10

TFSA filed amended Schedules A during fieldwork which contained previously
undisclosed occupation/name of employer information. However, a material portion of
the required information was still lacking.

The Audit staff discussed this matter with TFSA representatives at the exit conference
held at the close of fieldwork. TFSA representatives stated that they had been preparing
the amended reports prior to audit notification and would continue efforts to obtain any
missing information. Just prior to the issuance of the preliminary audit report, additional
amended Schedules A were filed. Review of those reports indicated that TFSA’s filings
have been materially corrected.

Preliminary Audit Report Recommendation and Committee Response
The Audit staff recommended that TFSA provide any relevant comments it had on this
issue. In response, a TFSA representative stated it was their understanding that based on
the amended Schedules A filed to date, TFSA has materially complied with this
recommendation; and, that no further action is required. Based on the Audit staff’s
review of TFSA’s amended Schedules A, TFSA has materially complied with the
recommendation.


Part I
Background

Authority for Audit

This report is based on an audit of Tancredo for a Secure America (TFSA), undertaken by
the Audit Division of the Federal Election Commission (the Commission) as mandated
by Section 9038(a) of Title 26 of the United States Code. That section states “After each
matching payment period, the Commission shall conduct a thorough examination and
audit of the qualified campaign expenses of every candidate and his authorized
committees who received [matching] payments under section 9037.” Also, Section
9039(b) of the United States Code and Section 9038.1(a)(2) of the Commission’s
Regulations state that the Commission may conduct other examinations and audits from
time to time as it deems necessary.

Scope of Audit

This audit examined:

1. The receipt of excessive contributions and loans.

2. The receipt of contributions from prohibited sources.

3. The receipt of transfers from other authorized committees.
4. The disclosure of contributions and transfers received.

5. The disclosure of disbursements, debts and obligations.

6. The recordkeeping process and completeness of records.

7. The consistency between reported figures and bank records.
8. The accuracy of the Statement of Net Outstanding Campaign Obligations.
9. The campaign’s compliance with spending limitations.

10. Other campaign operations necessary to the review.

Inventory of Campaign Records

The Audit staff routinely conducts an inventory of campaign records before it begins the
audit fieldwork. TFSA records were materially complete and the fieldwork began
immediately.


e An expense incurred for the purpose of determining whether an individual should
become a candidate, if that individual subsequently becomes a candidate,
regardless of when that expense is paid. 11 CFR §9034.4.

e An expense associated with winding down the campaign and terminating political
activity. 11 CFR §9034.4(a)(3).

D. Value of Capital Assets. The fair market value of capital assets is 60% of the total
original cost of the assets when acquired, except that assets that are received after the date
of ineligibility must be valued at their fair market value on the date received. A
candidate may claim a lower fair market value for a capital asset by listing the asset on
the NOCO statement separately and demonstrating, through documentation, the lower
fair market value. 11 CFR §9034.5(c)(1).

E. Entitlement to Matching Payments after Date of Ineligibility. If, on the date of
ineligibility (see above), a candidate has net outstanding campaign obligations as defined
under 11 CFR §9034.5, that candidate may continue to receive matching payments
provided that he or she still has net outstanding campaign debts on the day when the
matching payments are made. 11 CFR §9034.1(b).

Facts and Analysis

The Candidate’s date of ineligibility (DOI) was December 20, 2007. The Audit staff
reviewed TFSA’s financial activity through July 31, 2009, analyzed estimated winding
down costs and prepared the Statement of Net Outstanding Campaign Obligations that
appears on the next page:


Overview of Financial Activity

(Audited Amounts)
Cash on hand @ 12/28/06 $0
o Contributions from Individuals $ 3,994,731
o Matching Funds Received 744,327
o Contributions from Political Committees 9,545
o Transfers from Affiliates 100,000
o Loans Received 2,002,611
o Offsets to Operating Expenditures 153,273
o Other Receipts 11,575
Total Receipts $ 7,016,062
o Operating Expenditures $ 6,003,402
o Loan Repayments 821,649
o Contribution Refunds 34,420
o Other Disbursements 1,746
Total Disbursements $ 6,861,217
Cash on hand @ 2/29/08 $ 154,845



Part II
Overview of Campaign

Campaign Organization

Important Dates

Tancredo for a Secure America

« Date of Registration

January 22, 2007

« Eligibility Period

September 10, 2007 - December 20, 2007

e Audit Coverage

December 28, 2006 - February 29, 2008

Headquarters Vienna, VA
Bank Information
e Bank Depositories Five

e Bank Accounts

Thirteen Checking, One Money Market

Treasurer

e Treasurer When Audit Was Conducted

Steven J. Durham

¢ Treasurer During Period Covered by Audit

Kenneth C. McAlpin (1/22/07 - 4/17/07)
Steven J. Durham (4/18/07 - present)

Management Information

¢ Attended FEC Campaign Finance Seminar _| No

e Used Commonly Available Campaign Yes
Management Software Package

¢ Who Handled Accounting and Paid Staff

Recordkeeping Tasks



Part IV
Findings and Recommendations

| Finding 1. Net Outstanding Campaign Obligations

Summary

The Audit staff’s review of TFSA’s financial activity through July 31, 2009, and
estimated winding down costs, indicated that the candidate did not receive matching fund
payments in excess of his entitlement. The Audit staff recommended that TFSA
demonstrate an adjustment was required to any component of the NOCO or provide any
other comments it so desired. In response, a TFSA representative stated that they
accepted the Audit Division’s calculation.

Legal Standard
A. Net Outstanding Campaign Obligations (NOCO). Within 15 days after the
candidate’s date of ineligibility (see definition below), the candidate must submit a
statement of “net outstanding campaign obligations.” This statement must contain,
among other things:
¢ The total of all committee assets including cash on hand, amounts owed to the
committee and capital assets listed at their fair market value;
¢ = The total of all outstanding obligations for qualified campaign expenses; and
« Anestimate of necessary winding-down costs. 11 CFR §9034.5(a).

B. Date of Ineligibility. The date of ineligibility is whichever of the following dates
occur first:
¢ The day on which the candidate ceases to be active in more than one state;
« The 30th day following the second consecutive primary in which the candidate
receives less than 10 percent of the popular vote;
¢ The end of the matching payment period, which is generally the day when the
party nominates its candidate for the general election; or
« In the case of a candidate whose party does not make its selection at a national
convention, the last day of the last national convention held by a major party in
the calendar year. 11 CFR §§9032.6 and 9033.5.

C. Qualified Campaign Expense. Each of the following expenses is a qualified
campaign expense.
e Anexpense that is:

o Incurred by or on behalf of the candidate (or his or her campaign) during the
period beginning on the day the individual becomes a candidate and
continuing through the last day of the candidate’s eligibility under 11 CFR
§9033.5;

o Made in connection with the candidate’s campaign for nomination; and

o Not incurred or paid in violation of any federal law or the law of the state
where the expense was incurred or paid. 11 CFR §9032.9.


FEDERAL ELECTION COMMISSION
WASHINGTON, D.C. 20463

October 6, 2009

MEMORANDUM
To: Judith Ingram
Press Officer

From: Joseph F. Stoltz
Assistant Staff ctor
Audit Division

Subject: Public Issuance of the Audit Report on Tancredo for a Secure America

Attached please find a copy of the audit report on Tancredo for a Secure America,
which was approved by the Commission on September 24, 2009.

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
ITD Web


Shown below are adjustments for funds received after December 20, 2007, through July
31, 2009.

Net Outstanding Campaign Obligations (Deficit) as of 12/20/07 ($2,316,420) |

Private Contributions and Other Receipts Received 12/21/07 52,073

through 2/28/09

Matching Funds Received 12/21/07 through 7/31/09 2,228,901

Remaining Net Outstanding Campaign Obligations ($ 35,446)
(Deficit) as of 7/31/09

As presented above, TFSA has not received matching fund payments in excess of its
entitlement.

The NOCO was presented to TFSA and copies of workpapers were provided. TFSA
representatives stated that they would review the workpapers and provide any additional
comments, if necessary.

Preliminary Audit Report Recommendation and Committee Response
The Audit staff recommended that TFSA demonstrate an adjustment was required to any
component of the NOCO or provide any other comments it so desired. In response, a
TFSA representative stated that they accepted the Audit Division’s calculation.

| Finding 2. Disclosure of Occupation/Name of Employer

Summary
A sample review of contributions from individuals indicated that TFSA lacked, or did not

adequately disclose, occupation and/or name of employer information. The projected
dollar value of the exceptions was $422,023. TFSA filed amended Schedules A
(Itemized Receipts) during fieldwork, and again just prior to the issuance of the
preliminary audit report, which materially corrected the public record. The Audit staff
recommended that TFSA provide any relevant comments it had on this issue. In
response, a TFSA representative stated it was their understanding that based on the
amended Schedules A filed to date, TFSA has materially complied with this
recommendation; and, that no further action is required.

Legal Standard

A. Itemization Required for Contributions from Individuals. A political committee
other than an authorized committee must itemize any contribution from an individual if it
exceeds $200 per calendar year, either by itself or when combined with other
contributions from the same contributor. 2 U.S.C. §434(b)(3)(A).

B. Required Information for Contributions from Individuals. For each itemized
contribution from an individual, the committee must provide the following information:
e The contributor’s full name and address (including zip code);
e The contributor’s occupation and the name of his or her employer;


Tancredo for A Secure America

Statement of Net Outstanding Campaign Obligations
As of December 20, 2007
Prepared July 31, 2009

Assets

Cash in Bank
Accounts Receivable
Capital Assets

Total Assets
Liabilities

Loan Payable at 12/20/07
Accounts Payable for Qualified Campaign
Expenses at 12/20/07
Winding Down Costs:
Actual (12/21/07 - 7/31/09)
Estimated (8/1/09 - 10/31/09)
Bank Interest Due on Loan

Total Liabilities

Net Outstanding Campaign Obligations (Deficit) as of Dec. 20, 2007

$490,983
83,235

$451,881
132,418
2,904

$1,930,611

393,647

574,218
5,147

[a] Winding Down Costs include storage cost for a three year period.

$587,203

fa]

$2,903,623

$2.316.420)


Part III
Summaries

Findings and Recommendations

Finding 1. Net Outstanding Campaign Obligations

The Audit staff’s review of TFSA’s financial activity through July 31, 2009, and
estimated winding down costs, indicated that the candidate did not receive matching fund
payments in excess of his entitlement. The Audit staff recommended that TFSA
demonstrate an adjustment was required to any component of the NOCO or provide any
other comments it so desired. In response, a TFSA representative stated that they
accepted the Audit Division’s calculation. (For more detail, see p. 5)

Finding 2. Disclosure of Occupation/Name of Employer

A sample review of contributions from individuals indicated that TFSA lacked, or did not
adequately disclose, occupation and/or name of employer information. The projected
dollar value of the exceptions was $422,023. TFSA filed amended Schedules A
(Itemized Receipts) during fieldwork, and again recently, which materially corrected the
public record. The Audit staff recommended that TFSA provide any relevant comments
it had on this issue. In response, a TFSA representative stated it was their understanding
that based on the amended Schedules A filed to date, TFSA has materially complied with
this recommendation; and, that no further action is required. (For more detail, see p. 8)

Amounts Owed to the U.S. Treasury

At this time, there are no amounts owed to the United States Treasury.


Table of Contents

Part I. Background
Authority for Audit
Scope of Audit
Inventory of Campaign Records

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

Part III. Summaries
Findings and Recommendations
Amounts Owed to the U.S. Treasury

Part IV. Findings and Recommendations
Finding 1. Net Outstanding Campaign Obligations
Finding 2. Disclosure of Occupation/Name of Employer

Page


Report of the
Audit Division on

Tancredo for a Secure America
December 28, 2006 - February 29, 2008

Why the Audit
Was Done

Federal law requires the
Commission to audit
every political committee
established by a
candidate who receives
public funds for the
primary campaign.’ The
audit determines whether
the candidate was
entitled to all of the
matching funds received,
whether the campaign
used the matching funds
in accordance with the
law, whether the
candidate is entitled to
additional matching
funds, and whether the
campaign otherwise
complied with the
limitations, prohibitions,
and disclosure
requirements of the
election law.

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

About the Committee (p. 2)

Tancredo for a Secure America (TFSA) is the principal campaign
committee for Thomas G. Tancredo, a candidate for the Republican
Party’s nomination for the office of President of the United States.
The Committee is headquartered in Vienna, VA. For more
information, see chart on the Campaign Organization, p.2.

Financial Activity (p. 3)

e Receipts
o Contributions from Individuals $3,994,731
o Matching Funds Received 744,327
o Contributions from Political Committees 9,545
o Transfers from Affiliates 100,000
o Loans Received 2,002,611
o Offsets to Operating Expenditures 153,273
o Other Receipts 11,575
o Total Receipts $7,016,062

e Disbursements

o Operating Expenditures $ 6,003,402
o Loan Repayments 821,649
o Contribution Refunds 34,420
o Other Disbursements 1,746
o Total Disbursements $ 6,861,217

Findings and Recommendations (p. 5)
e Net Outstanding Campaign Obligations
¢ Disclosure of Occupation/Name of Employer

' 26 U.S.C. §9038(a).


Report of the
Audit Division on
Tancredo for a Secure America

December 28, 2006 - February 29, 2008



e The date of receipt (the date the committee received the contribution);

e The amount of the contribution; and

¢ The calendar year-to-date total of all contributions from the same individual. 11
CEFR §8§100.12 and 104.3(a)(4) and 2 U.S.C. §434(b)(3)(A).

C. Best Efforts Ensures Compliance. When the treasurer of a political committee
shows that the committee used best efforts (see below) to obtain, maintain, and submit
the information required by the Act, the committee’s reports and records will be
considered in compliance with the Act. 2 U.S.C. §432(h)(2)(i).

D. Definition of Best Efforts. The treasurer and the committee will be considered to
have used “best efforts” with respect to contributions if the committee satisfied all of the
following criteria:

e All written solicitations for contributions included:

o Aclear request for the contributor's full name, mailing address, occupation,
and name of employer; and
o The statement that such reporting is required by Federal law.

¢ Within 30 days after the receipt of the contribution, the treasurer made at least one
effort to obtain the missing information, in either a written request or a
documented oral request.

e The treasurer reported any contributor information that, although not initially
provided by the contributor, was obtained in a follow-up communication or was
contained in the committee’s records or in prior reports that the committee filed
during the same two-year election cycle. 11 CFR §104.7(b).

E. Sampling. In conducting an audit of contributions, the Commission uses generally
accepted statistical sampling techniques to quantify the dollar value of related audit
findings. Apparent violations (sample errors) identified in a sample are used to project
the total amount of violations. If a committee demonstrates that any apparent sample
errors are not errors, the Commission will make a new projection based on the reduced
number of errors in the sample. 11 CFR §9038.1(f)(1) and (2).

Facts and Analysis

A review of TFSA’s disclasure reports during pre-audit work indicated that there was a
problem with TFSA’s disclosure of occupation and/or name of employer information.
Most of these exceptions were either disclosed with the notation “information requested”
or were left blank on Schedules A (Itemized Receipts) filed with the Commission.

During audit fieldwork, a sample review of contributions from individuals indicated that
TFSA lacked, or did not adequately disclose, occupation and/or name of employer
information. The projected dollar value of the exceptions was $422,023, after
considering documented “best efforts.””

? The Audit staff utilized a monetary unit sample with a 95% confidence level. The projected dollar value
of the sample exceptions was $422,023 (midpoint of range) and the dollar value of the sampling error was
$73,893.