CHRONOLOGY

GEJDENSON REELECTION COMMITTEE

Audit Fieldwork
Interim Audit Report to
the Committee

Response Received to the
Interim Audit Report

Final Audit Report Approved

Page 11 of 1]
Approved 0125/2002

July 9 -
August 20, 2001

November 1. 2001

December 31, 2001

January 25, 2002


Page 2 of }1
Approved 0125/2002


The review identified apparent excessive contributions from 74
individuals, the excessive portions of which totaled $66.518. Of these. 33 contributions.
totaling $35,500, were on their face greater than $1.000 with no election designations on
the contributor’s checks. The remaining excessive contributions ($31,018) aggregated in
excess of $1,000. The excessive contributions may have arisen as the result of GRC
solicitation response cards used dung the campaign that stated. “Each person can
contribute a total of $2,000." Nowhere on the response cards was it explained that the
$2.000 represented two separate limitations. $1.000 for the primary election and $1.000
for the general election.

GRC did not provide reattribution or redesignation letters for any of the
above contributions, nor were any of the excessive contributions refunded to the
contributor. Although GRC did not deposit these excessive contributions into a separate
account, sufficient funds were maintained during most of the audit period to refund the
contributions. However, the cash on hand balance at December 31, 2000, was $28.479

At the exit conference. GRC’s Assistant Treasurer was provided with
schedules detailing the apparent excessive contributions. After indicating that funds were
not available to make all the refunds. she stated that when an individual exceeded their
Primary Election contribution level, she assumed that the money was designated for the
General Election cycle. She also assumed that it was not necessary to demand that
contributors make a clear election designation on their check(s)

Subsequent to the exit conference. a written response was submitted. The
Assistant Treasurer stated that every effort was made to follow Commission Regulations.
All donors were kept within the $1.000 limitation for each election. but the requirement
for documentation to show that a donation dated prior to the pnmary election was to be
attributed to the general election if the donor had exceeded the legal limits for the primary
election was misunderstood. Her response concludes that, unfortunately. GRC has no
documentation to show the intent of the donor for those situations.

During an ensuing telephone call. the Candidate asked about options
available to resolve the excessive contributions. The Candidate was advised that. since
the 60-day time frame provided under 11 CFR $103.3(b)(3) for the redesignation or
reattribution of a contribution had expired. the oniy option available was to refund the
contributions.

The interim audit report recommended that GRC provide evidence
demonstrating that the contributions noted above are not in excess of the limitation
Absent such evidence, it was recommended that GRC refund these contributions und
provide evidence of such refunds (copies of the front and back of the negotiated refund
check). If funds were not availabie to make the necessary refunds. those contributions
requiring refunds were to be disclosed as debts on Schedule D (Debts and Obligations)
until such time that funds became avuilable to make the refunds

Page 7 of 11
Approved 0125/2002



Sam Gejdenson, (the Candidate). Democratic candidate for the U.S. House of
Representatives from the State of Connecticut. 2" District. On June 24. 1996. its name
was changed to the Sam Gejdenson Reelection Committee; and, on October 16, 2000. it
became the Gejdenson Reelection Committee. The Treasurer dumng the period covered
by the audit was Patricia Tedisco LaGrega. who continues to serve in that capacity. GRC
Maintains its headquarters in Bozrah. CT

To manage its financial activity, GRC maintained two checking accounts.
one savings account. one money market account, five certificates of deposit and two
treasury bonds. From these accounts. GRC made approximately 1.400 disbursements.
GRC received in excess of 5.000 contributions from individuals. totaling $1.032.061. In
addition, GRC received 467 contributions from political committees and political party
committees totaling $634.558, a loan from the Candidate in the amount of $150,000,
interest of $10,381 and offsets to operating expenditures totaling $3.058.7 GRC utilized
common accounting software as well as a custom designed campaign management
application. Accounting, recordkeeping and reporting functions were performed by paid
campaign staff, initially by an individual who was an Accountant. During the period
covered by the audit, GRC did not file disclosure reports electronically. The Treasurer
did not attend any FEC reporting seminars nor previously worked on any other
congressional campaigns.

D. AUDIT SCOPE AND PROCEDURES

In maintaining its receipt records. GRC satisfied the minimum
recordkeeping requirements of 11 CFR $102.9: however, the Audit staffs testing of
contributions from individuals was limited by the lack of external documentation. such as
copies of contributor checks, for about 31% of the items tested.

Following Commission-approved procedures. the Audit staff evaluated
various risk factors and as a result. the scope of this audit was limited to the following
general categories:

1. the receipt of contributions or loans in excess of the statutory
limitations (see Finding I.A.):

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 enuties, to include the itemization of
contributions when required. as well as. the completeness and
accuracy of the information disclosed:

. These categories total $1.830.058 or $69,520 less than reported receipts ($1,899,578), See Finding
ILB..

Page 4 of 1]
Approved 0125/2002


FEDERAL ELECTION COMMISSION
WASHINGTON Lis cian
AOI-14

REPORT OF THE AUDIT DIVISION
ON THE
GEJDENSON REELECTION COMMITTEE

1. BACKGROUND
A. AUDIT AUTHORITY

This report is based on an audit of the Gejdenson Reelection Committee
(GRC). undertaken by the Audit Division of the Federal Election Commission (the
Commission) in accordance with the provisions of the Federal Election Campaign Act of
1971, as amended (the Act). The audit was conducted pursuant to Section 438(b) of Title
2 of the United States Code, which states. in part. that the Commission may conduct
audits and field investigations of any political committee required to file a report under
Section 434 of this title. Prior to conducting any audit under this subsection, the
Commission shall perform an internal review of reports filed by selected committees to
determine if the reports filed by a particular committee meet the threshold requirements
for substantial compliance with the Act

B. AUDIT COVERAGE
The audit covered the period from January |, 1999 through December 31,
2000. During this period, GRC reponed a beginning cash balance of $1,194: total

receipts of $1,899,578; total disbursements of $1.$16.807: and a closing cash balance of
$83,905".

Cc. COMMITTEE ORGANIZATION

GRC registered with the Clerk of the U.S. House of Representatives on
July 26, 1979, as Sam Gejdenson For Congress. the principal campaign commutice of,

Total receipts and disbursements were catculated by summing the current period totals tor cach
reporting period. The amount for disbursements differs trom the lgure for total disbursements
($1,815,367) calculated by summuny the calendar year-to-date amounts reported for 1999 and
2000. This difference results from refunded contributions ($ 1.500) reported on the July 31°" Mad-
Year report which were excluded trom the calendar year to date total for disbursements tor
calendar year 1999

Page 3 of 11
Approved 01 25.2002


Section 110.1(k) of Title 11 of the Code of Federal Regulations states. in
part, that any contribution made by more than one person. except for a contribution made
by a partnership, shall include the signature of each contributor on the check. money
order, or other negotiable instrument or in a separate writing and if a 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. If a 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 11 CFR §110.1(b). (c) or (d), as appropriate, the treasurer of the 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 if the 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 contnbutor that he or she may request the retum of the
excessive portion of the contribution if it is not intended to be a joint contribution, and
within sixty days from the date of the treasurer's receipt of the contribution, the
contributors provide the treasurer with a wnitten reattribution of the contribution. which is
signed by each contributor, and which indicates the amount to be attributed to each
contributor if equal attribution is not intended.

Section 110.1(b)(5) of Title 11 of the Code of Federal Regulations states,
in relevant part, that the treasurer of an authorized political committee may request a
written redesignation of a contribution by the contributor for a different election if the
contribution exceeds the limitation on contributions set forth in 1] CFR §$110.1(b)(1). A
contribution shall be considered to be redesignated for another election if the treasurer of
the recipient authorized political committee requests that the contributor provide a written
redesignation of the contribution and informs the contributor that the contributor may
request the refund of the contribution as an alternative to providing a written
redesignation and within sixty days from the date of the treasurer's receipt of the
contribution, the contributor provides the treasurer with a written redesignation of the
contribution for another election, which is signed by the contributor.

Section 110.1(1)(5) of Title 11 of the Code of Federal Regulations states.
in part, that ifa political committee does not retain the written records concerning
redesignation or reattribution, the redesignation or reattribution shall not be effective. and
the original designation or attribution shall control.

The Audit staff utilized the receipt database and copies of contributor
checks provided by GRC to review contributions from individuals. However. copies of
contributor checks for the first six months of 1999 were not available and limited our
ability to identify potential excessive contributions arising from contributions that were
either attributed improperly to an individual on the receipt database; or, contributions that
were improperly redesignated to another election.

Page 6 of 11
Approved 01/25/2002



FEDERAL ELECTION COMMISSION

WASHINGTON. DC 2t4b}

February 4, 2002

MEMORANDUM

TO: RON M. HARRIS
PRESS OFFICER
PRESS OFFICE

Leff
FROM: JOSEPH F. STOLTZ we
ASSISTANT STAFF CTOR
AUDIT DIVISION

v
SUBJECT: PUBLIC ISSUANCE OF THE AUDIT REPORT ON
GEJDENSON REELECTION COMMITTEE

Attached please find a copy of the audit report and related documents on

Gejdenson Reelection Committee, which was approved by the Commission on January 25,

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


FEDERAL ELECTION COMMISSION

WASHINGTON, OC 20464 AO1-14

January 29, 2002

Mrs. Patricia Tedisco LaGrega. Treasurer
Gejdenson Reelection Committee

P.O. Box 1818

Bozrah, CT 06334

Dear Mrs. LaGrega:

Attached please find the Report of the Audit Division on Gejdenson Reelection
Committee. The Commission approved the report on January 25, 2002.

The Commission approved Fina] Audit Report will be placed on the public record
on February 4, 2002. Should you have any questions regarding the public release of the
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 Philomena Brooks or Alex Boniewicz of the Audit Division at (202)
694-1200 or toll free at (800) 424-9530.

hF. Stoltz
Assistant Staff Director
Audit Division

Attachment as stated.

ce: Sally Cini, Assistant Treasurer

Page 9 of 11
Approved 01/25/2002


In response to the interim audit report. GRC amended its reports to
disclose those contributions requiring refunds as debts on Schedule D.

B. MISSTATEMENT OF FINANCIAL ACTIVITY

Sections 434(b)(1) and (2) of Title 2 of the United States Code state. in
part. that each report shall disclose the amount of cash on hand at the beginning of the
report period and the total amount of all receipts for the reporting period and calendar
year.

A reconciliation of GRC’s reported financial activity to its bank activity
indicated that receipts and ending cash on hand had been misstated for calendar year
2000.

GRC reported total receipts of $1,420,240. but should have reported
receipts of $1,350,902. an overstatement of $69,339. The misstatement resulted primarily
from an overstatement of contributions from individuals by $87,966 on the Post General
disclosure report. GRC did not maintain records showing the derivation of its reported
amount per contributions from individuals; therefore. the Audit staff was unable to
explain this error. In addition. interest eamed by GRC was overstated by $692. Finally,
there remained an unexplained understatement of receipts by $19,319 that. absent records
showing the derivation of its reported amounts. could not be identified.

The reported cash on hand balance on December 31, 2000 was $83,906.
The correct cash balance was determined to be $28.479. a difference of $55,428. The
overstatement resulted primarily from the discrepancies noted above and from GRC’s
failure to report disbursements totaling $11,525

Subsequent to the exit conference GRC’s Assistant Treasurer was
provided a copy of the bank reconciliation for calendar year 2000. She indicated an
amended report would be filed.

In the interim audit report, it was recommended that GRC file
comprehensive amended Summary and Detailed Summary Pages for calendar year 2000.

GRC amended its reports to materially correct the misstatements noted
above.

Page 8 of 11
Approved 01/25/2002


4. the accuracy of total reported receipts. total reported disbursements
and cash balances as compared to GRC bank records (see Finding

IL.B.);
5. adequate recordkeeping for GRC transactions: and.
6. 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 further any of the matters
discussed in this report in an enforcement action

Il. AUDIT FINDINGS AND RECOMMENDATIONS

A. RECEIPT OF CONTRIBUTIONS IN EXCESS OF THE LIMITATION

Section 441a(a)(1)(A) of Title 2 of the United States Code states 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.
Subsection (b) of 11 CFR §110.1 explains that with respect to any election means that if
the contribution is not designated in writing by the contributor for a particular elecuon
then the contribution applies to the next election for that Federal office after the
contribution is made. A contribution is considered made when the contributor
relinquishes control over the contribution by delivering the contribution to the Candidate,
the political committee, or an agent of the committee. A contribution that is mailed is
considered made on the date of the postmark

Section 103.3(b)(3) of Title 11 of the Code of Federal Regulations states
that the treasurer shall be responsible for examining all contributions received for
evidence of illegality and for ascertaining whether contributions received, when
aggregated with other contributions from the same contributor, exceed the contribution
limitations of 11 CFR §110.1. If any such contribution is deposited. the treasurer may
request redesignation or reattribution of the contribution by the contributor in accordance
with 11 CFR §$110.1(b) or 110.1(k). as appropriate. If a redesignation or reattribution is
not obtained, the treasurer shall. within sixty days of the treasurer's receipt of the
contribution, refund the contribution to the contributor.

Section 103.3(b)(4) of Title 11 of the Code of Federal Regulations states,
in relevant part, that any contribution which appears to be illegal under
11 CFR §103.3(b)(3), and which is deposited into a campaign depository shall not be
used for any disbursements by the political committee until the contribution has been
determined to be legal. The political committee must either establish a separate account
in a campaign depository for such contributions or maintain sufficient funds to make all
such refunds.

Page 5 of 11
Approved 0125/2002



FEDERAL ELECTION COMMISSION A#01-14

WASHINGTON Uc cis

REPORT OF THE AUDIT DIVISION
ON THE
GEJDENSON REELECTION COMMITTEE

EXECUTIVE SUMMARY

Gejdenson Reelection Committee (GRC) registered with the Clerk of the U.S. House of
Representatives on July 26, 1979. as Sam Gejdenson For Congress, the principal campaign
committee for Sam Gejdenson, Democratic candidate for the U.S. House of Representatives
from the state of Connecticut, Second District. The audit was conducted pursuant to 2 U.S.C.
§438(b), which states that the Commission may conduct audits of any political committee
whose reports fail to meet the threshold level of compliance set by the Commission. The
findings of the audit were presented to GRC at the completion of fieldwork on August 20.
2001, and later in the interim audit report. GRC’s response to those findings is contained in the
audit report. The following is an overview of the findings contained in the audit report. In
maintaining its receipt records, GRC satisfied the minimum recordkeeping requirements of 1]
CFR §102.9; however, testing of contributions from individuals was limited by the lack of
external documentation, such as copies of contributor checks, for about 31% of the items tested.

RECEIPT OF CONTRIBUTIONS IN EXCESS OF THE LIMITATION — 2 U.S.C.
§441a(a)(1). A review of contributions from individuals identified apparent excessive
contributions from 74 individuals, totaling $66.518. Of these. 33 contributions. totaling
$35,500, were on their face greater than $1.000 with no election designations on the
contnbutors’ checks. The remaining excessive contributions ($31.018) aggregated in excess of
$1,000. GRC did not provide reattribution or redesignation letters for any of the above
contributors, nor were any of the excessive contributions refunded to the contributor. In
response to the interim audit report, GRC amended its reports to disclose those contributions
requiring refunds as debts on Schedule D

MISSTATEMENT OF FINANCIAL ACTIVITY — 2 U.S.C. §434(b)(1) and (2). A
reconciliation of GRC’s reported activity to its bank activity revealed that materia!
misstatements occurred with respect to reports filed for the period January 1, 2000 through
December 31, 2000. In response to the internm audit repon. GRC amended its reports to
materially correct the misstatements.

Page | of 11
Approved 01/25/2002


TABLE OF CONTENTS

GEJDENSON REELECTION COMMITTEE

Page

Executive Summary 1
Final Audit Report 3
Background 3
Finding $s
Transmittal to Committee 9

Chronology 11


REPORT OF THE AUDIT DIVISION
ON THE

Gejdenson Reelection Committee

Approved January 25, 2002

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



Pave 10 of 11
Approved 01.25.2002