Memorandum to Joseph F. Stoltz
Proposed Audit Report

Gore 2000, Inc. (LRA 568)

Page 3

The number of issues in an audit is not necessarily a barometer of the amount of time
needed to wind down the campaign. One complex, contested issue may take much longer to
resolve than several simpler or uncontested issues, particularly if the issue involves a substantial
Tepayment like the recommended repayment of $432,124 in the proposed report. Although the
recommended repayment is entirely based on surplus funds, the Committee has made a number
of factual and legal arguments contesting the calculation of particular expenses; thus, this one
issue is made up of a number of smaller issues. The Committee has contested this issue
throughout the audit and repayment process and may continue to dispute this issue by requesting
administrative review of any Commission repayment determination.” See 1] C.F.R.

§ 9038.2(c)(2). Each of the steps in the administrative review process takes time, and there is no
indication that the administrative review process will be faster for the Committee than for other
campaigns that dispute repayments merely because the Committee would be disputing a surplus
repayment.’ Thus, estimated winding down expenses should not be limited to June 30, 2003
because the administrative review process may continue after that date. Further, winding down
expenses may be necessary for expenses unrelated to the audit and repayment process, such as
litigation or other matters, which will be incurred after June 30, 2003.

Other facts in this matter also support estimating wind down expenses through
December 31, 2003. Since the auditors estimated wind down expenses through December 31,
2003 in the PAR, the Committee has not had notice or the opportunity to contest the June 30,
2003 date used in the proposed report. It appears that the Committee has entered into contracts
with various vendors, such as computer consultants, through December 2003, perhaps in
anticipation that wind down activity will continue through that date.

Although this Office recommends estimating the Committee’s winding down through
December 31, 2003, we do not advocate allowing wind down to continue indefinitely. The
regulations do not mandate a specific cut-off date for estimated winding down costs, but rather,
provide that the NOCO Statement should include estimated winding down costs that will be

2 The Commission’s audit and repayment procedures. set forth at 11 C.F.R. § 9038.2(c). allow a candidate
who disputes a repayment determination to request an admunistrative review of the repayment determination

11 C.F.R. § 9038.2(c)(2). The procedures provide that within 60 days after the repayment determination, the
candidate shall submit written legal and factual materials demonstrating that no repayment. or a lesser repayment. 15
required. 11 C.F.R. § 9038.2(c). The candidate may also request an oral hearing. /d The Commussion will
consider the written submission and oral hearing in deciding whether to revise the repayment determination. Jd A
repayment determination following an admimistrative review must be accompanied by a written statement of reasons
explaining the legal and factual reasons supporting the determination /d

> The administrative review procedures are not different for candidates who dispute repayment
determinations based upon a surplus than for those who dispute other kinds of repayments. The regulations at
section 9038.3 provide that if a candidate has a surplus on the date of ineligibility, the candidate shall make a
repayment within 30 days: however, this section also provides that the Commission may make a surplus repayment
determination that requires repayment in accordance with section 9038.2. 11 C.F.R. § 9038.3(c). Section
9038.2(b)(4) lists as one basis of repayment that the Commission may determine that the candidate's net outstanding
campaign obligations reflect a surplus. Thus, the repayment procedures in section 9038.2 apply to disputes over the
amount of a surplus repayment.

Page 17 of 27


As a result, wind down expenses were reduced by the entire $27,595 and accounts
payable increased by $21,070.

8. Drafts Improperly Treated as Wind Down Expense

Gore 2000 argues that drafts clearing after August 16, 2000, which
totaled $39,926, should have been treated as accounts payable not as wind down
expenses. The Audit staff agrees with Gore 2000 relative to drafts totaling $11,965 and
notes that they were treated as such in the preliminary audit report NOCO. In addition,
based on the documentation submitted, the remaining drafts in question ($27,961) were
determined to be general election expenses. Therefore, no adjustment was required.

9. Offsets Erroneously Excluded

Gore 2000 argues that the Audit staff incorrectly omitted offsets of
$77,019 from its wind down calculation. Based on the documentation provided, the
Audit staff has removed the amount from accounts receivable and has included the
offsets as reductions to wind down expenses’.

This change also causes a reduction in the amount due from the
general for its share of wind down costs, which has the effect of reducing Gore 2000’s
surplus.

10. Account Payable Omitted

Gore 2000’s response notes the exclusion of an $88,000 debt,
disclosed on its 2002 July 15" Quarterly Report, as an accounts payable. The response
states that even though it is disputing this debt, the Audit staff should not have simply
disregarded it. Although a copy of relevant pages from the report were included as part
of the response; no other documentation was provided.

The Audit staff did not simply disregard the matter, but continues
to exclude the disputed debt from its NOCO until such time as the matter is resolved and
documentation is provided to show an obligation exists. An appropriate footnote has
been added to the NOCO presentation.

ll. Persuasive Technologies
Gore 2000 argues that payments to Persuasive Technologies,

which provides continuing computer maintenance services. should be included as a wind
down expense. Based on the documentation provided, the Audit staff agreed and

As part of accounts receivable, this amount increases the surplus dollar for dollar. As a reduction
to wind down expenses, the increase in the surplus attributable to these transactions is only 61% of
the amount of the transactions. Wind down expenses, and any offsets to those expenses, have
been attributed 61% to Gore 2000 and 39%0 to the general committee

Page 11 of 27


Memorandum to Joseph F. Stoltz
Proposed Audit Report

Gore 2000, Inc. (LRA 568)

Page 7

D. CALCULATION OF SURPLUS REPAYMENT

Although the Committee calculated and paid a surplus repayment of $54,591, it makes an
alternative argument that it has no surplus because the auditor’s calculation of the surplus is
inconsistent with the methods used to calculate matching fund repayments in other audits. The
Committee asserts that the auditors use two different methods to determine when a committee's
public funds have been used up, and that the auditors should have used a last in first out
(“LIFO”) method to determine when the Committee had used up its matching funds as it does to
determine repayments for non-qualified campaign expenses.

This Office concurs that the Audit Division has used the correct methodology to calculate
the surplus repayment and that the Committee is incorrect. The law provides different methods
to calculate repayments for candidates who are in a surplus position at the date of ineligibility,
like the Committee, than to calculate non-qualified campaign expenses for committees who are
in a deficit position. The different calculation methods are clearly delineated in the statute and
regulations as well as the regulatory history. Title 26 section 9038(b)(3) provides that candidates
may retain public funds to liquidate obligations for six months, but:

after all obligations have been liquidated. that portion of any unexpended balance
remaining in the candidate’s accounts which bears the same ratio to the total
unexpended balance as the total amount received from the matching payment
account bears to the total of all deposits made into the candidate’s accounts shall
be promptly repaid to the matching payment account.

Similarly, the regulations at section 9038.3(c)(1) provide that if the candidate’s net outstanding
campaign obligations reflect a surplus on the date of ineligibility, the candidate shall repay the
“amount of matching funds contained in the candidate's surplus” calculated as “an amount equal
to that portion of the surplus which bears the same ratio to the total surplus that the total amount
received by the candidate from the matching payment account bears to the total deposits made to
the candidate’s accounts.” Thus, the statute and regulations do not use a LIFO method to
calculate the amount of matching funds actually in the candidate's accounts on a particular date
for a surplus repayment. The auditor's calculation of the Committee's surplus repayment is in
accordance with these provisions of the statute and regulations.

The regulations provide a different method of calculation for repayments for non-
qualified campaign expenses, and consider when the candidate's accounts no longer contained
matching funds. Section 9038.2(b)(2)(iii) provides that the amount of a repayment for non-
qualified campaign expenses “shall bear the same ratio to the total amount determined to have
been used for non-qualified campaign expenses as the amount of matching funds cenified to the
candidate bears to the candidate's total deposits as of 90 days after the candidate's date of

7 The Committee specifically refers to the audit of Bill Bradley for President. Inc. That audit report notes in

footnote (a) to the NOCO Statement that it does not address certain non-qualified campaign expenses because the
majority of them were paid after all public funds in the committee's accounts had been spent

Page 2] of 27


Page 2 of 27



Memorandum to Joseph F. Stoltz
Proposed Audit Report
Gore 2000, Inc. (LRA 568)

Page 4

incurred “from the time the statement is submitted until the expected termination of the
committee’s political activity.” 11 C.F.R. § 9034.5(b)(2). Nevertheless, Commission precedent
does not support a perpetual winding down process. The Commission rejected Buchanan 1992's
argument that it should be allowed to wind down completely before the Commission sought a
repayment. See Statement of Reasons at 26-27. The Commission stated that postponing the
Tepayment determination until the end of wind down would lead to delay and create “potential
abuse of the process because committees might assert they have not completed winding down
activities in order to expend remaining funds rather than repaying funds.” Jd. at 27.

B. WIND DOWN RATIO

One significant area of dispute is the allocation of wind down costs between the
Committee and Gore/Lieberman Inc. (the “General Committee”), (i.e. between the primary and
general campaigns). The Committee allocates winding down costs 61% to the Committee and
39% to the General Committee. To arrive at this ratio, the Committee first applied a ratio of
56% primary and 44% general on most wind down expenses, based on the number of checks
issued by each committee. Then it allocated personnel, legal and accounting expenses for the
period between April 1, 2002 and September 30, 2002 as 80% primary and 20% general,
contending that there were more issues in the primary audit than in the general audit and that the
allocation was based “on the actual time and services provided by the personnel, lawyers and
accountants.” Committee Response (September 13, 2002) at 12. The total amounts calculated
using the Committee’s allocation percentages resulted in a ratio of 61% primary and 39%
general. The Committee contends that the law does not require a specific allocation method, and
notes that the allocation for the 1992 Clinton/Gore campaign was 57% primary and 43% general
while the 1996 Clinton/Gore campaign allocation was 60% primary and 40% general. Jd. The
Committee also asserts that most of the work needed to prepare for the audits related to the
primary campaign because the primary campaign has additional requirements related to
contributions, allocation and additional spending limitations. /d. It also argues that its response
to the PAR is more “lengthy and complex” than the General Committee’s response, and that the
primary campaign had additional costs related to moving offices. Jd. The proposed report
rejects the Committee’s allocation method and instead evenly divides all wind down costs 50%
to each committee. This Office disagrees and recommends that a larger percentage of winding
down costs be allocated to the Committee than to the General Committee.

The Audit Division relies on the Financial Control and Compliance Manual for
Presidential Primary Candidates Receiving Public Funding ("Compliance Manual”) (April
2000), which states that when a candidate's primary and general committees “share winding
down (overhead, staff, etc.) each committee must allocate and document its allocation of the
expenses of wind down as being attributable either to the primary or the general. If no allocation
is claimed by the respective committees, it will be presumed that the winding down expenses
should be allocated equally between the Committees.” Compliance Manual at 31. The
regulations, however, do not mandate a 50% allocation of wind down expenses between the
primary and general campaigns. Moreover. the Committee has in fact “claimed” a different
allocation method in its response to the PAR

Page 18 of 27


Any questions you have related to matters covered during the audit or in the report
should be directed to Tesfai Asmamaw or Alex Boniewicz of the Audit Division at (202)
694-1200 or toll free at (800) 424-9530.

Sincerely,

lt

Josg@ph F. Stoltz
Assistant Staff Director
Audit Division

Attachment as stated

ce: — Eric Kleinfeld

Page 24 of 27


, . vee

Memorandum to Joseph F. Stoltz
Proposed Audit Report

Gore 2000, Inc. (LRA 568)

Page 6

As this Office has previously commented with respect to the Quayle 2000, Inc. and Quayle 2000
Compliance Committee audit, the renewal of existing insurance coverage should be a
permissible winding down expense. Insurance coverage is not inappropriate to winding down a
campaign because potential liabilities continue as long as an entity continues to exist. As a
matter of policy, committees should not be discouraged from renewing insurance to reduce
potential liability.° The renewal of the Committee's professional malpractice insurance appears
to be a reasonable winding down expense even though it does not currently employ any attorneys
because it appears that the policy would protect the Committee against new claims conceming
actions by attorneys while they were employed by the Committee. In addition, the insurance
would cover any attorneys the Committee might hire during the policy period.

In addition, we disagree with the exclusion of $50,000 for other legal fees from the
winding down costs. The Committee asserts that this expense is necessary for existing and
potential litigation related to the campaign. Committee Response at 14. The Committee states
that it is currently involved in several lawsuits, and provided documentation of one lawsuit filed
in the United States District Court for the Southern District of New York by an individual against
the Democratic National Committee, the candidate and his spouse. The documentation includes
a letter from an attorney estimating legal fees of between $50,000 and $200,000 for the case
depending on whether it goes to trial as well as a filed motion to dismiss the case for failure to
state a claim and improper venue. Although the subject matter of this lawsuit is unclear, it
appears to be related to the campaign since it involves the candidate and his party. Additional
documentation of this and other litigation would be helpful. Based on the documentation
provided by the Committee, this Office believes some amount should be permitted as winding
down costs for other legal expenses.

Finally, we do not agree that expenses incurred for services provided by Hayes Software
and Consulting (“Hayes”) during the general election expenditure report period should be treated
as primary winding down costs. Instead, we recommend that these and any other expenses
incurred between the date of nomination and the end of the expenditure report period should be
treated as general election expenses rather than primary winding down costs, even if they were in
part related to the primary campaign, consistent with our comments on the Nader 2000 audit
dated November 8, 2002. The Committee contends that payments to Hayes were primary-related
because they involved compliance assistance, technical support and management of the
contributor database for contributions and matching funds. In addition, the Audit staff informed
us that Hayes had a separate contract with the Gore’Lieberman General Election Legal and
Accounting Compliance Fund (“GELACTM). Nevertheless. this vendor’s services may have had
some general election component because the contributor database could have been useful to the
general campaign as a source of information about its supporters and the services the vendor
provided to the GELAC and the Committee may have overlapped.

° Indeed, the Commission's regulations encourage publicly-financed committees to obtain insurance on

equipment; section 9038.4(b)(8) includes “whether the commimtee sought or obtained insurance on the items” as a
factor to consider in determining whether lost. misplaced or stolen equipment should be considered a non-qualified
campaign expense.

Page 20 of 27


RE
FEDERAL ELECTION
CCMMISSION
AUDIT DIVISION
FEDERAL ELECTION COMMISSION
WASHINGTON, DC 20463 102 HOY 21 ATi: 12

November 21, 2002

MEMORANDUM

TO: Joseph F. Stoltz
Assistant Staff Director
Audit Division

THROUGH: James A. Pehrkon
Staff Director
Robert J. Costa Ae
Deputy Staff Director

FROM: Lawrence H. Norton
General Counsel ao
Gregory R. pare 7
Acting Associate General Counsel
Peter G. Blumberg Va
Acting Assistant General Counsel
Delanie DeWitt Painter
Attorney

SUBJECT: Proposed Audit Report on Gore 2000. Inc. (LRA 568)

The Office of General Counsel has reviewed the proposed Audit Report on Gore 2000,
Inc. (the “Committee”) submitted to this Office on October 25, 2002. This memorandum
summarizes our comments on the proposed report.’ Generally, we concur with any findings not
specifically addressed in these comments. If you have any questions, please contact Delanie
DeWitt Painter, the attorney assigned to this audit

1. NOCO SURPLUS REPAYMENT (II. B.)

The proposed report states that the Committee has a surplus of $1,385.013 and
recommends that the Commission determine that the Committee must repay $432,124 to the
United States Treasury. See 26 U.S.C. § 9038(b)(3); 11 C.F.R. § 9038.2(b)(4), 9038.3(c). The

' The Office of General Counsel recommends that the Commission consider this document in open session
since the Report does not include matters exempt from public disclosure. See 11 C.F.R. § 2.4

Page 15 of 27


B. NOCO Surp.Lus REPAYMENT

Section 9038.2(b)(4) of Title 11 of the Code of Federal Regulations states.
in part, that the Commission may determine that the candidate’s net outstanding
campaign obligations, as defined in 11 CFR 9034.5, reflect a surplus.

Section 9038.3(c)(1) of Title 11 of the Code of Federal Regulations states,
in part, that if on the last day of candidate eligibility the candidate’s net outstanding
campaign obligations reflect a surplus, the candidate shall within 30 days of the
ineligibility date repay to the Secretary an amount which represents the amount of
matching funds contained in the candidate’s surplus. The amount shall be an amount
equal to that portion of the surplus which bears the same ratio to the total surplus that the
total amount received by the candidate from the matching payment account bears to the
total deposits made to the candidate's accounts.

The Audit staff's review of the Gore 2000 Statement of Net Outstanding
Campaign Obligations and associated records during fieldwork indicated there were
substantial surplus funds. This issue was discussed at the exit conference and Gore 2000
representatives expressed their intent to challenge the Audit staff's determination.
Subsequent to the exit conference, Gore 2000 submitted documentation in support of its
position that estimated winding down costs should be higher.

The NOCO presentation in the preliminary audit report included an
attachment that detailed those categories where the Audit staff and Gore 2000 differed on
wind down estimates; as well as those categories where there was either agreement or
Gore 2000 did not contest the Audit staff's estimate in its response. That NOCO showed
that Gore 2000 had a surplus in the amount of $1,456,005 and that $454,274 [$1,456,005
x 3120]! was repayable to the United States Treasury. The Audit staff recommended
that Gore 2000 provide evidence that it was not in a surplus position.

In its response to the preliminary audit report, Gore 2000 provided a
NOCO that showed a surplus of $174,972. calculated a repayment of $54,591. and was
annotated to note variances from the NOCO developed by the Audit staff. In accordance
with its own calculation, Gore 2000 submitted a check for $54,591 as a repayment to the
United States Treasury.

The response restated that the major difference between the two NOCOs
involves treatment of wind down expenses and included documentation in support of the
wind down expenses, as well as other transactions it was disputing. It should be noted
that two significant issues, Gore 2000's speculation that estimated wind down cost would
rise by 10% and its need for archiving costs of $300,000. raised previously by Gore 2000,
were not pursued in the response.

' This figure (.3120) represents Gore 2000's repayment ratio as calculated pursuant to 11 CFR
§9038.3(c)(1).

Page 7 of 27


CHRONOLOGY

GORE 2000. INC.
Audit Fieldwork 03/07/2001 — 03/01/2002
Exit Conference 03/04/2002
Preliminary Audit Report to
the Committee 06/27/2002
Response Received to the
Preliminary Audit Report 09/13/2002
Final Audit Report Approved 12/23/2002

Page 27 of 27


Gore 2000 currently maintains its headquarters in Washington D.C. The
Treasurer for Gore 2000 since inception has been Jose Villarreal, who continues to serve
in that capacity.

During the audit period Gore 2000 maintained its depositories in
Washington, D.C. To handle its financial activity, Gore 2000 utilized four bank accounts
from which it made 24,531 disbursements. Further, Gore 2000 Teceived contributions
totaling about $34,477,100, from 42.878 contributors. It also received $6,000 in transfers
from other authorized committees; $3,917,035 in offsets to expenditures; and, $15,708 in
interest and other receipts.

In addition to the above, the Candidate was determined eligible to receive
matching funds on September 30, 1999. Gore 2000 made 10 matching fund requests
totaling $15,561,886 and received $15,456,084 from the United States Treasury (U.S.
Treasury). This amount represents 92% of the $16,890,000 maximum entitlement that
any candidate could receive. For matching fund purposes, the Commission determined
that then Vice President Gore’s candidacy ended on August 16, 2000, the date on which
he received the nomination. On August 1, 2000, Gore 2000 received its final matching
fund payment to defray expenses and to help defray the cost of winding down the
campaign.

D. AUDIT SCOPE AND PROCEDURES

In addition to a review of expenditures made by Gore 2000 to determine
if they were qualified or non-qualified campaign expenses, the audit covered the
following general categories:

1. the receipt of contributions or loans in excess of the Statutory
limitations;

2. the receipt of contributions from prohibited sources, such as those
from corporations or labor organizations:

3. 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
of the information disclosed;

4. proper disclosure of disbursements including the itemization of
disbursements when required. as well as, the completeness and

accuracy of the information disclosed ;

5. proper disclosure of debts and obligations;

Page 4 of 27


FEDERAL ELECTION COMMISSION

WASHINGTON, DC 20466

REPORT OF THE AUDIT DIVISION
ON
GORE 2000, INC.

I. BACKGROUND
A. AUDIT AUTHORITY

This report is based on an audit of Gore 2000, Inc. (Gore 2000). The audit
is mandated by Section 9038(a) of Title 26 of the United States Code. That section
states, “After each matching payment period, the Commission shall conduct a thorough
examination and audit of the qualified campaign expenses of every candidate and his
authorized committees who received payments under section 9037.” Also, Section
9039(b) of Title 26 of the United States Code and Section 9038. 1(a)(2) of the
Commission’s Regulations state that the Commission may conduct other examinations
and audits from time to time, as it deems necessary.

In addition to examining the receipt and use of Federal funds, the audit
seeks to determine if the campaign has materially complied with the limitations,
prohibitions, and disclosure requirements of the Federal Election Campaign Act of 1971
(FECA), as amended.

B. AUDIT COVERAGE

The audit covered the period from Gore 2000’s first bank transaction on
January 8, 1999, through December 31. 2000. During this period, Gore 2000 reported an
opening cash balance of $0, total receipts of $53.871.927. total disbursements of
$50,378,013, and a closing cash balance of $3.493.914. In addition, a limited review of
Gore 2000’s financial activity and disclosure reports for the period from January 1. 2001,
through September 30, 2002, was conducted to determine its matching fund entitlement
based on its financial position.

Cc CAMPAIGN ORGANIZATION
Gore 2000 registered with the Federal Election Commission (the
Commission) on January 11, 1999, as the principal campaign committee for then Vice

President A] Gore (the Candidate), a candidate for the Democratic Pariy’s nomination for
the office of President of the United States

Page 3 of 27


Memorandum to Joseph F. Stoltz
Proposed Audit Report

Gore 2000, Inc. (LRA 568)

Page 2

Committee’s response to the Preliminary Audit Report (“PAR”) calculated a smaller surplus
amount of $174,972, and a repayment of $54,591. The main difference between the
Committee’s Statement of Net Outstanding Campaign Obligations (““NOCO Statement”) and the
NOCO Statement prepared by the auditors is that the Committee includes a larger amount of
winding down costs. Although some differences concerning the amounts of winding down costs
in the PAR have been resolved in the proposed report, a large amount remains in dispute. A
chart attached to the proposed report delineates the differences between the Committee's figures
and the Audit staff's calculations for specific types of wind down expenses. Two major areas of
disagreement between the Audit staff and the Committee, which affect all categories of
expenses, are the length of the winding down period and the attribution of wind down costs
between the primary and general election campaigns. The NOCO Statement in the proposed
Teport indicates that estimated wind down costs have been updated with actual figures through
June 30, 2002 and states that the Audit staff will continue to review Committee reports and
records to adjust estimated figures with actual figures.

A. WIND DOWN PERIOD

This Office notes that the Audit staff has shortened the projected wind down period by
six months. The proposed report includes estimated winding down costs only through June 30,
2003 rather than December 31, 2003, as projected in the PAR. The proposed report asserts that
“the paucity of issues and the time necessary to complete the remaining audit process” justifies
shortening the wind down period. It notes that the “only significant issue” is the amount of wind
down costs and the Committee “‘is left with continuing the dispute only to demonstrate that
additional wind down is necessary.” The Audit staff's shortened wind down period decreases
the estimated wind down costs by approximately $310,000.

This Office disagrees with the shortened projected winding down period in the proposed
report and recommends that estimated winding down costs be included through December 31,
2003, as projected in the PAR. We believe that allowing estimated winding down costs for the
Committee through December 31, 2003 is reasonable. In previous audits, the Commission has
limited estimated winding down costs, particularly for legal fees, where the candidate’s estimate
is speculative or uncertain and comparatively excessive. Sec Statement of Reasons. Patrick J.
Buchanan and Buchanan for President, Inc. (“Buchanan 1992"), (approved August 1, 1995). The
Commission found that Buchanan 1992's estimate of 1.500 hours of legal services after the
completion of the repayment process, which its counsel admitted was uncertain. lacked a
reasonable basis. /d. at 22-23. Buchanan 1992's projected wind down costs were also higher
than any other 1992 campaign except the Clinton campaign. “a much larger campaign for an
eventual party nominee.” /d. at 23. Here. on the other hand, the Committee is a large campaign
of a party nominee with substantial amounts of activity and the repayment process is not
complete; thus, a longer wind down period is reasonable. The administrative review process in
this matter might not be complete by June 30, 2003 and the Committee might incur reasonable
wind down costs after that date in connection with the repayment or other matters.

Page 16 of 27


GORE 2000, INC.
STATEMENT OF NET OUTSTANDING CAMPAIGN OBLIGATIONS
As of Augst 16, 2000
‘As Deterrrined at Septerrber 30, 2002

ASSETS
Cash in Bark $4,304,995
Accounts Receivable 4,101,533 (a)
Tota Assets $8,406,528
CBLIGATIONS
Accounts Payable:
For Quelified Carmpaign Expenditures through 9-30-02 $3,926,568 (b)
Due to Gore/Lieberrren for Primary Expenses Pad $108,569
(Que to Gore/Liebermen for Portion of Winding Down $621,828 (c)
Arrourt Payeble to the US. Treasury for Stae-Dated
Checks (See Finding lll.C.) 2.485
Winding Down Costs:
Dac. 8, 2000 to Septerrber 30, 2002 Actual 2,358,687
Cctober 1, 2002 to Decarber 31, 2008: Estimated 946,633 (d)
Tota Obligations 7,859, 762
NET OUTSTANDING CAMPAIGN OBLIGATIONS - SURPLUS $546,765
FOOTNOTES TO NOCO,

(b)

(c)

()

‘This arrount represents $2,746,420 in transfers received fromCore:Liebenran: vendor refunds, rebates and remmburserrents of
$420,477, deposits not yet reirbursed by the vendors and reported by Gore 2000 as outstanding as of ¥30/(2 of $31,771,
and, a receivable due from Gore/Liebemman and/or Gore’ Lieberman General Becnon Leval and Accounting Compliance Fund
for its share of winding down paid by Gore 2000 through 9 30 (P of SX.865

‘Ths arrount represents obligations incumed for goods and services and excessne contribunons received on or prior to.
8/16/00 (DO!) and paid/refinded thereafter. Not chided m ths figure is an SSS.0U0 disputed debt owed to Penn. Schoen
& Berland disclosed on Gore 2000s July 15th Quarterty report for 2002. Once this manter is resolved and docunrentanon
1s provided to the Audit staff for review, the NOCD will be appropnateh adrusted

‘This arrount represents half of the winding down costs paid by Core Leberman through 9302002

‘The wind down cost estirrate is based on Gore 2000 spending partems mn the first nme months of 2002. Core 2000
provided estirates that were higher than those of the Audi staff The Auda staff found sorre of ther estimates
to be unsupported especially in viewof the limited sues rased m this audi. The Auda staff will review Gore 2000s
disclosure reports and records to corrpare actual figures wtth the esturntes and prepare adjustrents as warranted.
‘Storage costs for records have been inchided through June 30. 2006

Page 6 of 27


Memorandum to Joseph F. Stoltz
Proposed Audit Report

Gore 2000, Inc. (LRA 568)

Page 8

ineligibility.” This section further provides that in seeking non-qualified campaign expense
repayments from candidates who received matching funds after the date of ineligibility, the
Commission will review expenditures “to determine at what point committee accounts no longer
contain matching funds” by reviewing expenditures “from the date of the last matching fund
payment to which the candidate was entitled, using the assumption that the last payment has been
expended on a last-in, first-out basis.”* 11 C.F.R. § 9038.2(b)(2)(iii)(B). Thus, the LIFO
method only applies to repayments for non-qualified campign expenses, not to surplus

repayments.

8 In 1987, the Commission revised the procedure for determining when a candidate no longer has matching

funds in his or her account, and stated that the Commission will not examine expenditures to determune if they are
non-qualified after all matching funds in the candidate's account are spent. Explanation and Justification, Public
Financing of Presidential Primary and General Election Candidates, 52 Fed. Reg. 20864, 20873 (June 3, 1987)
The Commission stated that its method “is to review the expenditures made after the commuttee has received its last
matching fund payment, using the assumption that the federal funds are used on a 100% basis until they are spent.”

Page 22 of 27



FEDERAL ELECTION COMMISSION

WASHINGTON, DC 20463

January 8, 2003

MEMORANDUM

TO: Ron M. Harris
Press Officer
Press Office

FROM: Joseph F. Stoltz 1b
Assistant Staff Director
Audit Division

SUBJECT: Public Issuance of the Final Audit Report on Gore 2000, Inc.

Attached please find a copy of the final audit report and related documents on
Gore 2000, Inc. that was approved by the Commission on December 23, 2002.

All parties involved have received informational copies of the report and the
report may be released to the public.

Attachment as stated

ce: Office of General Counsel
Office of Public Disclosure
Reports Analysis Division
FEC Library


3. Payments to Haves Software & Consulting

Gore 2000 argues that all payments to Hayes Software and
Consulting should be considered solely as a primary wind down expense and that the
services provided (compliance assistance, technical support and management of its
contributor database and records) are required until it has terminated.

As noted in the response, the Audit staff is familiar with Mr.
Hayes’ work and it relates to contributions and matching funds. Based on the response,
the Audit staff agrees that payments totaling $66,159 ($55,159 by Gore 2000 & $11,000
by the general committee) for services rendered from December 8, 2000 through
December 31, 2001, are solely primary-related wind down expenses. Other payments
($18,629) to Hayes Software & Consulting, for services rendered during the period
August 17 through December 7, 2000, were correctly categorized as general election
expenses.

Since no findings resulted from the Audit staffs review of
contributions that had been completed by December 31, 2001, and, there were no
reported contributions received during 2002, we fail to see the need for such services
after December 31, 2001, or what they accomplish.? As such payments made by Gore
2000, totaling $20,000, and made by the general, totaling $20,000, for services provided
during 2002 are not considered wind down costs.

As aresult, wind down expenses for Gore 2000 have been
increased by $27,580 (50% of $55,159) to adjust for that portion previously attributed to
the general. In addition, the amount due to the general. for wind down costs it paid, has
been increased by $5,500 (50% of $11,000).

4. Payments to Allen Wegehoft and Robert Ishikawa

Gore 2000 argues that payments to Allen Wegehoft and Robert
Ishikawa, both consultants providing technical support and compliance assistance related
primarily to filing FEC reports and preparing audit related material, should be included as
a wind down expense required until termination:

Based on the documentation provided, the Audit staff agreed and
increased wind down expenses, a portion of which are attributable to the general
committee.

5. Other Legal Fees

Gore 2000 argues that estimated legal expenses arising in
jurisdictions outside of Washington, DC should be included as estimated wind down

3 See Report of the Audit Division on Clinton for President (1992) where a similar determination
was made with respect to contribution database management during the wind down period.

Page 9 of 27


Based on Gore 2000’s response to the preliminary audit report, the report
considered by the Commission on December 12, 2002, showed Gore 2000 to be ina
surplus position in the amount of $1,360,100. Of that surplus amount, $424,351 was
repayable to the United States Treasury.

The topics that account for the major differences between the Gore 2000
and the Audit surplus amount are discussed below; as well as the Commission’s
determinations with respect to these matters when considered on December 12, 2002.

1. Alternative to Audit Staff's 50-50 Wind Down Ratio

Gore 2000 disputes the Audit staff's allocation of wind down costs
between the primary and general committees on a 50-50 basis*. It believes wind down
cost should be allocated 61% to Gore 2000 and 39% to Gore/Lieberman (the general
committee) based on greater number of checks issued during its life and the greater
number of issues related to the primary audit.

The Audit staff concluded that Gore 2000’s winding down allocation
method suffered from a number of flaws and in some parts was undocumented. As was
done in the preliminary audit report, the Audit staff recommended that the winding down
costs be allocated equally between the primary and general election campaigns. At its
December 12, 2002 meeting, the Commission decided that, in the absence of the
regulations mandating a specific ratio be used, the 61-39 ratio advanced by Gore 2000
would be accepted. The NOCO presented above has been revised accordingly.

2. Shortened Wind Down Period

After considering Gore 2000’s response, the paucity of issues and
the time necessary to complete the remaining audit process, the Audit staff had revised all
wind down estimates (except storage) to conclude at June 30, 2003, rather than December
31, 2003 as projected in the preliminary audit report.

At its December 12, 2002 meeting. the Commission decided that,
in anticipation of a continued challenge to the surplus repayment, as well as the
possibility of other legal issues, Gore 2000 should be permitted wind down costs through
December 31, 2003. The NOCO has been revised accordingly.

. The Commission’s Financial Control and Compliance Manual For Presidential Primary
Candidates Receiving Public Financing (April 2000) explains that when wind down is shared by
the primary and general election campaigns. each must document its allocation of the shared
expenses. Absent a documented claim. wind down is presumed to be attributable equally to the
primary and general campaigns (pages 30-31)

Page 8 of 27


6. the accuracy of total reported receipts, disbursements and cash
balances as compared to bank records;

7, adequate recordkeeping for transactions;

8. the accuracy of the Statement of Net Outstanding Campaign
Obligations (NOCO) filed to disclose its financial condition and to
establish continuing matching fund entitlement (See Finding II.A.);

9. compliance with spending limitations; and,

10. other audit procedures that were deemed necessary in the situation
(See Findings II.B. & II.C.).

The Audit staff did not analyze issue ads paid for by the national or state
party committees or review payments made to media vendors by the national or state
party committees.

As part of the Commission’s standard audit process, an inventory of Gore
2000’s records was conducted prior to the audit fieldwork to determine if the records are
materially complete and in an auditable state. The records were found to be matenally
complete and the audit fieldwork commenced.

Unless specifically discussed below, no material non-compliance was
detected. It should be noted that the Commission may pursue further any of the matters
discussed in the audit report in an enforcement action.

II. FINDINGS AND RECOMMENDATIONS —- AMOUNTS DUE TO THE U.S.

TREASURY
A. DETERMINATION OF NET OUTSTANDING CAMPAIGN OBLIGATIONS

Section 9034.5(a) of Title 11 of the Code of Federal Regulations requires
that within 15 calendar days after the candidate's date of ineligibility, the candidate shall
submit a statement of net outstanding campaign obligations which reflects the total of all
outstanding obligations for qualified campaign expenses as of the candidate's date of
ineligibility, plus estimated necessary winding down costs

The Candidate’s date of ineligibility (DOI) was August 16, 2000. The
Audit staff reviewed Gore 2000’s financial activity through September 30, 2002

Page 5 of 27


Memorandum to Joseph F. Stoltz
Proposed Audit Report

Gore 2000, Inc. (LRA 568)

Page 5

This Office acknowledges that the Committee's allocation method is imperfect. We
agree with the Audit staff that the number of checks issued by each committee does not
accurately reflect the allocation of wind down activity because the Committee was in existence
for a longer period than the General Committee and the Committee paid most of the wind down
costs for both committees. In addition, the Committee should have provided documentation of
the activity of its personnel, lawyers and accountants between April 1, 2002 and September 30,
2002 to support its allocation of 80% of those expenses to the primary campaign.

Nevertheless, we believe that a larger percentage of wind down costs during the audit and
Tepayment process are, and will continue to be, related to the primary election than to the general
election. This conclusion is not based strictly on the number of issues in the audits but on the
relative significance of those issues.* A comparison of the proposed report on the Committee
and the proposed report on the General Committee reveals that the total repayment amount for
the General Committee is $14,887 (of which $11,625 has already been paid) a small fraction of
the total repayment for the Committee of $434,609 (of which $54,591 has been paid). A larger
primary allocation is justified by the time and services provided by the Committee’s personnel,
lawyers and accountants, who are apparently focusing their efforts on the substantial contested
Tepayment issue in the audit of the Committee rather than on the undisputed issues in the General
Committee audit. This focus on the primary repayment is evident in the length and detail of the
Committee’s response to the PAR, compared to the brief response to the General Committee
PAR. Therefore, in the absence of documentation revealing the precise percentage of wind down
expenses related to the primary and general elections or any basis in the documentation or
regulations for a different allocation percentage. we recommend that the proposed report adopt
the Committee’s proposed 61% primary, 39% general allocation ratio because it would be more
accurate than a 50% allocation.

Cc. PARTICULAR CATEGORIES OF EXPENSES

This Office has the following comments on particular categories of expenses, including
insurance, other legal fees and payments to Hayes Software and Consulting.

We disagree with the exclusion of professional liability insurance costs for attorneys
employed by the Committee. The Audit staff notes that the Committee does not currently
employ any attomeys. However, the Committee explains that this expense is for the renewal of
attorney malpractice insurance to continue to protect the Committee against claims based on
actions by its attorneys ‘during the entire course of the campaign.”* Committee Response at 10.

‘ As noted above, the calculation of the Comminee’s net outstanding campaign obligations and the surplus

Tepayment can be considered a number of separate issues or a complex multi-part issue.
‘ The Committee provided the insurance policy and correspondence from the insurance company to support
its explanation. A letter from the insurance company concerning the policy renewal states that claims must be
submitted to the insurance carrier during the policy period or within 60 days after the expiration of the policy. The
enclosed policy states that it is limited to “claims that are first made against the employed lawyer and reported in
writing during the policy period.”

Page 19 of 27


FEDERAL ELECTION COMMISSION
WASHINGTON, DC 20464

January 3, 2003

The Honorable Albert J. Gore Jr.

c/o Mr. Eric Kleinfeld

Ryan, Phillips, Utrecht & MacKinnon

1133 Connecticut Avenue, N.W., Suite #300
Washington, D.C. 20036

Dear Mr. Gore:

Attached please find the Report of the Audit Division on Gore 2000, Inc. The
Commission approved the report on December 23, 2002. As noted on page 5, the
Commission may pursue any of the matters discussed in an enforcement action.

In accordance with 11 CFR §§9038.2(b)(4) and 9038.6, the Commission has made
a determination that a repayment to the Secretary of the Treasury in the amount of
$118,485 is required within 90 calendar days after the service of this report (April 7, 2003).

Should you dispute the Commission’s determination that a repayment is required,
Commission regulations at 11 CFR §9038.2(c)(2) provide you with an opportunity to
submit in writing, within 60 calendar days after service of the Commission’s notice (March
7, 2003), legal and factual materials to demonstrate that no repayment, or a lesser
repayment, is required. Further, 11 CFR §9038.2(c)(2)(ii) permits a Candidate who has
submitted written materials to request an opportunity to address the Commission in open
session based on the legal and factual materials submitted.

The Commission will consider any wntten legal and factual materials submitted
within the 60-day period when deciding whether to revise the repayment determination.
Such materials may be submitted by counsel if the Candidate so elects. If the Candidate
decides to file a response to the repayment determination. please contact Greg Baker of the
Office of General Counsel at (202) 694-1650 or toll free at (800) 424-9530. Ifthe
Candidate does not dispute this determination within the 60-day period provided. it will be
considered final.

The Commission approved report will be placed on the public record on January 8,
2003. Should you have any questions regarding the public release of the report, please
contact the Commission's Press Office at (202) 694-1220.

Page 25 of 27


FEDERAL ELECTION COMMISSION
WASHINGTON. DC 20404

REPORT OF THE AUDIT DIVISION
ON
GORE 2000, INC.

EXECUTIVE SUMMARY

Gore 2000, Inc. registered with the Federal Election Commission on
January 11, 1999, as the principal campaign committee for then Vice President Al Gore
(the Candidate), a candidate for the Democratic Party’s nomination for the office of
President of the United States.

The audit was conducted pursuant to 26 U.S.C. §9038(a), requiring the
Commission to audit committees authorized by candidates who receive Federal Funds.
Gore 2000, Inc. received $15,456,084 in matching funds from the United States Treasury.

The findings of the audit were presented to Gore 2000, Inc. at the exit conference
held on March 4, 2002, and in the preliminary audit report. Gore 2000, Inc. responses to
the findings are contained in the audit report.

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

NOCO SurRPLus REPAYMENT — 11 CFR §9038.2(b)(4). The Statement of Net
Outstanding Campaign Obligations shows Gore 2000. Inc. to be in a surplus position in
the amount of $546,765. Of that surplus amount. $170,591 is repayable to the United
States Treasury. As part of its response to the preliminary audit report, Gore 2000, Inc
submitted a check for $54,591 payable to the United States Treasury.

STALE-DATED CHECKS — 11 CFR §9038.6. of Title 11 of the Code of Federal
Regulations. Gore 2000, Inc. has remaining. unresolved. stale-dated checks totaling
$2,485, which are payable to the United States Treasury

Page | of 27


increased wind down expenses, a portion of which is attributable to the general
committee.

12. Computer Services

The Audit staff had allowed estimated wind down costs for
computer services of $35,920. Payments for the rental of computer equipment appeared
to end April of 2001. As a result, the Audit staff reduced wind down expenses by
$35,920, a portion of which is attributable to Gore 2000. The remainder of this amount is
attributable to the general.

Finally, in an alternative argument to the specific transactions discussed
above, Gore 2000 disagrees with the methodology used by the Audit staff to calculate the
surplus repayment, arguing that it is inconsistent with other methodologies used in
calculating matching fund repayments. Gore 2000 states, “...the question is whether and
when matching funds have been exhausted, i.e., used up, it appears that the auditors have
more than one way to calculate the outcome. This point may be best illustrated by the
different treatment accorded to the Bill Bradley campaign from the auditors’ proposal
here.” A description follows of the LIFO (last-in, first-out) process used to determine
when matching funds are exhausted in the situation where the candidate had a deficit on
the date of ineligibility, received matching fund payments after the date of ineligibility,
and repayment is being sought for non-qualified campaign expenses paid after the date of
ineligibility’. The response then states this method was not used to determine when its
matching funds were used up and, having received its last matching fund payment of
$138,210 on August 1, 2000, spent that amount in a matter of days, well before the date
of ineligibility (8-16-00). Gore 2000 concludes, “...that it used up its matching funds
prior to the date of ineligibility and has no repayment whatsoever due.”

Gore 2000 is confusing repayment matters. Section 9038(b)(3) of Title 26
of the United States Code is very specific concerning the calculation of a repayment
amount when there are funds remaining in the candidate's accounts after all qualified
campaign expenses have been paid. That is the calculation that the Audit staff performed
in determining the amount to be repaid by Gore 2000. The Bradley campaign, however,
had no unexpended funds. Instead it had net outstanding campaign obligations and was
entitled to continue to receive matching fund payments afier the date of ineligibility to
help retire those obligations. The LIFO method described by Gore 2000 is only applied
to determine when the last of the post date of ineligibility payments had been expended
After that point in time there could be no repayment for non-qualified campaign expenses
since there were no federal funds in the campaign's accounts. Thus, rather than treating
two similarly situated campaigns differently. the Audit staff applied the statutory and
regulatory provisions that apply to each campaign in the different circumstances in which
they found themselves.

Based on the Commission's deliberations of December 12, 2002, the
Audit staff prepared the revised NOCO that appears above at page four.

7 See 11 CFR §9038.2(b)(2)(iii)(B).


I. SUMMARY OF AMOUNTS DUE TO THE UNITED STATES TREASURY

Finding II.B. NOCO Surplus Repayment $ 170,591

Finding II.C. Stale-Dated Checks 2.485
Total $ 173,076
Less: Amount Paid (54.591)
Total Due United States Treasury $118,485

Page 14 of 27


TABLE OF CONTENTS

GORE 2000, INC.

Page
Executive Summary 1
Final Audit Report 3
Background 3
Findings 5
Legal Analysis 15
Transmittal to Committee 23
Transmittal to Candidate 25

Chronology 27


FEDERAL ELECTION COMMISSION
WASHINGTON. DC 20464

January 3, 2003

Mr. Jose Villarreal, Treasurer

Gore 2000, Inc.

1705 DeSalle Street N.W., Suite #300
Washington, D.C. 20036

Dear Mr. Villarreal:

Attached please find the Report of the Audit Division on Gore 2000, Inc. The
Commission approved the report on December 23, 2002. As noted on page 5, the
Commission may pursue any of the matters discussed in an enforcement action.

In accordance with 11 CFR §§9038.2(b)(4) and 9038.6, the Commission has made
a determination that a repayment to the Secretary of the Treasury in the amount of
$118,485 is required within 90 calendar days after the service of this report (April 7, 2003).

Should you dispute the Commission’s determination that a repayment is required,
Commission regulations at 11 CFR §9038.2(c)(2) provide you with an opportunity to
submit in writing, within 60 calendar days after service of the Commission’s notice (March
7, 2003), legal and factual materials to demonstrate that no repayment, or a lesser
repayment, is required. Further, 11 CFR §9038.2(c)(2)(ii) permits a Candidate who has
submitted written materials to request an opportunity to address the Commission in open
session based on the legal and factual materials submitted.

The Commission will consider any wntten legal and factual materials submitted
within the 60-day period when deciding whether to revise the repayment determination.
Such materials may be submitted by counsel if the Candidate so elects. If the Candidate
decides to file a response to the repayment determination, please contact Greg Baker of the
Office of General Counsel at (202) 694-1650 or toll free at (800) 424-9530. If the
Candidate does not dispute this determination within the 60-day period provided. it will be
considered final.

The Commission approved report will be placed on the public record on January 8,
2003. Should you have any questions regarding the public release of the report, please
contact the Commission's Press Office at (202) 694-1220.

Page 23 of 27


REPORT OF THE AUDIT DIVISION
ON

GORE 2000, INC.

Approved December 23, 2002

FEDERAL ELECTION COMMISSION
999 E STREET, N.W.
WASHINGTON, D.C.



Any questions you have related to matters covered during the audit or in the report
should be directed to Tesfai Asmamaw or Alex Boniewicz of the Audit Division at (202)
694-1200 or toll free at (800) 424-9530.

Assistant Staff Director
Audit Division

Attachment as stated

Page 26 of 27


expenses and provides one estimate of $50,000 for such fees. As noted above, Gore 2000
has reduced its estimate for such services from $250,000 to $50,000. The documentation
provided lacks any specifics about the litigation. The Audit staff's position remained
unchanged and no estimate for such legal services had been included in our wind down
estimates.

At its December 12, 2002 meeting, the Commission decided that,
based on the documentation provided and the possibility of other legal issues arising,
some amount should be permitted for such costs. The Commission determined that the
$50,000 estimate put forward by Gore 2000 was reasonable. The NOCO has been
revised accordingly.

6. Insurance Costs

Gore 2000 disputed the exclusion of insurance costs for directors
& officers liability, property & casualty, an umbrella policy, and professional liability for
legal staff, for 2002 and 2003. It provides documentation showing that it anticipates such
costs to be $52,205.

Although the Audit staff reviewed the documentation and had
concerns of duplicative coverage, we allowed $48,288 in such costs for 2002, as well as
an estimate for such insurance costs though the remaining wind down period ending on
December 31, 2003, a portion of which are attributable to the general committee.

7. Expenses Excluded From or Incorrectly Classified as Wind Down

Gore 2000 argues that the Audit staff erroneously excluded costs
totaling $28,060 as wind down expenses; and, in addition, erroneously treated as wind
down expenses $27,262 in costs that should have been treated as accounts payable’.

The Audit staff examined the documentation submitted for the
$28,060 and adjusted our NOCO as follows. The Audit staff included $21.048 as wind
down; recognized $5,000 as an accounts payable; and determined that $2,012 was solely
a general expense.

The Audit staff examined the documentation submitted for the
$27,595° and adjusted our NOCO as follows. The Audit staff determined that $21,070
was in fact accounts payable rather than wind down costs. The remaining expenses
($6,524) were determined to be solely general in nature, rather than wind down related.

Treatment as accounts payable attributes 100% of the expenses to Gore 2000 reducing the surplus
dollar for dollar. Treatment of the expenses as wind down causes them to be attributed 61% to
Gore 2000 and 39% to the general committee. reducing the Gore 2000 surplus only by its 61%
share.

Gore 2000 included a check at $1,602: the correct amount was $1,935

Page 10 of 27



It shows Gore 2000 to be in a surplus position in the amount of $546,765.
Of that surplus amount, $170,591 [$546,765 x .3120]° is repayable to the United States
Treasury.

Recommendation # 1

The Audit staff recommends that the Commission determine that a pro-rata
repayment of $170,591 [$546,765 x .3120] is due the United States Treasury.

Cc. STALE-DATED CHECKS

Section 9038.6 of Title 11 of the Code of Federal Regulations state that if
the committee has checks outstanding to creditors or contributors that have not been
cashed, the committee shall notify the Commission. The committee shall inform the
Commission of its efforts to locate the payees. if such efforts have been necessary, and its
efforts to encourage the payees to cash the outstanding checks. The committee shall also
submit a check for the total amount of such outstanding checks, payable to the United
States Treasury.

The Audit staff identified 17 stale-dated checks totaling $7,210 issued by
Gore 2000 from its Depository Account. These were all contribution refund checks.

The matter was discussed at the exit conference held subsequent to the
close of fieldwork. Gore 2000 was provided with a detailed schedule of the stale-dated
checks and was in agreement as to the checks and dollar amounts involved. Gore 2000
Tepresentatives stated that documentation would be provided as the checks cleared.

In the preliminary audit report, the Audit staff recommended that Gore
2000 either provide evidence that the checks are not outstanding, or, absent such
evidence, make a payment of $7,210 to the United States Treasury.

In its response to the preliminary audit report, Gore 2000 provided
evidence that stale-dated checks, totaling $4,725, had been negotiated. The response also
states the Audit staff will be advised as additional checks are resolved. As such, absent
evidence to the contrary, unresolved. siale-dated checks totaling $2,485 [$7.210-$4,725]
are payable to the United States Treasury

Recommendation #2

The Audit staff recommends that the Commission determine that a payment of
$2,485 is due the United States Treasury

8 This figure (.3120) represents Gore 2000's repayment rao as calculated pursuant to 1] CFR
§9038.3(c)(1).

Page 13 of 27