Part I
Background

Authority for Audit

This report is based on an audit of the Committee to Re-Elect Vito Fossella (CRVF),
undertaken by the Audit Division of the Federal Election Commission (the Commission)
in accordance with the Federal Election Campaign Act of 1971, as amended (the Act).
The Audit Division conducted the audit pursuant to 2 U.S.C. §438(b), which permits the
Commission to conduct audits and field investigations of any political committee that is
required to file a report under 2 U.S.C. §434. Prior to conducting any audit under this
subsection, the Commission must 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. 2 U.S.C. §438(b).

Scope of Audit

This audit examined:

The receipt of excessive contributions and loans.

The receipt of contributions from prohibited sources.

The disclosure of contributions received.

The disclosure of disbursements, debts and obligations.
The consistency between reported figures and bank records.
The completeness of records.

Other committee operations necessary to the review.

NORE


C. Refund or Disgorge Questionable Contributions. If the identity of the original
contributor is known, the committee must either refund the funds to the source of the
original contribution or pay the funds to the U.S. Treasury. AO 1996-5.

Facts and Analysis

On October 28, 2002, CRVF and the Commission signed a conciliation agreement
Telative to MUR 4850 which stemmed from a complaint filed under 2 U.S.C. §437g
regarding impermissible contributions received during the 1997-1998 election cycle.
CRVF made refunds in early January 2003 and the Audit staff determined that 15 of
these refund checks, totaling $18,100, had either never been cashed by the payees or had
been returned as undeliverable by the post office. The payees included 12 individuals
($8,100) and 2 political action committees ($10,000).*

At the exit conference, the Audit staff provided CRVF representatives a schedule of these
15 stale-dated contribution refund checks and in a written response, they stated that they
wanted to contact the individuals and organizations one more time in an attempt to get
them to cash these checks.

Interim Audit Report Recommendation and Committee Response
The Audit staff recommended that CR VF provide evidence that the checks were not
outstanding by providing copies of the front and back of the negotiated checks along with
bank statements. Absent such evidence, the Audit staff recommended that $18,100 be
paid to the U.S. Treasury. In response, CRVF remitted a check for $18,100 to the U.S.

Treasury.

4 One of these political action committees terminated in March 2000.


Part III
Summaries

Findings and Recommendations

Finding 1. Form 3Z-1 Filed Untimely

CRVF did not file Form 3Z-1 (Consolidated Report of Gross Receipts for Authorized
Committees) with its 2003 Year-End report in a timely manner. The Audit staff
recommended that CRVF demonstrate that the required form was filed timely or provide
any additional comments. In response to the recommendation in the interim audit report,
CRVF submitted a letter explaining why the Form 3Z-1 was not filed in a timely manner.
(For more detail, see p. 4)

Finding 2. Stale-Dated Contribution Refund Checks

The Audit staff determined that 15 refund checks written in January 2003 by CRVF,
totaling $18,100, relating to impermissible contributions from the 1997-1998 election
cycle, had not cleared CRVF’s bank account. A conciliation agreement between CRVF
and the Commission in October 2002 [Matter Under Review (MUR) 4850] required these
refunds to be made. The Audit staff recommended that CRVF remit $18,100 to the U.S.
Treasury. In response to the recommendation in the interim audit report, CRVF remitted
acheck for $18,100 to the U.S. Treasury.

For more detail, see p. 5)


Part II

Overview of Campaign

Campaign Organization

Important Dates

Committee to Re-Elect Vito Fossella

Date of Registration

June 18, 1997

Audit Coverage

January 1, 2003 through December 31, 2004

Headquarters Staten Island, New York
Bank Information

¢ __ Bank Depositories 2

e __ Bank Accounts 3 Checking

Treasurer

Treasurer When Audit Was Conducted

Anthony Maltese

Treasurer During Period Covered by Audit

Anthony Maltese

Management Information

. Attended FEC Campaign Finance Seminar Yes

. Used Commonly Available Campaign Yes
Management Software Package
Who Handled Accounting and Recordkeeping | Paid CPA Firm

Tasks

Overview of Financial Activity

(Audited Amounts)

Cash on hand @ January 1, 2003 $ 171,220

Receipts

o From Individuals 593,254

o From Political Committees 489,082

o Offsets to Operating Expenditures 41,077

Total Receipts $ 1,123,413

Disbursements

© Operating Expenditures 1,000,979

o Other Disbursements 55,237

o Refunds 82,236

Total Disbursements $ 1,138,452
$ 156,181

Cash on hand @ December 31, 2004



Interim Audit Report Recommendation and Committee Response
The Audit staff recommended that CRVF demonstrate that the required form was
correctly filed or provide any additional comments relevant to this matter. In response,
the CRVF Treasurer stated that the failure to file Form 3Z-1 timely was an oversight. He
added that, at the time the report was filed, the software that CRVF used to prepare its
reports was not able to generate the required form, and as a result, CR VF was unaware of
the omission. The Form 3Z-1 was submitted after they received a Request for Additional
Information from the Commission.

| Finding 2. Stale-Dated Contribution Refund Checks

Summary
The Audit staff determined that 15 refund checks written in January 2003 by CRVF,

totaling $18,100, relating to impermissible contributions from the 1997-1998 election
cycle, had not cleared CRVF’s bank account. A conciliation agreement between CRVF
and the Commission in October 2002 [Matter Under Review (MUR) 4850] required these
refunds to be made. The Audit staff recommended that CRVF remit $18,100 to the U.S.
Treasury. In response to the recommendation in the interim audit report, CRVF remitted

a check for $18,100 to the U.S. Treasury.

Legal Standard
A. Authorized Committee Limits. An authorized committee may not receive more

than a total of $1,000° per election from any one person or $5,000 per election from a
multicandidate political committee. 2 U.S.C. §441a(a)(1)(A), (2)(A) and (f); 11 CFR
§§110.1(a) and (b) and 110.9(a).

B. Handling Contributions That Appear Excessive. If a committee receives a
contribution that appears to be excessive, the committee must either:
e Return the questionable check to the donor; or
© Deposit the check into its federal account and:
o Keep enough money in the account to cover all potential refunds;
o Keep a written record explaining why the contribution may be illegal;
o Include this explanation on Schedule A if the contribution has to be
itemized before its legality is established;
o Seek a reattribution or a redesignation of the excessive portion, following
the instructions provided in the Commission regulations; and
o If the committee does not receive a proper reattribution or redesignation
within 60 days after receiving the excessive contribution, refund the
excessive portion to the donor. 11 CFR §§103.3(b)(3), (4) and (5) and

110.1(k)(3)Gi)(B).

3 The Bipartisan Campaign Reform Act of 2002 (BCRA) amended section 441a and the $1,000
contribution limit was modified to $2,000 with respect to contributions from any one person made on or

after January 1, 2003.


FEDERAL ELECTION COMMISSION
WASHINGTON, D.C. 20463

APRIL 26, 2006

MEMORANDUM

TO: ROBERT W. BIERSACK
PRESS OFFICER
PRESS OFFICE

FROM: JOSEPH F. STOLTZ LD
ASSISTANT STAFF ECTOR
AUDIT DIVISION

SUBJECT: PUBLIC ISSUANCE OF THE FINAL AUDIT REPORT ON
COMMITTEE TO RE-ELECT VITO FOSSELLA

Attached please find a copy of the final audit report and related documents on
Committee to Re-Elect Vito Fossella, which was approved by the Commission on APRIL
18, 2006.

Informational copies of the report have been received by all parties involved 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
Web Manager



Part IV
Findings and Recommendations

| Finding 1. Form 3Z-1 Filed Untimely

Summary
CRVF did not file Form 3Z-1 (Consolidated Report of Gross Receipts for Authorized

Committees) with its 2003 Year-End report in a timely manner. The Audit staff

recommended that CRVF demonstrate that the required form was filed timely or provide
any additional comments. In response to the recommendation in the interim audit report,
CRVF submitted a letter explaining why the Form 3Z-1 was not filed in a timely manner.

Legal Standard
Special Reporting Requirements. Principal campaign committees of candidates for the

U.S. House and the U.S. Senate must file FEC Form 3Z-1 as part of their July Quarterly
and Year-End Reports in the year preceding the year in which the general election for the
office sought is held. The information in this form allows opposing candidates to
compute their “gross receipts advantage” used to determine whether a candidate is
entitled to an increased contribution limit. The following information is to be disclosed:

1. Gross receipts to date for the primary and general elections,

2. Aggregate amount of contributions from personal funds of the candidate for the
primary and general elections, and,

3. A calculation of gross receipts less the candidate’s personal contributions for each
election. 11 CFR §104.19.

Facts and Analysis
CRVF did not file a Form 3Z-1 with its 2003 Year-End report unti] an amended report

was filed on April 15, 2004. This amended report appears to have been filed as a result
of CRVF receiving a Request for Additional Information letter (dated March 2, 2004)

from the Commission’s Reports Analysis Division.

The Audit staff determined gross receipts for the primary election of $386,375 and for the
general election of $38,199 should have been disclosed on Form 3Z-1 of the 2003 Year-
End Report. The totals disclosed on the Form 3Z-1 filed in Apri] 2004 were determined
to be materially correct. There were no personal contributions by the candidate.

The Audit staff discussed this matter with a CRFV representative at the exit conference.
The representative stated that he thought the Form 3Z-1 had been correctly filed with the

original report.

2 This regulation became effective January 27, 2003; as such, this election cycle is the first that required
filing of this form.


Report of the

Audit Division on the
Committee to Re-Elect
Vito Fossella

January 1, 2003 - December 31, 2004



Table of Contents

Part I. Background
Authority for Audit
Scope of Audit

Part II. Overview of Campaign
Campaign Organization
Overview of Financial Activity

Part III. Summaries
Findings and Recommendations

Part IV. Findings and Recommendations
Finding 1. Form 3Z-1 Filed Untimely
Finding 2. Stale-Dated Contribution Refund Checks

Page

NN


Report of the
Audit Division on the
Committee to Re-Elect

Vito Fossella
January 1, 2003 - December 31, 2004

Why the Audit

Was Done

Federal law permits the
Commission to conduct
audits and field
investigations of any
political committee that is
required to file reports
under the Federal
Election Campaign Act
(the Act). The
Commission generally
conducts such audits
when a committee
appears not to have met
the threshold
requirements for
substantial compliance
with the Act.' The audit
determines whether the
committee complied with
the limitations,
prohibitions and
disclosure requirements
of the Act.

Future Action
The Commission may
initiate an enforcement
action, at a later time,
with respect to any of the
matters discussed in this
report.

' 2 U.S.C. §438(b).

About the Campaign (p. 2)

Committee to Re-Elect Vito Fossella (CRVF) is the principal
campaign committee for Vito J. Fossella, Jr., Republican
candidate for the U.S. House of Representatives from the state of
New York, Thirteenth Congressional District. CRVF is
headquartered in Staten Island, New York. For more
information, see chart on Campaign Organization p.2.

Financial Activity (p. 2)
« Receipts

o From Individuals $ 593,254
o From Political Committees 489,082
o Offsets to Operating

Expenditures 41,077
o Total Receipts $ 1,123,413

¢ Disbursements

© Operating Expenditures $ 1,000,979
o Other Disbursements 55,237
o Contributions Refunds 82,236
o Total Disbursements $ 1,138,452

Findings and Recommendations (p. 3)
e Form 3Z-1 Filed Untimely (Finding 1)
e Stale-Dated Contribution Refund Checks (Finding 2)