FEDERAL ELECTIO:--' CO\.\\1I5510'.; AK005714

c

T:

December 5, 1994

MEMORANDUM

TO: RON HARRIS, PRESS

PRESS OFFICE

FROM: ROBERT J. COSTA

ASSISTANT STAFF

AUDIT DIVISION

SUBJECT: PUBLIC ISSUANCE OF THE FINAL AUDIT REPORT ON

DEMOCRATS FOR ECONOMIC RECOVERY - LAROUCHE IN 92

Attached please find a copy of the final audit report

and related documents on Democrats for an Economic Recovery - LaRouche in 92 which was approved by the Commission on

November 30, 1994.

Informational copies of the 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

FEe Library
0-

REPORT OF THE AlJDIT DIVISIO~

O~

Democrats for Economic Recovery -

LaRouche in 92

- - - -

Approved November 30, 1994

FEDERAL ELECTlOl" CO'lMISSIO~

999 E STREET, N.W.

WASHINGTO~, D.C.
TABLE OF CONTENTS

DEMOCRATS FOR ECONOMIC

RECOVERY - LAROUCHE IN 92

page

,r- '

Final Audit Report

Background

Findings

Transmittal to Committee

Transmittal to Candidate

1

1

4

13

15

-17-
FEDERAL ELECTION COMMISSION

REPORT OF THE AUDIT DIVISION

ON

DEKOCRATS FOR ECONOMIC RECOVERY - LAROUCHE IN 92

AKOOS644

, "

I. Background

A. Audit Authority

This report is based on an audit of Democrats for

Economic Recovery - LaRouche in 92 ("the Committee"). The audit

is mandated by Section 9038{a) of Title 26 of the United States

Code. That section states that "after each matching payment

peHod-,-the- Co1llJlti-u·ionsha·ll-conducta tbor.ougb ttx.llll_i.I1.a1;1 on and

audit of the qualified campaign expenses of every candidat-e-itnd---------

his authorized committees who received payments under Section

9037." Also, Section 9039(b) of the United States Code and

Section 9038.1(a)(2) of the Commission'. Regulations state that

the Commission may conduct other examinations and audits from time

to time as it deem. necessary.

In addition to examining the receipt and use of Federal

funds, the audit seeks to determine if the Committee has

materially complied with the limitation., prohibitions and

disclosure requirements of the Federal Election Campaign Act of

1971, aa aaended.

B. Audit Coverage

The audit covered the period from January 14, 1991, the

date of th. Co..ittee's first transaction, through March 31, 1994.

During thia period, the Committee's reports reflect an opening

cash balanca-of $-0-, total receipts of $1,698,661, total

disbursements of $1,657,883, and a closing cash balance of

$40,778.1/ In addition, a limited review of the Committee's

transactIons through September 30, 1994 was conducted for purposes

of determining the Committee's remaining matching fund

entitlement.

y Figures included in this report are rounded to the

nearest dollar.

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11/30/94
DEMOCRATS FOR ECONOMIC RECOVERY - LAROUCHE IN 92

Page 2

C. Campaign Organization

The Committee registered with the Federal Election

Commission on January 23, 1991. The Treasurer for the period

audited was Kathy A. Magraw, who continues to serve as the

Committee's Treasurer. The Committee maintains its headquarters

in Leesburg, Virginia.

During the audit period the Committee used two bank

accounts to handle its financial activity. From these accounts

approximately 1,400 campaign disbursements that totaled about

$1,700,000 were made. Approximately 7,600 contributions were

received that totaled about $1,600,000.

In addition to contributions, the campaign received

$568,435 in matching funds from the United States Treasury. This

amount represents 4' of the $13,810,000 maximum entitlement that

any candidate could receive. The candidate was determined

-, eligible to receive matching funds on July 2, 19~3.2/ The campaign

made one matching fund request in the amount of $57~,339. The

Commission certified 98.8' of the requested amount on April 28,

1994. For matching fund purposes, the Commisaion determined that

Lyndon B. LaRouche, Jr.'s candidacy for the Democratic Party's . -pLesidential-nomination--endedJ\ll.Y_J.~,19~2. This determination

was based on the date of the convention pursu-a-nt-t-o--t:be-·-·--

Commission'S regulations at 11 crR S9033.5(c) which states, in

relevant part, that the candidate'S date of ineligibility shall be

the last day of the matching payment period as specified in 11 crR

59032.6; which states that the matching payment period may not

exceed -the date on which the party nominates its candidate. w

Attachment tl to this report is a copy of the

Commission's most recent Report on Financial Activity. The

amounts shown are as reported to the Coaaission by the Committee . . .,

D. Audit Scope and Procedures

In addition to a review of the qualified campaign

expense. incurred by the Committee, the audit covered the

following general categories:

1. The receipt of contributions or loans in excess of

the statutory limitations;

~/ The U.S. Court of Appeals for the District of Columbia

Circuit instructed the Commission to certify matching

funds to Lyndon B. LaRouche, Jr. for his 1992

Presidential Election Campaign. [LaRouche v. F.E.C.,

996 F.2d 1263, 1269 (1993).)

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11/30/94
DEMOCRATS FOR ECONOMIC RECOVERY - LAROUCHE IN 92

Page 3

2. the receipt of contributions from prohibited

sources, such as those from corporations or labor

organizations;

3. proper disclosure of receipts from individuals and

other entities, to include the itemization of

receipts 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 Committee debts and

obligations;

6. the accuracy of total reported receipts,

disbursements and cash balances as compared to

Committee bank records;

7. adequate recordkeeping for campaign transactions;

8.

9.

-accuracy of--the-Sta tement-ofNet__Ou_t_s_talld!n9

Campaign Obligation& filed by the COll1llittee to----- ------------- disclose its financial condition and establish

continuing matching fund entitlement {see Finding

II.B.};

the Committee's compliance with spending

limitations; and

10. other audit procedures that were deemed necessary

in the situation.

As part of the Commission's standard audit process,

an inventory of the Committee's records is normally conducted

prior to the audit fieldwork. This inventory is conducted to

determine if the auditee's records are materially complete

and in an auditable state. Based on our review of the

records presented at the entrance conference, fieldwork began

immediately.

Unless specifically

non-compliance was detected.

Commission may pursue further

this report in an enforcement

discussed below, no material

It should be noted that the

any of the matters discussed in

action.

Page 3

11/30/94
DEMOCRATS FOR ECONOMIC RECOVERY -

LAROUCHE IN 92

page 4

II. Findings and Recommendations - Repayment Matters

A. Calculation of Repayment Ratio

Section 9038.3(c)(1) of Title 11 of the Code of

Federal Regulations states 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.

Pursuant to 11 CFR SS9033.S(c) and 9032.6, Mr.

LaRouche's date of ineligibility was determined to be July

15, 1992.

The formula and the appropriate calculation with

respect to the Committee's receipt activity is as follows:·

-Total- Ma tching-runds-Rece ived through the Date

of Ineliiibility - July 15, 1992 3/ --

Numerator plus Tota Deposits to the Candidate's Accounts

c.

$568,435 - .270034

B.

Thus, the repayment ratio for a surplus is

27.0034\.

Determination of Net Outstanding Campaign

obligatIons - Surplus Repayment

Section 9034.5(a) of Title 11 of the Code of

Federal Regulations requires the candidate to submit a

statement of net outstanding campaign obligations which

contains, among other things, the total of all outstanding

obligations for qualified campaign ~xpenses and an estimate

of necessary winding down costs. Subsection (b) of this

section states, in part, that the total of outstanding

campaign obligations shall not ir.cl~de any accounts payable

for non-qualified campaign expenses.

The Audit staff'S calculation of the ratio assumes that the

matching funds were received prior to the Candidate's date cf

ineligibility.

Page 4

11/30/94
DEMOCRATS FOR ECONOMIC RECOVERY - LAROUCHE IN 92

Page 5

Section 9038(b)(3) of Title 26 of the United· Stat•• Code states that amounts received from the matching payment

account may be retained for the liquidation of all

obligations to pay qualified campaign expenses incurred for a

period not exceeding 6 months after the end of the matching

payment period. 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 candidate's accounts shall be promptly repaid to

the matching payment account.

On February 27, 1992, the Commission made a final

determination that the Candidate be denied eligibility to

receive Federal matching funds. AS a result of litigation by

the Committee, on July 2, 1993, the U.S. Court of Appeals for

the District of Columbia Circuit instructed the Commission to

certify matching funds to Lyndon H. LaRouche, Jr. for his

1992 presidential Election Campaign. The Committee filed a

Statement of Net Outstanding Campaign Obligations (NOCO) on

April 1, 1994. The NOCO is the basis for determining the

Committee's financial position at the Candidate'. date of

ineligibility. Our analysis assumes that the matching funds --"'e~e_receiyed_pr_tortotheCandidate's date of ineligibility.

The Audit staff reviewed the Coaaittee's financial

activity through September 30, 1994, analyzed winding down

costs, and prepared a NOCO Statement as of July 15, 1992,

which appears below:

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11/30/94
DEMOCRATS rOR ECONOMIC ReCOVERY -

LAROUCHE IN 92

Page 6

DEMOCRATS FOR ECONOMIC RECOVERY - LAROUCHE IN 92

Statement of Net Outstanding Campaign Obligations

as of July 15, 1992

as determined at September 30, 1994 by the Audit staff

ASSETS

Cash ~/

Accounts Receivable

Matching Funds Receivable ~/

capital Assets

Total Assets

, LIABILITIES

Accounts payable for Oua1ified

Campaign Expenses

Actual 7/16/92 thru 3/31/94

Reported 4/1/94 thru 9/30/94

Total Liabilities

$66,073

11,663

$26,821

3,647

568,435

1,294

$44,645

77,736

$600,197

122,381

-'"

NOCO Surplus/(Deficit)

Repayment Percentage (See rinding II.A.)

Repayment Amount

$477,816

.270034

~/

~/

This figure includes cash available in bank ac~ounts as well

as contributor checks dated on or before 7/15/92 but

deposited after 7/15/92.

Matching funds were received on February 24, 1994 ($100,000)

and on May 20, 1994 ($468,435).

Page 6

11/30/94
DEKOCRATS FOR ECONOMIC RECOVERY - LAROUCHE IN 92

page 7

At the exit conference, the Audit staff informed

Committee representatives of the surplus. In a written response

to matters presented at the exit conference, the Committee noted

that the differences between its NOCO calculations and those of

the Audit staff are immaterial, and therefore, does not challenge

the NOCO amounts determined by the Audit staff. However, the

Committee did state that • ... this concession should not be

understood to represent either an agreement with all of the

methodologies and conclusions contained in the Audit Division's

report, or a waiver by the candidate of the right to take up any

of these issues in any future campaigns in which he may

participate, should they recur in those campaigns at a more

material level .. ,•.

On September 14, 1994, the Committee submitted a letter

(with attachments) accompanied by a cashier's check in the amount

of $132,300, payable to the U.S. Treasury, According to the

Committee's letter, it understands the actual repayment amount may

vary somewhat based on other considerations (e.g •., interest earned

on deposit of Federal funds) and has tendered this payment in a

greater amount to encompass possible increas.s. The Committee

noted that the • ••. payment is issued with the understanding that, ___ should the COllllllission deter.in\! a lesser amount is due, the

----dYHerence---will-be -refunded -at the-appropriate time after that

determination ismade.·--

The interim audit report recommended that the Committee

demonstrate that it was not in a surplus position. The interim

audit report also stated that absent such a demonstration, the

Audit staff would recommend that the Commission make an initial

determination that the COllllllittee make a pro rata repayment to the

United states Treasury pursuant to 26 U.S.C. S9038(b)(3l. As

noted above, on September 14, 1994, the COllllllittee had submitted a

repayment check.

In a letter submitted in response to the interim audit

report, the COllllllittee's Treasurer stated that • ••• the candidate

and cOllllllittee have no comments at this time, but reserve our right

to respond at any appropriate future time to findings made by the

Commission.· In addition, the Treasurer noted the apparent

overpayment by the Committee and expects the • ... return of the

excess portion upon proper determination of the exact amount due."

Finally, the Audit staff has revised the above NaCO

presentation based on our review of the Committee'S October 15,

1994 Quarterly Disclosure Report.

Page 7

11/30/94
C.'

'0

DEMOCRATS ,oa ECONOMIC RECOVERY - LAltOUCHE IN 92

Page 8

Recommendation 11

The Audit staff recommends that the Commission make an

initial determination that the Committee was required to make a

pro rata repayment of $129,027 to the united States Treasury

pursuant to 26 u.s.c. S9038(b)(3). On September 14, 1994, the

Committee submitted a repayment check in the amount of $132,300.

C. Interest Earned on Investment of Federal Funds

Section 9038.2(b)(4) of Title 11 of the Code of Federal

Regulations state., in part, that the Commission may determine

that the net incom. derived from the investment of surplus public

funds after the candidate's date of ineligibility, less 'ederal,

State and local taxes paid on such income, is also repayable.

An attachment included with the letter received from the

Committee on September 14, 1994, details the investment of surplus

funds and the interest earned on the surplus. The schedule noted

that $468,435 in matching fund proceeds was invested; of this

amount, $130,105 represented surplus Federal fund.. The Committee

calculated the ratio for the Federal portion of the invested funds

to__be apprOXimately 27.77\ ($130,105/$468,386) and noted total interest:iarn.donthe'edera1portion_wU_$1,~4I_J$5, 208 x

27.77\). Workpapera were also prOVided detailing th.--co-lIiiiln-tee-' s

calculation of $234 in rederal and State tax liabilities.

The Audit staff's analysis determined the amount of

surplus Federal funds to be $129,635. Our revised ratio for the

Federal portion of the invested funds wa. determined to be

approximately 27.67\ ($129,635/$468,435). The total interest

earned on the Federal portion of the invested funds was $1,441

($5,208 x 27.67\). In addition, the Audit staff determined that

the Committee's calculation of Federal and State taxes owed i.

materially correct. Therefore, at the time of the interim audit

report, the Audit staff calculated that the amount of interest

earned on the Federal portion less applicable tax.s i. $1,207

($1,441 - $234).

As preViously noted, on September 14, 1994, the

Committe. submitted a cashier's check payable to the U.5.

Treasury, representing repayment of the Federal portion of surplus

funds, interest earned on investment of surplus Federal funds and

other amounts that may be owed by the Committee.

The interim audit report recommended that the Committee

submit documentation to show that no repayment Obligation (or a

lesser amount) exists. Absent such a submission, the Audit staf!

would recommend that the Commission make an initial determination

that $1,207 is repayable to the United State. Treasury pursuant to

11 CFR S9038.2(b)(4). The interim audit report also noted that

the Committee had submitted a repayment check.

Page 8

11/30/94
$ 129,027

$

1,200 130,227

132,300

s 12·973) .Y

DEMOCRATS rOR ECONOMIC RECOVERY - LAROUCHB IN 92

Page 9

In a letter submitted in response to the interim audit

report, the Committee's Treasurer stated that • ... the candidate

and committee have no comments at this time, but reserve our right

to respond at any appropriate future time to findings made by the

Commission.· In addition, the Treasurer noted the apparent

overpayment by the Committee and expects the • ... return of the

excess portion upon proper determination of the exact amount due."

Based on our revisions to the NOCO presentation above

and the resultant decrease in the amount of surplus Federal funds,

the Audit staff has recalculated the amount of interest earned on

the investment of public funds less applicable taxes to be $1,200.

Recommendation 12

The Audit staff r~commends that the Commission make an

initial determination that the Committee was required to make a

repayment of $1,200 to the United States Treasury pursuant to 11

CFR S9038.2(b)(4). On Septeaber 14, 1994, the Co..ittee had

subaitted a repayment check in the amount of $132,300.

III. Recap of Amounts Repayable to the United States Treasury

---Reflltcted- belovareamounts 4ue_ the United State. Treasury as

noted in the report.

rinding II.B. Surplua Repayment

rinding II.C. Intereat Earned on Surplus Total Amount Repayable

Less: Repayaent Received 9/14/94

Apparent averpayaent

.Y The amount of the overpayment should be refunded subsequent

to the Committee's receipt of the Commission's final

repayaent deteraination.

Page 9

11/30/94
y;" I

I

I

Adlu,' ,....Ip•• AttachP.'ent 1 (nlJOugh S.PI"",oe, 30, 199.)

! Page 1 of 2

F.o.,ffl! Ind'vld.-J PAC, and OIhtf Con'rtbultonl , Condld"'. O,*,loe,.,. ".,/U.,od

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WIl<lo< $28D.02& $508,5111 $750 SO $0 $0 $1.0311 $199,33.

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John ..... $353,180 $5113.800 "'411 $0 $0 15,1130 15,3111 11128,355

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c

Page 12

11/30/94
FEDERAL ELECTIO, C0\1\\15510' AK005701

,.~J:..'1i

.- .'.'

_ c

'.r:

November 30. 1994

Ms. Kathy A. McGraw, Treasurer

Democrats for Economic

Recovery - LaRouche in 92

c/o Richard Welsh

60 Sycolin Rd.

Leesburg, VA 22075

Dear Ms. McGraw:

Attached please find the Final Audit Report on Democrats

for Economic Recovery - LaRouche in 92. The Commission

approved this report on November 30, 1994. As noted on page 3

of this report, the Commission may pursue any of the matters

discussed in an enforcement action.

In accordance with 11 CFR S9038.2(c)(1) and (d)(l), the

Commission has made an initial determination that you were

required to repay to the Secretary of the Treasury $130,227.

On September 14, 1994, a payment of $132,300 was submitted

based on preliminary figures.

Should the Candidate dispute the Commission's

determination that a repayment is required, Commission

regulations at 11 CFR S9038.2(c)(2) provide the Candidate with

an opportunity to submit in writing, within 30 calendar days

after service of the Commission'S notice (January 3, 1995),

legal and factual materials to demonstrate that no repayment.

or a lessor repayment, is required. Further, 11 crR

S9038.2(c)(3) permits a Candidate who has submitted written

materials to request an opportunity to make an oral

presentation in open session based on the legal and factual

materials submitted.

The Commission will consider any written legal and factual

materials submitted by the Candidate within the 30 Day period

in making a final repayment determination. Such materials may

be submitted by counsel if the Candidate so elects. If the

Candidate decides to file a response to the initial repayment

determination, please contact Kim L. Bright-Coleman of the

Office of General Counsel at (202) 219-3690 or toll free at

(800) 424-9530. If the Candidate does not dispute this initial

determination within the 30 day period provided. it will be

considered final.

Page 13

11/30/94
MS. KATHY A. MCGRAW

Page 2

The Commission approved Final Audit Report will be placed

on the public record on December 5, 1994. Should you have any

questions regarding the public release of this report, please

contact Ron Harris of the Commission's Press Office at (202)

219-4155.

Any questions you may have related to matters covered

during the audit or in the audit report should be directed to

Alex Boniewicz or Henry Miller of the Audit Division at (202)

219-3720 or toll free at (800) 424-9530.

ArelYI

71~tJ Assistant Staff Director

Audit Division

Attachment as stated

Page 14

11/30/94
FEDERAL ELECTIOr-; CO,'vI,'vliSSION AKOOS701

November 30, 1994

Mr. Lyndon H. LaRouche, Jr.

Democrats for Economic

Recovery - LaRouche in 92

c/o Richard Welsh

60 sycolin Rd.

Leesburg, VA 22075

Dear Mr. LaRouche:

Attached please find the Final Audit Report on Democrats

for Economic Recovery - LaRouche in 92. The Commission

approved this report on November 30, 1994. As noted on page 3

of this report, the Commission may pursue any of the matters

----discus-sed -in an-tmf~rcement-acti-on. _

In accordance with 11 CFR S9038.2(c)(1) and (d)(l), the

Commission has made an initial determination that you were

required to repay to the Secretary of the Treasury $130,227.

On september 14, 1994, a payment of $132,300 was submitted

based on preliminary figures.

Should the Candidate dispute the Commission's

determination that a repayment is required, Commission

regulations at 11 crR S9038.2(c)(2) provide the Candidate with

an opportunity to submit in writing, within 30 calendar days

after service of the Commission's notice (January 3, 1995),

legal and factual materials to demonstrate that no repayment,

or a lessor repayment, is required. Further, 11 CFR

S9038.2(c)(3) permits a Candidate who has submitted written

materials to request an opportunity to make an oral

presentation in open session based on the legal and factual

materials submitted.

The Commission will conside: any written legal and factual

materials submitted by the Candidate within the 30 Day period

in making a final repayment determination. Such materials may

be submitted by counsel if the Candidate so elects. If the

Candidate decides to file a response to the initial repayment

determination, please contact Kim L. Bright-Coleman of the

Office of General Counsel at (202) 219-3690 or toll free at

(800) 424-9530. If the Candidate does not dispute this initial

determination within the 30 day p~riod provided, it will be

considered final.

page 15

11/30/94
, -~!

MR. LYNDON H. LAROUCHE, JR.

page 2

The Commission approved Final Audit Report will be placed

on the public record on December 5, 1994. Should you have any

questions regarding the public release of this report, please

contact Ron Harris of the Commission's Press Office at (202)

219-4155.

Any questions you may have related to matters covered

during the audit or in the audit report should be directed to

Alex Boniewicz or Henry Miller of the Audit Division at (202)

219-3720 or toll free at (800) 424-9530.

£4.L-./:~ Assistant aff Director

Audit Div ion

Attachment as stated

Page 16

11/30/94
CHRONOLOGY

DEMOCRATS FOR ECONOMIC

RECOVERY - LAROUCHE IN 92

.: }

Pre-Audit Inventory Commenced

Audit Fieldwork

Interim Audit Report to

the Committee

Response Received to the

Interim Audit Report

Final Audit Report Approved

page 17

11/30/94

6/15/94

6/15/94 - 8/3/94

11/10/94

11/16/94

11/30/94
•

AGENDA DOCUMENT #94-12-A

.\ \." " '.

MEMORANDUM

AKO~~r!~ 14 PH 2: S6

SUBMITTED LATE

AGENDA ITEM

for Meeting of: fEB , 1 \QQ4

February 14, 1994

TO:

THROUGH:

FROM:

SUBJECT:

THE

I-)~ ./ - ROBERT J. COS"lA

ASSISTANT ST~F DIREC OR

AUDIT DIVISI0N

ELIGIBILITY/REPORT - LYNDON H. LAROUCHE, JR./DEMOCRATS

FOR ECONOMIC RECOVERY - LAROUCHE IN '92

Attached is a report from the Audit Division regarding the

eligibility of Lyndon H. LaRouche, Jr./Democrats for Economic

Recovery-LaRouche in '92 to receive presidential Primary Matching

Fund payments.

We request that this matter be placed on the agenda for the

February 17, 1994, Commission meeting. Should you have any

questions regarding this matter, please contact Ray Lisi at

219-3720.

Attachment as stated
AK004662

ELIGIBILITY REPORT

OF THE

AUDn DIVISION

FOR

LYNDON H. LAROUCHE, JR.

DEMOCRATS FOR ECONOMIC RECOVERY LAROUCHE I~ '92

For a Candidate seeking to become eligible to receive

presidential primary matching fund payments, 26 U.S.C. 59033(a)

and (b) and 11 C.F.R. 559033.1 and 9033.2 set forth a series of

agreements and certifications which must be executed by a

Candidate and to which the Candidate and any of the Candidate's

authorized committees will comply as a condition to receiving

payments from the Presidential Primary Matching payment Account

under 26 U.S.C. 59037 and 11 C.F.R. 59037.1. In addition, 11

C.F.R. S9036.1(bl requires the Candidate and Committee to submit a

Threshold Submission, prepared in accordance with the Commission's

--GuTdeline -for-Presentation in G~od Order ,which dClo:;uments that

matchable contributions exceeding $S,OOO have been recei;'-edfromresidents of at least 20 States, which with respect to anyone

contributor, do not exceed $250.

, .-~.

On November 18, 1991, Lyndon H. LaRouche, Jr. and Democrats

for Economic Recovery-LaRouche in '92 submitted a Letter of

Candidate and Committee Agreements and Certifications as specified

by 11 C.F.R. 559033.1 and 9033.2. Democrats for Economic

Recovery-LaRouche in '92 also presented a Threshold Submission on

November 18, 1991.

The Office of General Counsel reviewed the Letter of

Candidate and Committee Agreements and Certifications submitted by

Lyndon B. LaRouche, Jr. and Democrats fo~ Economic

Recovery-LaRouche in '92. The legal analysis from that office

concluded that the letter did not meet the requirements of 26

U.S.C. 59033 and 11 C.F.R. 59033.1 and 9033.2 because of

qualifying language added to Paragraph VIII regarding the

production of documentation relating to funds received and

disbursements made on behalf of other political committees and

organizations associated with the candidate. (see copy at

Attachment I.) On December 2, 1991, a revised letter of Candidate

and Committee Agreements and Certifications was submitted Which

omitted the qualifying language (see copy at Attachment II.) The

Audit Division reviewed the Threshold Submission and. based upon

the information and documentation contained in the SUbmission, has

certified that the eligibility requirements have been met. (See

listing of qualifying States and verified amounts at Attachment

II I I .
-2-

RECOMMENDATIONS

1) The Audit Division recommends that the Commission determine

that Lyndon H. LaRouche, Jr./Democrats for Economic

Recovery-LaRouche in '92 have fulfilled the requirements set

forth in 26 U.S.C. §9033(a) and (b) and 11 C.F.R. SS9033.l,

9033.2, and 9035.1(b) and have established eligibility to

receive primary matching fund payments under 26 U.S.C. S9037

and 11 C.F.R. S9037.l.

2 )

3 )

The Audit Division further recommends that, in accordance

with 11 C.F.R. 9036.l(c) and the Commission's Guideline for

Presentation in Good Order, a notification letter be sent to

the Candidate regarding the Commission's eligibility

determination. The letter further advises that additional

Matching Fund Requests may be presented to the Commission for

review. (See proposed letter at Attachment IV.)

The Audit Division recommends that the Commission notify-the

secretary of the Treasury of the Candidate/Committee's

eligibility to receive payments from the Presidential Primary

Matching Payment Account. (See proposed letter at Attachment

V. )

Attachments as stated
~.....:J

~f I,I;>...~{"

AKA'lTl\.CHMENT 1

Page 1 of 2

FEDERAL HECTIOi' CO,'v1MISSION

\\ ,~$HI:-"C10.... 0 C :O..:.td

~~ 25, 1991

MEKORANDUM

TO:

THROUGH:

FROM:

SUBJECT:

Robert J. Costa

Assistant Staff . rector

Audit Divisio

John C. Su

Staff Dire

Lawrence M. ebll ."f/J If'

General Coun - . L 1~

Rim L. Brigh -Coleman \U Associate Ge ral Counsel

~::~:~.~t ~~~~~"., Letter of Candidate Agreements and Certifications

Submitted by Lyndon LaRouche/Democrats for Economic

Recovery: LaRouche in '92 (LRA 1385)

The Office of General Counsel has reviewed the letter dated

November 11, 1991, submitted by Lyndon LaRouche/Democrats for

Economic Recovery: LaRouche '92, setting forth the agreements

and certifications required of candidates seeking to become

eligible to receive Presidential primary matching fund5. On

November 20, 1991, we received your memorandum summarizing the

results of your review of the letter for compliance with thp.

requirements of 11 C.F.R. 55 9033.1 and 9033.2.

Based on our review of the letter, the Office of G~neral

counsel concludes that the lett~r does not meet the requirements

of 26 U.S.C. 5 9033 and 11 C.F.R. 55 9033.1 and 9033.2.

Specifically, our review of the letter noted that the Committee

added qualifying language to P~ragraph VIII. The statement

reads " ... to the extent such receipts and disbursements

pertain to my Presidential primary campaign, and to t.he ~xtent 1

or my authorized committee{s) have the legal authority to obtain

and furnish such documentation." We believe th~t the inclusion

of such qualifying language in the letter is co~tr~ry to tlla .

commission's regulations and Guideline for Presentation in Good

Order ("Guideline"). - -- ._-_... -------.--

The COlll1llission's regulations provide that, "[tlhe candidate

and the candidate's authorized committee(s) will obtain and "

furnish to the Commission upon request all documentation
Memorandum to Robert J. costa r\l·~AW-l."U:.."l' 1

Letter of Candidate Agreements and Certifications Page 2 of 2

Submitted Lyndon LaRouche/Democrats for Economic Recovery:

LaRoucne '92 (LRA 1385)

Page 2

relating to funrls rpceived and disbursements made on the

candidate'S bellalf by other political commlttees and

organizations associated with the candidate." 11 C.F.R.

S 9033.1(b)(6). See also Guideline, Suggested Format for

Candidate and Committee AgreementS-and Certifications, Appendix

1. In promulgating this provision, the Commission stated that

this requirement will ensure a more timely production of

pertinent records that the Commission needs to audit the

candidate'S Presidential campaign committee or to make repayment

determinations. See 56 Fed. ~~g. 35896, 35904 (July 29, 1991).

Thus, there is no authority in the Commission's regulations

or the Guideline for the lnclusion of the qualifying language in

the letter. Therefore, this Office recommends that Lyndon

LaRouche/Democrats for Economic Recovery: LaRouche '92 revise

its letter of candidate and committee agreements to comport with

the Commission's regulations and the Guideline by removing the

offending language. This Office will not recommend the approval

of the letter until the letter is revised to meet the

appropriate standards.

In a separate memorandum, this Office will address the

Audit Division's request regarding the effect of the candidate's

conviction on his eligibility to receive federal matching funds.

Lyndon LaRouche/Democrats for Economic Recovery: I,aRoi.fche

'92 also presented a threshold submission. If a routine

Eligibility Report is prepared for Commission consideration, no

legal analysis of the Eligibility Report will be prepared by

this Office. The Eligibility Report will, however, include our

legal analysis of the candidate'S 9033 letter as an attachment.

Staff assigned: Gregory R. Baker
DEC 0:2 '91 13:JE

----,-. ~~~';:'1~

734 Pe2 A:TT.l\CHMENr II

Page 1 of 4

0.".. P. AIt-=>N

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A. 0.0.\/10 0.0._

L.-R.HO~

OI'ClUNKL:

l:LVoHOll W. PD<,.'"

ANDERSON, ROSSI & DAVIS

ArrORN~SAT L.AW

I"OUR L.oNGn:U.Ow PLAa:. sum;; 370!l

905TON. MASSIICHUSETTS 021 t 4

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e.ucCco~

ZTSMlu.W .

ION 8.U<NST u HAIt-.J

Il4ANSTAa.L "" OZCl3O 1~31.1'-"

November 27, 1991

Greq Baker, Esq. Office of General Counsel

rederal Election Commission

999 E Street, N.W.

Washington, D.C. 20463

RE: Democrats for Economic ReCovery- LaRouche io '92

Threshold Submission "9033 Letter·

Dear Mr. Baker:

In light of our telephone-(ffScusifions-()f-U726191~-I---­

consider the concerns raised in my faxed letter of that ~ate to

be resolved. Enclosed please find the revised Candidate

Agreement letter which replaces the letter currently in your possession as part of the Threshold Submission.

Very truly yours,

Enclosure
tEe 132 '91 13:'38 FGl'1. iNC. r~ 1=03 ATI'J\L1-!?-U'Nr II

Page 2 \)f 4

Lyndon H. LaRouche, Jr.

c/o Democrats for Economic Recovery-LaRouche in 92

PO Boz 690

Leesburg, VA 22075

November 28, 1991

Chairman

Federal Election Commission

999 E street, NW

Washington, DC 20463

Dear Mr. Chairman:

As a candidate seeking to become eligible to receive ?~esident1al primary funds, I certify and agree to the

following provis1ons:

t. I am see~in9 the nomination of the Democratic party

for election to the Office of President in more than

one State. I and/or my authorized committee(s) have

-reeeived-matchable ~ontr-ibutionswhich_in_the _ 8gQr89ate exceed $5,000 from residents of e.ch of at

least twenty states which with respect to any one

person do not exceed $150.00.

II. I and/or my authorized committee(s) have not incurred

and will not incur qualified campaign ezpenses in

excess of the expenditure limitations prescribed by 26

U.S.C. Part 9035 and 11 C.F.R. Part 9035.

III. I acknowledge that I have the burden ot proving that

disbursements Mde by me, and any of my authorizea

committee(s) or agents are qualified campaign expenses

aa defined at 11 C.l.R. Part 9032.9.

IV. I and authorized comm1ttee(s) will comply with the

documentation requirements set forth in 11 C.F.R. Part

9033.11.

v. Upon the request of the Comnission, I or my authorized

commdttee will supply an explanation of the connection

between any disbursement made by rae or my authorized

committee(s) and the campaign as prescribed by 11

C.Y.R. Part 9033.1(b)(3).

VI. In accordance with 11 C.F.R. Part 9033.l(b)(4), I and

MY authorized committee(s) agree to keep and furnish

to the Commdssion all documeatation for matching fund

submissions, any boOkS, recorda (includin9 bank

records for all accounts) aDd aupportiu9 dOcumentation

and other information that the COmm181sion may request.
DEC a:2 '91 13:39 PG'\, it<.

VII. As provided at 11 C.~.R. Part 9033.1(b){5), I and my authorized committee(s) agree to keep and furnish to

the Commission all documentation relating to

disbursements and receipts including any books,

records (includi~q bank recorOs for all accounts), and

documentation required by t~is section including those

required to be maintained under 11 C.~.R. Part

9033.11, and other information that the Commission may

request. The records provided for the post-primary audit shall also include production of magnetic media

containing all information required to be maintained

on my authorized committee(s)' receipts and

disbursements, if my authorized committee(s)

maintain(s) its (their) records on computer. Upon

request by the Commission, documentation explaining the computer software capabilities shall also be

provided. The production of all computerized information shall be in contormance with 11 C.P.R.

Part 9033.12.

--VIn-:- I---ind-my-authorized-comlllittee{s}will-obtain-and---

furniSh to the Comddssion upon request all

documentation relating to funds received and

disbursements made on my behalf by other political

committees and organizations associated with me.

o IX. In accordance ~ith 26 U.S.C. Part 9038 and 11 C.F.R.

Part 9033.1(b)(7), I and my authorized committee(s)

shall permit an audit and examination pursuant to 11

C.F.R. Part 9038 of all receipts and disbursements,

including those made by me. all authorized

committee(s) and any agent or person authorized to

make eZllenditures on tlly behalf or on behalf of my

authorized committee(s). I and my authorized

committee(s) shall facilitate the audit by making

available in on. central location, office space,

records and such personnel as are necessary to conduct

the audit and examdnation, Ind shall pay any amounts

required to be repaid under 11 C.r.R. Parts 9038 and

9039.

X. Pursuant to 11 C.F.R. Part 9033.l(b)(8). the person listed below is entitled to receive matchinq fund

payments on my behalf which will be deposited into the

listed depository which I have designated as the

campaign depository. Any change in the information

required by this paragraph shall not be effective

until submitted ~o the Commission in a letter signed by me or the Treasurer of my authori~ed principal

campaign committee.
DEC 02 '91 13:39 PG1. II'C.

Name of Person:

Mailing Address:

Kathy". Maoraw

P.O. Boz: 690

Leesburg, VA 22075

Designated Depository: Sovran Bank

Address: King and Market Streets

Leesburg, VA 22075

'.--

XI.

Signed:

Pursuant to 11 C.F.R. Parts 9033.1(b)(9), (10), and

(11), I and my authorized committee(s) will: (A)

prepare matching fund submissions in accordance with

the Federal Election Commission's Guideline for

Presentation in Good Order, including the provision of

any magnetic media pertaining to the matching fund

submissions ind which conforms to the requirements

specified at 11 C.F.R. Part 9033.12; (B) comply with

the applicable requirements of 2 U.S.C. Part 431 ~.; and the Commission's regulations at 11 C.F.R. - Parts lOO-llS,--and 9031-9039: (C) -pay-civll--penalties -

included in a conciliation agreement imposed under 4

U.S.C. Part 4379 against myself, any of my authorized

co~ittee(S) 02rany agent thereof,

I '/ /;r f

~·M tWit .. /?

on H. LaRouche,/Jr.
ATrAOlMmr I I I

DEMOCRATS FOR ECONOMIC RECOVERYLAROUCHE IN '92

QUALIFYING THRESHOLD STATES

state Submitted Verified Matchable Amount

.~.

1. California

2. Colorado

3. Connecticut

4. Florida

5. Illinois

6. Kansas

7. Massachusetts

8. Maryland

9. Michigan

10. Minnesota

11. Missouri

12. North Carolina

-13; --Nebtaska---

14. New Jersey

15. New York

16. Ohio

17. Oregon

18. Pennsylvania

19. Texas

20. virginia

21. washington

22. Wisconsin

Total

$ 6,420

5,445

6,225

6,223

6,145

5,630

5,390

5,750

5,450

5,950

6,155

5,725

5,5"15-

6,100

6,217

5,762

5,800

6,015

5,550

5,965

5,075

5,465

$128.031,
; . A'ITACHMENr IV

Page 1 of 2

FEDERAL ElECTlO'- CO,\\\lI-;SIO'.;

.\ \ ""_". jf)'- '(

'0

Lyndon H. LaRouche, Jr.

Democrats for Economic RecoveryLaRouche in '92

Rt. 1, Box 284

Roundhill, VA 22141

Dear Mr. LaRouche:

This letter is to advise you that, pursuant to 11 C.F.R.SS

9033.4 and 9036.1{c), on , 1994, the Federal Election

Commission approved an Audit Division staff report which states

that you, as a presidential candidate, have satisfied the

eligibility requirements of 2 U.S.C. S9033{a) and (b) and 11

C.F.R. SS9033.1, 9033.2 and 9036.1(b). In approving this report,

the Commission has determined that your eligibility has been

established to receive payments from the Presidential primary

Matching Payment Account under the provisions_ ()J__2~JJ ._S_.C_._S903_7 ---and-l1-C;F~R;-S9037.1.-- X-i::-opy-Ci-Cthe- report-is enclosed for your

information.

At this time a payment of $100,000 will be certified to the

Secretary of the Treasury for payment. An additional matching

fund request containing contributions raised between January 1,

1991, through June 30, 1992, may be submitted on April 1, 1994.

In addition, a matching fund request(s) containing contributions

raised subsequent to July 1, 1992, may also be submitted on that

date contingent on a deficit financial position based on a

statement of net outstanding campaign obligations as of July 15,

1992, taking into account private contributions and public funds

received after June 3D, 1992.

The Commission suggests that if you have not already done so,

your Comaittee contact the Office of Financial Management Service

at the Department of Treasury to arrange for a method of payment

and further that the bank account number of the account to which

payments will be deposited also be transmitted in writing to the

Department of Treasury.
<<-.,

ATrACHMmr IV

Page 2 of 2

LETTER TO LYNDON H. LAROUCBE, JR.

Page 2

Should you have any questions regarding these matters, please

contact Mr. Raymond Lisi of the Audit Division at (202) 219-3720

or toll free at (800) 424-9530.

For the Commission,

Trevor Potter

Chairman

Enclosure as stated

cc: Treasurer
FEDERAL EUCTIO'- (n\\\\ ~'~C)'-

ATl'AOlMEN!' V

AK004664

Honorable Lloyd M. Bentsen, Jr.

Secretary

Department of the Treasury

washington, D.C. 20220

Dear Mr. Secretary:

On , the Federal Election Commission

determined that the following candidate and his authorized

committee had satisfied the eligibility requirements of 26 U.S.C.

59033 and 11 C.F.R. 559033.1, 9033.2, and 9036.1 to receive

presidential primary matching funds under 26 U.S.C. 59037 and 11

C.F.R. 59037.1:

Lyndon H. LaRouche, Jr.

Democrats for Economic Recovery-LaRouche in '92

Pursuant to 11 C.F.R. 59-0H.Hb)(8), the fonowIng individual

and depository were designated by the candidate to receive funds

from the Presidential primary Matching Payment Account under 26

U.S.C. 59037 and 11 C.F.R. 59037.1:

Designated Recipient:

Address of Recipient:

Designated Depository:

Kathy A. Magraw

Rt. I, Box 284

Roundhill, VA 22141

Sovran Bank

King and Market streets

Leesburg, VA 2207

(

Certification will be transmitted as provided in 26 U.S.C.

59036(a) and 11 C.F.R. 59036.2.

For t~e Commission,

Trevor Potter

Attest:

Marjorie Emmons

Secretary to the Commission