FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

May 12,2009 

MEMORANDUM 

To: Judith Ingram 

Press Officer 1-4 

From: Joseph F. StOltz~~ Assistant Staff I?' ctor 

Audit Di vision I 

Subject:	 Public Issuance of the Audit Report on Democrat, Republican, Independent 

Voter Education Political Campaign Committee (DRNE) 

Attached please find a copy of the audit report on Democrat, Republican, 

Independent Voter Education Political Campaign Committee, which was approved by the 

Commission on April 30, 2009. 

All parties involved have received informational copies of the report and the report 

may be released to the public on May 12,2009. 

Attachment as stated 

cc:	 Office of General Counsel 

Office of Public Disclosure 

Reports Analysis Division 

FEC Library 

lTD Web 
Report of the 

Audit Division on the 

Democrat, Republican, Independent Voter 

Education Political Action Committee 

January 1, 2003 - December 31, 2004 

Why the Audit	 About the Committee (p. 2) 

Was Done The Democrat, Republican, Independent Voter Education 

Federal PoLitical Action Committee is a separate segregated fund ofthe law permits the 

Commission International Brotherhood ofTeamsters headquartered in to conduct 

Washington, DC. For more information, see chart on the audits and field 

Committee Organization, p.2. investigations of any 

political committee that is 

required to file reports	 Financial Activity (p. 2) 

under the Federal	 • Receipts 

Election Campaign Act o From Individuals	 $ 9,681,080 

(the Act). The o Loans received	 1,000,000 

Commission o Refunds of Federal Contributions generally	 54,180 

o Other Federal Receipts conducts such audits	 76,946 

o Total Receipts when a committee	 $ 10,812,206 

appears not to have met • Disbursements 

the threshold o Operating Expenditures $ 244,747 

requirements for o Transfers to Affiliated Committees 253,014 

substantial compliance o Contributions to Federal Candidates 2,583,419 

with the Act. I The audit o Independent Expenditures 511,614 

determines whether the o Loans Repayment 500,000 

committee complied with o Other Disbursements 6,936,6432 

the limitations, o Total Disbursements $ 11,029,437 

prohibitions and 

disclosure requirements . Finding_s and Recommendations (p. 3) 

ofthe Act. • Disclosure of Independent Expenditures (Finding 1) 

• Disclosure of Outstanding Debt (Finding 2) Future Action • Disclosure of Other Disbursements (Finding 3) 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any ofthe 

matters discussed in this 

report. 

2 U.S.C. §438(b).
 

2 This figure primarily includes contributions to non-federal entities.
 

I 
1 

Table of Contents 

Part I. Background 

Authority for Audit 

Scope ofAudit 

Part II. Overview of Committee 

Committee Organization 

Overview of Financial Activity 

Part III. Summaries 

Findings and Recommendations 

Part IV. Findings and Recommendations 

Finding 1. Disclosure ofIndependent Expenditures 

Finding 2. Disclosure of Outstanding Debt 

Finding 3. Disclosure of Other Disbursements 

Page 

2
 

2
 

3
 

3
 

4
 

5
 

8
 

9
 
2 

Part I 

Background 

Authority for Audit 

This report is based on an audit ofthe Democrat, Republican, Independent Voter 

Education Political Action Committee (DRIVE), undertaken by the Audit Division ofthe 

Federal Election Commission (the Commission) in accordance with the Federal Election 

Campaign Act of 1971, as amended (the Act). The Audit Division conducted the audit 

pursuant to 2 U.S.c. §438(b), which permits the Commission to conduct audits and field 

investigations of any political committee that is required to file a report under 2 U.S.C. 

§434. Prior to conducting any audit under this subsection, the Commission must perform 

an internal review ofreports filed by selected committees to determine if the reports filed 

by a particular committee meet the threshold requirements for substantial compliance 

with the Act. 2 U.S.c. §438(b). 

Scope of Audit 

This audit examined: 

1. The receipt of excessive contributions and loans. 

2. The receipt of contributions from prohibited sources. 

3. The disclosure of contributions received. 

4. The disclosure of disbursements, debts and obligations. 

5. The consistency between reported figures and bank records. 

6. The completeness of records. 

7. Other committee operations necessary to the review. 
3 

Part II 

Overview of Committee 

Committee Organization 

Important Dates DRIVE 

• Date ofRegistration Prior to 1975 

• Audit Coverage January 1, 2003 -December 31,2004 

Headquarters Washington, DC 

Bank Information 

• Bank Depositories 3 

• Bank Accounts 5 

Treasurer 

• Treasurer When Audit Was Conducted C. Thomas Keege1 

• Treasurer During Period Covered by Audit C. Thomas Keegel 

Management Information 

• Attended FEC Campaign Finance Seminar Yes 

• Used Commonly Available Campaign 

Management Software Package 

Yes 

•	 Who Handled Accounting and Paid Staff 

Recordkeeping Tasks 

Overview of Financial Activity 

(Audited Amounts) 

Cash on hand January 1, 2003 . $ 753,608 

0 From Individuals 

0 Loans Received 

0 Refunds of Federal Contributions 

0 Other Federal Receipts 

Total Receipts 

9,681,080 

1,000,000 

54,180 

76,946 

$ 10,812,206 

244,747 

253,014 

2,583,419 

511,614 

500,000 

6,936,643 

$ 11,029,437 

$ 536,377 

0 Operating Expenditures 

0 Transfers to Affiliated Committees 

0 Contributions to Federal Candidates 

0 Independent Expenditures 

0 Loans Repayment 

0 Other Disbursements 

Total Disbursements 

Cash on hand @ December 31, 2004 
4 

Part III 

Summaries 

Findings and Recommendations 

Finding 1. Disclosure of Independent Expenditures 

The Audit staff identified 24 independent expenditures made by DRIVE totaling 

$314,650 that were not properly disclosed. DRIVE disclosed these expenditures on 

Schedules B (Itemized Disbursements) rather than itemizing them on Schedules E 

(Itemized Independent Expenditures) and did not file the corresponding 48 or 24-Hour 

notices that are required for qualifying independent expenditures. The Audit staff 

recommended that DRIVE document that these transactions were not independent 

expenditures or file amended reports itemizing them on Schedules E. In its response to 

the interim audit report, DRIVE filed amended reports which itemized the 24 

independent expenditures in question on Schedules E. 

(For more detail, see p. 5) 

Finding 2. Disclosure of Outstanding Debt 

DRIVE failed to itemize outstanding debt totaling $227,883 owed to its two largest 

vendors on four of its 2004 disclosure reports. The Audit staff recommended that 

DRIVE amend Schedules D (Debts and Obligations) and the corresponding Summary 

Pages for the affected 2004 reports to disclose this debt. In its response to the interim 

audit report, DRIVE filed corrective amendments. 

(For more detail, see p. 8) 

Finding 3. Disclosure of Other Disbursements 

A sample review of 'Other Disbursements' itemized on Schedules B (Itemized 

Disbursements) indicated that approximately 16% of expenditures lacked a disclosure of 

purpose. The Audit staff recommended that DRIVE file amended reports to provide the 

omitted purposes. In response to the recommendation in the interim audit report, DRIVE 

filed amended reports which materially corrected its disclosure of purposes on Schedules B. 

(For more detail, see p. 9) .. . 
5 

Part IV
 

Findings and Recommendations
 

IFinding 1. Disclosure of Independent Expenditures 

Summary 

The Audit staff identified 24 independent expenditures made by DRIVE totaling 

$314,650 that were not properly disclosed. DRIVE disclosed these expenditures on 

Schedules B (Itemized Disbursements) rather than itemizing them on Schedules E 

(Itemized Independent Expenditures) and did not file the corresponding 48 or 24-Hour 

notices that are required for qualifying independent expenditures. The Audit staff 

recommended that DRIVE document that these transactions were not independent 

expenditures or file amended reports itemizing them on Schedules E. In its response to 

the interim audit report, DRIVE filed amended reports which itemized the 24 

independent expenditures in question on Schedules E. 

Legal Standard 

A. Definition of Independent Expenditures. The term "independent expenditure" 

means an expenditure by a person for a communication expressly advocating the election 

or defeat of a clearly identified candidate that is not made in coordination with any 

candidate or authorized committee or agent of a candidate. 11 CFR §100.16 

B. Clearly Identified Candidate. The term "clearly identified" means the candidate's 

name, nickname or image appears, or reference to the candidate is otherwise apparent. 

11 CFR §100.17 

C. Expressly Advocating. The term "expressly advocating" means any communication 

that includes a message that unmistakably urges election or defeat of one or more clearly 

identified candidate(s). There are two ways that a communication can be considered 

express advocacy: (1) by use of certain "explicit words of advocacy of election or defeat" 

and (2) by the "only reasonable interpretation" test. 11 CFR §100.22 

1.	 Explicit Words of Advocacy of Election or Defeat. The following words 

convey a message of express advocacy: 

•	 "Vote for the President," "re-elect your Congressman," "support the 

Democratic nominee," "cast your ballot for the Republican challenger for the 

U.S. Senate in Georgia," "Smith for Congress," "Bill McKay in '02"; 

•	 Words urging action with respect to candidates associated with a particular 

issue, e.g., "vote Pro-Life" or "vote Pro-Choice," when accompanied by 

names or photographs of candidates identified as either supporting or 

opposing the issue; 

•	 "Defeat" accompanied by a photograph of the opposed candidate, the opposed 

candidate's name or "reject the incumbent"; and 
6 

•	 Communications of campaign slogan(s) or word(s), e.g., on posters, bumper 

stickers and advertisements, that in context can have no other reasonable 

meaning than to support or oppose a clearly identified candidate, for example, 

"Nixon's the One," "Carter '76," "Reagan/Bush." 11 CFR §100.22(a). 

2.	 "Only Reasonable Interpretation" Test. In the absence of such "explicit words 

of advocacy of election or defeat," express advocacy is found in a communication 

that, when taken as a whole and with limited reference to external events, such as 

the proximity to the election, can only be interpreted by a "reasonable person" as 

advocating the election or defeat ofone or more clearly identified candidates(s). 

11 CFR §100.22(b)(1) and (2). 

D. Disclosure requirements - general guidelines: An independent expenditure shall be 

reported on Schedule E, when added to other independent expenditures made to the same 

payee during the same calendar year, exceeds $200. Independent expenditures are 

itemized on Schedule E. Independent expenditures made (i.e, publicly disseminated) 

prior to payment should be disclosed as "memo" entries on Schedule E and as a 

reportable debt on Schedule D. Independent expenditures of $200 or less do not need to 

be itemized, though the committee must report the total of those expenditures on line (b) 

on Schedule E. 11 CFR §104.3(b)(3)(vii), 104.4(a) and 104.11 

E. Last-Minute Independent Expenditure Reports (24-Hour Notices): Any 

independent expenditures aggregating $1,000 or more, with respect to any given election, 

and made after the zo" day but more than 24 hours before the day of an election must be 

reported and the report must be received by the Commission within 24 hours after the 

expenditure is made. A 24-hour report is required for each additional $1,000 that 

aggregates. The 24-hour report must be filed on a Schedule E. The date that a 

communication is publicly disseminated serves as the date that the Committee must use 

to determine whether the total amount of independent expenditures has, in the aggregate, 

reached or exceeded the threshold reporting amount of$I,OOO. 11 §CFR 104.4(c) and 

104.5(g) 

F. Last-Minute Independent Expenditure Reports (48-Hour Notices): Any 

independent expenditure aggregating $10,000 or more with respect to any given election, 

at any time during a calendar year, up to and including the 20th day before an election, 

must disclose this activity within 48 hours each time that the expenditures aggregate 

$10,000 or more. 11 §CFR 104.4(f) 

Facts and Analysis 

The Audit staff identified 24 independent expenditures (totaling $314,650) made in 2003 

and 2004 that DRNE disclosed on Schedules B instead of Schedules E. A DRNE 

official stated that they determined that these expenditures were not "independent" and 

consequently, disclosed them on Schedules B. No corresponding 48 or 24-Hour notices 

were filed. 

The correspondence between the Commission's Reports Analysis Division (RAD) and 

DRNE indicates that DRNE experienced reporting problems involving the independent 
7 

expenditures during the 2003-2004 campaign. For example, in one of its Requests for 

Additional Information (RFAIs), RAD inquired about the disbursements disclosed on 

Schedules B that were previously reported as independent expenditures on Schedules E. 

RAD requested clarification as to whether these disbursements were made on behalf of 

the previously identified federal candidates. In three RFAls, RAD inquired about the 

missing purposes for independent expenditures disclosed on Schedules E. In its response, 

DRIVE explained the disclosure of these expenditures on Schedules E was the reporting 

error, amended its reports to disclose the missing information, and moved the 

disbursements to Schedules B. 

The Audit staff reviewed DRIVE's vendor invoices, purchase orders and all other 

available disbursement documentation to determine if the expenditures were disclosed 

correctly. The documentation demonstrated that the payments were for campaign 

materials which included the following: 41,216 items of clothing such as T-shirts, 

jackets, pullovers and polo shirts; 392,650 bumper stickers; and 64,800 buttons. These 

items displayed logos and text in support of or against eight clearly identified federal 

candidates. For example, a "Teamsters for Gephardt" logo appeared on the clothing and 

"Teamsters for Kerry" and "Teamsters for Kerry/Edwards" logos appeared on the 

bumper stickers and buttons. The majority of these invoices contained the written 

notation "Independent Expenditures" along with the corresponding expense code (240). 

This same classification was keyed onto the DRIVE Disbursement Authorization forms. 

The Audit staff found no evidence that these expenditures were coordinated with the 

named federal candidates or their committees. 

At the exit conference, the Audit staff provided DRIVE representatives a list of the 

expenditures in question. The representatives responded that five of these expenditures 

could be classified as independent; however, the remaining ones were not. They stated 

that expenditures made for printed materials were shipped to local unions and then 

distributed to DRIVE members at member-only events. While DRIVE representatives 

were not aware of any documentation that would show exactly when and where the 

distribution of these materials took place, they could provide documentation showing 

dates and amounts of materials shipped to local unions. The representatives believe that 

all such materials were used in their member-to-member election outreach and were not 

intended for public display or distribution. ­

The DRIVE representatives did not provide any evidence relative to whether these 

materials were publicly displayed. While these materials may have been distributed to 

DRIVE's membership during various members-only functions, they might have 

constituted a communication beyond DRIVE's membership. Accordingly, the Audit staff 

determined that DRIVE should have disclosed these transactions on Schedules E and 

filed the appropriate 48 or 24-hour notices. 
8 

Interim Audit Report Recommendation and Committee Response 

The Audit staff recommended that DRIVE: 

•	 Document that the transactions in question were not independent expenditures. 

Absent such evidence, DRIVE should file amended reports itemizing them on 

Schedules E. 

•	 Provide evidence that the required 48 or 24-Hour notices were timely filed or 

submit any comments it considers relevant. 

In response, DRIVE filed amended reports which itemized the 24 independent
 

expenditures in question on Schedules E.
 

IFinding 2. Disclosure of Outstanding Debt 

Summary 

DRIVE failed to itemize outstanding debt totaling $227,883 owed to its two largest 

vendors on four ofits 2004 disclosure reports. The Audit staffrecommended that 

DRIVE amend Schedules D (Debts and Obligations) and the corresponding Summary 

Pages for the affected 2004 reports to disclose this debt. In its response to the interim 

audit report, DRIVE filed corrective amendments. 

Legal Standard 

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

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

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

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

by the committee and debts owed to the committee, together with a statement explaining 

the circumstances and conditions under which each debt and obligation was incurred or 

extinguished. 11 CFR §104.11 (a). 

Itemizing Debts and Obligations. 

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

the date incurred (the date ofthe transaction); the committee reports it on the next 

regularly scheduled report. 

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

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

Facts and Analysis 

The Audit staff reconciled the accounts'' ofDRIVE's two largest vendors and determined 

that DRIVE had outstanding debt at the end offour reporting periods, primarily the 

second half ofthe calendar year 2004, that was not disclosed on Schedules D. 

3 The reconciliation consisted of calculating invoiced and paid amounts for individual reporting periods in 

the 2003 - 2004 campaign cycle. The Audit staff then detemrined whether any outstanding debts were 

correctly disclosed on Schedules D. . 
9 

According to both reconciled vendor accounts, DRIVE received eight invoices totaling 

$355,388 from May through November, 2004, and paid all invoiced balances usually 

within one calendar month. The disclosure of an outstanding debt is required when the 

payment date occurs after the end of the reporting period. In five instances payments 

were made after the reporting periods but no debt was reported. DRIVE was required to 

disclose the outstanding debt balance totaling $227,883 on its following reports; 2004 

June Monthly report ($10,483); 2004 September Monthly report ($6,435); 2004 October 

Monthly report ($156,565); and 2004 Pre-General report ($54,400). 

At the exit conference, the Audit staff provided the DRIVE representatives reconciled 

vendor accounts detailing the unreported debt for the four reporting periods of the 

calendar year 2004. In their response, the DRIVE representatives agreed to amend the 

appropriate Schedules D and Summary Pages. 

Interim Audit Report Recommendation and Committee Response 

The Audit staff recommended that DRIVE amend Schedules D and the corresponding 

Summary Pages ofits 2004 reports to disclose the outstanding debt In its response to the 

interim audit report, DRIVE filed corrective amendments. 

IFinding 3. Disclosure of Other Disbursements 

Summary 

A sample review of 'Other Disbursements' itemized on Schedules B (Itemized 

Disbursements) indicated that approximately 16% of expenditures lacked a disclosure of 

purpose. The Audit staff recommended that DRIVE file amended reports to provide the 

omitted purposes. In response to the recommendation in the interim audit report, DRIVE 

filed amended reports which materially corrected its disclosure of purposes on Schedules B. 

Legal Standard 

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

person exceed $200 in a calendar year, the committee must report the: 

•	 Amount; 

•	 Date when the expenditures were made; 

•	 Name and address ofthe payee; and 

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

U.S.c. §434(b)(5)(A) and 11 CFR §104.3(b)(3)(i). 

B. Itemizing Transfers to Affiliated Committees. Political party committees must 

itemize all transfers (i.e., the full name, address, date, amount, and purpose) regardless of 

amount to other political party committees. 11 CFR §104.3(b)(3)(ii). 

C. Examples of Purpose. 

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

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

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

repayment, or contribution refund. 11 CFR §104.3(b)(3)(i)(B). 

10 

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

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

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

registration. 11 CFR §104.3(b)(3)(i)(B). 

Facts and Analysis 

The Audit staff reviewed 'Other Disbursements' on a sample basis and determined that 

DRIVE failed to disclose purpose for approximately 16% ofthe sample items. This was 

the largest category of disbursements totaling approximately $6,936,640 which 

represented nearly 63% of all disbursements. Included in this figure were primarily nonfederal contributions made by DRIVE during the 200312004 campaign cycle. 

Interim Audit Report Recommendation and Committee Response 

The Audit staff recommended that DRIVE amend its reports to provide the omitted 

purposes. In response to the recommendation in the interim audit report, DRIVE filed 

amended reports which materially corrected its disclosure of purposes on Schedules B.