FEDERAL ELECTION COMMISSION

1325 K STREET N.VV.

VVASHINGTON,D.C. 20463

REPORT OF THE AUDIT DIVISION

ON

" THE JACKSON FOR PRESIDENT COMMITTEE

I. Background

This report covers an audit of the Jackson for President

Committee (lithe Committee ll ) undertaken by the Audit Division

of the Federal Election Commission to determine whether there

has been compliance with the provisions of the Federal·

Election Campaign Act of 1971 as amended (lithe Act ll ). The

audit was conducted pursuant to Section 438(a)(8) of Title 2

and Section 9038(a) of Title 26 of the United States Code.

Section 438(a)(8) directs the Commission lito make from

time to time audits and field investigations with respect to

reports and statements filed under the provisions of this

chapter, and with respect to alleged failures to file any

report or statement requjred under the provisions Of this

chapter, and to give priority to auditing and field investigating of the verification for, and the receipt and use of,

any'payments received by a candidate under Chapter 95 or

Chapter 96 of the Internal Revenue Code of 1954. 11 Section

9038(a) of Title 26 states that "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. 11

The Committee was established as the principal campaign committee of Senator Henry M. Jackson in December, 1974. The

principal officers of the Committee at the time of the audit

were Ms. Zmira Goodman and C. Peter McColough, Co-Chairpersons,

arid Mr. Walter 1. Skallerup, Jr., Treasurer. The Committee

maintains its headquarters in Washington, D.C.
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The audit covered the period from January 1, 1975,

through June 30, 1977. During that period the Committee

reported beginning cash of $938,982.08; receipts of

$5,613,395.58; expenditures of $6,486,470.51; and ending

cash of $65~907. 15.

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.

II. Findings and Conclusions

A. Contributions Not Deposited Within 10 Days

of Date of Receipt

Section 103.3(a) of the Commission's Disclosure

Regulations requires that all contributions received by a

candidate, his or her authorized political committee(s), and

any other political committee(s) shall be deposited in a

checking account in the appropriate campaign depository by

the candidate, or by the treasurer of the Committee or his or

her agent, within 10 days of the candidate's or treasurer's

receipt thereof. ..- - .

Durlng the course of the audit, it was notBd that

on numerous occasions the Committee had deposited checks that

had been received months prior to the deposit date. In some

instances, the checks were found to have been held from six

(6) months to over one (1) year. The latest Committee deposit

containing these contributions occurred in September 1976.

The Committee advised that they followed this practice when

contributions requiring additional information to ensure

compliance with Sections 441a and b of the Act were

received. Letters requesting the necessary information were

sent to the contributors and the contribution checks were

held by the Committee in a locked file drawer until a response

was received. Depending upon the nature of the response,

the contributions were then either returned to the contributor or deposited into the Committee's checking account.

If no response was received, the contribution was returned

to the contributor.

For reporting purposes, the Committee disclosed the·

dollar amount of contributions held in this manner in a

letter attached to the summary pages of their disclosure

reports. For example, the following balances were reported

as held by the Committee in this mann~r: as of 12/31/75 - $45,400.00; 1/31/76 - $81,395.00; 2/29/76 - $36,750.00;

4/30/76 - $17,630.00.

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The Committee treasurer feels that, prior to

acceptance and deposit of contributions, sufficient documentation should exist to determine whether or not the contribution

is from a prohibited source. He, therefore, takes the position

that a con~ribution is neither received or accepted until such

documentation exists.

At the conclusion of the audit, it was noted that

all such outstanding contributions had been deposited in the

Committee's account and properly reported.

Recommendation

Based on these facts, it is our recommendation that no

action by the Commission in this matter is necessary.

B. Disclosure of Occupation and Principal Place

Of Business of Persons Whose Contributions

Aggregate In Excess Of $100.00 During the

Calendar Year .

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

requires that the treasurer of a political committee keep a

detailed and exact account of occupation and principal place of

business (if any) if a person's contributions aggregate more

than $100.00 during the calendar year, and Section 434(b)(2)

requires that the treasurer disclose this information in reports

filed with the Commission. Section 434(b) further states that

wher e best ef for t s too bt a i nth isinformat i.0 n have bee n ae-m0 ns t rat ed, • the committee will be de~med to be ih co~p~iance with this section.

During the audit, it was determined that the

occupation and/or principal place of business was either

omitted or insufficient on the Committee reports for

approximately 25% of the contributors.

Procedures to obtain additional information from

contributors (such as occupation and principal place of

business) were employed by the Committee. A standard form

letter was sent to the contributors requesting the additional

information, and was followed by a phone call if no respon~e

to the letter was received. Committee officials stated that

only about one-half of the letters they sent were returned,

and trlat in many cases follow-up phone calls to the contri- b~tors were unsuccessful. They feel that t~e procedures emp1byed to obtain additional contributor information were

adequate and that they made every reasonable effort to acquire

all of the information necessary to comply with the Act.
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- Further, on February 2, 1977, the Committee

submitted amendments to their reports of receipts and

expenditures previously filed with the Commission. The

amendments include additional information on the occupation

and principal place of business of the contributors.

Recommendation

Based on the Committee's attempt to secure the required

information, our recommendation is that the Committee has

demonstrated their best effort and the disclosure of contributors complies with the requirements of Sections 434(b)(2)

and 432(c)(2) of Title 2 of the United .States Code.

III. Matching Fund Repayment

A. Section 9038(b)(3) of Title 2 of the United States

Code states in part that "After all obligations have been liquidated, that portion of any unexpended balance remaining in

the candidate's acccounts which bears the same ratio to the

total unexpended balance as the total amount received from

thematchi ng payment account bears to the total .of all deposi ts

made into the candidate's accounts shall be promptly repaid to

the matching payment account." _

On June 24, 1976, the Commission notified Senator

Jackson of its preliminary determination that 'his candidacy

terminated on June 16, 1976 for purposes of making qualified

campaign expenditures. This letter further requested a

statement of the total net outstanding campaign obligations

on.June 16,1976. On April 18,1977, the Committee comptroller

responded to our letter and after review of the information

received, the Committee was able to substantiate that all of

the Committee debts and obligations were incurred prior to the

Candidate's date of ineligibility. As of June 16, 1976, the

Committee maintained a net surplus of $57,118.07.

The Audit staff has computed the amount of repayment

as follows:

Tota 1 t~atching Payments X Net Surplus ::: Repayment

Total Deposits -

$1,980,555.00 X $57,118.07 ::: $17,603.78 $6,425,732.84

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Recommendation

Based on the above computation, we recommended a repayment

of $17,603.78 of the Committee's net surplus. On December 28,

1977, the Committee Treasurer hand delivered a certified check,

drawn on the account of the Jackson for President Committee and

made payable to the United States Treasurer in the amount of

$17;603.78. This represents payment in full of the Committee's

repayment obligation under Section 9038(b)(3) of Title 26 of the

United States Code.

IV. Auditor's Statement

Except for the matters specifically noted in this report,

the audit disclosed that the Jackson for President Committee

conducted ~heir activities in conformity with the Federal

El ecti on Campa i gn Act of 1971, as amended, and in conformi ty

w5th Chapter 96 of Title 26, U.S.C., in all material aspects.

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