendation

The Committee has filed amended schedules properly disclosing

the contributor's occupation and/or principal place of business

for 78 of the contributions, totaling $18,880.00, and has submitted

documentation of its efforts to obtain the required contributor

information for the remaining 35 contributions. 1/ Therefore,

we recommend no further action on this matter. - •

E. Preservation of Receipts

Section 432(d) of Title 2 of the United States Code

states, in part, that it shall be the duty of the treasurer to

obtain and keep a receipted bill, stating the part:cu1ars, for

every expenditure made by or on behalf of a political committee

in excess of $100 in amount, and for any such expenditure in a

lesser amount, if the aggregate amount of such expenditures to

the same person during a calendar year exceeds $100.

In addition, Section l02.9(c) (4) of the Commission's

Regulations states, in part, that instead of a receipted bill,

the treasurer may keep the cancelled check showing payment of

the bill; and the bill, invoice, or other contemporaneous

memorandum.

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!./ The Committee apparently overlooked requesting the

required information for one (1) contributor •
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Our review of the Committee's expenditure records

disclosed 108 expenditures, each aggregating in excess of $100

and totaling $31,392.37 that were not supported by receipted

bills, invoices, or other contemporaneous memoranda. This

represents approximately 15% of the number and 6% of the dollar

amount of itemized expenditures. Cancelled checks were presented

for each of the expenditures.

In our letter dated April 24, 1978, we recommended

that the Committee obtain the supporting documentation for 108

expenditures or present evidence of its efforts to do so. The

Committee submitted the necessary supporting documentation for

15 expenditures, totaling $11,779.96. Additionally, the

Committee submitted copies of 93 letters, dated July 3, 1978, to

the payees requesting copies of billing statements, invoices, or

other contemporaneous memoranda of the transaction.

The Committee's initial date to comply with our

recommendation was May 29, 1978. This date was subsequently

extended to July 5, 1978. Since the 93 letters were dated

July 3, 1978, it was our opinion that the Committee did not

exercise best efforts to obtain the necessary documentation,

therefore, this matter was referred to the Commission's Office

of General Counsel on July 17, 1978, where Matter Under Review

(MUR) 654(78) was initiated.

On September 13, 1978, the Commission, found reason

to believe that the Committee violated Section 432(d) of Title 2

of the United States Code by failing to retain documentation for

93 itemizab1e expenditures.

On September 15, 1978, the Committee submitted the

required documentation for 47 items totaling $10,290.97, and has

submitted documentation of its efforts to obtain the required

documentation for the remaining 46 expenditures. The General

Counsel, therefore, recommended that the Commission take no

further action on the matter.

Based on these facts, the Commission voted on

November 21, 1978, to close the file on MUR 654(78) with no

further action •
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Disclosure of Changes in Statement of Organization

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Section 433(b) (5) and (9) of Title 2 of the United

States Code states, in part, that a statement of organization

shall include the name, address, and position of the principal

officers, and a listing of all banks or other repositories used.

In addition, Section 433(c) of Title 2 of the United

States Code states that any change in information previously

submitted in a statement of organization shall be reported to

the Commission within a lO-day period following the change.

Our review of the Committee's records revealed that

the Committee did not amend its statement of organization to

disclose the current treasurer. In addition, the Committee did

not disclose three (3) additional depositories used during a portion

of 1976. However, all receipts and expenditures attributable to

the depositories were properly disclosed by the Committee. The

treasurer informed us he was unaware that this information required

disclosure.

Recommendation

Since the Committee has filed an amendment to its statement

of organization of July 8, 1978, disclosing the required information, we recommend no further action on this matter.

G. Disclosure of In-Kind Contributions

Section 104.3 (a) (1) and (2) of the Commission's

Regulations requires that each in-kind contribution in excess

of SlOO be itemized as a receipt and expenditure on the appropriate schedules, and identified as an "in-kind contribution."

It was determined that the Committee itemized 17 inkind contributions, each exceeding $100 and totaling $2,985.36,

on the receipts schedules, but did not identify them as "in-kind

contributions"; in addition, the Committee disclosed these items

as unitemized expenditures. This represents 100% of the number

and dollar value of itemizable in-kind contributions•
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Recommendation

Since the Committee has filed amended schedules on July 8, 197~, disclosing the required information, we recommend no further

action on this matter.

H. Other Matter

Presented below is a matter noted during the audit

for which the Audit staff feels no action is warranted. The

Committee has been advised of this discrepancy and informed

of the respective requirements of the Act.

Nine {9} contributions which aggregated in excess

of $100 and totaled $1,285.00 were not itemized.

1. Audit Findings and Recommendations

with Respect to Democrats for Schmitt

A. Preservation of Receipts

Section 432(d) of Title 2 of the United States Code

states, in part, that it shall be the duty of the treasurer to

obtain and keep a receipted bill, stating the particulars, for eve~y expenditure made by or on behalf of a political committee

in excess of SlOO in amount, and for any such expenditure in a

lesser amount, if the aggregate amount of such expenditures to

the same person during a calendar year exceeds SlOO.

In addition, Section 102.9(c) (4) of the Commission's

Regulations states, in part, that instead of a receipted bill,

the treasurer may keep the cancelled check showing payment of

the bill; and the bill, invoice, or other contemporaneous

memorandum.

During the course of the audit, it was determined that

23 expenditures which aggregated in excess of SlOO and totaled

S6,486.45 were not supported by receipted bills, invoices,

or other contemporaneous memoranda. However, cancelled checks

were presented for each of the expenditures. This represents

approximately 72% of the number and 32% of the dollar amount of

expenditures requiring supporting documentation •
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In our letter dated April 24, 1978, we recommended

that the Co~nittee obtain and submit the required supporting

documentation for the 23 expenditures or present evidence of

their efforts to do so.

On July 8, 1978, the Committee submitted copies of

23 letters, dated July 3, 1978, to the payees requesting copies

of billing statements, invoices or the contemporaneous memoranda

of the transaction.

The Committee's initial response date to comply with

our recommendation was May 29, 1978, (30 days after receipt of

our letter notifying the Committee of the findings and recommendations) this date was subsequently extended to July 5,

1978. Since the 23 letters were dated July 3, 1978, it was our

opinion that the Committee did not exercise best efforts to

obtain the necessary documentation, therefore, this matter was · referred to the Commission's Office of General Counsel on July

17, 1978, where Matter Wnder Review (MUR) 654(78) was intitiated.

On September 13, 1978, the Commission, found reason to

believe that the Committee violated Section 432(d) of Title 2 of

the United States Code by failing to retain documentation for 23

itemizab1e expenditures.

On September 15, 1978, the Committee submitted the

required documentation for 15 items totaling $4,688.31, and has

submitted documentation of its efforts to obtain the required

documentation for the remaining eight (8) items. The General

Counsel, therefore, recommended that the Commission take no action

on the matter.

Based on these facts, the Commission voted on November

21, 1978, to close the file on MUR 654(78) with no further action .
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FEDERAL ELECTION COM;\1ISSION

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ADDITIONAL INroRMATION RE~ING 'lHIS ORGANIZATION

MAY BE lOCATED IN A CDMPLETED OOMPLIANCE ACIION

FILE RELEASED BY 'l1E aMfiSSION AND MADE PUBLIC m

'!HE PUBLIC REOORDS OFFICE. roR 'lHIS PARTICUlAR

ORGANIZATION'S COMPLETED OOMPLIANCE ACl'lON FILE

SlM'Ly J.SK :FUR '!HE PRESS sm+1ARY OF MlJR 41 f"'>Y

;

'IHE PRESS stJr.M\RY WIIL PROVIDE A BRIEF HISTORY OF

'!HE rASE AND A StMfARY OF THE ACl'lONS TAKEN, IF p.m,•

Audit i: l.sI