FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

VIA ELECTRONIC & CERTIFIED MAIL 

Dan Backer, Esq. 

Joseph Lilly, Esq. 

DB Capitol Strategies 

203 South Union Street, Suite 300 

Alexandria, VA 22314 

JUL 1 3 2016 

Re: Governor Gary Johnson and Gary Johnson 2012, Inc. 

Dear Messrs. Backer and Lilly: 

The Commission has considered the Petition for Rehearing ("Petition") of the 

Commission's April4, 2016 Repayment Determination After Administrative Review that 

you submitted on behalf of Governor Gary Johnson and Gary Johnson 2012, Inc. (the 

"Committee") on April 25, 2016. On July 6, 2016, the Commission denied the Petition. 

We are enclosing for your reference a memorandum that sets forth the basis for the 

Commission's decision on the Petition.

1 

Since the Commission has denied the Petition, Governor Johnson and the 

Committee must repay the sum of $333,441 2 to the United States Treasury within 30 

calendar days after service of this decision on the Petition. 11 C.F.R. §§ 9038.2(d)(2), 

9038.5(a)(2). 

In the Petition, you requested an extension of 90 days within which to pay the 

$1,250 associated with the Commission's uncontested determination that certain 

submitted contributions did not meet the matching requirements. Insofar as both the 

uncontested and the contested repayment determinations are on the same payment 

schedule, this extension request was premature. The filing of the Petition suspended the 

time to pay both repayment determinations. See 11 C.F.R. § 9038.5(a)(2). You may 

We have not also enclosed the attachments to that memorandum, but we can provide you with 

attachments upon request. 

This sum combines the amounts associated with two separate repayment determinations: first, a 

total of $332,191 associated with the use of public funds for non-qualified campaign expenses, and second, 

a total of $1 ,250 representing contributions submitted for matching later determined not to have met the 

matching requirements. See Final Audit Report ofthe Commission on Gary Johnson 2012, Inc[.] 

(approved July 6, 2015), at 7. 
Letter to Dan Backer and Joseph Lilly, Esqs. 

Governor Gary Johnson and Gary Johnson 2012, Inc. 

Page 2 of2 

submit a new request for an extension of up to 90 days to make repayment if you wish to 

do so. 11 C.F.R. § 9038.2(d)(2). 3 

Judicial review of the Commission's repayment determination is available 

pursuant to 26 U.S.C. § 9041. Should you elect judicial review, you have the option of 

seeking a stay of all or a part of the Commission's repayment determination pending 

appeal. 11 C.F.R. § 9038.5(c). Requests for stays under this section must be filed within 

30 calendar days after service of the Commission's decision on a petition for rehearing. 

11 C.F.R. § 9038.5(c)(l)(ii). If you have any questions regarding the Commission's 

determination, you may contact Joshua Blume, the attorney assigned to this matter, at 

(202) 694-1533. 

Enclosure 

Sincerely, 

AA.rv tD u~ I r~ Adav Noti 

Acting Associate General Counsel 

Policy Division 

If you do elect to submit such a request, please note that the request must be submitted at least 

seven calendar days before the expiration of the time within which to make repayment. II C.F.R. 

§ 9038.4(c). If a request for extension were to be submitted less than seven calendar days before the 

relevant deadline, then you would be required to show that the delay was occasioned by excusable neglect 

in addition to showing good cause for the extension. II C.F.R. § 9038.4(d). 
FEDERAL ELECTION COMMISSION 201[) Jl.i.~ 17 ~ i?.: 23 WASHINC H l N. IJ.t . 20 ~1> ! 

MEMORANDUM 

TO: 

FROM: 

The Commission 

Adav Noti (til 

Acting Associate General Counsel 

Policy Division 

Lorenzo Holloway "'· ~ _....... Assistant General Counsel for 

Compliance Advice 

Joshua Blume ~ .. _ )[]~ . 

Attorney 

JUN f 72016 

SUBJECT: Petition for Rehearing on the Commission's Repayment Determination for 

Gary Johnson 2012, Inc . (LRA #905) 

I. INTRODUCTION 

The Commission determined, on April 4, 2016, that Governor Gary Johnson and Gary 

Johnson 2012, Inc . (the ··committee'') must repay $332,191 to the United States Treasury. 

Statement of Reasons in Support of the Repayment Determination After Administrative Review 

(approved April 4, 2016) (Attachment I). The Committee submitted a petition for rehearing of 

the Commission's repayment determination. See Petition for Rehearing of Repayment 

Determination from Dan Backer, dated Apr. 25, 20 t 5 (sic. '·20 16) (Attachment 2). We 

recommend that the Commission deny the Committee·s petition. 

The Committee requests a rehearing on three grounds: ( 1) the Committee's oversight in 

not amending the designation language on its contribution solicitation forms amounts to a 

scrivener's error and the Commission should apply a principle of contract law to reform that 

language retroactively to conform to the Committee's and the contributors' true intent; (2) the 

Committee lacks sut1kient funds to make the repayment: and (3) the Committee acted in good 

faith in holding its public and private funds in separate accounts and in using its post-primary 

election contributions in the manner that it did. 

Before addressing the Committee's petition. we first address a separate matter that the 

Committee also raises in its petition : the Committee's request tor an extension of time to repay 
Gary Johnson 20 !2, Inc . 

Petition for Rehearing on Repayment Determinat ion (LRA #905) 

Page 2 

an amount to the U.S. Treasury in consequence of a second repayment determination that the 

Committee does not contest. 

II. THE REQUEST TO EXTEND TIME TO REPAY $1,250 TO U.S. TREASURY IS 

PREMATURE 

The Committee requests a 90-day extension of time to repay a second repayment 

determination in the amount of $1 ,250 that the Committee is not contesting. This repayment 

determination also arises from the Commission 's July 6, 2015 Final Audit Report, and represents 

the amount of contributions submitted for matching that were later found to have been ineligible 

to be matched . See Final Audit Report on Gary Johnson 2012, Inc (approved .July 6, 2015). 

at 19. 

Because the Committee did not request administrative review of this repayment 

determination. repayment would ordinarily have been due within 90 calendar days following 

service upon the Committee of the Commission's Final Audit Report, or October 5, 2015. 

11 C.F.R. § 9038.2(d)(l). However. the Committee indicated in a letter on that day that it 

wished to await the resolution of the other, contested, repayment determination on administrative 

review in order to have the benefit of a complete accounting of all repayment obligations. 

13ccausc the amount of the uncontested obligation is much smaller than that of the contested 

obligation. we advised the Commission in an informational memorandum that we intended to 

place both obligations on the same payment schedule. See 

Consistent with this approach, we regard the Committee's extension request as 

premature. Because the Committee's time to pay the amount assessed in the Commission's 

contested repayment determination is suspended by virtue of the filing of the petition for 

rehearing, 11 C.F.R. § 9038 .5(a)(2), the Committee's time to pay the $1,250 assessed in the 

Commission's uncontested repayment determination is also suspended pending the 

Commission's resolution of the petition. We will advise the Committee accordingly. 

Ill. THE COMMISSION SHOULD DENY THE PETITION 

We recommend that the Commission deny the Committee's petition for rehearing of the 

repayment determination. The Commission 's regulations permit a candidate to petition the 

Commission for a rehearing of a final repayment determination. 11 C.F.R. § 9038.5(a). To be 

considered by the Commission, the petition must: ( 1) be filed within 20 calendar days after 

service of the Commission's final repayment determination: (2) raise new questions of law or 

fact that would materially alter the Commission's final determination; and (3) set forth clear and 

convincing grounds why such questions were not. and could not have been, presented during the 

original determination process. /d. 

13ecause the Committee filed its petition for rehearing on April25, 2016 ·- the 20111 day 

fo llowing service of the Statement of Reasons after Administrative Review on the Committee on 

April 5. 2016 - the petition is timely. Nevertheless. the Office of the General Counsel 
Gary Johnson 20 I 2, Inc. 

Petition for Rehearing on Repayment Determination (LRA ii905) 

Page 3 

recommends that the Commission deny the petition on all three grounds cited by the Committee. 

We expound upon each of these recommendations below. 

A, The Contributor-Intent Argument Is Not a New Question of Law or Fact 

The Committee takes issue with the Commission's statement in the Statement of Reasons 

that the Committee's written designation statement appearing on its contribution fom1s, 

accompanied by the contributor's signature, constitutes the best evidence of the contributor's 

intentions regarding designation. See Attachment 1 (';SOR on Repayment"), at 14- I 5. The 

Committee states to the contrary that its written designation rule did not rellect the Committee's 

and the contributors' intentions. The Committee argues that its failure to modify its designation 

statement to conform to its intent was a drafting error that should be disregarded according to a 

principle of contract lav-.: that allows a court to modify the written terms of a contract when those 

terms do not adequately rellect the intent of the contracting parties. 

The Committee also argues that the designation rule as written, accompanied by the 

signatures of the contributors, is actually inadequate evidence of contributor intent for two 

reasons: ( 1) generally, contributors do not actually read the designation statements placed on the 

contribution forms and the actual manner in which their contributions are designated is a matter 

of indifference to them, and (2) contributors were not given any option to modify the terms 

stated in the designation rule .

1 

The Committee asserts that the questions it raises could not have been raised during the 

original determination process because they arc a response to the aforementioned statement in 

the Commission's Statement of Reasons, which was not available to the Committee until it 

received that document. See Attachment 2, at 3. 

The Commission has stated that the intent underlying the creation of the petition for 

rehearing process is to provide a "mechanism under which a candidate may respond to 

Commission arguments he or she did not previously have an opportunity to respond to.' ' See 

Explanation and Jl/stification of Final Rule on fuh!ic Financing of' Presidential Primary and 

General Election Candidates, 52 Fed . Reg. 20864, 20873 (Jun. 3. I 987). In spite of this, the 

Committee does not raise a new question of law or fact, and, further. does not show that it could 

not have raised these questions earlier. 

first, the Committee has consistently asserted throughout the audit process that the actual 

wording of its designation statements did not conform to its intended wording, and that at all 

times it acted out of a good-faith, albeit inadvertently mistaken, belief that its intentions and the;; 

actual language of the designation statement coincided. See Letter from Dan Backer to 

Commission Regarding Draft Final Audit Report on Gary Johnson 2012 Inc (Apr. 14, 20 15) 

(Attachment 4), at 1-2; Letter to Commission from Joseph Lilly Regarding Repayment 

There appears to be some tension between these Jwo rationales. insofar as if contributors truly do not read 

the designation statements. then it would seem to follow that they could not be disadva ntaged by the absence of an 

option to mod ify thern. 
GaT)' Johnson 20 12 , Inc . 

Petition for Rehearing on Repayment Determination (LRA #905) 

Page 4 

Determination for Gary Johnson 2012 Inc (Sept. 4. 201 5) (Attachment 5), at 4. Accordingly, 

these arguments do not raise new legal or factual questions, but rather constitute merely a revised 

version of the longstanding assertion that the Commission should relieve the Committee of its 

repayment obligation in light of what the Committee describes as a good faith error. 

Second, even if the Committee's argument respecting the application of contract law 

principles should be construed as raising a new question of law, the Committee has not provided 

a clear and convincing ground for its failure to raise this question during the original 

determination proceedings. 

The Committee contends that it could not have raised this question during the original 

determination proceedings because it is directly responsive to a new argument in the 

Commission's April 5 Statement of Reasons. However, this contention exaggerates the novelty 

of the Commission's statement. The Commission's statement in fact states nothing new, but 

merely articulates in another form the policy judgment embodied in the underlying regulation 

that it cites, II C.F.R. § II 0.1 (b)(4)(ii). That provision states the rule that both committees and 

the Commission must follow to determine how contributors intended to allocate their 

contributions between different elections. It allows a committee's designation statement to be 

used as the rule, so long as a contributor returns a contribution with his or her written signature, 

\vhich is evidence of the contributor's affirmative endorsement of the designation statement that 

accompanied the contribution solicitation. II C.F.R. ~ II 0.1 (h)(4)(ii). See also See Explanation 

and Justification ofFinol Rule on Contribution and Expenditure Limitations ami J>rohihitions[.} 

Contributions hy Persons and Multicandidate Political Commi!!ees, 52 Fed. Reg. 760, 763 (Jan. 

9. 1987). This being the case, the Commission's statement that contributions meeting these 

criteria are the best evidence of the contributors' intentions adds nothing new to the substance of 

the regulation itself; rather. it is the express articulation, in a different form. of the essence ofthe 

regulation. 

Here, the Commission has relied upon II C.F.R. ~ IIO.J(h)(4)(ii) since November 2013, 

when it issued a Statement of Reasons explaining its determination to terminate the candidate's 

and the Committee's entitlement to receive future matching funds. See Statement of Reasons in 

Support of Final Determination on Entitlement in the Matter of Governor Gary Johnson (LRA 

'105), Nov. 14, 2013 (' 'SOR on Entitlement") (Attachment 6), at 9-10 (Commission applied 

section I I 0. I (h)( 4 )( ii) to calculate amount of primary contributions). Further, from the inception 

of the audit, und throughout the original determination process, the Commission has consistently 

relied upon this calculation . . )'ee Preliminary Audit Report of the Audit Division on Gary 

Johnson 2012. [nc. (Nov. II, 20 14), at 14 (Commission identified primary and general election 

contributions by using list of contributions derived from the SOR on Entitlement). 

The argument that the Commission should not, in this case, apply that regulation on 

account of the various considerations outlined in the petition does not raise or involve specific 

facts or circumstances that were unknown to the Committee earlier in the audit process. The 

Committee could have advanced these legal contentions against the application of the regulation 

at any time during the original determination process because that regulation was known to the 

Committee throughout that process. The Commission's SOR on Entitlement, in particular, 

which preceded and formed the background for the subsequent Preliminary Audit Report, 
Gary Johnson 2012, Inc . 

Petition for Rehearing on Repayment Determination (LRA 11 905) 

Page 5 

contains detailed discussion of the Commission's obligation to apply its designation regulations 

and rejects the Committee's statement of its own conflicting practice to consider only the first 

$250 of each contribution as designated for the primary election . See Attachment 6. Therefore, 

the availability of the Committee's contentions and legal theories did not depend upon the 

Committee receiving the Commission's statement in the SOR on Repayment. 

B The Lack-of-Funds Argument Cannot Materially Alter the Repayment 

Determination 

The Committee also seeks rehearing of the administrative determination because the 

Committee asserts that its financial position and assessment or its continuing capacity to raise 

funds have changed in the interim, and that these factors suggest that the Committee would be 

unable to pay the amount owed in the determination. That the Committee may lack funds, 

however, even if this is a new circumstance that was not apparent during the original 

determination process,

2 is not a basis for rehearing because a committee's ability or inability to 

pay a repayment obligation is not a factor that bears on the validity of the repayment 

determination . This determination is based on the Committee unlawfully using public funds to 

pay nonqualified campaign expenses. See 11 C.F.R. ~ 9038 .2(b)(2)(i); Attachment I, at 3. The 

fact that the Committee currently does not have sufficient funds to make the repayment cannot 

change the amount or public funds that the Committee already used to pay nonqualificd 

campaign expenses. The Committee's argument, therefore, cannot materially alter the final 

repayment determination. l l C.F.R. § 9038 .5(a)( l )(ii). 

C. The No-Abuse-of-System Argument Docs Not Raise a New Question of Law 

or Fact 

The Committee's linal argument is that even if allowing publicly funded committees to 

avoid liability for repayment by maintaining their public and their private funds in segregated 

accounts would be ripe for abuse in general, it should not be deemed so in this case, where the 

Committee asserts that it acted in accordance with its sincere conviction that its manner of 

allocating contributions to the primary and the general elections was proper. It argues that in 

light of th is good-faith belief, the Commission may not ignore the fact that no abuse occurred in 

this case. 

This argument also cannot surmount the threshold for rehearing established by II C.F.R. 

§ 9038.5 because it does not raise a new question, either o!' fact or or law, for the Commission to 

review. The Committee has in fact advanced this argument earlier in the repayment 

determination process. Specifically, in a letter to the Commission responding to the 

Commission's Final Audit Report, the Committee argued, inter alia, that the Commission 's 

imposition of a repayment obligation >vas unreasonable . given the Committee's good faith 

At the time the Committee sought administrati ve review of' the repayment determination, September 4, 

20 15, the Committee's most recent ly filed disclosure report showed an ending cash on hand balance of $286.13 . See 

FEC Form JP, Rerort of Recepts and Disbursements by an Authorized Committee of a Candidate for the Office of 

Prestdent or Vice President, 1n Quarterly Report ( 4/l l l5-6' 30i 15 ), at 2 (filed July IS. 20 I 5 ). 
Gary Johnson 20 12, Inc . 

Petition fo r Rehearing on Repayment Determi nation (LRA 11905) 

Page li 

attempt to comply with the designation statement that it intended to usc . See Attachment 5, at 4. 

In the letter, the Committee stated: 

The instant case is not a situation like the one imagined by OGC, where a 

committee is secretly attempting to circumvent the restrictions on its use of 

matching funds by using primary [sic '·private''] fund s in their pl ace. If a 

committee did attempt to abuse the leeway that OGC fears section 9038(b)(2) 

offers, it would be easily identified during an audit. The Committee is not such 

an actor. and cannot equitably be treated like one. 

!d. The Committee also stated in the letter that its actions were based on a good faith belief that 

the primary election fund s it spent were actually general election funds. !d. The Committee's 

current argument essentially recapitulates this argument in its September 2015 letter. The fact 

that the Committee has previously presented this argument in itself warrants rejecting it as an 

adequate ground to support a petition for rehearing. 

IV. RECOMMENDATIONS 

For the above reasons, this Office recommends that the Commission: 

I. Deny the petition for rehearing. and 

2. Approve the appropriate letter. 

Attachments 

I. Statement of Reasons in Support of the Repayment Determination Afte r Administrative 

Review (''SOR on Repayment" ) (approved April 5, 20 16). 

2. Petition for Rehearing of Repayment Determination from Dan Backer (Apr. 25, 2015) (sic . 

.. 20 16"). 

4. Letter from Dan Backer to Commission Regarding Draft Final Audit Report on Gary Johnson 

2012 Inc (Apr. 14, 2015). 

5. Letter to Commission from Joseph Lilly Regard ing Repayment Determination for Gary 

Johnson 2012 Inc (Sept. 4, 20 15 ). 

6. Statement of Reasons in Support of Final Determination on Entitlement in the Matter of 

Governor Gary Johnson (LRA 905) (''SOR on Entitlement' ') (Nov. 14, 2013). 
IH~FORE THE FEDERAL ELECTION C0:\1MISSION 

In the Matter of 

Gary Johnson 

Gary Johnson 2012, Inc. 

LRr'\ 905 

STATEMENT OF REASOI\S IN SUPPORT OF REPAYMENT DETERMII\A TI0:\1 

AFTER ADMINISTRATIVE REVIEW 

I. SUMMARY OF REPAYMENT DETERMINA TI0:\1 AFTER ADMINISTRATIVE 

REVIEW 

Pursuant to 26 U.S.C. ~ 9038(b)(2), on April4, 2016, the Federal Election Commission 

(''the Commission'') determined, after administrative review, that Governor Gary Johnson and 

Gary Johnson 2012, Inc. (collectively, ··Johnson'' or ''the Committee'') must repay $332,191 to the 

United States Treasury for matching funds spent on non-qualified campaign expenses. 

Therefore, for the reasons set forth below, the Commission orders Gary Johnson to repay $332,191 

to the United States Treasury within 30 calendar days after service of this repayment 

determination. II C.F.R. § 9038.2(c)(3), (d)(2). 

II. PROCEDURAL BACKGROCND 

Ciary Johnson sought the Libertarian Party's 2012 nomination for the Office of President of 

the United States. Gary Johnson 2012, Inc .. his principal campaign committee, registered with 

the Commission in January 2012. Johnson applied for matching funds, and the Commission 

deteimined that he was eligible to receive matching funds on May 3, 2012. Johnson received a 

total of$632,016.75 in matching funds from the United States Treasury. 

The Commission determined that Johnson was no longer eligible to receive public funds to 

seek his party's nomination as of May 5, 2012. This date is referred to as his date of ineligibility 

ATTAC.HKENT _ _,J,__ __ Pat"e _....,1 __ of, i;) 
Gary Johnson and Gar; Johnson 2012, lnc. 

Repayment Determination After t\drr,inistra!ivc Re>i~w 

St~tement uf Rc<lsons 

Pdg~ 2 

c·DOl"). ' and it is the day the Libertarian Party nomtnated him to be its presiden:ial candtdate at 

its national nominating con\'ention. Set' II C.F.R ~~ 9012.h(a). 90'13 5(c) 

Following :he conclusion ofGovemo; Jor.nson·s campaign, :he Commission conducted a 

mandatory audit ot'the Committee's finances. and, as a part of that audit, determined that Johnson 

must repay $332,191 to tl~e United States Treasury because the Committee used matcr.ing funds to 

defray non-qualified campaign expenses. See Attachment I. As a publicly-financed committee 

for the 20 I 2 pn:sidential primary election. the Committee had two sources of tlnanctng for that 

election ( l) public matching funds from the l;nitcd States Treasury. and (2) private contnbutions 

from individual contributors that \\ere designated for the primary election. The Commission has 

consistently considered these funds a mixed pool ot public and private funds. See e.g. 

Exp/unuriun unci .Ju.11ijicurion lor Finul Rule on f'ublic Financing u!Fre.wlenrial Pnmar_).' and 

C!enerul Fleer/on Cundidare.;, 56 Fed. Reg. 15898. 35905 (July 29. l C)C)l) (" . u/1 jimd1 1n a 

fiuhlicly funded commillet' '.1 uccolml.\ are considered to be commingled.") (emphasis added) 

Publicly-tlnanced committees may only use these funds for qualified campaign expenses. 

26 L' S.C.~ 9038(b)(2)(A): 11 C.F.R. ~~ 9034.4(a); 9038.2(b)(2)(i). /\qualified campaign 

c\pense is a purchase. payment. distribution, loan, advance. deposit. or gift ot' money or anything 

of value incurred by or on bL:half or a publicly-ftnanced candidate or his or her authorized 

While the DOl marks :he end of the penod within which ;m eligible rrcsirlcntial candidate rna;, receive 

:natchtng paymenh to pa) for qualified primar) carnpign exrcnsc-; generally, rrcstdcnt:al candidates ma) rccei\c 

matchir~g pa; r.1c:nts af1cr the DOl to the extent that the; continue to have net outstanding campaign ubl:gatior~s ansing 

from :he rrmlcry campatgn II C r It~ CJOJJ 5 S~t' ul1o II C r R. ~ 9034 5 (dcf~ning "net ou:standing campaign 

obi,gattons"J On l'>ovc::nbc; 14, 201~. the Comrmssio:1 made a fin<li dctcrminatton that Johnson 1\as no longer 

clig:blc to rt:ct:ive :natch1~g payrncrm after hiS DO! because the Com:n:ttec: co·,J!d not demonstrate tha: it had net 

out:-.t.Jnd:ng campa:gn ohligatton:-. See Statcrr1cnt ol Red.,ons :r. Surport o! Fin:; I Determtn<;::otl on f:nt:tkrncnt in the 

'v1Jtter ofGovcrnor Gary Johnson, l_R:'\ 905 (~O'> !4. 20'31 •\Iter conduclirg the subscq·Jcnt mdndator: audi! of 

the Committee, the Commission dctnm:ncd t:1at John sur. contl:wcd to have nc: outstandirg camr<11gn obllgattons. 

s~c fir~al t\udtl Report o:thc Cornl1llSSi0Tl on Gar; Johnson 2012, !:JC, Jl!; (Jul; 6. 2015) 

ATTACHMENT _ _.! __ _ Pace .;;_ of . ..._~5"".__ 
Ciar: Johnson and Ciary Johnson 2012. Inc 

Repayment De:crmination After Admirmtrativc Rcvic\\ 

~tate:n~nt uf Reasons 

Page ) 

committee through the last day of eligibility that is made in connection with the campaign for 

nomination and IS not made in violation of federal or State Ia\\. 11 CFR. ~ 90n.9 . . '-J'ec also 

26 L.S.C. 9 90'2(9). 

If a committee uses these funds to defray nonqualitied car;1paign npenses. then the 

committe~ may owe a repayment to the t:nited States Treasury. 11 C F.R ~ 9038.2(b)(2)(i). 

Only public funds are subject to repayment. 26 L.SC. ~ 9038(b)(2). buttht· committee's funding 

source 1s considered a mixed pool ofpri\atc contributions and puJl1c funds. To detennine the 

ar.wunt o: puolic funds that \vere used to defray the nonqualilied carr.paign expenses. the 

Commission uses a pro-rata rcpayr.1ent formula :ound at 1: C.F R. ~ 90J8 2(b)(2)(iii) 

The Commission found that the Committee incurred $1,: Y4.425 in nonqual!tied campaign 

expenses because t~ey \\Cre expenses incurred in connection with the general election rather than 

in connection with the primary election. Sec Attachment 1, at 17, n.l4. Lsing the appropriate 

pro-rata formula. the Commission made an !l1itial deterr.1ination that the Cor;11r.ittee must repay 

$112,: Q] to the L'ni:cd States Treasury on July 6. 2015. T:1e Committee submitted a written 

response to the Commission's mitial repayment determination on September 4, 2015 and 

requested an oral hearll1g. Attachment 2. An oral hearing was conducted on November 2. 2015. 

FollO\\ing the oral hearing, the Committee submitted supplementary comments on 1'\o\ember 9. 

2015. Attachment 1 . 

III. AFTER ADMI~ISTRATIVE REVIE\V, TilE CO:Vl!\1ISSION DETERMINES 

THAT THE COMMITTEE MUST REPAY PUBLIC FUNDS THAT WERE USED 

TO DEFRAY NONQUALIFIED CAMPAIGN EXPENSES 

The Comrr:ittce disputes the initial determination in administratiYe rc\ iev .. , primarily 

contending that the usc of the pro-raw formula in t!lis case 1s not consistent with the Matchmg 

Payment /\ct. The Cor.1mittcc argues that the pro-ruta formula was not properly appl:ed in this 

ATT!CHIU:!MT __ ....__~­

Pa•e _ .... 3...:.__ e - ot is-
Gary Joh,1so~ and Gary Juhnson ~01~. Inc 

Repaymc:H Determination After Adm1nistra!ive Re>Jew 

Statement of Reasons 

Page ..1 

case because the Committee maintained its public and private funds in separate accounts and the 

i'unds that were used to de:'ray the nonqualtlied campaign expenses were only disbursed from the 

account that wc.s used to hold the private contributions. See Attachments 2-1. 

The Commisston disagrees with the Committee's legal interpretation. This re\ iew boils 

down to the simple question of how the Commission determines how much, if any. public funds 

were improperly used when a committee uses its primary funds to defray nonqualificd campaign 

expenses Unucr the governing Commission regulations, the Commission relics on a pro rata 

formctla se: Conh in the ret;ulations a: II C.F.R. ~ 9038 :Z(b)(:Z)(iii) to make that calccJiation, rather 

than attempttng to recreate the originating source of funding for each do!lar spent on nonqualificd 

campa1gn expenses. Under this formula, the amount of repayment is in the same ratio to the total 

amount spent on non-qualified campaign expenses as the ratio of matching funds ccrtit:cd to the 

candidate bears to the candidute's totul Jeposib. /d. ··Total depostts," for the purpose of 

applying :his formula. means ··ulf depooils to all ccmdidute uccrn1nl\ mtnus transfers between 

accoC~nts, refunds. rebates. reimbursements, checks re:urned tor insufticien: funds, procee,:s of 

loans. and other Similar amounts." II C.F.R. ~ 9038.3(c)(2) (emphasis wdded). The regulations, 

therefore. require that the Commtssion apply the formula to all or the candidate's primary funds in 

all or' his election-related accounts! There is no exception for a separate account that solely holds 

private contributions. 

Thu;, the CommiSSion ncluded the Comrlllttee's general elect1on cc,JtrJ:JUtJor.s depos1ted in rts general 

ckuion account. hut 1ncluded the Commrttee's rrimary election contributions dcposned rn the sa!ne account. The 

Cornrn~ttee could not use general election contrrbutions !o finance p:rmarv ekclion acll>ity. see Exp/anauon anJ 

J:nllfic a1101: lur !'tn,d Rult: on Puh/1,. F!nunG~ng u! (',.:.1 iJt:nl!al Pnmc11y unci Gena a/ Elecrwn Cund!Ja!l:s, 60 Fed 

Reg J 185-1,:; 1866 (June 16. 19lJ5). and so not count1r.g general electron contr1but.on; !n the n·1xed pool of private 

pr:mar> contributions and publ1c funds IS proper The ComrnJssron. therefore. disagrees With the Committee's 

suggest,on tha: :he Cornmrttcc is actrng 1r.comistent 1) by departing trcmthe !Jtcra! !ar.~uagc of its ddlni:10n of"total 

dcpos1ts" !~ II C F R ~ 9038 3(c)(::l b) exclud:ng 1!1c general elecJron cor.tn'lul!ons whr!e berng urndling to 

'>JmJ!ariy e\clude the prin1ar:-. electron contribulior.s Attachment J. at 3 

ATT!ClDIEllT _--.;. ___ _ 

'Pa«• _j"'--- of. l S: 
Gary :ohnson and Gary Johnson 2012, Inc. 

RepJyment Determmat1on A ftcr AJmin1strattvc Revie" 

Statement of Reason' 

rage 5 

The Commission adopted this formula follov,ing the decision of the llnited States Court of 

Appeals tor the District of Columbia Circuit in Kennedyjor President Commiffl.'e \' Federal 

Election Comnn.\swn. 734 F.2d 1558 (DC Cir. 1984 ). The Kennedy court invalidated a prior 

Commission regulatior. governing repayment deterrninZttions, which required repaymer.t of the 

total amount ot' a committee's spending on non-t;ualitied campaign expenses regardless of 

whether that amot:n: consisted of private or public funds. See Kennedy for Pn:sident Commiffet: 

1 1-t:daal Fll!uion Commi.\\1011, 734 f.2d at I 559-60 ("'I he Commission's regulation, however, 

on 1ts face and as app:ied to [the Kemu:d} committeej in this case. indulges the unreasonable 

presumption that all unqualitied expenditures are paid out of federal matchng funds'') (emphasis 

in ongmal) In imalidat1ng this approach, the court concluded that the Commission is required to 

make a reasonable detcrmination that the sum to be repaid rellects the public funds used fo~ 

non-qualiCicd purposes. Kenn,;dy, 734 F.2d at I 562. At the same time. because 26 L.S.C. 

~ 9038(b)(2) does not specify a particular method for calculating :he amount ofmonc) to be 

repaid, the Kennedy court concluded that Congress granted the Comm1ssion discretion to devise a 

method for calculating this repayment amount. 

The Commission excrcised this discretion when it adopted the repayment ratio in II C.F.R. 

~ 903R.2(b)(2)(1:i) The Committee argues. howc\'er. that II C FR.§ 9038 2(b) purportedly 

establishes a two-step procedure that the Comm1ssion must follow but has failed to follow in this 

case tirst, :he Commission must make a determination that matching payments were in fact used 

JS a sou:-cc of funds inappropriate!; pursuant to ll C F R 9 9038 2(b)(l). and. sccond, once that 

determination has been rnade. t!1e Commission must calculate the amount of repa) mcnt to be 

sought using :he repayment ratio set forth in 11 C.!·.R. ~ 903X.2(b)(2)(iii) St:e Attachment 3. 

B) proccedtng stmight to the sccor.d stcp, the Committee argues that the Commission has 

ATTACHKEHT _..._.. __ _ 

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Gary Johnsen and Ga;y Johnson 2012. Inc 

Rq1ayment Determination A ftcr r\dminlstratlvt: RcvicY. 

Statcmcr:t of Reasons 

Page 6 

neglected its predicate responsibility to make a detem1ination that matching funds were in fact 

used- a determination that it presumably could not make in the Committee's view because the 

Committee physical I y separated the private and pub I ic funds in separ<Jte accounts 

Contrary to the Committee's characterization, both of these steps are accounted for in the 

pro rata formula adopted by the Commission. The Comm:ssion·s regulations. particu:arly the 

Commission's definition of "total deposits'' as that term is to be construed when applying the 

:-epa~ ment :-atio formu:a. presume that ali accounts of a candidate constitute a single. mixed pool 

of monies contai!llng both private Jnd public funds. Therefore. unde:- the Commission's 

:-egulations, any spending on non-qualified campaign expenses necessari I y means that matching 

funds were spent on non-qualified campaign expcnses. The ratio represents a portion of"the total 

ar:wunt determined to have been used for non-qualit:ed campaign expenses." ll C.F.R. 

9 9038.2(b)(2)(tii) Th1s "total ar:wunt" necessarily includes both public and pmate primary 

:unds used tor such expenses in ail of the candidate's accounts. Sec. e g. ll C F R ~ 9034.4(a) 

The repayment rat:o is applied collectively to a publicly-funded committee's total deposits up to 

the point at which public funds are no longer deemed to be in the accounts. 1: C.f.R. 

~ 9038.2(b)(2)(iii)(B). 

A. THE COMMISSION HAS CONSISTENTLY APPLIED A "\11XED 

POOL" ANAL YSJS WHEN DETERMINING A COMMITTEE'S 

REPAY\1E~T OBLIGATION FOR NON-Ql:ALIFIEO CAMPAIGN 

EXPE!\SES 

T~e Commission has consistently ;-ejected arguments similar to the Committee's tn 

previous audits ofpubltcly-fundcd committees Jnd has concluded that a publicly-funded 

committee's segregation of its public funds from its private funds has no impact in the application 

ATTACH.UlfT _......., __ _ 

Page __ ... ( <2'--- ot 15-
Gary Johmon and Gary Johnson 2012, Inc. 

Repayment Determ:natton After Adrntntstra:ive Rntev. 

S:atement o:· Reason> 

Page 7 

or the pro-rata formula anc calculation of the ~epayment ob:igation See Final Report of the 

Audit Dtvis:on on LaRouche Democratic Campatgn (approved May 17. 1990), at S (rejecting 

comrmttee·s argument that no repayrnert required because segregatec federal funds account not 

used);' Final Report of the Audit Division on Albert Core, Jr. for President Committee, Inc. 

(approved July l 3, 1989), at ll (separate bank account fur deposit of matching funds would still 

require repayment); Final Report of the :'\udtt Division on The Tsongas Committee. Inc (approved 

Dec 16. : 9lJ4 ). at 65-66 trejeeting argument that KenneJy uecision disallows n:payment 

detcrmina:10n where specific account used cid not contJin matcn:r:g fundsl: 1 Statement of 

In 1987, the Cornrntsston voted to dec/me tu seck repayrncrt. and to nernpr trom :he oreration of the "rmxcd 

pool" prtnctple.thc >Hivatc runds used in connection v.tth a <,;andtdate·s conttnuatton oflm campaign after havtng 

become tncligtble :o rccc:vc public funds because ora failure to receive 10 percent or more oftl~e vote 1n mo 

con>~cuttve pmnary elections See f'topos.;J Srmr:menr a; R.:ason1· In rlr.: .\f<;/l,•r u/1 . .\nJon /! /.,;Rrm.:lre, lh.: 

l.uRuuch~ CumfJutgn. a: 17, Cerufi, u!tun In rh.: .\1u11ur off· mal Hep<~.\'menl /J.:tennmuliiJ/1 und Oruji Star.:menr "' 

Hr:uwm i ht' l.uRouchc' C.unpwgn, Age<nJu /Jocumenr n S~-87 (1\ug. :20. 1987) (apprO\ing Dratt Statement of 

Reasons by >o:c of 5-0) Sec al.1u l i C r·.rz. ~ 9033 S(b) (l'a:lure to obtatn :0 percent ot· vote tn two consecutive 

prtmary c!ec10ns renders candtdatc 'ncligible) The Commtssion spectllcally addressed this issue and utcd Kenne<Zl 

for !'restJ.:nr when 1t revised Jts regulation> to allow candidates 10 usc private funds to conttnuc to campatgn after 

DO: See ;_·xp/anut,nn and JusujiccliiOn jc!f' f mal Rule r,n !'ubltc f mcm(.mg uf !'r..:srJt!nllal !'r11nur,J anJ Gena,JI 

£/<!Citun Cand11larn, 56 Fed Reg 3'89S, 35905 (jul:- 29, \991 ). II C F.R ~ 903·14(a)l))(lt). Tht'> J'i conststcnt 

\\ tth the Commission's mixed poolthcof) bccau,;c;; candtdatc v.ho continues to campaign after DOlts no longer 

eltg,blc lor pub::c funds for the purpose of .:ampaigntng Tho>c candtdatcs, therefore, ciln only rcce:vc illld usc 

j'Jrt>atc contrtbuttons ror that purrosc. II CF R ~ 90344(a)(l)(tt) 

The LaRouche commntee sought adrnintstrativc review ofth' ponion of the Cornmissior.·s rerayrnent 

detet~tniltton findrng that the LaRouche committee recctved matcht~g funds that. when combined v.tth ,ts pnvate 

contrdJu!t(Hl:-., L'\Ccedt..'d the an1ount necessary lo retire Its (kbts .\'et' l)r()pu~ed Finu! R:._'l'u:~ o1enl [)eterrntnu/l(JTI und 

SI.JI<'I!It'IJI ufR,•wons- l) ll<icm II !.uRuu,·h.: ./r and rhe LuR(;IIChc' Ot:!ltOcr,JIIc Cumpwgn f/.R~l ~3.?6; (''SOR'') 

!Sept. 3. \992 ). ( 'err1_!icurtun In tit.: ,\fcJ!ft'r of !'rupu1t!d F111JI RepU\ Ill en/ D.:renn;nur,on ,;nd Srult:m<'fli u/Rea.wns-

/. i ndon f{ I uRuu,·he Uenrucruuc C,Jmpmgrt (LHA '' 3}6; flgenda Document "- 92-; 19 (Sept. 18. i 992) (aprrovmg 

SOR) See ,diU 26 lj S C.~ 9038(b)i I) (recc:vttlg matching fund> C\leeding entitlement) The l'ommis.;ion noted 

that the :_aRouche cornmtltee through t:s ilCttons revealed thai It <.:Onsidercd its pr.vate and rubiK funds cornrntnglcd 

despttc thctr rclcgacon 10 separate bank acco'Jnts. /'ropmed F11wl Repc:) mem 0etet mmu11u11 uml .\'wrement of 

R<!wun> L) ndun J I l.aRut"h.:, Jr and rhe La R,,uche: Oetllucrallc Cwnputgn, 'J;pra. ill :0 \ "[ <; Jubmttting the funds 

lor miltchtng rendns all ofthc mone; :n the [LaRuuche commtttec's] accounts a par1 llfthc <.amc roo!.'' I. G:ven the 

cor:c.xt dtscussed. the Comrntssion does not regard this last '>!atent,nt as plaCJng 1ts general pOSJ!Jon regardtng 

presumpti\c commtngling of pnvate ar.d pubiic funds tnto quest ton Rather. the Comrntssior \ stcltcments here were 

rnadc in :he context of evalualtng whether the LaRouche corrmittec. tn the conte\t of the conttnuing to campatgn 

rcgtmc, should be deemed eltgtble to rccet\'e the benefit oft~c cxccpt;or~ to the prc;umptton ofcnmn,ingling that the 

Commisston created tn its 1\ugust 20. ! 987 Swterncnt of Reason>. discussed tn footnote 3, llifil'i.J 

In tl~c Tsonga:, audtt, the Commisstcr. ulttmatel: deci'ned to seck rcpa;.rnent wtth respect to amounts 

dtobursed t·rom a separate accDunt, known as the "t\nuover account."opcned by a rrincipal fundratser. ',1r. Ntcholas 

A'J.'TAC~T 

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Gary Johnson and Gary Johnsor: 2012, Inc 

Keraymcnt Dcterminalion After AdmJnJstratJve Revie'' 

Statement ot Reason' 

Page 8 

Reasons. Senator Roben Dole and the Dole for President Com:11ittee, Inc. (arrroved Feb 6, 1992), 

a: 24-25 (rejecting argument that exrcnditures of third rany on behalf of committee causing 

committee ~o exceed srending limitations not subject to repavme:1t because third rany never 

received flUhlic funds, and Stattng "[o ]rdinarily, federal matching funds and [)rivate COI:tributions 

are commt;,gled in a committee's accounts'') Thus. the Commission has cor.sistently followed 

the rrinctrle that a committee's rublic funds and rrivare rrimary contributions are commtngled, 

even :fa committee has more thar. one account, and applied the pro rata formula to '"all deposits to 

all candidate accounts·· i:1 audits of publicly-financed committees, just as it has applied it here to 

the Johnson Committee. II C.P.R.§ 9038 3(c)(2). 

The Commtssion has also consistently applied the principle that the public funds and 

rmvate contributions are treated as be1ng in a mixed pool in and across all accounts m similar 

contexts under the ~-latching Payment Act In revising 11 CF.R. ~ 903g 2(b)(2). the Commission 

could ha\e chosen to segregate private contributions rece1ved by a publicly-funded committee 

ufter the car:dtdate's DOl and to exclude those rr:vate contributions from the repayment ratio 

calcu:utior: Explonurion und Jusnticauon for Fined Rule on Puhlic Financing u/l'n:sidemial 

h inzur; unJ General F./eel ton Candidures. 60 Fed Reg 31854. 31870 (June 16, 1995) lr.stead, 

the Commission elected to capture the privute contributions received after the DOl as a mixed roo! 

R1zzo. wJ:hoL:tthc committee's knowledg~ S<~ Catl}lcatrotJ /tJ the .lfall<r ufTiit: T10ng..;s Cumnllllt:.:. inc .. Report 

:JI tl1e .~ 11Jit Dnii/Uil, Agenda Document 11 9.:1-12X (Dec X. 1994) (vollng to rev1se rcrayment recommendation 

"relating to t1'c amounts ra1scd and <.[lent by Mr RiZLo"). Set: also f1nal RcrorT of the Aud11 D:vision on The Tsongas 

Comrn;tlee. Inc (arrroved Dec 16. 199~). a: 66. The Comn11Ss;on·s dJscusston of the audit rndicatc' th<H it deemed 

the a~1d11 :o rresen: a untquc sttuallon "arranting deparTure from the J[1pl1cation of the m1xed tJOO!thcory, but wa> not 

a reJeCtiOn of the theory itself Specifi;;ali; \1r Riao had embezzled the comm:ttce's funds; th: benefit of the 

disbws..:ments tTom tl,e i\ndo\er accuL:nt had accrued so!cly ro Mr Rino and not to the cor11n1rttee, and the Anaover 

account did not cont<Wl publiC funds. nor were the f·-~Jds 1r1 the account used to obtam public funds. Se><. e g Aud1o 

Recording CommiSSion Oren Meeting on the \fatter oftl~e Tsongas Committee. Inc - RctJOr. of :he Audit Division . 

. Agenda Doc ~ 94-128 (Dec 8. 1994) ("Audio Record ing''i, 1\ ~d io fi,e 11 2, Jt l 26: I 1-126 J 5, at 3':4 5-4~ I 0: a: 

-19 1-l-5-l J-l 

ATTACHME.NT_--=----

Pace 8 of, Is-
Gary Johnson and Gary Johnson 2012, Inc 

Reraymenr Determination /lfier Adrninistrati\e Re\ ie\• 

S!aternent o! Reasons 

Pagt: 9 

with publtc funds so as to "rnore accurately reflect[] the mtx of public funds and private 

contribut:ons received during the campaign, particu!arly for a candidate \l;ho receives srgntf!cant 

amounts of private contributions alter his or her lDOJ l Ry taking pri\ ate contributrons recerved 

within 90 days of DOl into account when determining a candidate's repayment ratro. the new rule 

will likely reduce the ratio, thereby reducing the amount of the candidate's repayment." /J. 

Simi!J.riy, the Commission elected not to separate public funds and private contributions 

based on the accounts holding those funds in the context of general election public financing 6 

\\'hen a publicly-linanced candidate in the general election accepts pmate contrrbutrons. the 

committee rr.ay opt to deposit them into separate accounts, or may deposit both types of funds into 

the s:tme account. :I C.F.R. §§ 9003.3(b)(2), (c)(3J, 9005.2(cJ. Although the regulations 

explrcit~y allov .. for the possibility that a publicly-funded committee will physically segregate rts 

public from tts private funds, the repayment ratio strll applies to all of the accounts .';ee ll C.F.R. 

~ 9007.2(b)(2)(ili). 

l f the Commission did not consider "all deposits to all candidate accounts'· as adopted in its 

regulation, but rather merely examined which account disbursed public funds when accounts are 

seraratcd, as the Committee argues. such an approacr., ulthough simple. \vould be ripe for abuse. 

The Committee's interpretation would permit publicly-funded committees genera:ly to a\oid 

incurring repayment obligations by simply resorting :o the expedrency or depositing their public 

funds and their private funds 111 separate accounts and only spending private contributrons on 

'While cand1da!es ~re generally not rerm:tted to accept rrivate contnburtons 111 thl'> context, 26 L:.S C 

~ 9003(b)(2). tr.ere ar<: t\I.O cxce[JIIons to thl'> rule. hrst, ~naJOr ranv candtdates re:eiv:ng rubl1c funds mav ra1se 

pnv~te contnbut:ons to :he exte'lt necessary to comrensate for a ddictenc: in rub'tc fund'> II C.F R 

~ 90033(b)(:) Second. rntnor and ne\~ ran} rres1dential candidates r:1ay surp!ernent thetr receipt of rubllc t'Jnd> 

~~ tth pma:e contnbuttons to defray qualified ,-~lllflJign e.\[Jt:nses e.\ceeding tl~e amount o!' publ1c funds d1sbursed b> 

the gove:nmen: fund 11 C.I .. R ~ 9003 J(c) 

ATTACJUW{T_.....__~~ 

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Repayment Dete-rmination Aflcr Adn~rnistra:i\e Rcvrew 

Sti:ilemcnt o I Reasons 

Page ! 0 

non-qualified campaign expenses The United States Court of Appeals has already rejected the 

approach that all nonqualified campaign expenses are paid from public funds. Kennedylor 

President Commillee v. Federal Election Commi.11ion. 734 F.2d at 1559-60. Similarly. the 

Commission, by adopting the mixed-pool theory, has consistently rejected the approach that all 

non-qualified campaign expenses are paid from private contributions.' 

R. THE APPLICATION OF THE REPAYMENT RATIO TO ALL OF 

THE CANDIDATE'S PRIMARY FUNDS DEPOSITS IN ROTH 

ACCOLI:"'TS IS CONSISTENT WITH THE MATCHING PAYMENT 

ACT AND WITH THE KE:V:VEDF DECISION. 

The Commission's interpretation of the Matching Payment Act :s consistent \\ith the Act's 

requtrement of repayment only orpublic funds that were used to pa; for non-qualified campaign 

expenses. See 26 L1 S.C ~~ 9038(b)(2) (Commtssion authorized to seek repayment offunds paid 

to candidate fror;, matching payment account used to defray expenses other than qualified 

campaign expenses); 9032(5) ("matching payment account" means the Presidential Pnmary 

Matchmg Payment Account establtshed under sectton 9037(a)) . . '-)ee olso f.:ennedv (or Pre1ident 

Commillee v Ft:denJ/ Election Comnus.110n. 734 F.::d 1558, 1561 (D.C. Ctr 1984) (sectton 

9038(b)(2) limits repayment determination to the amour~! of public funds spent on non-qualified 

campaign expenses). 

Congress has. tn fact, already prescribed the use of a repayment ratio as the means to 

detern11ne the amount that a publicly-funded campaign must repay to the l! S Treasury in cases 

where the pub!icJy.;·unded comrnitt<:e cor;,pletes the campaign \\tth surplus funds. See 26 U.S.C. 

~ 9038(b)(3 ). This provision directs the Commission to require repayment of··thut portion oj any 

unexpended halcmce remaining in the candidate '.1 occounts 11'h1ch bears the sume rutiu to the total 

The Curnmrssrun's regu!atruns also !urbid the use of p'ivate prin~ary contrrbu11ons l0 ckfray nu:l·q~dlrflcd 

camratgn c\pemcs. II C.F R ~ 903.::.4(a)( I) 

A'fTACHMENT_--:. __ _ 

P~e tC of, 15": 
C!ar> Johnson and Gar>· Joh~son 2012. Inc. 

R.~:paymcnt DeterminatiOn After Adm:n1strauve R.ev:cw 

Statement of Reason<. 

Page ll 

unexpended holunce as th,; /olaf amounr n!c<:il·ed from the matching pu) nzenl uccowJI heor.1 to thr 

total ufa/1 deposits madr into thr cundiJute 's uccozmts.·· !d. (emphasis added). The 

Commtssion·s implemen~ation of this command in II C.F.R. 9038.3(c) uses the same definition of 

"total deposits" as docs the repayment ratio for non-qualified campaign expenses. See 11 C.F.R. 

~§ 9038.2(b)(2)(iii)(A), 9038J(c)( 1 ). (2). 

In exerctsing the discretion afforded it by Congress and conlinncd in the Kennedy 

deciston' to devise a method for computtng a publici) -funded candidate's repayrncn~ obligation in 

the event that the candidate spends public funds on non-qualified campaign expenses, see 

26 U.S.C. ~ 9038(b)(2), the Commission did not invent a whole new approach. but rather adopted 

the same method •.hat Congress had already mandated for the repayment of rubltc funds in the 

event o:· a surtJ!us under 26 l_I.S C ~ 9038(bJ(3) 5)ee .\olin: uf !'roposed Ru!emuktn?, on 

Repayments hy l'uhlic/y Financed Presidell/ial Comlidalel . ..t9 Fed Reg 26596 (June 28, 1984) 

("In addition. the proposed fom1Ula would cssentia;ly adopt the tJro-rata approach found in 26 

U S C. [ §] 9038(b )(3 ). concerning rcraymcnt of surplus funds'') 

f'he Curnmtttee ne\ertheless argues that the Kenned'r' court would not endorse the 

application of the pro rata formula here. where the rrivate and public funds arc seraratcd, as 

rr.:asonable. Attachment 2. It cites material from the Kennedy decision criticizing the 

Commission's rationale for its previcn;s rcgulatior .. which required I 00 percent repayment of all 

primar; t'unds spent on non-qualtfied campaign expenses. \\Jthout regard to the distinction 

There is some indication in the K~nn.:dy dissentmg opinion thatt~:e question of the traceability of the use of 

publiC fu1dS may have been an issue in the litigatiOn S..-.: Kenn~ll, Ji;r ri('S/(icnt, 734 r.::d at 1567 (Starr, J 

d1ssent1ng) ("l)oth the CommiSSIOn and the Cornrlllttee ackno1\ledge that the cor:Hnrngl1nr, of pnv<Jt~ and tederal 

fu1ds rrec1udes :rac1nf', to dt:termme wh1ch federal !·unds 11ere used for unqcJallfied expenditures") There 1s 'lo 

JndiC31ion, hOI\CICr. that the ln3JOrlt)" 's endorsement of a ~31!0 3flf1roach "as bJSCd on t~C flhysica' comn11ngl1ng of 

i·u1ds 

.lTTACHltENT _ _._ __ _ 

Pace tl 
(jar; Johnson and Gary Johnson 2012, Inc 

Rcrayment Determ1nat1on A tier Admini5:ratlve Rcv1ev. 

St~tcmcnt ol Reasons 

Page 12 

between private and public funds. to support this proposition Sec Kennedy, 734 F.2d at 1564-65. 

n R-l 0. Attachment 2. However, as noted above, in each of these ci·.ations. the Kenncdv court 

\Vas addressing the propncty of adopting a l 00 percent rcpa; ment formula. The Kennedy court at 

:he same time indicated that the adoption of a pro rata formula in lieu of a l 00 percent repayment 

formula would be the better course given these criticisms. See, e g, Kennedy, 734 F 2d at 1564. 

n. 8 c·We find it considerably difficult to understand, then, why an expenditure, paid out of a pool 

of funds at least half of which was comprised olpn,·me money, should be deemed to have been 

comprised solely of federal money) (emphasis in original): Kenned;. at 1564 c·or CO~Jrse, an 

unqualified expenditure, :ike any other expenditure. will reduce the campaign's overall available 

funds. and thus cause more federal monies to be spent than otherwise woulc have been spent. The 

relevant q~estion, hov.ever. is how much extra federal money ~c spent as a result of the unquali:icd 

expenditure'.)''): Kennedy, at 1565 ("Accordingly. insofar as the FEC's repayment formula for 

unqualified expenditures looks to the "net result'' of the unqualified expenditures. [citation 

omitted] it appears that a pro m/U formula, such as the one proposed by the Committee, would be 

reasonable.")~ Kennedy, at 1565, n.l 0 ("Therefore. the FEC's rationale would still justify at most a 

pro raw repayment formula. insofar as the formula looks to the overall "net result" of the 

unqualified spending [citation omitted]'') 

Thus, the Commission concludes that its usc of the repayment formula of II C.f.R. 

9 903R 2(b)(2)(iii) to calculate Johnson's repayment obiigation is n:asona~le. is consistent with 

the command ot' the Matching Payment Act, and docs not transgress the limttations on the 

Commtssion's discretion to seek repayment identified by the Kennu~\' court. 

•TT!CHUNT_......, __ _ 

P~e Lcl__ , l. c- ot. .} 
Gary Johnson and Ga;y Johnson 2012, Inc. 

Repayr~1ent Determrn<Jtron Afler Administrative Review 

Sta!ement of Reasons 

Page I J 

C. THE COMMITTEE'S FAILURE TO CHANGE THE WORDING OF 

ITS CO~TRIHUTION SOLICITATIONS, EVE~ IF I~AOVERTENT, 

CANNOT EXEMPT IT WHOLLY OR PARTIALLY FROM ITS 

REPAYMENT OBLIGATION 

Contrary to the Committee's argument. the Com:nittec's failure to alter its contribution 

sol!citatron language in accordance with its intent docs not exempt Johnson from his repayment 

obligation. The Commrttec included language in its sol:citations of contributions that had the 

effect of designating portions of each contribution toward the pnmary and the general elections, 

respectr\ely.' Throughout both c!ection periods. this language indicated that the first $2.500 of 

each contributton would be considered as designa:ed for the primary election. Howc\er. the 

Committee contends that it had intended to change this language so that only the first $250 of each 

contribution would be considered designated tcmard the primary election. and that durrng the 

e 1cction periods it acted 1n accordance \\ith this understanding. St't' Statement of Reasons 1n 

Support of Final Determination ot [nti(lcment in the Matter of Governor Gary Johnson (LRA 905) 

(Nov 14. 2013): Memorandum from Audit Division to the Commission on Audit Division 

Recommendation Memorandum on Gary Johnson 20!2, Inc.. at 2 (June 4, 20 15) 

The Committee argues that had it not committed this error. it would no: have used its 

prtmary funds ro dcfra; general election expenses. This argument focuses on the amount of 

nonlJuaiJCred campaign expenses. The Committee argues thCJt if it applied the designation of only 

allov .. rng the first $250 to he for the primary election. then it would have had mo:-c general election 

Commtssion regulat1ons aiiO\\. and, indeed. encourage. contnbutor; !o desrgnatc their contributions for 

;peci'ic electrons, and one wa) that a contributor may designate his or her contribution rs to subr111t 11 alo:1g with a 

\\ritrng, srgned by the contributor, ''hrch clearly rndrcates the pa:itcuiar electron for wh:ch the contrrbutron is made. 

! I C F.R. ~ 110 ltb)(4)(ir) This rcqurrement rs l'ullillcd rrthe contributor srg:1s a sta:emcnt provid.ng for the 

destgnatron of the contributron suppl~t;d by the recipicr1l comrnltlce. Explanurum und Ju.llljicul;onjor Fr;u/ Rule on 

Cunlrrhulion und Lxrendllwe Lnnllaliuns ,md f'ruhrh;ltcmf.lCunlnlmlirms hr Pc:nr,ns ;mel \fufu,·andtdule f'u!tlicu/ 

Cutnlllllll!n. 52 I cd. Reg. 760, 76J (Jan. '1. 1987) 

ATTACHMENT-------

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Gar; Johnson and Gar; Johnson 2012. Inc 

Repayment Det<::rm in at ion ;\ ftcr Adm 1n istrat1ve Rcv1ew 

Statement or Reasons 

F'age i 4 

funds to spend on genera1 election expenses. Thus, there \\ould ha\'C been less primary election 

funds used to defray general election expenses and there would be !ess nonqualified campaign 

expenses The Committee argues, therefore. that the repayment determination. grounded as it 

was upon this unintentional oversight, represents a disproportionate and puniti\·e response to this 

purported error 

The Commission disagrees. The Commission's repayment deterrr.ination is based strictly 

upon 1ts application of the repayment ratio in ll C.F.R ~ 9038 2(b)(2)(iii) to the facts of the case. 

It is not intended, nor does it operate. as punishment. ;\repayment determination made under the 

auspices of the Presidential Primary Matching Payment Aecot.:nt Act is not considered to im·olve a 

\Iolation of law, and sanctions would only be appropriate if the Commission were to find, as it has 

not in this case, that the Committee willfully and knowingly violated the qualified spending 

IImllatton Sl'e John G!L'nn Pre.\tdl'ntw! Commttll'e, Inc v. Fudau! E!.:ction ( ·ummt.l.\ion. 822 

F.2d I 097. II 00 (D.C C1r. 1987): Reogun !Jush Commillee v. Federal Election Commission, 525 

F.Supp. 1330, 133 7 (D.D C. 1981 ). See cd:,o l.aruuche ,. Federal Election Commission, 28 F 3d 

137. 142 (DC. Cir. 1994) (" ... the request that [petitio:1ers] repay the post-July 22, 19S8, 

matching funds was not a sanction (provided by FECA or by chapter 95 or chapter 96 of title 

26] ''1. 

Although the Comm;ttee may have erred i:1 neglecting to change the language of its 

designations in accordance with its intentrons. the Cor-:1r:1:ssion is ob!iged by its regulations to 

categonze the Committee's contributions :n accordance with the evidence of record. which 

consists of signed contributor statements endorsing the designation formula as actually written. 

II C F.R ~ 110 ! (b)(4 )(1i) It is the contri!Jutor.\· declared intentions respecting the designatio:1 

of their con~ributions to which the Commission must attend. rather than the Comrnrttee's 

.l'!'TACw.Mt 

Page 1j -~-----
Ciar; Johnson anJ Cia') Johnson 2012, Inc 

Kepaymcnt lleterrmnat1on After AJmin1,trat1ve Rcvic\> 

Statement of Reilsom 

Page 15 

undeclared intentions, and the fact that the contributors· signatures appear on wr:tings containing 

the rule that the tirst $2,500 of each contribution is considered a primary election contribution is 

the best evidence ofthe contributors' intentior,s 10 See ExplanatiOn mu/Justijic:ation (or Fino/ 

Rule on Contrilmtion and Expenditure Ltmita!ions and Prohibitumsf.}Con!nhulions h} Persom 

and ~ful!tcandidarf:' Politico! Commirree:J. 52 Fed. Reg. 760, 761 (Jan 9, ! 987) ("\Vntten 

designations ensure that the contributor's inte:1t is clearly conveyed to the recipient candidate or 

comm:ttee "). 

IV. CONCLUSION 

The Com:nission determines that, \\ithin 30 days of service of this Repayment 

Determmation Alter Admmistrative Review. (iary Johnson and Gary Johnson 2012, Inc. :nust 

repay $332,191 to the Cnited States Treasury for matching funds spent on non-qualified campaigr. 

expenses. 26 l'.S.C. 9 9038(b)(2); ll C.F.R. § 9038.2(b)(2)(iii). 

ATrACIJMF.NTS 

Final Audit Report of the Commission. approved July 6, 2015 

2. Committee's Request for Administrative Revtew, dated Sept.·+, 2015 

J. Committee's Post-Hear;ng Supplementary Com:11cnts, dated Nov. 9. 2015 

:c The Col:lmiSSIOn notes as \veil t~at while the Commmce deposited most of the contributiOns :t receiVed after 

the D0!1r1to its general election account, some of the funds th;1t the Commmee characterized as general election 

funds. accurd1ng to it'i ur1Jcrstandmg that arrount> al-ter :he tirst $250 of each contnbu!ion \\l'f~ gcr,cra! elcC:10n 

con:ributiOilS. were 1n fact used for ;Jrimary cleU10n cxp~;nscs 

A'l'TACHM.ENT ~__. ____ _ 

Pace I .C)' 
aB PAC • CAMPAIGN • NON-PROFIT • POLITICAL LAW 

SENT VIA EMAIL AND FIRST CLASS MAIL 

Federal Election Commission 

999 E Street NW 

Washington, DC 20463 

audit@fec.gov 

Dear Commissioners: 

April 25, 2015 

Pursuant to 11 C.F.R. § 9038.5(a), I request a rehearing with respect to Gary Johnson 2012, Inc.'s 

("GJ20 12'' or "Committee") repayment obi igation. Pursuant to § 903 8 .2( d)( I), I also request a 90-

day extension of time to repay the $1,250 found to be owed that is not being disputed. 1 

I. RELIEF DESIRED 

The Committee seeks an abatement of the repayment obligation, or a finding that the Federal 

Election Campaign Act (''FECA") and the holding in Kennedy for President Committee v. FEC, 

734 F.2d 1558 (D.C. Cir. 1984) do not permit the Commission to treat a committee's public 

matching funds and private primary contributions as commingled, when such funds are in fact 

segregated in separate accounts, and a recalculation of the repayment obligation. 

II. LEGAL AND FACTUAL BASIS IN SUPPORT 

A. Scrivener's Error and Contributor Intent 

The Committee's oversight in not updating the disclaimer language on its contribution page after 

the primary election amounted to nothing more than a scrivener's error, and should be treated 

accordingly. When a written agreement does not properly reflect the intent of the parties due to a 

drafting error, the contract may be reformed to bring its language in line with that intent. 27 

Williston on Contracts§ 70:93 (4th ed.). In the instant case, the Commission should retroactively 

read the post-primary disclaimer language to properly reflect what was both the Committee's and 

the contributors' intent. 

The Committee's intent was to allocate the first $250 of all contributions to the primary election, 

and any remaining amount, up to $2,500, to the general election. This has been extensively 

discussed throughout this proceeding, and never disputed by the Commission. As to the 

contributors who actually made the private contributions at issue, the Committee agrees that it is 

their intentions, and not the Committee's, that matters. The Commission argues that the disclaimer 

as-written is the best evidence of how the contributors intended to designate their contributions, 

Statement of Reasons at 14-15, but this is clearly incorrect for a number of reasons. 

1 Pursuant to~ 9038.5(a)(2), the timely filing of this petition suspends repayment of the $332.191 being disputed until 

the Commission has acted on the petition. However. since the Committee lacks sufficient funds to repay even the 

much smaller amount properly due. it is separately requesting an extension of time for that amount. 

203 South Un1on Street • Su1te 300 

Alexandna, VA 22314 

202·210-5431(office) 202·4 78-0750(fax) 

www. D BCaprtoiStrategres .com ATTACH»ENT --()_-~-­ Page _..._l __ of, 3, 
aB DB ·''' ; 

... ~· PAC • CAMPAIGN • NON-PROFIT • POLITICAL LAW 

First. and most plainly, is that contributors do not read disclaimers. The allocation formula, along 

with the other "fine print" on the Committee's contribution page, was skimmed over like so much 

boilerplate legalese - which it was. The contributors were on that page in order to support a 

candidate that they liked, not to read about the minutiae of campaign finance law or make 

designation decisions between elections. Not a single contributor would have cared what the 

disclaimer said if they had read it; whether their contribution was for the general instead of the 

primary matters about as much to the average contributor as whether their contribution is used to 

pay for campaign signs instead of coffee creamer. Contributors know that candidates need money 

for a wide variety of campaign activities, and contribute to the campaign overall. If paying for 

coffee creamer would be more helpful than paying for campaign signs, then that is how the 

contributors would want the campaign to use their contributions, but in general they defer entirely 

to the committees they support to decide how best to maximize whatever contribution they can 

make. 

Further, contributors were not given any option to change how their contributions were designated. 

There were no sliders to adjust or box to fill in with the contributor's preferred designation; the 

only options were to contribute or not to contribute. Only the Committee had the ability to change 

the allocation formula given on the page. Indeed, this entire repayment issue came about as a result 

of inaction by the Committee, not because of any act or omission on the part of the contributors. 

If anything. the disclaimer as-written is at most reflective ofwhat the Committee's intentions were, 

and, as established above, even that is not the case. 

The Committee can appreciate the difficult position that this puts the Commission in, not having 

any clear indicator of contributor intent as to designation, but instead of relying on clearly 

unreliable indicators, it should look at the two clear indicators that are available: the contributors' 

desire to support the candidate and the specific way in which the Committee treated and used those 

funds. Designating the first $2,500 to the primary election is clearly not in the best interest of the 

candidate in this case, so ascribing that intent to contributors requires a powerful justification -

one that is clearly lacking here. In the end, the Commission's decision may end up working more 

harm against the contributors than against the Committee. 

B. Lack of Funds 

A more practical consideration, and one that the Commission has not yet addressed, is that the 

Committee has no funds available with which to make a repayment. As seen on the Committee's 

most recent periodic report, the Committee had a negative cash on hand balance as of March 31, 

2016, as a result of monthly bank fees overdrawing the account. Though the Committee anticipates 

securing sufficient contributions to cover that shortfall before the next report, the amount needed 

is orders of magnitude less than what would be necessary to cover the full repayment amount, as 

it is currently calculated. 

It is not reasonable to expect the Committee to be able to raise funds in that amount within the 

time allotted for repayment, even accounting for the extensions available. In fact, the Committee 

has such poor prospects of raising funds it is doubtful it could ever obtain the necessary amount. 

203 South Union Street • Su1te 300 

Alexandna, VA 22314 

202-210- 5431(office) 202-4 78-0750(fax) 

www. 0 BCapitoiStrateg 1es. com 
aB r.n ... ,¢··'*' ? PAC • CAMPAIGN • NON-PROFIT • POLITICAL LAW 

r~:, t.J \ 

In light of this reality, it would seem imprudent ofthe Commission to spend limited administrative 

resources pursuing this matter. The Commission, to the extent it wishes to affirm precedent for its 

argument in this matter, could both make the finding and still abate the penalty, which in all 

likelihood could never be paid. 

C. Abuse of System 

Finally, though the Commission argues that the Committee's proposed method- treating federal 

matching funds and private primary contributions as separate when they are in fact maintained in 

separate bank accounts- would be "ripe for abuse," Statement of Reasons at 9-10, the fact remains 

that the Committee only ever acted in a good faith beliefthat its allocation and use of post-primary 

contributions was lawful. Even if the Committee's method would be open to abuse - a notion 

which the Committee strongly rejects- that does not permit the Commission to ignore the facts of 

the case that no abuse in fact occurred. The Committee is simply asking that the Commission 

consider the totality of the circumstances in what is a peculiar situation unlikely to reoccur. 

III. QUESTIONS NOT RAISED DURING ORIGINAL HEARING 

The questions of law and fact raised here were not and could not have been raised during the 

original repayment dispute because they are directly responsive to the arguments presented in the 

Commission's Statement of Reasons, not made available to the Committee until April 5, 2016. 

Further, the Committee's financial position and its assessment of its fundraising prospects have 

changed since the original hearing, presenting novel considerations relevant to the case. 

Sincerely, 

Is! 

Dan Backer 

(202) 210-543 I Direct 

dbacker@dbcapitolstrategies.com 

CC: jblume@fec.gov 

lholloway@fec.gov 

203 South Umon Street • Su1te 300 

Alexandria, VA 22314 

202- 210-5431(offlce) 202-4 78-0750(fax) 

www. DBCap1toiStrateg1es.com !TTACHMEHt __ ;)___..,.. __ 

Page --.;;3-..._ ot. ' 3 
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SENT VIA EMAIL AND FIRST CLASS MAIL 

Federal Election Commission 

Audit Division 

Mr. Marty Favin 

999 E Street, NW 

Washington, DC 20463 

Audit@fec.gov 

April14, 2015 

RE: Draft Final Audit Report on Gary Johnson lOll Inc 

Dear Mr. Favin: . 

I am writing on behalf of my client, Gary Johnson 2012Inc ("GJ2012''), in response to the Draft 

Final Audit Report of the Audit Division ("DF AR''). 

I. Request for a Hearing before the Commission 

GJ20 12 requests a hearing to discuss its responses to Findings 1-5 in the DF AR, and to the 

comments on those same Findings in the March 18, 2015 Office of General Counsel memo (''OGC 

Memo"). 

ll. Finding 1. Net Outstanding Campaign Obligations 

GJ2012 accepts the Audit Division finding that GJ2012 did not receive matching fund payments 

in excess of its entitlement. Any changes to the Statement of Net Outstanding Campaign 

Obligations ("NOCO'') to account for debt settlement or asset valuation can only be properly 

addressed if and when such actions are actually taken. 

The Audit Division requested copies of invoices from this firm to corroborate the expenses added 

to the NOCO. Those fees listed are estimates of total cost for our services in relation to the audit, 

and, given the unpredictable nature of that process, will not be invoiced for until the work has been 

completed. Once GJ2012 has been invoiced for the work, copies of the invoices will be provided. 

III. Finding 2. Amounts Owed to the U.S. Treasury 

It should be noted from the outset that during the campaign, GJ2012 acted on a good faith basis 

that contributions received were subject to its understanding of what the disclaimer ·should have 

been had it been properly updated, and that were this the case its intended allocation formula for 

contributions received after the candidate's date of ineligibility ("DOl"), with the first $250 of 

each contribution being designated to the primary, was permissible. As the Kennedy court noted, 

''the violation of campaign spending limitations is often, if not usually, inadvertent." Kennedy for 

President Committee v. FEC, 734 F.2d 1558, 1560 (D.C. Cir. 1984). But for the failure to update 

the disclaimer on the campaign's donation page, this repayment issue would never have arisen, 

because the campaign acted in a manner consistent with what it intended the disclaimer to be, 

notionally the optimal format of such disclaimer. While the Commission has already ruled on the 

20] South UniOn Street • Suite 300 

AI.....Srla, VA 22]14 

202·21o-54l1Cai!ICIII 202·4 71..0750(1ul -.oac.pltalstr.tegiH.com ~TT.&.CH.II.Ellt __ 4...,· ---

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impact of the failure to change the disclaimer, it does not change that the outcome was an 

unintentional one, and that the Committee acted in good faith - if incorrectly - despite the error, 

and that its lack of intent is precisely the kind of inadvertent error the Kennedy court noted. 

It is improper to base the committee's repayment obligation on the repayment ratio of 11 C.F.R. § 

9038.2(b)(2)(iii), which is not a "reasonable method for determining the extent to which matching 

funds, rather than private contributions, were used for unqualified purposes." /d. at 1563. The OGC 

Memo's reliance on Kennedy to support the Audit Division's application of the repayment ratio 

seems misplaced, as that case clearly supports the committee's position on this issue. 

While a committee is prohibited from spending both matching funds and com.ingled primary funds 

on non-qualifying expenses, the penalty is limited to repayment of the amount of matching funds 

that can be reasonably determined to have been spent on such expenses. /d. at 1562. As the court 

recognized, 26 U.S.C. § 9038(b)(2) "expressly limits the repayment obligation to ... the amount 

of matching funds 'so used"'; "the statute plainly allows the Commission to take back only the 

amount of federal funds used for unqualified purpose." /d. at 1561, 1562 (emphasis in original). 

The OGC Memo correctly notes that the Kennedy court left it to the Commission to decide on a 

method to determine the amount of matching funds used for non-qualifying purposes, but the court 

did impose limits on what that method could be - it must produce a reasonable estimation of the 

amount of matching funds spent on non-qualifying expense. /d. at 1563. The court stated that 

section 9038(b)(2) "delegates to the Commission the task of estimating the amount of federal 

funds, rather than private contributions, that were spent for unqualified purposes," and that the 

Commission had ''the responsibility to make a reasonable determination that the repayment sum 

represents the matching funds used for unqualified purposes." !d. at 1562. 

In Kennedy, a pro rata share of the total amount spent on non-qualifying expenses may well have 

been a reasonable estimate of the matching funds so spent, but that is not the case here. There, the 

matching funds were deposited into the same bank account as the funds used to pay for the nonqualifying expenses, but in the instant case, the matching funds were held in a separate account, 

and, at most, only a small fraction of the non-qualifying expenses were paid out it. The intentional 

segregation of funds was based on the Committee's belief that it operated under what was intended 

to be the correct disclaimer language, and consequently it is easy to determine that no federal funds 

were spent on non-qualifying campaign activity. Only by the disclaimer error, and artificial posthac comingling of funds contained in separate accounts, does the Audit Division arrive at 

(notionally) additional funds being included in these calculations. Even if that is the case, it does 

not mean that actual federal funds were spent on non-qualifying campaign activity. 

As the Audit Division's own findings indicate, matching funds were all deposited into GJ2012's 

primary election account, and the overwhelming majority of private contributions received postDOl were deposited into the general account. See Calculation of unqualified C?tpenses worksheet. 

GJ2012 considered these general contributions, and intended to spend them on general expenses. 

GJ2012 believed that its disclaimer had been updated, and operated on that assumption, treating 

contributions as general or primary based on the intended terms of the disclaimer. This detailed 

accounting resulted in the matching funds in the primary account only being used for qualified 

campaign expenses, and the Audit Division's own analysis supports this. 

:103 5oultl 1111101'1 ser.t • Sullll JCIII 

Aleulndlla, VA 22314 

:zoz-uo-543l(alllca) :ZOZ-4 71-C1750(fu) 

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PAC • CAMPAIGN • NON-PROFIT • POUTICAL LAW 

Of the total $1,199,701 that the Audit Division claims was spent on non-qualifying expenses, it 

identifies a total of$2,5 I 0.32 that was paid out of the primary account. Although GJ20 12 maintains 

that even these amounts were not paid for with matching funds, this figure is the maximum possible 

amount of matching funds that could have been used to pay for non-qualifying expenses. The . 

remaining $1.1 million in non-qualifying expenses was paid out of the general account, which 

none of the matching funds were ever deposited into. 

As in Kennedy, the Commission is vastly overestimating the amount of matching funds that were 

spent on non-qualifying expenses, and, as in that case, its methodology must be rejected. The Audit 

Division's calculation of when matching funds were no longer in the account is fundamentally 

flawed, since those funds were only ever in the primary account, and their analysis uses both 

accounts. The repayment ratio therefore estimates in an incongruent manner GJ2012's repayment 

obligation from the activity of a bank account that never contained matching funds, and, as the 

Kennedy court said, the Commission's discretion in choosing a methodology of calculating 

repayment "does not legitimate such a clearly unreasonable formula as the one used by the FEC 

in this case." /d. (footnote omitted). 

The OGC Memo states that the repayment ratio was intended to avoid forcing the Commission to 

conduct in-depth analyses of committee finances in order to determine the appropriate repayment 

obligation. Considering imitation on agency time and resources, that is certainly an admirable 

goal. However, that does not relieve the Commission of its obligation to reasonably estimate the 

amount of matching funds to be repaid, and should not prevent the committee from conducting its 

own analysis to show that its repayment obligation is lower than that calculated by whatever 

method the Commission uses. In this case, the Commission has already conducted a sufficiently 

in-depth analysis of GJ2012's finances to determine that the repayment ratio vastly overstates 

GJ2012's repayment obligation, and, having done so, it cannot willfully ignore those results. 

Finally, with respect to the funds submitted for matching that were identified as being ineligible, 

GJ2012 has not found any indication that the funds were misattributed. The $1,250 total will be 

included in any amount repaid to the US Treasury. 

IV. Finding 3. Use of General Election Contributions for Primary Election Expenses 

GJ2012 urges the Commission to reconsider its arguments regarding the use of general election 

funds as an advance against matching funds. 

V. Finding 4. Reporting of Debts and Obligations 

The Audit division specifieally found that the $300,000 contractual win bonus was a prim.ary 

expense, and should have been paid from primary funds. Consequently, in order to comply with 

Commission directive here, NSON reallocated the $171,200 in payments from GJ20 12 to NSON 

during the 30 days subsequent to the DOl (5/5/14- 6/4/12) to what would have been the earlier 

invoices based on the reasonable preference of the time-limited win bonus over other pre-DOl 

expenses .. The remaining balance of the $300,000 win bonus would be a non-qualified campaign 

20] 5oulh llnlan - • Suite lOCI ~.VA22l14 

20l·21G-54Jl(alllce) 202-471-G750(fllr) 

-.~.com 
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expense and will be addressed through the ultimate debt settlement negotiation between NSON 

and GJ2012, subject to Commission approval. 

VI. FindingS. Extension of Credit by a Commercial Vendor 

The Audit Division objects to redaction of the NSON contracts submitted with GJ2012's response 

to the Preliminary Audit Report. However, it would work an unreasonable burden on NSON to 

be forced to disclose its other clients - including being in violation of relevant contract or trade 

custom- in order to demonstrate the similarity of terms here, and neither the statute nor regulations 

require such. The client identity-redacted contracts clearly demonstrate that NSON was 

conducting its services in a manner consistent with its ordinary course of business for other clients. 

With respect to NSON's regular invoicing for services it provided the committee, the Audit 

Division points to a small number of invoices out of a great many from the campaigns principle 

vendor that were invoiced late as evidence that NSON is not attempting to collect on its outstanding 

debts. Although some invoices were received "late" relative to the services performed, these are 

the exceptions rather than the rule. Moreover, it is not obviously outside the ordinary course of 

business for an enterprise to be sluggish in its own invoices, particularly where such a substantial 

number of invoices were issued. Mistakes happen in business, as in government, and it is patently 

unreasonably to draw the inference that this constitutes a pattern of intentional unlawful conduct. 

The Audit Division notes that, other than the balance of its bank accounts, GJ20 12 did not include 

any assets on the NOCO, but referred in its response to the Preliminary Audit Report to the 

possibility of settling its debts with NSON in exchange for certain committee assets. The assets 

referred to are currently intangible and not readily susceptible to easy valuation. For example, the 

use of the name, likeness, and/or signature of the candidate for fundraising, or a copy of the 

committee's mailing and email lists might be worth a great deal, but the time and resources 

required to convert these intangible assets into a tangible form with a readily identifiable fair 

market value is substantial, and the Committee must first resolve its audit matter to understand 

what resources and obligations it still has. 

With respect to the remaining outstanding debt of GJ2012 to NSON, the parties have agreed to 

defer resolution of that matter until conclusion of the audit process. The outcome of the audit 

bears directly on the scope of committee assets- and potentially the amounts owed to NSON. 

Consequently, providing a comprehensive debt settlement plan to the Commission for its approval 

must necessarily wait until conclusion of the audit process for the parties to possess all materially 

relevant facts to such negotiation. 

Sincerely, 

lsi 

Dan Backer 

(202)-21 0-5431 Direct 

dbacker@dbcapitolstrategies.com 

CC: mfavin@fec.gov 

creminsky@fec.gov 

203 5outll IJniOn Street • SUI!! 300 AleAndrllo, VA 22314 

202-Z 10-543 1(alllat) 202-4 71-Q750(1D) 

www.DIIQpltciSb..,._..cam 

ATTACHUNt__j___,.__ 

Pa~e i __ of~-
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PAC • CAMPAIGN • NON-PROFIT • POLITICAL LAW 

SENT VIA EMAIL AND FIRST CLASS MAIL 

Federal Election Commission 

Audit Division 

Mr. Tom Hintermister 

999 E Street NW 

Washington, DC 20463 

audit@fec.gov 

September 4, 2015 

RE: Repayment Determination for Gary Johnson 2012 Inc 

Dear Mr. Hintermister: 

Pursuant to II C.F.R. § 9038.2(c)(2), I am writing to dispute the repayment determination in the 

Commission's Final Audit Report ("FAR") on Gary Johnson 2012 Inc ("GJ2012" or 

··committee"). 

I. Request for a Hearing Before the Commission 

The Committee requests an opportunity to address the Commission to discuss the issues raised in 

this submission, and any others that may be relevant to the Committee's repayment obligation. 

II. The Commission's Presumption of Commingling is Inconsistent with FECA and with 

the Holding in Kennedy 

In the FAR, the Commission adopted the Audit Division's finding that $332,191 was repayable to 

the U.S. Treasury for federal matching funds spent on non-qualified campaign expenses. It arrived 

at this figure by applying its repayment ratio to Committee expenditures on such expenses from 

both of the Committee's back accounts. Since only one of the Committee's bank accounts ever 

contained federal matching funds, this methodology is not consistent with the Federal Election 

Campaign Act ("FECA"), or with Kennedy for President Commiflee v. FEC, 734 F.2d 1558 (D.C. 

Cir. 1984), and must be rejected. 

A. The Court in Kennedy did not Hold that all Private Primary and Federal Matching 

Funds are Commingled as a Matter of Law 

In Kennedy, the court held that the Commission has a duty to determine the amount of federal 

matching funds spent on non-qualified campaign expenses, and to limit any repayment obligation 

to that amount. Kennedy, 734 F.2d 1558. The court acknowledged that it may be difficult to 

determine precisely what amount of matching funds, as opposed to primary funds, was spent on 

non-qualified campaign expenses, and therefore left it to the Commission to choose a method to 

estimate that amount. !d. at 1563. However, the Commission's discretion in this matter is limited 

to those methods that produce a reasonable estimate of the amount. !d. Although the difficulty in 

determining the amount of matching funds improperly spent may be caused in part by the 

commingling of primary and matching funds, the court did not hold, as the Office of General 

Counsel ("'OGC") concluded, in its March 18, 2015, memo ("OF AR Memo"), that all primary and 

203 South Un1on Street • Su1te 300 

Alexandna, VA 22314 

202-210-5431(offlce) 202-4 78-0750(fax) 

www. D BCap1toiStrateg1es .com ATTACHME.NT__.flf.__-.s-_-_ 

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matching funds are considered commingled '"as a matter of law." DFAR Memo at 2. This is not 

supported by the language of the opinion, and in fact clearly violates the court's express limitation 

of the Commission's discretion in choosing a method to estimate the amount of matching funds 

improperly spent. 734 F.2d at 1563. 

In Kennedy, the court concerned itselfwith the specific facts ofthe case before it, and did not reach 

or even consider the issue of whether all primary funds and matching funds of all committees must 

always be deemed commingled. The court talks only about how the committee in that case, 

Kennedy for President Committee, handled its finances, and does not generalize the analysis to all 

committees that receive matching funds. See 734 F.2d at 1562, 1564, 1565 n.ll. Indeed, it would 

have been entirely unreasonable of the court to do so, given the huge variety in how different 

committees manage their finances, and in how much information the Commission will have about 

those finances when conducting an audit. A repayment determination cannot be conducted using 

a one-size-fits-all methodology, with the Commission pre-determining the facts before knowing 

what they are. Rather, it must be a case-by-case analysis based on the facts as they are discovered 

and the information available to the Commission at the time. 

In the instant case, documents create by Audit Division staff in the ordinary course of the auditas opposed to an idiosyncratic and impracticable analysis that worried the court in Kennedy -

clearly demonstrate that the federal matching funds that the Committee received were only ever 

kept in the Committee's primary account, and that only a maximum of$2,510 in non-qualified 

campaign expenses could possibly have been paid for with those matching funds. See FEC 

Calculation of Unqualified Expenses spreadsheet. This is information already available at no extra 

cost, and that can hardly be considered suspect, since it was Audit Division staffthat prepared it. 

Nonetheless, the Commission has chosen to ignore it and rely instead on the statutorily 

unsupported presumption of commingling. The result is a determination that $332,191 in matching 

funds was improperly spent- which is simply factually erroneous- well over a hundred times as 

much as the FEC' sown analysis says could actually have been spent. 1 

The Committee does not object to the Commission's use of the repayment ratio in determining a 

repayment obligation, but rather to the way that the ratio was improperly applied to both sets of 

Committee accounts, instead of only that set which actually contained federal matching funds and 

from which payments for non-qualified campaign expenses were paid. If matching funds had in 

fact been commingled with the re-designated primary funds (those originally segregated as general 

election contributions), then those primary funds should of course be included in the analysis. But 

if, as in the instant case, there is clear evidence that those funds were not commingled, then there 

is no reasonable option but to exclude them. The Commission cannot simply opt to ignore evidence 

that contradicts the results of its chosen method of estimation. Such a method can only be 

reasonable- and therefore consistent with the requirements of Kennedy- if it takes those, and all 

1 The Committee also notes that in its June 3, 2015 memo ("ADRM Memo''), OGC stated that the Commission has 

"continuously considered a publicly-funded committee's public and private funds to be commingled as a matter of 

law under the authority of the Kennedy decision.'' ADRM Memo at 3 n.3. This may well be the case. but simply the 

fact that the Commission has been consistent in its interpretation of Kennedy tells us nothing about the \·alidity of 

that interpretation. If the Commission was wrong when it tirst interpreted the case- as we maintain it was- then it 

is just as wrong today when it repeats that interpretation. 

203 South Union Street • Suite 300 

Alexandna, VA 22314 

202- 210-5431(office) 202-4 78-0?SO(fax) 

www. D BCa pitol Strategies. com 
aB PAC • CAMPAIGN • NON-PROFIT • POLITICAL LAW 

other relevant facts into account. If the Commission refuses to do so m this case, its final 

determination cannot be considered valid. 

B. The Commission's Presumption of Commingling is Unreasonable in Section 

9038(b)(2) Repayment Cases 

In its ADRM Memo, OGC raises a second argument for treating all primary and matching funds 

as commingled: if there were no such presumption in place, committees could simply segregate 

their matching funds in a separate account, spend primary funds on non-qualified campaign 

expenses, and escape a repayment obligation by claiming, accurately, that no matching funds were 

spent improperly. ADRM Memo at 6. This argument does not in and of itself justify a presumption 

of commingling. 26 U.S.C. § 9038(b) gives three bases for repayment of matching funds: (I) when 

a committee receives more matching funds than it was entitled to, (2) when a committee spends 

matching funds on non-qualified campaign expenses, and (3) when a committee is in a surplus 

position after the end of the matching funds period. 

In the hypothetical OGC presents, it is true that a committee would be able to avoid repayment 

under section 9038(b )(2), but this is entirely proper. In Kennedy, the court made clear that the 

manner in which primary funds are spent has almost no bearing on a committee's obligations with 

regard to matching funds. 734 F.2d at 1564, nn.8-9. Section 9038(b)(2) provides for repayment 

when "any amount of any payment made to a candidate from the matching payment account was 

used for any purpose other than ... [qualified campaign expenses]" (emphasis added). This section 

makes no mention of private primary funds, or how a committee may spend them. In Kennedy, the 

court explicitly stated that treating primary funds like matching funds in the way the Commission 

does would be "absurd and utterly dissolve[] the distinction, recognized by statute, between 

expenses paid out of matching funds and expenses paid out of private contributions." 734 F.2d at 

1564 n.9 (internal citation omitted). 

There is only one situation where section 9038 would provide for repayment when only primary 

funds were spent on non-qualified campaign expenses: if, but for the primary funds improperly 

spent, a committee would be in a surplus position, then repayment of some portion of matching 

funds would be available under section 9038(b )(3), and potentially 9038(b )(I) as well. 

Though the Commission may consider this bad policy, the court in Kennedy held that repayments 

of matching funds are simply not appropriate where only private primary contributions were spent 

on non-qualified campaign expenses, except in the narrow case where the amount improperly spent 

exceeds the committee's deficit. 734 F.2d at 1564-65, n.l 0. The Commission is bound by the law 

as interpreted by the courts, and therefore must act consistently with this ruling. 

In the instant case, the Commission has acknowledged that ''the [Committee] did not receive 

matching fund payments in excess of [its] entitlement," FAR at 12 (footnote omitted), and also 

that the Committee is in a deficit position, even when accounting for the primary funds spent on 

non-qualified campaign expenses. See FAR at I 0. Therefore, the Commission cannot pursue 

repayment under section 9038(b )(I) or (b )(3 ). The only alternative is 9038(b )(2), which is strictly 

limited to matching funds spent on non-qualified campaign expenses; the manner in which primary 

funds have been spent is therefore not relevant in determining the Committee's repayment 

203 South Un1on Street • Su1te 300 

Alexandna, VA 22314 

202·210·5431(office) 202·4 78·07SO(fax) 

www. D BCap1toiStrategies .com ATTACWtENt_ .... -L'--~- Pace · ~ ot1 S: 
aB PAC • CAMPAIGN • NON-PROFIT • POLITICAL LAW 

obligation. Any analysis which treats all Committee accounts as commingled runs directly counter 

to this imperative, and must be rejected. 

Therefore, the Commission must apply the repayment ratio to only those accounts which actually 

contained matching funds and could have spent them on non-qualified campaign expenses- which 

we know in this case can only be the primary account. Doing otherwise could not result in a 

reasonable estimation ofthe amount of matching funds spent on non-qualified campaign expenses, 

as required by Kennedy. 

C. The Commission's Analysis is Unreasonable in this Case given the Committee's 

Good Faith Attempt to Comply with its Intended Disclaimer 

The Commission should reject the repayment determination adopted in the FAR because the highly 

particularized facts of the instant case clearly demonstrate that such a repayment obligation is a 

disproportionate penalty to what is, at root, a very minor error with respect to disclaimer language. 

The instant case is not a situation like the one imagined by OGC, where a committee is secretly 

attempting to circumvent the restrictions on its use of matching funds by using primary funds in 

their place. If a committee did attempt to abuse the leeway that OGC fears section 9038(b)(2) 

offers, it would be easily identified during an audit. The Committee is not such an actor, and cannot 

equitably be treated like one. 

The Committee only ever acted based on a good faith beliefthat the primary funds it was spending 

were actually general funds- a belief it maintained until after the election, when the Commission 

made the determination to the contrary. But for the oversight in updating its disclaimer language 

after the primary election, those funds would in fact have been general funds, and spending them 

in the way the Committee did would have been entirely proper and permissible. 

Section 9038 was not intended as a remedy for violations of the disclaimer rules. Requiring the 

Committee to repay such a huge amount, with money it does not have, based on an ex post reclassification of campaign funds - and a repayment determination in violation of FECA and 

relevant case law- is a clearly unjust result that the Commission must reject. 

Ill. Conclusion 

The Commission's policy of treating all of a committee's private primary funds and federal 

matching funds as commingled, regardless of how the committee actually managed these funds, 

violates the Commission's statutory obligation to reasonably estimate the amount of matching 

funds - and matching funds alone - that were spent on non-qualified campaign expenses, as set 

forth in the Kennedy decision. 

The Commission may not ignore clear evidence that primary and matching funds were not 

commingled, regardless of the policy or enforcement ends it seeks to achieve. Similarly, the 

Commission may not rely on section 9038(b )(2) as justification to presumptively treat all primary 

and matching funds as commingled, because even in the contrived scenario presented by OGC, an 

appropriate repayment obligation is only achieved by not treating all funds as commingled. 

203 South Un1on Street • SUite 300 

Alexandna. VA 22314 

202-210-5431(office) 202-4 78-07SO(fax) 

www. D BCapttol Strategtes. com ATTACHMENt __ £ __ _ P~e t-f ot • s-;,. 
aB PAC • CAMPAIGN • NON-PROFIT • POLITICAL LAW 

Finally, irrespective of the approach the Commission decides to adopt going forward, the 

repayment obligation in the FAR must be rejected due to the facts and circumstances in this case 

showing that such an amount is wholly disproportionate to the inadvertent Committee error -

identified long after the campaign ended- that the Committee properly operated under. 

Sincerely, 

Is/ 

Joseph Lilly 

(805) 279-3973 Direct 

joe@dbcapitolstrategies.com 

CC: mfavin@fec.gov 

creminsky@fec.gov 

lholloway@fec.gov 

203 South Union Street • Suite 300 

Alexandna, VA 22314 

202-210-5431(office) 202-4 78-07SO(fax) 

www. DBCap1toiStrateg1es. com ATTACHliEHT_s:...._ __ _ 

Page _s- ct ~ 
BEFORE THE FEDERAL ELECTION COMMISSIOJ'I 

In the Matter of 

Governor Gary Johnson 

) 

) 

) 

LRA # 905 

STATEMENT OF REASONS IN SUPPORT OF FINAL DETERMINATION ON 

ENTITLEMENT 

I. SUMMARY OF FINAL DETERMINATION 

The Federal Election Commission ("Commission") made a final determination on 

November 14, 2013 that Governor Gary Johnson ("Candidate") is not entitled to receive 

any additional payments of public funds for the 2012 primary election ("Matching 

Funds") pursuant to 26 U .S.C. § 9034(a) of the Presidential Primary Matching Payment 

Account Act and 11 C.F.R. § 9034.5(g). See generall_v 26 U.S.C. §§ 9031-9042 

("Matching Payment Act"); 11 C.F.R. §§ 9031-9039 ("Matching Fund Regulations"). 

The Candidate is not entitled to receive any additional Matching Funds because the 

primary election contributions and the Matching Funds he has received are sufficient to 

pay all of his net outstanding campaign obligations as of his date of ineligibility, and, 

therefore, he and his principal campaign committee, Gary Johnson 2012 Inc 

("Committee''), do not have net outstanding campaign obligations. See II C.F.R.§§ 

9033.5, 9034.1(b), 9034.5. 1 See also Attachment 1. This Statement of Reasons sets 

forth the legal and factual basis for the Commission's final determination. 

Section 9034.5(g)( 1) authorizes the Commission to temporarily suspend payments of Matching 

Funds "[i]fthe Commission receives information indicating that substantial assets of the candidate's 

authorized committee(s) have been undervalued or not included in the statement of Net Outstanding 

Campaign Obligations ("NOCO Statement") or that the amount of outstanding campaign obligations has 

been otherwise overstated in relation to committee assets ... ". 11 C.F.R. § 9034.5(g)(l ). The candidate 

may submit written legal or factual materials "to demonstrate that he or she has net outstanding campaign 

obligations that entitle the campaign to further matching payments." II C.F.R. § 9034.5(g)(2). The 

Commission has concluded that the Candidate and the Committee have not successfully demonstrated that 

the amount of the Committee's outstanding campaign obligations still exceeds the Committee's assets. 

ATTACHllENt_...liG-.:o:..-__ 

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Governor Gary Johnson 

LRA 905 

Page 2 

In sum, the Commission has determined, through its Audit stafC that as of 

December l 8, 20 l 2, the total amount of private contributions received for the primary 

election was $1,213,640.97; 2 the total amount of Matching Funds certified to the 

Committee was $632,016.75; and the amount of the Committee's outstanding obligations 

for the primary election was $1,661 ,789.90. See Attachment I. Thus, the Committee has 

no remaining net outstanding campaign obligations and is not entitled to any further 

payment ofMatching Funds. 

The Committee takes issue with the Commission's calculation of the amount of 

private contributions received for the primary election. The Committee asserts that for 

contributions received after the Candidate was nominated by the Libertarian Party on 

May 5, 2012, it treated the first $250 of each contribution (not coincidentally, the 

maximum matchable amount) as made to retire primary election debt; the next $2,500 of 

each contribution as made in connection with the general election; and any additional 

amounts as again made to retire primary election debt. 

The Commission rejects the Committee's arguments as to the proper allocation of 

contributions between the primary and general elections. As discussed in detail below, 

the designation rules promulgated under the Federal Election Campaign Act of 1971, as 

amended ("FECi\''), require the Committee to follow the written designation of the 

I I C.f'.R. § 9034.5(g)( I). 

The revised NOCO Statement, prepared by the Commission's Audit staff, and attached to this 

Statement of Reasons as Attachment I, reflects the Commission's most recent calculation ofthe 

Committee's net outstanding campaign obligations as of the Candidate's date of ineligibility. 

Attachment I. The Audit staffs calculations on that document reflect contributions received through 

December 18, 20 I 2, the date of the second to last Matching Funds payment the Committee received, 

because this was the last payment date on which the Committee was still entitled to receive Matching 

Funds. The details of the Audit staffs method of allocating contributions between the primary and the 

general elections, which resulted in the calculation of this number, are shown in Attachment 12. 

A'.l'TACWtUf~ (o "--=--- P~e -c...L_-- of, 11 
Govemor Gary Johnson 

LRA 905 

Page 3 

contributors. In this case the Committee's own solicitations contained written 

designations which expressly stated that the Committee would treat the first $2,500, 

rather than the first $250, of a contribution as made for the primary election. 

11. BACKGROUND 

On April 24,2013, the Commission made an initial determination to suspend the 

payment of Matching Funds to the Candidate pursuant to 26 U.S.C. § 9034(a) and 

II C.F.R. § 9034.5(g). See Attachment 2. The Commission concluded that the 

Candidate and the Committee no longer had net outstanding campaign obligations. !d. 

In particular, the Commission found that, given the combined sum of private 

contributions for the primary election and the public funds that the Committee received to 

pay the net outstanding campaign obligations, the Committee no longer had any 

outstanding debt. !d. 

When the Candidate was nominated by the Libertarian Party as its presidential 

candidate at the Libertarian Party's nominating convention on May 5, 2012, he became 

ineligible to receive Matching Funds for the purpose of seeking the nomination. 1 Under 

an exception to the general rule, however, presidential candidates may continue to receive 

Matching Fund payments after the candidate's date of ineligibility, but only to the extent 

that they have net outstanding campaign obligations on the date(s) that they receive 

Matching Fund payments. 4 See II C.F.R. §§ 9033.5, 9034.1 (b). As part of each of its 

For a candidate seeking the nomination of a party that nominates its candidate at a national 

convention. the date of nomination is considered, under Commission regulations, to mark the conclusion of 

that candidate's eligibility to continue to receive Matching Funds. See 26 U.S.C. § 9032(6) and II C.F.R. 

§ 9032.6 (a) (defining the "matching payment period"). Thus, the Commission determined that the 

Candidate's date of ineligibility was May 5, 2012. See Attachment 7; II C.F.R. § 9033.5(c). 

A candidate's net outstanding campaign obligations equal the difference between the total of all 

outstanding obligations for qualified campaign expenses as of the candidate's date of ineligibility, plus 

!TTACHKENT -"""'~""'·)1M--- Page :~ of. i]. 
Governor Gary Johnson 

LRA 905 

Page 4 

submissions for Matching Funds throughout 2012. the Committee provided "1\iOCO 

Statements representing that it had sufficient net debts relating to the primary election. 

The Commission, therefore, continued to consider the Candidate's requests for Matching 

Funds and has certified $632,016.75 in Matching Funds payments to date. 

The Commission discovered, however, through a mandatory audit of the 

Committee that the Committee has no remaining net outstanding campaign obligations 

related to the primary election. To be precise, the preliminary audit of the Committee's 

NOCO Statement found that the Committee had $301,207.31 more in total assets (here, 

private primary contributions plus matching payments) than was necessary to pay its net 

outstanding campaign obligations. The Committee, therefore, was no longer entitled to 

receive public funds. Accordingly, the Commission made the initial determination to 

suspend the payment of Matching Funds pursuant to 26 U.S.C. § 9034(a) and 11 C.F.R. 

§ 9034.5(g). 

The Commission notified the Candidate and the Committee ofthe initial 

determination by letter dated April 25, 2013, to which the Committee responded by letter 

and e-mail. Attachments 2 and 3. The Committee noted that it had not been privy to the 

auditors' data and requested an exit conference.' Attachment 4. In response, the 

Commission's Office of the General Counsel sent the Committee spreadsheets prepared 

by the auditors indicating how the auditors allocated the Committee's contributions in 

determining the possible amount received in excess of entitlement, and provided the 

estimated necessary winding down costs, less the sum of cash on hand, capita! assets, other assets, and 

receivables. ! I C.F.R. § 9034.5(a); see also Advisory Opinion 2000-12 (Bradley/McCain). 

The Commission's Office of General Counsel and the Audit Division denied the Committee's 

request to hold the exit conference while the suspension of public funds was pending. II C.F.R. 

§ 9034.5(g). 

ATTACHWENt-~(o:r;;.._ __ 

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Governor Gary Johnson 

LRA 905 

Page 5 

Committee with an extension oftime to file a substanti\·e response. Attachment 5. See 

II C.F.R. § 9034.5(g)(2) (candidate has 15 business days from service of notice of initial 

detem1ination to respond with factual and legal argument). These initial spreadsheets 

identified the total amount of primary contributions as $1,284,643.94.' 

The Committee contends that the Commission characterized too many 

contributions as primary rather than general election contributions, thereby inflating or 

overstating the amount of primary contributions that the Committee had available to pay 

its net outstanding campaign obligations. Attachments 3 and 6. In particular, the 

Committee states that it initially deposited virtually all contributions it received following 

the date of ineligibility into its general election account and it then submitted the tirst 

$250 of each contribution for primary Matching Funds, using this amount to pay primary 

campaign debts. Attachment 6. The Committee asserts that it maintained funds 

submitted during the general election cycle 7 in the general election account and used 

these funds only to pay general election debt. !d. Finally. the Committee contends that 

amounts exceeding the $2,500 for the general election cycle were considered designated 

for the primary election and were also used to pay primary election debt. !d. The 

In its June 12,2013 response, the Committee contends that the Commission's Audit staff 

·'redesignated $1,307,199.50 from the general election account to the primary election account." 

Attachment 6. The spreadsheets sent to the Committee identify the amount of$! ,307,199.50 as "total" 

rather than as "primary" contributions. The "primary contributions" total was identified as S 1,284,643 .94. 

Both of these numbers were incorrect, however, because they inadvertently included some contributions 

that the Commission's Audit Division should have actually classified as general election contributions as 

well as some primary election contributions that the Committee received before the date of ineligibility. In 

considering the Committee's response to the initial determination and the Commission's overall review of 

the record for the final detem1ination, the Commission has adjusted the amount of primary contributions 

based on these and other changes detailed in Attachment 11. 

The Commission interprets this phrase used by the Committee ("The Committee next maintained 

any funds submitted during the general cycle in the general accounts and used them strictly for expenses 

related to that election." Attachment 6. page 3) to describe its practice to refer to amounts above the initial 

S250, but not exceeding S2,500, that the Committee construed as designated for the general election. 

ATTACHllENt __ {q,..· .._ __ 

Pace S: of, i 7 
Governor Gary Johnson 

LR/\ 905 

Page 6 

Committee asserts that it interpreted the designation language appearing on its own 

website and donor cards to authorize this practice, 8 and further, that it understood it could 

proceed this way as a result of discussions with the Commission's Audit staffthat took 

place on September 28, 2012. !d. 

As to the Committee's Internet solicitations, the Committee's website solicitation 

page included a series of proposed dollar amounts for donations; a series of fields inviting 

the donor to provide the number and expiration date of the credit card used, the donor's 

name, address, e-mail address, and telephone number, as well as occupation and 

employer information; and a check box that the contributor must mark for a contribution 

to be processed. The text accompanying the check box states that the contributor has 

··read the contribution rules below and certif1ies] that [he or she] compl[ies] with them." 

The contribution rules included the following statement: "Gary Johnson 2012 can accept 

contributions from an individual of up to $2,500 per federal election (the primary and 

general are separate elections). By submitting your contribution, you agree that the first 

$2,500 of a contribution will be designated for the 2012 primary election, and any 

additional amount, up to $2,500 will be designated for the 2012 general election."9 

See Attachment 8 (Attachment A to Attachment 8). 

Referring to the designation rule, the Committee also stated: '·Further, and more saliently, that 

language was meant to signify that the "first" $2,500 obtained by the Committee. including donations prior 

to May 5. 2012 [i.e., the date of eligibility] and intended to apply to the primary, were in fact submitted to 

the primary election account. In other words, the Committee was explaining to the donors that they could 

indeed donate again for another $2,500, for a penultimate amount of $5,000 in 2012 (the first going to the 

primary and the second going to the general).'' Attachment 6. See also Declaration of Kim Blanton. at 2 

(in Attachment 6) ("Further, that language was meant to explain to the donors that they could indeed donate 

again for another $2500, for a penultimate amount of $5000 in 2012 (the first going to the primary and the 

second going to the general.)"). 

The Commission will refer to this language hereafier as the Committee's "designation rule" or its 

"designation rule language." 

ATTACHWENT __ (o ___ _ 

Page <0 ot. l 7 
Governor Gary Johnson 

LRA 905 

Page 7 

The Committee's donor cards contained the identical designation rule language 

that appeared on its \vebsite solicitation page. The donor cards contained spaces for the 

contributors to fill out their names, addresses, e-mail addresses, telephone numbers, 

occupations, and employers, but they did not contain signature lines and were not 

signed. 10 See Attachment 9. 

The Committee claims that it followed specific donor intent when that intent was 

made manifest and that there were also a few occasions when the specific language of the 

designation rule was not used. Attachment 3 (May 20 letter). The Committee also states 

that it automatically redesignated excessive primary election contributions to its general 

election account until donor intent with respect to those contributions could be verified. 11 

/d. 

III. FINAL DETERMINATION- THE CANDIDATE IS NOT ENTITLED TO 

RECEIVE ADDITIONAL MATCHING FUNDS BECAUSE THE PRIVATE 

CONTRIBUTIONS AT ISSUE WERE RECEIVED FOR THE PURPOSE 

OF INFLUENCING THE PRIMARY ELECTION 

The Commission has considered the Candidate's response to the initial 

determination and makes a final determination that the Candidate is not entitled to 

10 This description applies to the vast majority of donor cards under analysis. A very small number 

of donor cards contained different language, however. One type of donor card, which also contained the 

signatures of contributors, states: ·•t designate my contribution(s) to Gary Johnson for President, to be used 

towards 2012 primal)' election debt retirement.'' The Commission followed the contributors' designations 

and allocated these contributions to the primary election. Another variety of donor card states: "Gary 

Johnson can accept contributions from an individual of up to $2,500 per.'' It appears that the succeeding 

words were omitted during copying as part of the Committee's submission process, and was likely intended 

to be '·election" or omitted the entirety of the designation rule cited above. Given the uncertainty of these 

designations. the Commission treated these contributions as undesignated, and the Commission allocated 

contributions accompanying these donor cards to the general election. I I C. f. R. § I I 0.1 (b )(2 )( i i). 

11 The Committee requests the opportunity to seek clarification from the donors as to their intent to 

the extent that their intent for contributions following the date of ineligibility is not clear. As discussed 

below, the Commission does not consider it necessary to clarify donor intention. See, infra, page 12. 

ATTACHMENT_ ... kz.,· ---

Page l of, ·t] 
Governor Gary Johnson 

LRA 905 

Page 8 

receive any additional payments of Matching Funds for the primary election in 2012 

because he no longer has net outstanding campaign obligations arising from that primary 

election. 12 See II C.F.R. §§ 9033.5, 9034.1(b). Specifically, the amount ofprivate 

contributions the Candidate raised for the primary election, combined with the amount of 

public f\'latching Fund payments received for the primary election, exceed his net 

outstanding campaign obligations arising from the primary election. 

A. Internet Contributions and Donor Card Contributions Received After 

May 5, 2012, the Date of Ineligibility, Totaling $1,213,640.97 Were 

Designated for the Primary Election. 

The Committee submitted the private contributions at issue for matching under 

the primary election financing system. To qualify for public funds under this system, 

'·[t]he contribution shall be a gift of money made: By an individual; by a written 

instrument andfor the purpose ofinfluencing the result of a primary election" 11 C.F.R. 

§ 9034.2(a)(l) (emphasis added). See also 11 C.F.R. § 9034.3(i) (contributions made for 

any purpose other than to influence the result of a primary election arc not matchable). 

Therefore, the contributions submitted for matching must be for the purpose of 

influencing the primary election. The question that the Commission must address is what 

portion of the private contributions at issue here was made for the purpose of influencing 

the primary, as opposed to the general, election. 

12 The Commission is aware that its audit of the Committee is still pending and that the exit 

conference has not yet taken place. See II C.F.R. § 9038.1(b)(2)(iii). The Committee will have the 

orportunity to respond to the Audit staffs findings (including preliminary calculations regarding 

repayments to the United States Treasury) both during the exit conference and after the preliminary audit 

report. II C.F.R. § 9038.1 (c), has been issued. Thus, the Commission is necessarily basing this final 

determination upon what the Committee has submitted at this time and the Audit staffs preliminary 

findings in the context of this determination. The scope of this final determination is limited to the 

determination ofthe Committee'sfuture entitlement to receive Matching Funds, and does not address 

whether the Committee has been overpaid public funds entitled to repayment. 

ATTACIULE.NT _____ (o__ _ 

Pare 8" of1 ·;] 
Governor Gary Johnson 

LRA 905 

Page 9 

The Commission's regulations prescribe the methods to follow for allocating 

contributions to either the primary or to the general election. When a contribution is 

designated in writing for a specific election. the committee must treat the contribution as 

so designated. 11 C.F.R. § 110. 1(b)(2)(i). When a contribution is not specifically 

designated in writing, a committee must treat the contribution as made for the next 

election for the relevant Federal office occurring after the contribution is made. 

11 C.F.R. § 110. 1(b)(2)(ii). 

Commission regulations provide for two ways in which a contribution may be 

considered ··designated in writing" for the purpose of applying 11 C.F.R. § 1 10.1 (b )(2)(i). 

First, the contribution may be made by a negotiable instrument that clearly indicates the 

particular election for which the contribution is made. 11 C.F.R. § 110.1 (b)(4)(i). 

Second, the contribution may be accompanied by '·a \Vriting," signed by the contributor, 

which clearly indicates the particular election for which the contribution is made. 

11 C.F.R. § 110.1(b)(4)(ii). 

Following the contributors' written designation of the private contributions in this 

case, the Commission allocated the first $2,500 to the primary election and any remainder 

to the general election. As described in detail in Section II above, the contributions made 

through the Committee's website and with donor cards were accompanied by the 

following designation language: .. Gary Johnson 2012 can accept contributions from an 

individual of up to $2,500 per federal election (the primary and general are separate 

elections). By submitting your contribution, you agree that the first $2,500 of a 

contribution will he designated for the 2012 primary election, and any additional amount, 

up to $2,500 will be designated for the 2012 general election." 

.t'l'TACHliENt_...;(q~-;._ __ 

Page J of, ~ 11 
Governor Gary Johnson 

LRA 905 

Page 10 

Applying this clear designation language, the Commission allocated aggregate 

contributions of $2,500 or less from each contributor to the primary election, and 

allocated any portion of aggregate contributions above $2,500 to the general election. 

This allocation procedure followed the plain language of the Committee's own 

designation rule. By this method. the Commission concludes that the amount of primary 

contributions the Committee has received to date from the date of ineligibility is 

$1,213,640.97. 13 See Attachment I. In arriving at this conclusion, the Commission 

applied I I C.F. R. § 11 0. I (b)( 4 )(ii ). under which contributions accompanying a signed 

writing that provides for a designation of the contributions are considered designated 

contributions. Section IIO.I(b)(4)(ii) requires a ''signed writing'' to accompany the 

contributions to make their designations effective. The contributions received by the 

Committee by donor card and Internet were not signed by the contributors in the 

traditional sense. The donor cards do not have a signature line, and the Internet forms do 

not contain a space for electronic signatures. The Commission, nevertheless, concludes 

that both represent valid designations for the Committee's primary election. 

With respect to the donor cards. the Commission has previously concluded that, 

so long as donor cards contain name and address information filled out by the 

contributors themselves, the signature requirement of section 110.1 (b)( 4 )(ii) is satisfied. 

See Final Audit Report, Craig Romero for Congress, Inc. (Approved by Commission Oct. 

The Commission's current calculation of the amount ofthe Committee's outstanding obligations 

for the primary election as of the date of ineligibility is $1,661, 789.90. Sec Attachment I. The 

Commission had previous!)' calculated this number as part of the initial determination to be $1 ,619.383.38. 

Since the Committee received $632,016.75 in Matching funds, this means that the Committee received 

$183,867.82 [($1 ,213,640.97 + 632,016.7 5) - S I ,661 ,789.90] in excess of its net outstanding campaign 

obligations. The Commission may seek a repayment for receiving funds in excess of entitlement when 

Matching Funds are paid and there are no net outstanding campaign obligations. II C.F.R. 

§ 9038.2(b)(l)(i). However. the figure of$183,867.82 does not reflect the ultimate amount that the 

Committee may owe to the United States Treasury because the audit of the Committee is not complete. 

4TT.AClULENt -...o(~~o~o~:f2~---- Paga l 0 nf', .. t.] 
(]overnor Gary Johnson 

LRA 90) 

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3, 2007), at 9-1 0; Office of General Counsel Comments on Interim Audit Report, Craig 

Romero for Congress (LRA # 698). 14 In this case, the donor cards included all of this 

information, and the Commission does not have any information to suggest that the cards 

were not completed by the contributors or that the cards do not represent the intent of the 

contributors. 

With respect to the credit card contributions made through the Committee's 

website, the Commission concludes that the process followed by the Committee, in which 

it required the contributors to ''check off' a box on an electronic contributor form that 

states that the contributors certify they have read a series of contribution rules, which 

include the designation rule, and comply with them, represents valid designations of the 

contributions. See Advisory Opinion 1999-09 (Bradley for President) (Commission 

interprets the fECA, the Matching Payment Act, and the regulations implementing these 

in a manner that attempts to accommodate technological innovations where possible). 

In Advisory Opinion 1999-09, the Commission concluded that the electronic 

contributor form with the "checking ofT' of the appropriate boxes, could be the functional 

equivalent of a "'written instrument" as described, and required for matchability, in 

26 U.S.C. s 9034(a). !d. The Commission more recently arrived at a similar conclusion 

in the context of its issuance of an interpretive rule regarding electronic redesignations, 

which also require a written signature. 15 Notice of Interpretive Rule Regarding Electronic 

Contributor Redesignations, 76 fed. Reg. 16,233 (Mar. 23, 2011); 11 C.F.R. 

,, A copy ofthis document is included as Attachment 13. 

15 The Commission has noted that additional precautions must be taken when a committee receives 

contributions via the Internet. See Explanation and Justification for Final Rules Regarding Matching Credit 

Card and Debit Card Contributions in Presidential Campaigns, 64 Fed. Reg. 32,394-32,395 (June 17, 

I 999). In this case. the Internet forms elicit personal information from the contributors that can be verified 

4TT4CHILE.N't _ _,(w.Q'---

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Governor Gary Johnson 

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§ 110.l(b)(5). 

The Committee requests the opportunity to contact its donors to clarify the 

election designation of their contributions ifthe Commission detem1ines that their intent 

is not clear. See. supra, note 11. The Commission, however, using the plain language of 

the Committee's own designation rule, determines that the intent of the donors was clear, 

and therefore concludes that no further clarification is necessary. 16 

In summary, the Commission concludes that $1,213,610.97 in private 

contributions was for the purpose of inf1uencing the primary election because the 

contributors made effective \\Titten designations of the contributions for the primary 

election, both through the Committee's website, and via its donor cards. 17 

See Attachment 12. 

against the Committee's records, such as their names, addresses, e-mail addresses, telephone numbers, 

occupations, and employers, in addition to their credit card information. This provides a level of assurance 

as to the contributor's identity and intent analogous to that which the Commission has deemed sufficient in 

the case of electronic redesignations of contributions, which also require a written signature. Notice of 

Interpretive Rule Regarding Electronic Contributor Redesignations. 76 fed. Reg. 16,233 (Mar. 23, 2011); 

11 C.f.R. § 1JO.l(b)(5). 

16 Nor could the Committee seek to redesignate the contributions because the contributions were not 

excessive and the 60-day deadline for seeking a redesignation has passed 11 C .f. R. § II 0.1 ( b )(5). 

:--Jevertheless, the Commission concludes that it cannot countenance additional delay at this point. The 

procedure for suspending Matching fund payments is a formal process that requires the Commission to 

adjudicate and to reach a tina! agency action. Under this process, the Committee was allowed 15 business 

days to respond to the initial determination, and, in fact, it has been given additional time. 11 C.f.R. 

§ 9034.5(g)(2). If the Committee had wanted to request changes in designations in this manner. it could 

have done so upon being notified of the initial determination. 

17 Even if the regulatory requirement for a signed writing accompanying the contributions was 

somehow not satisfied in this case, this would not assist the Committee in advancing its position. Ifthe 

contributions received after the date of ineligibility were not accompanied by signed writings, then the 

entire amount of the contributions would have to be considered undesignatcd, and therefore would be 

allocated to the general election pursuant to 11 C.f.R. § ll0.l(b)(2)(ii) lfthat were the case, then it would 

follow that the contributions submitted by the Committee were not eligible at all for matching because the) 

were not intended to influence the primary election. See II C.f.R. ~§ 9034.2(a)( I), 9034J(i) (to be 

matchable, a contribution must be intended to influence the primary election). 

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CJovemor CJary Johnson 

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B. The Committee's Professed Designation Practice Contradicts Both the 

Plain Language of lts Designation Rule and Its Contemporaneous 

Documentation to the Commission. 

Contrary to the Audit staffs allocation, the Committee asserts that it had a 

practice of allocating only the first $250, rather than the first $2,500, of each contribution 

that it received towards the primary election and submitting that portion for matching 

while it allocated the remainder of the contribution, up to $2,500, to the general 

election. 18 The Committee· s description of its designation practice is contrary to the plain 

language of its own publicized designation rule, as well as the Committee's 

contemporaneous representation to the Commission of the meaning of its designation rule 

following a September 28. 2012 meeting with the Audit staff. 

First, the Committee's professed practice cannot be reconciled with the 

designation rule language used by the Committee on its website and donor cards. While 

the designation rule language appearing on the face of the solicitations indicates that the 

first $2,500 of each contribution would be considered designated for the primary election, 

the Committee's practice involved designating only the first $250 of each contribution 

toward the primary election, and designating the remainder of that contribution, up to 

$2,500, toward the general election. The Committee's reported designation practice is 

JM As detailed above, at pages 5-7, the Committee made a number of assertions about how it 

allocated deposits and payments between its primary and general election accounts. As noted in greater 

detail in the Audit Division's Analysis :V1emorandum of CJary Johnson 2012 Inc, the Commission's analysis 

of the Committee's activity in this regard does not appear to support these assertions. In particular, the 

Audit stafrs examination shows that there was only minimal transfer activity between the general and 

primary election accounts and that expenses identified as relating to the primary election were paid from 

the Committee's primary election account, the balance of which consisted mostly of Matching Funds. See 

Attachment 8, pages 4-5, and Attachment D to Attachment 8. 

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facially inconsistent with the designation rule language, ~ and only serves to attempt to 

ma'\imize the Committee's public tinancing by understating the total amount of funds 

available to the Committee to retire its primary debt while submitting the maximum 

amount of $250 available for contribution. 

Second, the Committee contends it understood it could proceed to designate 

contributions in accord with what it now reports as its practice as the result of a 

September 28,2012 meeting with the Commission's Audit staff. Yet the Commission's 

records do not indicate that a practice of deducting the first $250 of each contribution and 

submitting it for matching was discussed during the September 28 meeting. Rather, the 

Commission first leamed of this reported practice in the Committee's June 12,2013 

response to the Commission's initial detem1ination. See Attachment 8. 

Further, the Committee's own communications with the Commission's Audit staff 

immediately following the September 28. 2012 meeting reflect an understanding of the 

designation language which not only follows the plain meaning and mirrors the allocation 

methodology applied by Audit staff, but contradicts the Committee's current 

representation of its designation practice. Shortly after the September 28 teleconference, 

19 The Commission recognizes the possibility that the contributors could have instructed the 

Committee, through a proper designation, to assign only the first 5>250 to the primary election. The 

Committee indicated as part of its response that it followed specific designation instructions when it 

received them, regardless of whether those specific instructions were consistent with its general designation 

language. The Commission notes. however, that the Committee has presented no specific information or 

evidence to show that it received specific designation instructions from any contributor, including 

instructions to designate the first $250 of a contribution toward the primary election and the remainder, up 

to 5>2,500, toward the general election. The Commission's own review ofthe records in its possession 

shows evidence of only one donor card in which the word "primary'' in the standard designation rule 

language appearing on the card was replaced with the word "general". The Commission considered this 

one contribution to be designated toward the general election, thereby honoring the specific intent of the 

contributor even when it was expressed in a manner that conflicted with the standard designation language 

on the donor card. 

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Governor Gary Johnson 

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the Committee sent an e-mail to the Commission's Audit statTon October 3, 2012. 

Attachment I 0. In that communication, the Committee stated the following: 

The Committee submits that the donation card being 

returned by the donors and the marking of the required box on the 

website are both indicative of the donors' having read and 

understood that their contributions \Vould be applied first to the 

Primary 2012 election up to a maximum amount of $2,500.00 and 

afterward to the General 2012 election. As such, these actions 

demonstrate that the donative intent of the contributor was that the 

contribution be used for the Primary 2012 election so that 

II CFR § 9034.3(i)20 does not apply. 

Following receipt ofthis information, the Commission's Audit staff notified the 

Committee that contributions accompanied by the Committee's designation language 

would be matchable provided that certain conditions were met. See E-mail from Marty 

Kuest, Audit Division, to Kim Blanton, dated October 16, 2012, in Attachment C to 

Attachment 8. That e-mail stated the following: 

Based on the information your committee has provided that your 

web site and contribution materials included language that indicated 

the first $2,500 of each contributions [sic.] would be contributed to 

the primary election, the contributions would be designated to the 

primary election and thus would be matchable; BUT ONLY IF your 

committee provides I) evidence that the online credit card 

contributors checked the box for the contribution rules and 2) the 

donor cards filled out by the contributors for direct mail 

contributions, as long as the cards were filled out by the contributors 

rather than by the Committee. 

The October 3 e-mail from the Committee reflects the Committee's 

contemporaneous understanding of its designation language, which is consistent with the 

Audit staffs allocation methodology. As the quoted excerpt from this e-mail states, the 

Committee understood that contributions would first be applied to the primary election up 

20 This section provides that "[c)ontributions which are made by persons without the necessary 

donative intent to make a gift or made for any purpose other than to influence the result of a primary 

election" are not matchable. I I C.F.R. § 9034.3(i). 

ATTACMJ(EH'l: kz 

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Governor Gary Johnson 

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to a maximum of $2,500. Equally signilicant is that the Committee did not interpret the 

language to mean that the contributions would be applied to the primary election up to a 

maximum of $250, with the remainder going to the general election. Further, the Audit 

statr s October 16 e-mail restates this understanding of the Committee's designation 

language. There is no indication in Commission records that the Committee at any time 

surrounding the September 28 teleconference, or indeed thereafter up to the time that it 

received notice of the Commission's initial determination, took any action or made any 

communication to the Commission suggesting that it interpreted these words of 

designation to mean that the first $250, rather than the first $2,500, of each contribution 

would be designated toward the primary election. 

In summary, by now claiming contributions initially characterized as for the 

primary under the aegis of its designation rule were in actuality general election funds, 

the Committee would prolong its entitlement to Matching Funds when there is no proper 

basis for doing so. The Commission concludes that the Committee may not reap the 

bene lit of asserting two mutually inconsistent positions. Rather, a single, consistent rule 

must be applied throughout the matching process. The Commission is satisfied that the 

Committee's original representation to the Audit stafT is the proper single, consistent rule 

to apply, and is consistent with the plain language of the designation rule contained in the 

Committee's online and donor card solicitations. 

Because the Committee's current interpretation of its designation language is 

corroborated neither by the plain language nor by its own contemporaneous 

communications, the Commission finds the Committee's arguments unpersuasive. The 

Commission concludes that the Committee has received a sufficient amount of matching 
Governor Gary Johnson 

LRA 905 

Page 17 

funds and private contributions to pay its net outstanding campaign obligations. The 

details of the total amount of primary contributions are set forth in Attachment 11 and 

this is further supported by the details of how the Commission allocated specific 

contributions in Attachment 12. 

IV. CONCLUSION 

Based on the foregoing, the Commission has made a final determination that 

Governor Johnson is no longer entitled to receive Matching Funds under 11 C.F.R. 

§ 9034.5(g). 

Attachments 

Attachment 1 (Revised Statement ofl'\et Outstanding Campaign Obligations) 

Attachment 2 (Notice of Initial Determination on Entitlement, Dated April 24, 2013) 

Attachment 3 (Notification of Initial Determination to Gary Johnson. 2012, Dated April 

25,2013, and May 20,2013 Response of Committee) 

Attachment 4 (Response of Committee to Office of General Counsel E-mail of May 24, 

2013, Dated May 24, 2013) 

Attachment 5 (E-mail enclosing Auditor Spreadsheet to Committee, Dated May 31, 

2013) The spreadsheet is attached as electronic media. 

Attachment 6 (Response of Committee to Initial Determination, Dated June 12, 2013) 

The spreadsheets submitted by the Committee are attached as electronic media. 

Attachment 7 (Letter from Vice Chair Weintraub to Committee, Dated May 29, 20 12) 

Attachment 8 (Audit Analysis Memorandum, with attachments, Dated September 13, 

2013 ). The Memorandum includes spreadsheets that are attached as electronic media. 

Attachment 9 (Sample Committee Donor Card) 

Attachment 10 (E-Mail from Kim Blanton to Audit staff, Dated October 3, 20 12) 

Attachment 11 (Commission Adjustments to Primary Contributions For Final 

Detenn ination) 

Attachment 12 (Final Determination Spreadsheet Showing Commission's Allocation of 

Contributions Between Primary and General Elections). This spreadsheet is attached as 

electronic media. 

Attachment 13 lOftice of General Counsel Comments on Report of the Audit Division on 

Craig Romero for Congress, Inc. (LRA #698), Dated January 29, 2007) 

ATTACWttHT_....a(.,..o.._ __ 

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