)

FEDERAL ELECTION COMMISSION

WASHINGTON, D.L 20463

August 2, 1999

MEMORANDUM

TO: RON M. HARRIS

PRESS OFFICER

PRESS OFFICE

FROM: ROBERTJ.COSTA Ji:t 1,;111 . ASSISTANT STAFF J(ritEclo'R r

AUDIT DIVISION

SUBJECT: PUBLIC ISSUANCE OF THE FINAL AUDIT REPORT ON

AMORELLO FOR CONGRESS

Attached please find a copy ofthe final audit report and related documents on

Amorello for Congress which was approved by the Commission on July 21, 1999.

Informational copies ofthe report have been received by all parties involved and

the report may be released to the public.

Attachment as stated

cc: Office of General Counsel

Office of Public Disclosure

Reports Analysis Division

FEC Library
TABLE OF CONTENTS

AMORELLO FOR CONGRESS

:f

fl~1 Page ~., ,

j~l

Executive Summary "

U:~

.,.

nil Final Audit Report 2

bJ

• Background 2

i::.\

M= Findings 4

!!Ii Transmittal to Committee 8 n~

Chronology 9
AMORELLO FOR CONGRESS

EXECUTIVE SUMMARY

Amorello for Congress (the Committee) registered with the Federal Election

Commission on November 4, 1997 as the principal campaign committee for Matthew J.

Amorello (the candidate), Republican candidate for the U.S. House ofRepresentatives

from the state ofMassachusetts for the Third District. The Committee maintained its

headquarters in Worcester, Massachusetts.

The audit was conducted pursuant to 2 U.S.c. Section 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 finding from this audit was presented to the Committee at an exit conference

held subsequent to the completion offield work on May 7, 1999 and later in an interim

audit report. The Committee's response to the finding is included in this final audit

report.

The following is an overview ofthe finding contained in the final audit report.

Receipt of Contributions in excess ofthe Limitation - 2 U.S.c. 441a(a)(I)(A) and

II CFR §§ 102. 9(t), 103.3(b)(3) & (4), 11O.I(b)(2), (5)(i)(C) & (5)(ii), I 10. 1(k)(3)(i) &

(ii)(A) & (B) and 110.1(1)(1), (3) & (5). The audit revealed that the Committee failed to

comply with the prescribed methods for designation, redesignation or reattribution of

contributions received from individuals. In doing so, the Committee received

contributions from fifty-nine individuals which were in excess ofthose individuals'

$1,000 per election contribution limit for the primary election. The total excessive

amount received by the Committee equaled $43,825.

In response to the interim report, the Committee agreed to refund the excessive

contributions.

Page 1, Approved 7/21/99
A99-09

FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 20463

REPORT OF THE AUDITDIVISION

ON

AMORELLO FOR CONGRESS

I. BACKGROUND

This report is based on an audit of Amorello for Congress (the

Committee), undertaken by the Audit Division ofthe Federal Election Commission in

accordance with the provisions ofthe Federal Election Campaign Act of 1971, as

amended (the Act). The audit was conducted pursuant to Section 438(b) ofTitle 2 ofthe

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

ofthis title. Prior to conducting any audit under this subsection, the Commission shall

perform an internal review ofreports frled by selected committees to determine ifthe

reports filed by a particular committee meet the threshold requirements for substantial

compliance with the Act.

f1J

A. AUDIT AUTHORITY

B. AUDIT COVERAGE

The audit covered the period from the Committee's initial deposit on

October 31,1997, through December 31,1998. The Committee reported a beginning

cash balance of$O; total receipts for the audit period of$681,874; total disbursements for

the audit period of$681,012; and an ending cash balance 0[$3,042 on December 31,

1998.1

The figures cited in this report are rounded to the nearest dollar. The amounts reported do not

foot.

Page 2, Approved 7/21/99
2

C CAMPAIGN ORGANIZATION

The Committee registered with the Federal Election Commission on

November 4, 1997 as the principal campaign committee for Matthew 1. Amorello (the

candidate), Republican candidate for the U.S. House ofRepresentatives from the state of

Massachusetts for the Third District.

The treasurer ofthe Committee during the audit period and currently"isPatricia M. Finnegan. The Committee maintained its headquarters in Worcester,

Massachusetts.

To manage its financial activity, the Committee maintained one bank

account. From this account, the Committee made approximately 650 disbursements. Into

this account the Committee deposited approximately 3,600 contributions totaling

$675,463.

D. AUDIT SCOPE AND PROCEDURES

The audit included testing ofthe following general categories:

1. The receipt of contributions or loans in excess ofthe statutory

limitations; [see Finding II.A.]

2. the receipt ofcontributions from prohibited sources, such as those

from corporations or labor organizations;

3. proper disclosure ofreceipts from individuals, political committees

and other entities, to include the itemization of contributions or

other receipts when required, as well as, the completeness and

accuracy ofthe information disclosed;

4. proper disclosure of disbursements including the itemization of

disbursements when required, as well as, the completeness and

accuracy ofthe information disclosed;

5. proper disclosure of campaign debts and obligations;

6. the accuracy oftotal reported receipts, disbursements and cash

balances as compared to campaign bank records;

7. adequate recordkeeping for campaign transactions; and

Page 3, Approved 7/21199
3

8. other audit procedures that were deemed necessary in the situation.

This report is based on documents and workpapers which support

each ofits factual statements. They form part ofthe record upon which the Commission

based its decisions on the matters in the report and were available to the Commissioners

and appropriate stafffor review. Unless specifically discussed below, no material

non-compliance was detected. It should be noted that the Commission may pursue

further any ofthe matteI's discussed in this report in an enforcement action.

II. AUDIT FINDINGS AND RECOMMENDATIONS

A. RECEIPT OF CONTRIBUTIONS IN EXCESS OF THE LIMITATION

Section 441a(a)(l)(A) ofTitle 2 ofthe 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.

Section 102.9(f) ofTitle 11 ofthe Code of Federal Regulations states that

the treasurer shall maintain the documentation required by 11 CFR 110.1(1) concerning

designations, redesignations, reattributions and the dates of contributions. Ifthe treasurer

does not maintain this documentation, 11 CFR 110.1(1)(5) shall apply.

Section 103.3(b)(3) ofTitle 11 ofthe Code ofFederal Regulations states,

in relevant part, that the treasurer shall be responsible for examining all contributions

received for ascertaining whether contributions received, when aggregated with other

contributions from the same contributor, exceed the contribution limitation 11 CFR

110.1. Contributions which on their face exceed the contribution limitations set forth at

11 CFR 110.1 and contributions which do not appear to be excessive on their face, but

which exceed the contribution limits set for in 11 CFR 110.1 when aggregated, may be

either deposited into a campaign depository under 11 CFR 103.3(a) or returned to the

contributor. If any such contribution is deposited, the treasurer may request redesignation

or reattribution ofthe contribution by the contributor in accordance with 11 CFR 110.1(b)

or 110.1(k). If a redesignation or reattribution is not obtained, the treasurer shall, within

sixty days ofthe treasurer's receipt ofthe contribution, refund the contribution to the

contributor.

Section 103.3(b)(4) ofTitle 11 ofthe Code ofFederal Regulations states,

in part, that a contribution, which appears to be illegal under 11 CFR 103.3(b)(3) and is

deposited in a campaign, 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 or maintain

sufficient funds to make all such refunds.

Page 4, Approved 7/21/99
4

Section 110.1(b)(2) ofTitle 11 ofthe Code ofFederal Regulations states,

in part, that with respect to any election means in the case of a contribution designated in

writing by the contributor for a particular election, the election so designated and in the

case of a contribution not designated in writing by the contributor for a particular

election, the next election for that Federal office after the contribution is made.

Section 110.1(b)(5)(i)(C) ofTitIe 11 ofthe Code ofFederal Regulations

states, in part, that the treasurer of an authorized political committee may request a

written redesignation of'a contribution by the contributor for a different election ifthe

contribution was not designated in writing for a particular election, and the contribution

exceeds the limitation on contributions.

Section llO.l(b)(5)(ii) ofTitIe 11 ofthe Code ofFederal Regulations

states, in part, that a contribution shall be considered to be redesignated for another

election ifthe treasurer ofthe recipient authorized political committee requests that the

contributor provide a written redesignation ofthe contribution and informs the

contributor that the contributor may request the refund ofthe contribution as an

alternative to providing a written redesignation; and that within sixty days from the date

ofthe treasurer's receipt ofthe contribution, the contributor provides the treasurer with a

written redesignation ofthe contribution for another election, which is signed by the

contributor.

Section 11 0.I(k)(3)(i) ofTitIe 11 ofthe Code ofFederal Regulations

states, in part, that if a contribution to a candidate, either on its face or when aggregated

with other contributions from the same contributor, exceeds the limitations on

contributions, the treasurer ofthe recipient committee may ask the contributor whether

the contribution was intended to be ajoint contribution by more than one person.

Sections 110.1 (k)(3)(ii)(A) and (B) ofTitle 11 ofthe Code of Federal

Regulations state, in part, that a contribution shall be considered to be reattributed to

another contributor ifthe treasurer ofthe recipient committee asks the contributor

whether the contribution is intended to be a joint contribution by more than one person,

and informs the contributor that he or she may request the return ofthe excessive portion

ofthe contribution ifit is not intended to be a joint contribution; and ifwithin sixty days

from the date ofthe treasurer's receipt ofthe contribution, the contributors provide the

treasurer with a written reattribution ofthe contribution, which is signed by each

contributor, and which indicates the amount to attributed to each contributor ifthe equal

attribution is not intended.

Section 110.1(1)(1) ofTitle 11 ofthe Code of Federal Regulations state, in

part, that if a political committee receives a contribution designated in writing for

particular election, the treasure shall retain a copy ofthe written designation.

Section 110.1(1)(3) ofTitle 11 ofthe Code of Federal Regulations states,

in part, that if a political committee receives a written reattribution of a contribution to a

Page 5, Approved 7/21/99
5

different contributor, the treasurer shall retain the written reattribution signed by each

contributor.

Section 110.1(1)(5) ofTitle I I ofthe Code ofFederal Regulations states,

in part, that ifa political committee does not retain the written records concerning

designation the contribution shall not be considered to be designated in writing for a

particular election and the provisions of II CFR 110.1(b)(2)(ii) will apply.

As cited above, the Commission's regulations provide that a committeemay, within ten days, return or deposit, any contribution which is either excessive on the

face or excessive when aggregated with contributions previously received by the

committee from the same contributor. When an excessive contribution is deposited, a

committee has sixty days from receipt to obtain from the contributor either a written

redesignation ofthe excessive portion to the next election or a written reattribution which

indicates that the contribution is ajoint contribution and identifies the individual(s)

making the contribution; in either case the contributor must be informed that he/she may

request a refund as an alternative to a redesignation or reattribution. Additionally, a

committee may maintain a separate account for the deposit ofquestionable contributions

but must maintain funds sufficient to make all refunds; until the legality ofthese

contributions is established, the committee may not use the funds. Each excessive

contribution (or excessive portion) for which a committee is not able to obtain a

reattribution or redesignation must be refunded to the contributor, within the same sixty

day period.

This Committee began receiving contributions in October of 1997.

Solicitation response cards used throughout the campaign by this Committee stated that

either "Campaign finance laws" or "Federal election laws" limit campaign contribution to

$2,000 maximum per person per election cycle. Beginning in April, 1998, the solicitation

response cards were modified and this request was added, "Ifyou have already

contributed $1000, please write For Use in General Election in the memo area ofyour

check." No attempt, however, was made to explain that the aforementioned "$2,000

maximum" represented two separate limits combined. An individual's contributions in

the aggregate are limited to $1,000 for the primary election and $1,000 for the general

election. It appears the Committee was aware that contributions in excess of or

aggregating in excess of$l,OOO received from an individual before the date ofthe

primary needed to be designated for use in the general election.

The primary election for the Third Congressional District of

Massachusetts was held on September 15, 1998; the general election was held on

November 3,1998. Through September IS, 1998, the Committee received approximately

$366,000 or 67% ofthe value oftotal contributions received from individuals.

We conducted a comprehensive review to identify all apparent excessive

contributions. This review identified contributions, totaling $43,825, received from fiftynine individuals which were in excess ofthose individuals' $1,000 per election

Page 6, Approved 7/21199
6

contribution limit for the primary election. The Committee issued checks totaling $2,000

representing the timely return ofotherwise potentially excessive contributions; however,

with one exception, only in instances where an individual's aggregate contributions

exceeded $2,000. No documentary evidence was provided which established that the

$43,825 in contributions were designated for use in the general election or that the

Committee had sought to redesignate, reattribute or refund the excessive portions. By

October 10, 1998, the Committee no longer maintained a balance in its campaign account

sufficient to allow it to refund these excessive contributions.

A schedule detailing the results ofthe excessive review was provided to

the Committee at the exit conference. The Committee representative stated at that time

that it was the intention ofthe Committee to refund the contributions in question and

would begin the process soon.

In the interim audit report, the Audit staffrecommended that the

Committee provide evidence demonstrating that the contributions in question were not

excessive. This evidence was to include documentation showing that the excessive

portions ofthese contributions had either been correctly designated to the general

election, timely redesignated or reattributed, or timely refunded. Absent such evidence, it

was recommended that the Committee refund the excessive contributions and provide

evidence ofsuch refunds (copies ofthe front and back ofthe negotiated refund checks)

for our review. Iffunds were not available to make the necessary refunds, those

contributions requiring refunds should be disclosed as debts on Schedule D (Debts and

Obligations) until such time that funds became available to make the refunds.

The Committee responded to the interim audit report as follows:

"This letter will acknowledge that Amorello for Congress must refund to

59 individuals sums totaling $43,825, representing excessive contributions for the

1998 primary. These individuals shall be listed as Schedule D debts in our July,

1999 filing.

"To date we have refunded the sum of $2048 ..."

Provided that debt schedules are filed! detailing the amounts to be

refunded, it appears the Committee has begun the process necessary to refund' the

aforementioned excessive contributions.

This report is due July 31, 1999.

Copies, front and back, ofthe negotiated refund checks ($2,048) were not included in the

Committee's response.

Page 7, Approved 7/21/99
FEDERAL ELECTION COMMISSION

WASHINGTON. D.C. 20463

•

•

July 27,1999

Ms. Patricia M. Finnegan, Treasurer

Amorello for Congress

484 Main Street, #570

Worcester, MA 01608

Dear Ms. Finnegan:

Attached, please find the Report ofthe Audit Division on Amorello for Congress.

The Commission approved the report on July 21, 1999.

The Commission approved Audit Report will be placed on the public record on July

28,1999. Should you have any questions regarding the public release ofthe report,

please contact the Commission's Press Office at (202) 694-I220 or toll free at (800)

424-9530. Any questions you have related to matters covered during the audit or in the

report should be directed to Marty Kuest or Wanda Thomas ofthe Audit Division at

(202) 694-1200 or the above toll free number. '

Assistant StaffDirector

Audit Division

Attachffient as stated

cc: Robert E. Amorello

Page 8, Approved 7/21/99
CHRONOLOGY

AMORELLO FOR CONGRESS

p,'!

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,~i Audit Fieldwork 04/26/99 TO 05/07/99 ...

.!

1'1 Interim Audit Report to •

j o=~ the Committee June 3,1999

bii

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"'" Response Received to the bl

• Interim Audit Report July 7,1999

r~11

0 Final Audit Report. Approved July 21, 1999 •

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Page 9, Approved 7/21/99
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