Preliminary Report of the 

Audit Division on 

Biden for President, Inc. 

December 15, 2006 - April 30, 2008 

Why the Audit 

Was Done 

Federal law requires tlie 

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) 

Biden for President, Inc. is the principal campaign committee of Joseph R. 

Biden, Jr., a candidate for the Democratic Party's nomination for the office of 

President of the United States. The Committee is headquartered in 

Wilmington, DE. For more information, see chart on the Campaign 

Organization, p. 2. 

Financial Activity (p. 3) 

• Receipts 

o Contributions from Individuals $8,210,947 

o Contributions from Political Committees 166,045 

o Transfers from Affiliated Committees 1,900,000 

o Loans Received 1,468,614 

o Matching Funds Received 857,189 

o Offsets to Operating Expenditures 270,611 

o Other Receipts 12,650 

o Total Receipts $ 12,886,056 

• Disbursements 

o Operating Expenditures $ 10,656,525 

o Loan Repayments 857,189 

o Transfers to Other Authorized Committees 639,408 

o Contribution Refunds 578,032 

o Total Disbursements $ 12,731,154 

Findings and Recommendations (p. 4) 

Net Outstanding Campaign Obligations (Finding 1) 

Receipt of Contributions that Exceed Limits (Finding 2) 

Prohibited In-Kind Contribution (Finding 3) 

Stale-Dated Checks (Finding 4) 

Disclosure of Disbursements (Finding 5) 

Reporting of Debts and Obligations (Finding 6) 

26 U.S.C. §9038(a). 
Preliminary Report of the 

Audit Division on 

Biden for President, Inc. 

December 15, 2006 - April 30, 2008 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Inventory of Campaign Records 1 

Changes to the Law 1 

Part II. Overview of Campaign 

Campaign Organization 2 

Overview of Financial Activity 3 

Part III. Summaries 

Findings and Recommendations 4 

Sunmiary of Amounts Potentially Owed to the U.S. Treasury 5 

Part IV. Findings and Recommendations 

Finding 1. Net Outstanding Campaign Obligations 6 

Finding 2. Receipt of Contributions that Exceed Limits 9 

Finding 3. Prohibited In-Kind Contribution 14 

Finding 4. Stale-Dated Checks 16 

Findings. Disclosure of Disbursements 17 

Finding 6. Reporting ofDebts and Obligations 18 
Part I 

Background 

Authority for Audit 

This report is based on an audit of Biden for President, Inc. (BFP), undertaken by the Audit 

Division of the Federal Election Commission (the Commission) as mandated by Section 9038(a) 

of Titie 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, Sectioii 9039(b) ofthe 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. BFP records were materially complete and the fieldwork began immediately. 

Changes to the Law 

On September 14,2007, the President signed into law the Honest Leadership and Open 

Govemment Act of 2007 (HLOGA), which included many revisions to the ethics rules that 

govern the conduct of U.S. Senators and members of the House of Representatives. One of the 

effects of HLOGA was to establish new rules goveming presidential non-commercial travel after 

September 14,2007. Section 439(a)(c) of Titie 2 oftiie United States Code was amended to 

prohibit Senate and Presidential candidates, and their authorized conmiittees, from spending 

campaign funds for travel on non-commercial aircraft, unless they pay their pro-rata share of the 

charter rate. The Commission intends to amend its current regulations to implement the new 

law. However, in a press release dated September 24,2007, the Commission Chairman indicated 

that "until regulations are issued, the Commission would not pursue a political committee if it 

operates under a reasonable interpretation of the statute, even if our subsequent regulations reach 

a different interpretation." Since the travel noted in Finding 3, Prohibited In-Kind Contribution, 

occurred before September 14,2007, the new travel rules were not applicable. 
Part II 

Overview of Campaign 

Campaign Organization 

Important Dates Biden for President, Inc. 

• Date of Registration January 31,2007 

• Eligibility Period December 3,2007 - January 3,2008 

• Audit Coverage December 15,2006 - April 30, 2008 ^ 

Headquarters Wilmington, DE 

Bank Information 

• Bank Depositories One 

• Bank Accounts Three checking, one certificate of deposit 

Treasurer 

• Treasurer When Audit Was Conducted Melvyn Monzak 

• Treasurer During Period Covered by Audit Melvyn Monzak 

Management Information 

• Attended FEC Campaign Finance Seminar No 

• Used Commonly Available Campaign 

Management Software Package 

Yes 

• Who Handled Accounting, Recordkeeping 

Tasks and Other Day-to-Day Operations 

Paid staff 

^ The period during which the candidate was eligible for matching funds, began on the date of certification of his 

matching fiind eligibility and ended on the date the candidate announced his withdrawal from the campaign. See 

11 CFR §9033. 

^ Limited reviews of receipts and expenditures were performed after April 30,2008, to determine whether the 

candidate was eligible to receive additional matching funds. 
Overview of Financial Activity 

(Audited Amounts) 

Cash on hand December 15,2006 $0 

o Contributions from Individuals $ 8,210,947^* 

o Contributions from Political Conimittees 166,045 

o Transfers from Affiliated Conmiittees 1,900,000 

o Loans Received 1,468,614 

o Matching Funds Received 857,189' 

o Offsets to Operating Expenditures 270,611 

o Other Receipts 12,650 

Total Receipts $ 12,886,056 

o Operating Expenditures $ 10,656,525 

o Loan Repayments 857,189 

o Transfers to Other Authorized Committees 639,408 

o Contribution Refunds 578,032 

Total Disbursements $ 12,731,154 

Cash on hand @ April 30,2008 $ 154,902 

* Approximately 33,000 contributions from more than 20,000 individuals. 

^ As of April 30,2008, BFP had made 5 matching fund submissions totaling $2,016,725 of which $1,992,225 was 

certified by the Commission. However, BFP only received $857,189. As of November 1,2008, BFP had submitted 

8 requests totaling $2,061,282 of which $2,025,597 was certified representing 9% of the maximum entitlement 

($21,025,000). 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Net Outstanding Campaign Obligations 

The Audit staffs review of BFP's financial activity through December 31,2008 and 

estimated winding down costs indicated that the candidate did not receive matching fund 

payments in excess of his entitlement. (For more detail, see p. 6) 

Finding 2. Receipt of Contributions that E<xceed Limits 

The Audit staffs review of contributions from individuals indicated that BFP failed to 

resolve a material number of excessive contributions. Based on a sample of 

contributions, the projected dollar value of the unresolved excessive contributions in the 

population is $106,216. In addition, the projected amount of excessive contributions that 

were not resolved in a timely manner is $1,092,899. The Audit staff recommends that 

BFP provide evidence that the contributions are either not excessive or were resolved in a 

timely manner. Absent such a demonstration, BFP should make appropriate refunds to 

contributors or make a payment of $106,216 (or a lesser amount based on BFP's 

response) to the U.S. Treasury. (For more detail, see p. 9) 

Finding 3. Prohibited In-Kind Contribution 

The review of campaign travel identified one flight by BFP on private aircraft that was 

reimbursed using the lowest unrestricted and non-discounted first-class commercial 

airfare. However, the plane utilized was certified by the Federal Aviation Administration 

and operated in a manner that requires its use be paid at a charter rate. The difference 

between what BFP paid and the charter rate resulted in the receipt of an in-kind 

contribution of $26,889 from a corporation. The Audit staff recommends that BFP 

demonstrate that it did not receive a prohibited in-kind contribution or make a payment to 

the U.S. Treasury. (For more detail, see p. 14) 

Finding 4. Stale-Dated Checks 

The Audit staff identified stale-dated checks totaling $137,757 issued by BFP. 

Subsequent to the exit conference, BFP made a payment to the U.S. Treasury for staledated checks in the amount of $8,457 resulting in an unresolved balance of $129,300. 

The Audit staff recommends that BFP provide evidence that the remaining checks are not 

outstanding or make a payment to the U.S. Treasury in the amount of the outstanding 

checks. (For more detail, see p. 16) 

Finding 5. Disclosure of Disbursements 

The Audit staff identified 49 disbursements, totaling $3,779,976, that were not 

adequately disclosed. Problems noted included incorrect or inadequate purpose as well 

as incorrect addresses. Subsequent to the exit conference, BFP filed amended reports that 
materially corrected the disclosure of these disbursements. The Audit staff recommends 

that BFP provide any additional comments it feels relevant to this matter. (For more 

detail, seep. 17) 

Finding 6. Reporting of Debts and Obligations 

The Audit staff identified debt totaling $870,296 that was not disclosed on Schedules D 

(Debts and Obligations) as required. Subsequent to the exit conference, BFP filed 

amended reports that materially corrected the disclosure of these debts. The Audit staff 

recommends that BFP provide any additional comments it feels relevant to this matter. 

(For more detail, see p. 18) 

Summary of Amounts Potentially Owed to 

the U.S. Treasury 

• Finding 2 Receipt of Contributions that Exceed $ 106,216 

Limits 

• Finding 3 Prohibited In-Kind Contribution 26,889 

• Finding 4 Stale-Dated Checks 129,300 

Total Due U.S. Treasury $ 262,405 
Part IV 

Findings and Recommendations 

Finding 1. Net Outstanding Campaign Obligations 

Summary 

The Audit staffs review of BFP's financial activity through December 31,2008 and 

estimated winding down costs indicated that the candidate did not receive matching fund 

payments in excess of his entitlement. 

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 

• An estimate of necessary winding-down costs. 11 CFR §9034.5(a). 

B. Date of Ineligibility. The date of ineligibility is whichever of the following dates 

occurs 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 

tiie calendar year. 11 CFR §§9032.6 and 9033.5. 

C. Qualified Campaign Expense. Each of the following expenses is a qualified 

campaign expense. 

• An expense 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. 

• 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. 
• An expense associated with vsdnding 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 eisset by listing the asset on 

the NOCO statement separately and demonstrating, through documentation, the lower 

fair market value. 11 CFR §9034.5(c)(l). 

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 January 3,2008. The Audit staff 

reviewed BFP's financial activity through December 31,2008, analyzed estimated 

winding down costs and prepared the Statement of Net Outstanding Campaign 

Obligations that appears on the next page: 
Biden for President, Inc. 

Statement of Net Outstanding Campaign Obligations 

As of January 3,2008 

Prepared December 31,2008 

Assets 

Cash in Bank $ 1,617,833 [a] 

Accounts Receivable 173,184 

Capital Assets 38,774 

Total Assets $1,829,791 

Liabilities 

Accounts Payable for Qualified Campaign Expenses at 

1/3/08 $ 2,067,605 

Winding Down Costs: 

Paid 1/4/08 - 12/31/08 $ 817,304 

Estimated Winding Down Costs (1/1/09 - 12/31/09) 45.500 862,804 [b] 

Loan Payable at 1 /3/08 1,132,114 

Amounts Payable to U.S. Treasury for: 

Unresolved Excessive Contributions (See Finding 2) $ 106,216 

Prohibited In-Kind Contribution (See Finding 3) 26,889 

Stale-Dated Checlcs (See Finding 4) 129.300 262.405 

Total Liabilities 4,324,928 

Net Outstanding Campaign Obligations (Deficit) as of January 3,2008 ($2,495,137) 

[a] Adjusted for stale-dated checlcs totaling $8,457 issued prior to DOI. 

[b] The Audit staff will review BFP's disclosure reports to compare actual figures with the estimates and 

prepare adjustments accordingly. 
Shown below are adjustments for funds received after January 3,2008, through 

December 31,2008, based on the most current financial information available at the close 

of fieldwork: 

Net Outstanding Campaign Obligations (Deficit) as of 1/3/08 ($2,495,137) 

Private Contributions and Other Receipts Received 1/4/08 

through 12/31/08 

358,680 

Matching Funds Received 1/4/08 through 12/31/08 2,031,197 

Remaining Net Outstanding Campaign Obligations 

(Deficit) as of 12/31/08 

($105,260)** 

As presented above, BFP has not received matching fund payments in excess of its 

entitiement. However, the Audit staff will reevaluate whether any repayment is due 

based on BFP's response to this report. 

Preliminary Audit Report Recommendation 

The Audit staff recommends that, within 60 calendar days of service of this report, BFP 

demonstrate an adjustment(s) is required to any component of the NOCO statement or 

provide any other comments it so desires. 

Finding 2. Receipt of Contributions that Exceed Limits 

Summary 

The Audit staffs review of contributions from individuals indicated that BFP failed to 

resolve a material number of excessive contributions. Based on a sample of 

contributions, the projected dollar value of the unresolved excessive contributions in the 

population is $106,216. In addition, the projected amount of excessive contributions that 

were not resolved in a timely manner is $1,092,899. The Audit staff recommends that 

BFP provide evidence that the contributions are either not excessive or were resolved in a 

timely manner. Absent such a demonstration, BFP should make appropriate refunds to 

contributors or make a payment of $106,216 (or a lesser amount based on BFP's 

response) to the U.S. Treasury. 

Legal Standard 

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

tiian a total of $2,300 per election firom any one person. 2 U.S.C. §441a(a)(l)(A), and (f); 

11 CFR §§110.1(a) and (b) and 110.9(a). 

B. Handling Contributions That Appear Excessive. If a conimittee receives a 

contribution that appears to be excessive, the committee must either: 

• retum the questionable contribution to the donor; or 

^ Subsequent to date of ineligibility, BFP incurred and repaid a $ 161,500 loan. This has no efiTect on the 

analysis and is not included in the above figures. 
10 

• deposit the contribution into its federal account and keep enough money on 

account to cover all potential refunds until the legality of the contribution is 

estabUshed. 11 CFR §103.3(b)(3) and (4). 

The excessive portion may also be redesignated to another election or reattributed to 

another contributor as explained below. 

C. Redesignation of Excessive Contributions. The committee may ask the contributor 

to redesignate the excess portion of the contribution for use in another election. 

• The committee must, within 60 days of receipt of the contribution, obtain and 

retain a signed redesignation letter which informs the contributor that a refund of 

the excessive portion may be requested; or 

• refimd tiie excessive amount. 11 CFR §§110.1(b)(5), 110.1(1)(2) and 103.3(b)(3). 

Notwithstanding the above, when an authorized political conimittee receives an excessive 

contribution firom an individual or a non-multi-candidate committee, the committee may 

presumptively redesignate the excessive portion to the general election ifthe 

contribution: 

• Is made before that candidate's primary election; 

• Is not designated in writing for a particular election; 

• Would be excessive if treated as a primary election contribution; and 

• As redesignated, does not cause the contributor to exceed any other contribution 

limit. 

Also, the committee may presumptively redesignate the excessive portion of a general 

election contribution back to the primary election if the amount redesignated does not 

exceed the committee's primary net debt position. 

The committee is required to notify the contributor in writing of the redesignation within 

60 days of the treasurer's receipt of the contribution and must offer the contributor the 

option to receive a refund instead. For this action to be valid, the committee must retain 

copies of the notices sent. Presumptive redesignations apply only v^thin the same 

election cycle between the committee's primary and general elections. 11 CFR 

§110.1(b)(5)(ii)(B) & (C) and (l)(4)(ii). 

D. Reattribution of Excessive Contributions. When an authorized committee receives 

an excessive contribution, the committee may ask the contributor if the contribution was 

intended to be a joint contribution firom more than one person. 

• The committee must, within 60 days of receipt of the contribution, obtain and 

retain a reattribution letter signed by all contributors; or 

• refund tiie excessive contribution. 11 CFR §§110.1(k)(3), 110.1(1)(3) and 

103.3(b)(3). 

Notwithstanding the above, any excessive contribution that was made on a written 

instrument that is imprinted vsdth the names of more than one individual may be attributed 

among the individuals listed unless instructed othenvise by the contributor(s). The 

conimittee must inform each contributor: 

• how the contribution was attributed; and 
11 

• tiie contributor may instead request a refund of the excessive amount. 11 CFR 

§110.1(k)(3)(ii)(B). 

For this action to be valid, the conimittee must retain copies of the notices sent. 11 CFR 

§110.1(l)(4)(ii). 

E. General Election Contributions. If a candidate is not a candidate in the general 

election, any contributions made for the general election shall be refunded to tiie 

contributors, redesignated in accordance with 11 CFR §§110.1(b)(5) or 110.2(b)(5), or 

reattributed in accordance with 11 CFR §110.1(k)(3), as appropriate. 11 CFR 

§102.9(e)(3). 

F. 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. Within 30 days of service of the final audit report, the 

conimittee must submit a check to the United States Treasury for the total amount of any 

excessive contributions not refunded, reattributed, or redesignated in a timely manner; or 

take any action required by the Commission with respect to sample-based findings. 11 

CFR § 9038.1(f). 

Facts and Analysis 

The Audit staffs sample review of contributions from individuals indicated that BFP 

received a significant number of excessive contributions that either were unresolved or 

were not resolved in a timely manner. The projected dollar value of the unresolved 

excessive contributions in the sample population was $106,016'^. An additional error of 

$200 was identified as the result of a separate review of contributions not included as part 

of the sample population. Sample errors included: 

• Check - Attribution Issue - The errors were for contributions from single account 

holder checks. Such contributions cannot be presumptively reattributed to 

another individual. 

• Other Credit Card - Attribution Issue - The documentation provided in support of 

these contributions included credit card authorizations and, if available, 

solicitation response devices. The excessive portion of the contribution was 

reattributed to another individual without obtaining the signature of the second 

individual acknowledging both the contribution and joint liability for the credit 

card used to make the contribution. 

• Other Credit Card - Designation Issue - The documentation provided in support 

of this contribution included a credit card authorization and a solicitation response 

device. The response device was not adequate to constitute a designation ofthe 

^ A Monetary Unit Sample was used with a 95% confidence level. The estimate is subject to a sampling 

error of $91,693 for unresolved excessive contributions. For untimely resolved excessive contributions the 

estimate is subject to a sampling error of $348,491. 
12 

contribution to the general election and the excessive contribution was not 

refunded. 

• Online Credit Card - Designation Issue - Some of the contributions were received 

through BFP's intemet website. The website did not provide sufficient notice to 

the contributor to constitute an attribution of a portion of the contribution to 

another person or to designate a portion of the contribution to the general election. 

The Audit staff also identified excessive contributions that were resolved but not in a 

timely manner, totaling $1,092,899. The projected dollar value of such excessive 

contributions in the sample population was $1,055,399. Additional errors totaling 

$37,500 were identified as the result of a separate review of contributions not included as 

part of the sample population. All of these excessive contributions were presumptively 

designated for the general election; however, BFP did not provide copies of letters sent to 

contributors as notification for the election designation. However, BIFP did provide the 

Audit staff vsdth letters obtaining redesignations of these general-designated contributions 

to the Candidate's Senate campaign conimittee. Citizens for Biden (CFB). The letters 

were all signed by the contributors and mailed after the Candidate's date of ineligibility 

(1-3-08), well after the receipt of these contributions. Although these letters were not 

presumptive redesignations as specified in the Commission's regulations, the Audit staff 

considered these letters to be an adequate, though untimely, substitute to support the 

"general election" designation of these contributions for BFP. 

This conclusion is consistent vsdth the notice provision of presumptive redesignations. A 

presumptive redesignation does not require a written authorization from the contributor. 

Rather, BFP may send a notice to the contributor of the redesignation and inform the 

contributor of his or her option to request that the contribution be refunded. The Audit 

staff concluded that the signed forms authorizing the redesignation of Presidential 

contributions to the Senate election(s) also serve to put the contributor on notice that BFP 

had presumed that the portion of the otherwise excessive Presidential primary election 

contribution was redesignated to the Presidential general election. The contributions to 

the Presidential primary election, however, were excessive until the Presidential general 

to Senate redesignation forms were sent. Given that these redesignation forms, serving as 

the functional equivalent of the presumptive redesignation notices, were sent much later 

than 60 days after the excessive Presidential primary contributions, they are untimely as 

to the redesignations from the Presidential primary to the Presidential general election. 

At the exit conference, the Audit staff provided BFP representatives with schedules of all 

the errors for both the unresolved excessive contributions and the imtimely resolved 

excessive contributions. A discussion ensued regarding the adequacy of letters used to 

support redesignations of contributions to the general election. 

On September 26,2008, BFP submitted its response to the matters presented at the exit 

conference. The response acknowledged that the untimely redesignation issue arises 

firom BFP's inability to provide presumptive redesignation letters. Although confident 

that such letters were timely sent, BFP staff was unable to locate the letters or evidence 

that they were sent and believe they were inadvertently lost when its location changed in 
13 

tiie spring of 2008. BFP furtiier explained the letter would have been prepared using a 

template on a BFP computer that was subsequently "vsdped clean" and sold when its 

assets were liquidated following the Candidate's withdrawal from the presidential 

campaign. 

BFP offered the follovsdng circumstantial evidence to support that the letters had in fact 

been sent: 

• BFP submitted a complete library of "cure" letters, whether for excessive 

contributions or missing contributor information. In addition, its Contribution 

Review Procedures make reference to presumptive redesignation and/or 

reattribution letters and templates for obtaining redesignations and reattributions 

are provided. BFP files contained other compliance letters sent for problematic 

contributions and those requesting additional information. BFP noted that it is 

unlikely that it would send this array of compliance letters and omit presumptive 

redesignation and/or reattribution letters. 

• The individual primarily responsible for sending the compliance letters, including 

letters to resolve excessive contributions, had specific recollection that 

presumptive redesignation and/or reattribution letters had been sent. However, 

this individual is recentiy deceased; and, therefore, BFP was unable to obtain a 

signed affidavit. BFP staff confirmed her recollections, and that she was 

meticulous and conscientious in performing her duties. 

• BFP has been contacting recipients of presumptive redesignation and/or 

reattribution letters and although some do recollect receiving such a letter, none 

have been able to furnish a copy. Should any be located, copies will be forwarded 

to the Audit staff. To date, no such copies have been provided to the Audit staff. 

• Finally, BFP concurred with the Audit staffs position that those letters sent to 

redesignate contributions to Citizens for Biden serve to demonstrate that BFP did 

not fail to resolve a material number of excessive contributions. According to 

BFP, these letters reflected an understanding by the contributor and BFP that the 

excessive portion had been properly resolved and expressed the donative intent of 

the contributor. 

The Audit staff doesn't believe that BFP's response was sufficient to document that 

presumptive redesignation and/or reattribution letters had been sent. 

Preliminary Audit Report Recommendation 

The Audit staff recommends that, within 60 calendar days of service of this report, BFP 

provide: 

• Documentation demonstrating that the unresolved excessive contributions 

($106,216) were not excessive. Such documentation should include copies of 

timely negotiated refund checks or timely signed and dated 

reatrribution/redesignation letters. Absent such documentation, BFP should make 

appropriate refunds to contributors or make a payment of $106,216 to the U.S. 

Treasury and provide evidence of such action (copies of the firont and back of 

negotiated refimd checks). Should documentation be presented that demonstrates 

any sample exceptions are not excessive contributions, the Audit staff will 
14 

calculate a revised amount payable to the U.S. Treasury. This revised amount or 

the unrefunded portion thereof, is payable vsdthin 30 calendar days of service of 

the final audit report; and 

• Documentation demonstrating that excessive contributions ($ 1,092,899) were 

timely reattributed and/or redesignated. Such documentation should include 

evidence that timely presumptive reattribution or redesignation letters were sent; 

copies of timely signed and dated reattribution/redesignation letters; or, any other 

documentation which indicates a timely reattribution and/or redesignation were 

obtained. BFP should provide any other comments it feels are relevant to this 

issue. 

Finding 3. Prohibited In-Kind Contribution 

Summary 

The review of campaign travel identified one flight by BFP on private aircraft that was 

reimbursed using the lowest unrestricted and non-discounted first-class commercial 

airfare. However, the plane utilized was certified by the Federal Aviation Administration 

and operated in a manner that requires its use be paid at a charter rate. The difference 

between what BFP paid and the charter rate resulted in the receipt of an in-kind 

contribution of $26,889 from a corporation. The Audit staff recommends that BFP 

demonstrate that it did not receive a prohibited in-kind contribution or make a payment to 

the U.S. Treasury. 

Legal standard 

A. Corporate Contributions Impermissible. A corporation is prohibited from making 

any contribution in connection vsdth a federal election. 2 U.S.C. §441b(a). 

B. Travel by airplane. Campaign use of an airplane licensed to operate for hire by the 

Federal Aviation Administration (FAA) under 14 CFR part 121,129, or 135 are govemed 

by tiie definition ofa contribution at 11 CFR § 100.52(a) and (d). 11 CFR § 100.93(a)(2). 

C. Contribution defined. A gift, subscription, loan (except when made in accordance 

vsdth 11 CFR §§100.72 and 100.73), advance, or deposit of money or anything of value 

made by any person for the purpose of influencing any election for Federal office is a 

contribution. The term anything of value includes all in-kind contributions. 

The usual and normal charge for a service is the commercially reasonable rate that one 

would expect to pay at the time the services were rendered. 

The provision of services at a charge less than the usual and normal charge results in an 

in-kind contribution. The value of such a contribution would be the difference between 

the usual and normal charge for the services and the amount the political conimittee was 

billed and paid. 11 CFR § 100.52(a) and (d). 

D. Contributions by a Limited Liability Company (LLC). An LLC not electing 

treatment as corporation under federal tax law or having publicly-traded shares may make 
15 

contributions to influence federal elections. Such a contribution will be considered as 

having been made firom a partnership and govemed by the rules pertaining to partnerships 

and subject to a single election limit per candidate of $2,300. 11 CFR §110.1(b)(1) and 

(g)(2) and (4). 

Facts and Analysis 

BFP reimbursed GEH Air Transportation, LLC (GEH) $7,911 for first-class airfare for 

three people who made a roundtrip flight between New Hampshire and Iowa in June 

2007. This roundtrip flight was flovs^ on a plane which was certified for commercial 

service by the FAA under 14 CFR part 135 and documentation provided by BFP 

indicated the flight took place under this part; and thus, it was not eligible for this manner 

of payment. 

Payment for this flight should have been made at a charter rate which reflected the usual 

and normal charges for services. Based on the charter rate and flight time noted on 

BFP's intemal documentation for this trip, BFP should have paid $34,800 ($6,000 charter 

rate per hour x 5.8 hours). By failing to pay a charter rate, BFP received an in-kind 

contribution of $26,889 (tiie $34,800 owed less tiie $7,911 paid) fi-om GEH. 

The entire amoimt represents a corporate contribution if GEH elected tax treatment as a 

corporation under Intemal Revenue Service rules. However, if GEH elected to be treated 

for tax purposes as a partnership, or if GEH did not elect treatment as a either a 

partnership or corporation, the contribution is considered as made by a partnership. The 

partnership would have made an excessive contribution in the amount of $24,589 

($26,889 - $2,300). 

Although documentation indicated that the flight was flovsni under 14 CFR part 135, the 

Audit staff provided BFP vsdth an opportunity to obtain additional documentation firom 

GEH indicating that the flight was not flovsoi under 14 CFR part 135 and therefore not 

subject to the charter rate. The required information had not been obtained at the time of 

the exit conference. 

At the exit conference, the Audit staff provided information regarding this item to BFP 

representatives. The representatives were requested to provide documentation 

demonstrating that BFP did not receive a prohibited contribution or make a payment to 

the U.S. Treasury. The representatives agreed to review the matter and respond 

accordingly. 

On September 26,2008, BFP submitted its response. BFP representatives indicated that 

they agreed vsdth the finding and would vsnrite a check for $26,889 to the U.S. Treasury. 

Preliminary Audit Report Recommendation 

Although BFP's response to the exit conference indicates that it agrees vsdth the Audit 

staff analysis, it may, within 60 days of service of this report, provide documentation 

firom GEH which details how GEH elected to be treated under Intemal Revenue Service 

rules. Also, if GEH is treated as a partnership for tax purposes, information should be 
16 

provided shovsdng how the contribution is attributed to the various partners and that only 

those partners' profits are decreased or losses are increased as a result of the contribution. 

Within the same 60 day period, BFP may also produce documentation which: 

• demonstrates a lower charter rate; 

• establishes a different minimum flight time requirement; and/or, 

• proves that the plane was not certified for commercial 

service by the FAA at the time the flight occurred under 

14 CFR parts 121,129 or 135; and 

Absent such a demonstration, the Audit staff recommends that BFP make a payment of 

$26,889 to tiie U.S. Treasury. 

Finding 4. Stale-Dated Checks 

Summary 

The Audit staff identified stale-dated checks totaling $137,757 issued by BFP. 

Subsequent to the exit conference, BFP made a payment to the U.S. Treasury for staledated checks in the amount of $8,457 resulting in an unresolved balance of $129,300. 

The Audit staff recommends that BFP provide evidence that the remaining checks are not 

outstanding or make a payment to the U.S. Treasury in the amount of the outstanding 

checks. 

Legal Standard 

Handling Stale-Dated (Uncashed) Checks. If a conimittee has issued checks that the 

payees (creditors or contributors) have not cashed, the committee must notify the 

Commission of its efforts to locate the payees and encourage them to cash the 

outstanding checks. The conimittee must also submit a check payable to the U. S. 

Treasury for the total amount of the outstanding checks. 11 CFR §9038.6. 

Facts and Analysis 

During our reconciliation of BFP's bank activity, the Audit staff identified 88 stale-dated 

checks totaling $137,757 dated between January 1,2007 and April 30,2008. 

The Audit staff provided a schedule of the stale-dated checks to BFP representatives at 

the exit conference. The representatives were requested to either provide evidence that 

the checks are not outstanding or make a payment to the U.S. Treasury for the amount of 

the stale-dated checks. They agreed to review the schedule to determine whether they 

agreed vsdth the list and respond accordingly. 

Subsequent to the exit conference, BFP submitted a check for $8,457 to the U.S. Treasury 

for the stale-dated checks issued during 2007. The remaining stale dated checks 

($129,300), were all refunds of contributions to contributors issued during 2008. BFP 

indicated that when it was able to determine the status of these refunds, a final payment 

would be made to the U.S. Treasury for the amount of those checks that had not cleared 

and for which an obligation still exists. 
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Preliminary Audit Report Recommendation 

The Audit staff recommends that, vsdthin 60 calendar days of service of this report, BFP 

provide evidence that: 

• The checks or a reissued check are not outstanding. Such evidence should include 

copies of the front and back of the negotiated checks along with bank statements; 

or 

• The outstanding checks have been voided by providing copies of the voided check 

vsdth evidence tiiat no obligation exists. 

Absent such evidence, the Audit staff recommends that BFP make a pa3anent of 

$129,300 to tiie U.S. Treasury. 

Finding 5. Disclosure of Disbursements 

Summary 

The Audit staff identified 49 disbursements, totaling $3,779,976, that were not 

adequately disclosed. Problems noted included incorrect or inadequate purpose as well 

as incorrect addresses. Subsequent to the exit conference, BFP filed amended reports that 

materially corrected the disclosure of these disbursements. The Audit staff recommends 

that BFP provide any additional comments it feels relevant to this matter. 

Legal Standard 

A. Reporting Operating Expenditures. When operating expenditures to the same 

person exceed $200 in an election cycle, the committee must report the: 

• Amount; 

• Date when the expenditures were made; 

• Name and address of the payee; and 

• Purpose (a brief description of why the disbursement was made—see below). 2 

U.S.C. §434(b)(5)(A) and 11 CFR §104.3(b)(4)(i). 

B. Examples of Purpose. 

• Adequate Descriptions. Examples of adequate descriptions of "purpose" include 

the following: dinner expenses, media, salary, polling, travel, party fees, phone 

banks, travel expenses, travel expense reimbursement, catering costs, loan 

repayment, or contribution refimd. 11 CFR §104.3 (b)(4)(i)(A). 

• Inadequate Descriptions. The follovsdng descriptions do not meet the requirement 

for reporting "purpose": advance, election day expenses, other expenses, expense 

reimbursement, miscellaneous, outside services, get-out-the-vote, and voter 

registration. 11 CFR §104.3 (b)(4)(i)(A). 

Facts and Analysis 

The Audit staff identified 49 disbursements, totaling $3,779,976, that were not 

adequately disclosed. For approximately half of these disbursements to its media vendor, 

the purpose was incorrect or inadequately disclosed. For the remaining disbursements to 

its credit card vendor, the address of the credit card vendor was incorrectly disclosed. 
18 

When questioned, BFP representatives responded that the person who had been primarily 

responsible for data entry had been dismissed for poor data entry and reporting. 

At the exit conference, BFP representatives were provided a schedule detailing these 

items. The representatives were requested to file amended Schedules B to correct the 

disclosure of these transactions. They agreed to comply with the recommendation. 

Subsequent to the exit conference, BFP filed amended reports that materially corrected 

the disclosure of the disbursements noted above. 

Preliminary Audit Report Recommendation 

The Audit staff recommends that, vsdthin 60 calendar days of service of this report, BFP 

provide any additional comments it feels relevant to this matter. 

Finding 6. Reporting of Debts and Obligations 

Summary 

The Audit staff identified debt totaling $870,296 that was not disclosed on Schedules D 

(Debts and Obligations) as required. Subsequent to the exit conference, BFP filed 

amended reports that materially corrected the disclosure of these debts. The Audit staff 

recommends that BFP provide any additional comments it feels relevant to this matter. 

Legal Standard 

A. Continuous Reporting Required. A political committee must disclose the amount 

and nature of outstanding debts and obligations until those debts are extinguished. 2 

U.S.C. §434(b)(8) and 11 CFR §§104.3(d) and 104.11(a). 

B. Separate Schedules. A political committee must file separate schedules for debts 

owed by the conimittee and debts owed to the conimittee, together vsdth a statement 

explaining the circumstances and conditions under which each debt and obligation was 

incurred or extinguished. 11 CFR § 104.11 (a). 

C. Itemizing Debts and Obligations. 

• A debt of $500 or less must be reported once it has been outstanding 60 days firom 

the date incurred (the date of the transaction); the conimittee reports it on the next 

regularly scheduled report. 

• A debt exceeding $500 must be disclosed in the report that covers the date on 

which tiie debt was incurred. 11 CFR § 104.11 (b). 

Facts and Analysis 

The Audit staff identified debts totaling $870,296 that were not disclosed on Schedules 

D. These debts consisted of nine transactions to two vendors, all of which were more 

than $500. The debts were typically incurred during the middle of the month and paid in 

full the subsequent month. However, BFP did not disclose them as debts in the report 

covering the date on which the debt was incurred. 
19 

At the exit conference, BFP representatives were provided a schedule detailing these 

items. The representatives were requested to amend the reports to correct the disclosure 

of these transactions. They agreed to comply vsdth the recommendation. 

Subsequent to the exit conference, BFP filed amended reports that materially corrected 

the disclosure of the debts noted above. 

Preliminary Audit Report Recommendation 

The Audit staff recommends that, vsdthin 60 calendar days of service of this report, BFP 

provide any additional comments it feels relevant to this matter.