FEDERAL ELECTION COMMISSION

WASHINGTON. 0 C 20463

July 16, 1997

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MEMORANDUM

This infonnational memorandum is to advise you of a 5369,642.00 check received

from Phil Gramm for President, Inc.. The check represents a repayment from Phil

Gramm for President, Inc. for matching funds received in excess ofentitlement.

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TO:

FROM:

SUBJECT:

TheCO~~l9,

Robert J. 8ta C-.M Yea. ~f- J-'Cc ..£11 As8istanltaff Director

Audit Di sion

Repayme t ofS369,642.00 Received From Phil Gramm for President, Inc.

Attached is a copy ofthe receipt showing delivery to the Department ofTreasury.

Should you have any questions regarding the repayment, please contact Ray Lisi

or Rhonda Simmons at 219-3720.

Attachment as stated

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FEDERAL ELECTION COMMISSION

WASHINCTON, 0 C 20463

-

July 1S, 1997

RECEIPT FROM THE

UNITED STATES TREASURY

FORA '.

PAYMENT TO THE PRESIDENTIAL PRIMARY

MATCHING PAYMENT ACCOUNT

. Received on July IS, 1997, from the Federal Election

Commission (by hand delivery) a check drawn on Franklin

National Bank (#0002274) in the amount ofS369,642.00.

The check represents a repayment from Phil Gramm for

President, Inc. for Matching Funds received in excess of

entitlement.

The repa~ent should be deposited in the Presidential

Primary Matching Payment Account.

PHIL GRAMM FOR PRESIDENT, INC.

AMOUNT OF REPAYMENT: 5369,642.00

Presented By

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Federal Election Commission

Received By

!!ltcUI3dt'1

for the

United States Treasury
FEDERAL ELECTION COMMISSION

WASHINGTON. D.C 20463

July 10, 1997

MEMORANDUM

SUBJECT: PUBLIC ISSUANCE"OF THE AUDIT REPORT ON PHIL GRAMM

FOR PRESIDENT, INC., PHILL GRAMM FOR PRESIDENT

COMPLIANCE COMMITI'EE, INC., AND PHIL GRAMM FOR

PRESIDENT AUDIT FUND

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TO:

FROM:

RON M. HARRIS

PRESS OFFICER

PRESS OFFICE

ROBERT J. COSTA 4-

ASSISTANT STAFF DIRECTOR

AUDIT DIVISION

Attached please find a copy ofthe audit report and related documents on Phil

Gramm for President, Inc., Phil Gramm for President Compliance Committee, Inc., and

Phil Gramm for President Audit Fund which was approved by the Commission on June 26,

1997.

Informational copies ofthe report have been received by all parties involved and

the report may be released to the public.

Attachment as stated

cc: Office ofGeneral Counsel

Office ofPublic Disclosure

Reports ADalysis Division

FEe Library
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REPORT OF THE AUDIT DIVISION

ON

Phil Gramm for President, Inc.

Phil Gramm for President

Compliance Committee, Inc.

and

Phil Gramm for President

Audit Fund

Approved JUDe 26, 1997

FEDERAL ELECI10N COMMISSION

999 E STREET, N.W.

WASHINGTON, D.C.
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REPORT OF THE AUDIT DIVISION

ON

Phil Gramm for President, Inc.

Phil Gramm for President

Compliance Committee, Inc.

and

Phil Gramm for President

Audit Fund

Approved June 26, 1997

FEDERAL ELECTION COMMISSION

999 E STREET, N.W.

WASffiNGTON, D.C.
TABLE OF CONTENTS

PfUL GRAMM FOR PRESIDENT, INC.

PHIL GRAMM FOR PRESIDENT COMPLIANCE COMMITIEE, INC.

PmL·GRAMM FOR··PRESIDENT AUDIT FUND

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0 Executive Summary 1

2

5 Audit Report 3 it Background 3 1 Findings 6 4

Legal Analysis 19 5

Transmittal to Committee 2S

Transmittal to Candidate 27

Chronology 29
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FEDERAL ELECTION COMMISSION

WASHINGTON, 0 C 20463

REPORT OF THE AUDIT DIVISION

ON

PHIL GRAMM FOR PRESIDENT, INC.

PHIL GRAMM FOR PRESIDENT COMPLIANCE COMMI'ITEE, INC. AND

PHIL GRAMM FOR PRESIDENT AUDIT FUND

EXECUTIVE SUMMARY

Phil Gramm for President, Inc. (the Primary Committee) registered with the

Federal Election Commission on November 14, 1994. In addition, the Phil Gramm for

President Compliance Committee, Inc. (the Compliance Committee) registered with the

Federal Election Commission on January 14, 1995 and on April 29, 1996 filed an

amended Statement ofOrganization, changing its name to Phil Gramm for President

Audit Fund (the Audit Fund).

The audit was conducted pursuant to 26 U.S.C. §9038(a), requiring the

Commission to audit committees authorized by candidates who receive Federal Funds.

The Candidate received $7,356,221 in matching funds from the U.S. Treasury.

The fmdings ofthe audit were presented to the Committees at an exit conference

held on December 5, 1996 and in the Exit Conference Memorandum. The Committee

responses to those findings are contained in the audit report.

The following is an overview ofthe findings contained in the audit report.

FEDERAL FUNDS RECEIVED IN EXCESS OF ENTITLEMENT - 11 CFR

§§9034.1(b) and 9038.2(b)(1). The Audit staffcalculated that the candidate received

matching funds in excess ofentitlement totaling $369,642. The excess resulted primarily

from the Committee's overstatement of estimated winding down expenses on its

Statement ofNet Outstanding Campaign Obligations and from differences in the

valuation ofthe Primary Committee's capital assets purchased after August 16, 1995.

The Commission determined that this amount was repayable to the U.S. Treasury.

RED1NDED CONTRIBUTIONS - 11 CFR §9038.2(b)(I)(iii). The Primary

Committee received contributions totaling $12,960 from 25 individuals who requested

refunds after the Candidate's date ofineligibility. The amount ofmatching funds .

associated with these contributions totaled $4,700. The Commission determined that this

amount was repayable to the U.S. Treasury. The Committee made this payment on

February 19, 1997.

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SU•.£-DADD CHECKS - 11 CFR §§9038.6 and 9007.6. The Auditstaff

identified cbecJcs issued by the Primary Committee and the Compliance Committee

totaling 533,006 and $10,015 respectively, that had not been negotiated. The

Commission determined that these amounts were repayable to the U.S. Treasury. The

two Committees made the payments on February 19, 1997.

PHIL GRAMM FOR PRmDENT. AUDIT FuND

No material non-compliance was detected during the audit ofthe Audit Fund.

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FEDERAL ELECTION COMMISSION

WASHINGTON, 0 C. 20463

c'-...

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REPORTOF THE AUDITDIVISION

ON

PHIL GRAMM FOR ~~SIDENT,INC.

PHIL GRAMM FOR PRESIDENT COMPLIANCE COMMI1TEE, INC.

PHIL GRAMM FOR PRESIDENTAUDITFUND if

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I. BACKGRQUND

A. AUDIT AUTHORITY

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This report is based on an audit ofPhil Gramm for President, Inc. (the

Primary Committee), the Phil Gramm for President Compliance Committee, Inc. (the

Compliance Committee), and the Phil Gramm for President Audit Fund (the Audit Fund).

The audit is mandated by Section 9038(a) ofTitle 26 ofthe United States Code. That

section states that "After each matching payment period, the Commission shall conduct a

thorough examination and audit ofthe qualified campaign expenses of every candidate

and his authorized committees who received payments under Section 9037." Also,

Section 9039(b) ofthe United States Code and Section 9038. 1(a)(2) ofthe Commission's

Regulations state that the Commission may conduct other examinations and audits from

time to time as it deems necessary.

In addition to examining the receipt and use of Federal funds, the audit

seeks to detennine ifthe campaign has materially complied with the limitations,

prohibitions and disclosure requirements ofthe Federal Election Campaign Act of 1971,

as amended.

B. AUDIT COVERAGE

The audit ofthe Primary Committee covered the period from its inception,

November 9, 1994, through March 31, 1996. In addition, a review oftransactions

through February 23, 1997 was conducted to gather information used in the evaluation of

the Primary Committee's financial position and remaining matching fund entitlement.

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The Primary Committee reports for the audit period reflect an opening cash balance of

S4, total receipts of$29,451,376, total disbursements of$28,850,085 and a closing cash

I balance of5601,291.

The audit ofthe Compliance Committee covered the period from the _

Committee's inception, January 13, 1995, through April 23, 1996, the date it became the

Audit Fund. The Compliance Committee reports reflect an opening cash balance of$-0-,

total receipts of5137,618, total disbursements ofS57,093, and a closing cash balance of

580,525.

The Audit Fund reports reflect an opening cash balance of580,5252

, total

receipts of$I,482, total disbursements of5-0-, and a closing cash balance of$82,006 as

ofSeptember 30, 1996.

c. CAMPAIGN ORGANIZATION

The Primary Committee, the Compliance Committee, and the Audit Fund

maintained their headquarters in Washington, D.C. until February 3, 1997. On February

3, 1997, the committees' records were moved to Alexandria, Virginia. The Treasurer of

all three committees is Mr. Keith A. Davis.

1. pammy Committee

The Primary Committee registered with the Federal Election

Commission on November 14, 1994. To handle its financial activity, it utilized a total of

twenty-two bank accounts at various times throughout the audit period. From these

accounts the campaign made approximately 13,400 disbursements. The Primary

Committee received 124,405 contributions from 76,203 persons. These contributions

totaled $16,206,745. The Primary Committee also received approximately 280

contributions from 250 political party and other political committees. These

contributions totaled approximately $424,000.

In addition to the above contributions, the Primary Committee

received 57,356,221 in matching funds from the United States Treasury. This amount

represents 48% ofthe $15,455,000 maximum entitlement. The candidate was determined

eligible to receive matching funds on March 20, 1995. The Primary Committee made 13

matching fund requests totaling $7,362,543. The Commission certified 99.91% ofthe

requested amount For matching fund purposes, the Commission determined that Senator

Gramm's candidacy ended February 14, 1996. This determination was based on the date

the candidate publicly announced he was withdrawing from the campaign. The

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This opening balance is the ending balance ofthe Compliance Committee.

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Commission's regulations at 11 CFR §9033.5(a)(I) state, in part, that the candidate's

ineligibility date shall be the day on which the candidate publicly announces that he or

she is not actively conducting campaigns in more than one State. On May 15, 1996, the

Primary Committee received its final matching fund payment to defray expenses incurred

through February 14, 1996 and to help defray the cost ofwinding down the campaign.

2. Compljance Committee

The Compliance Committee registered with the Federal Election

Commission on January 14, 1995. It maintained one bank account throughout the audit

period. The Compliance Committee receipts total SI37,618, 53,487 ofthat in interest.

The Compliance Committee refunded a total ofS55,996 to contributors, $54,996 ofthis

after the Candidate's date ofineligibility. On April 29, 1996 an amended Statement of

Organization was filed which changes the Compliance Committee's name to the Audit

Fund.

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3. Audit Fund

The Audit Fund used the same bank account as the Compliance

Committee. As ofJanuary 31, 1997, the account still bears the name ofPhil oranim for

President Compliance - Contributions. Through January 31, 1997, one disbursement was

made from this account by the Audit Fund, a payment ofSl0,Ol5 to the U.S. Treasury for

14 stale-dated contribution refund checks. (See Finding IV.A.I.) As ofJanuary 31, 1997,

the balance in the Audit Fund was $83,159.

II. AUDIT SCOPE AND PROCEDURES

In addition to a review ofthe Primary Committee's expenditures to detennine the

qualified and non-qualified campaign expenses incurred by the campaign, the audit

covered the following general categories as appropriate for each committee:

1. The receipt of contributions from prohibited sources, such as those from

corporations or labor organizations;

2. the receipt of contributions or loans in excess ofthe statutory limitations;

3. proper disclosure ofcontributions from individuals, political committees

and other entities, to include the itemization of contributions when.

required, as well as, the completeness and accuracy ofthe infonnation

disclosed;

4. proper disclosure ofdisbursements including the itemization of

disbursements when required, as well as the completeness and accuracy of

the information disclosed;

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5. proper disclosure ofcampaign debts and obligations;

6. the accuracy oftotal reported receipts, disbursements and cash balances as

compared to campaign bank records;

7. adequate recordkeeping for campaign transactions;

8. accuracy ofthe Statement ofNet Outstanding Campaign Obligations filed

by the campaign to disclose its financial condition and establish

continuing matching fund entitlement (Findings III. A.I. and 2.);

9. the campaign's compliance with spending limitations; and

10. other audit procedures that were deemed necessary under the

circumstances. (Findings III.A.3. and IV.A.l.).

As part ofthe Commission's standard audit process, an inventory ofcampaign

records was conducted prior to the audit fieldwork. The inventory was to detennine ifthe

committees' records were materially complete and in an auditable state. The records

were found to be materially complete and the audit fieldwork commenced as soon as the

inventory was complete.

Unless specifically discussed below, no material non-compliance was detected. It

should be noted that the Commission may pW'Sue further any ofthe matters discussed in

this report in an enforcement action.

III. PHIL GRAMM FOR PRESIDENT, INC.

A. AUDIT FINDINGS AND RECOMMENDATIONS - AMOUNTS DUE TO

THE U.S. TREASURY

1. DeterminatioD orNet Outstanding Campaian ObliKatioos

Section 9034.5(a) ofTitle 11 ofthe Code of Federal Regulations

requires that within 15 days ofthe candidate's date ofineligibility, the candidate shall

submit a statement of net outstanding campaign obligations which contains, anlong other

things, the total of all outstanding obligations for qualified campaign expenses and an

estimate ofnecessary wind down costs. Subsection (b) ofthis section states, in part, that

the total outstanding campaign obligations shall not include any accounts payable for

non-qualified campaign expenses. Subsection (c)(1) states, in part, that the fair market

value ofcapital assets shall be considered to be the total original cost ofsuch items when

acquired less 400!'o to account for depreciation.

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Senator Gramm's date ofineligibility was February 14, 1996. The

Audit staffreviewed the Primary Committee's financial records and winding down cost

estimates and, at the time ofthe Exit Conference Memorandum (ECM) detennined that,

on the Candidate's date ofineligibility, a deficit of$2,713,354 existed. The major

differences between the Audit staff's calculation ofNet Outstanding Campaign

Obligations and the Primary Committee's calculation involved approximately $169,000

in voided checks included in the Primary Committee's post date ofineligibility

disbursements for qualified campaign expenses and winding down expenses, and

. reductions totaling $462,182 to estimated Winding Down costs. Also, the Primary

Committee contests the valuation placed on Capital Assets by the Audit staff.3

In its response to the ECM, the Primary Committee does not

question the $169,000 adjustment for voided checks. However, it does address the other

differences at length. The Primary Committee's arguments and the Audit staffs

conclusions are presented below.

a. Valuation ofCapital Assets

With respect to ~apital assets, the Primary Committee

makes two arguments why the 40% depreciation rule should not apply to its assets and

presents substantial evidence to demonstrate that the fair market value ofits assets was

considerably less than 60% ofits cost." First, the Primary Committee argues that the

Commission intended the "strict" depreciation rule at §9034.5(c)(1) to be limited to

capital assets sold or shared between a candidate's primary and general election

campaigns. It points to sections ofthe Explanation and Justification (E & J) for that

regulation which, it argues, show that the provision was meant to be limited to those

candidates who have both a primary and general election campaign. Since Senator

Gramm did not participate in the Presidential general election, the provision does not

apply to his campaign. The Primary Committee then reasons that since the regulation

does not apply, it may show that a different depreciation allowance should be used to

value its capital assets.

In reviewing the E & J for the revised §9034.5(c)(1), the

Audit staff notes that it states" [t]he Commission is amending paragraph (c)(l) ofthis

section to provide for a standard 40% depreciation of capital assets that are received by a

prinlary campaign committee prior to the candidate's DOl and subsequently sold to the

general campaign or to another entity." (Emphasis Added) This wording is clear. The

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Although the Primary Committee disagreed with the use ofthe 400.4 depreciation rate, it did list its

Capital Assets at 600.4 oforiginal value on its NOCO statements filed with the Commission.

The Primary Committee also notes that the rigid application ofthe 400/. depreciation rule to

committees similarly situated to itself, could leave such committees with the choice of either

taking huge losses on their capital assets or potentially accepting illegal corporate contributions if

a buyer willing to pay 600!'o of cost could be found.

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40010 depreciation is meant to apply to all campaigns as is indicated by the plain wording

ofthe regulation. The sections ofthe E & J that the Primary Committee references,

explain the concerns that lead the Commission to revise the regulation, not the intended

application ofthe revision.

Second, the Primary Committee points out that the majority

ofits assets were purchased before the effective date ofthe cUlTent 11 CFR

§9034.S(c)(I) (August 16, 1995). It goes on to note that the version of §9034.S(c)(1) in

effect at the time it purchased its assets allowed a candidate to show a higher depreciation

percentage, thus it should not be forced to depreciate assets pmchased before August 16,

1995 using a 40% rate. The Audit staffagrees. The material submitted by the Primary

Committee showing how its assets were valued and liquidated, along with materi~l

gathered during the audit, was reviewed and, with minor exception, the Primary

Committee's valuation is accepted. The majority ofthe approximately 525,000

remaining difference is the result ofthe Primary Committee valuing assets purchased

after August 16, 1995 under the previous version of§9034.5(c)(l) and the valuation of

computer software.5 The Primary Committee does not value any computer software

while the Audit staffvalued it at approximately $6,700. The software valuation is based

on infonnation available on used computer equipment. The Audit starrs revised capital

asset valuation is 5147,779 compared to the Primary Committee valuation of5115,247.

b. Estimated Winding Down Costs

The Primary Committee also disputes the Audit staff's

estimates for winding down expenses presented in the EeM. The Primary Committee

submitted revised estimates for total winding down expenses totaling 5733,244. The

Audit stafJ's estimate in the ECM was 5271,062, resulting in a difference of5462,182.

The principle difference is in estimates for legal and accounting fees which the Primary

Committee projected estimated through December 31, 1997 and the Audit staffprojected

through June 30, 1997 at a smaller monthly amount, and in the estimate for record storage

fees for the years 1998 • 2000. The Primary Committee estimated 572,000, the Audit

staffallowed 515,000.

In response to the ECM, the Primary Committee stated,

'·the Campaign must project its wind-down costs for all future phases ofthe repayment

process, not just through 1997. And while it is true that the total costs the Campaign ends

up incuning will depend in part on whether it is required to further challenge the Audit

Division's repayment determination within the Commission or, ifnecessary, in the

federal courts, there is no basis for the Audit Division substituting itsjudgment regarding

these future costs for the considered judgment ofthe Campaign, which is based on the

The difference between the higher depreciation rate applied by the Primary Committee and the

40% rate mandated in the regulations and applied by the Audit Division totals approximately

$25,000.

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experience ofprior Campaigns.. In the light ofthe foregoing, the Audit Division should

revise upward the Gramm Campaign's future wind-down costs on its NOCO."

In comparing the winding down cost estimates used·for the

NOCO contained in the ECM to the actual costs incurred by the Primary Committee, it is

noted that with the exception ofthe month ofFebruary 1997, the latest infonnation --

available at this writing, the Audit staffestimates were materially correct, while the

Primary Committee's estimates were overstated by approximately 5100,000. In February

1997, the month in which the Primary Committee filed its response to the ECM, the

Audit staff's estimates were approximately 525,000 less the actual expenses incurred.

The NOCO shown below has been revised to reflect the actual expenses incurred.

According to infonnation provided by the Primary

Committee in November 1996, for the period January 1, 1997 through June 30, 1997, the

Primary Committee has estimated total expenses ofS59,390 per month, while the Audit

staffhas estimated approximately 525,000. Based on costs incurred to date, the Audit

stafffeels that this amount is sufficient to cover expenses during this period. Winding

down estimates have been revised to include estimated expenses for the months ofJuly

and August 1997. Currently it is projected that the Audit report will be released to the

public by that time. The Audit staffhas used the Primary Committee's estimate of

519,960 per month.

In reviewing the Committee's estimates for activity

between September 30, 1997 and December 31, 1997 and beyond, it appears that the

Primary Committee's estimates for professional fees and overhead assume protracted

legal proceedings with respect to repayment.6 The Audit staffbelieves these expenses to

be speculative. The findings in the audit report, especially given the revised Capital

Asset valuation discussed above, should not require protracted administrative or legal

proceedings.. Ifthe Primary Committee does find it necessary to challenge the repayment

detennination and our estimates prove insufficient, the Commission may reconsider this

issue at that time.

The Committee had estimated a total of572,000 in storage

fees for the campaign's records for a period ofthree years, (1998-2000). While the Audit

staffdoes not dispute the need for retention ofrecords, we feel that $24,000 per year for

storage is excessive. Based on our review ofselected facilities in this area,

7 the Audit

staffbelieves a more reasonable figure to be S1S,OOO for the three year period.

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Since this report contains no non-repayment fmdings, there is no need to include any estimates

for legal fees usocialed with any Matter Under Review that may have resulted from further

Commission action on such 1D8UerS. •

The campaign's records are stored at Huckaby" Associates, which is located at 228 S.

Washington St, Alexandria VirJinia, the Primary Committee's estimates for storage are for this

site.

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Presented below is the revised Statement ofNet

Outstanding Campaign Obligations as determined by the Audit staff:

PHIL GRAMM FOR PRESIDENT, INC.

STATEftENTOF NETOUTSTANDING CMFAIGN OBLIGATIONS

M of F.......ry. 14. 1118

M Detell'llined at 2/23117

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ASSETS

CalhinBank

Accounta RecehBbIe:

Capital AsI.ts

Total M.ets

OBLIGATIONS

Accounts Payable for Qualifted

C.mpaign &pense.

loan Payable

Amount Payable to U.S. T....ury;

Stal...tad Chec:kl

Wnding Down Costa

2I15J98.2fl3l97: ktu.1

311/97 and 'ater: Estim.ted

Tota' Obligations

NET OUTSTANDINGCAMPAIGN OBI.IGATIONS

FOOTNOTES TO NOCO

$1,337.918 Ca)

260.470

147.779

$2,121.647 (b)

1,888.064

33.006

580.322

154.839 (e)

$1.746.167

$4,777,878

($3,031,711)

(8) The Pttmary Commlttee·s Cash in Bank ftgure hal been adjUlled to ....d Pre Date of lnelgltlily

lIaJlt.daled c:hecIa.

(b) The Accounts Payable fig.... hu been adjusted for non-quallld campaign expendllunt, paid

after... 'candida"" date of InelgMly. No mention of non-qualfied expense, II included in the

memonmdum becaUle ma."'.eM paid .fter" Fecht••funda had been expended.

The aInIng amOWltl not ..........

ee) Some uted in com", amount: the Audllta" .1.... the Pltmary

eomm "~I eta and IMOIdIIo comp... 1M acIuaI""'l wlh the eltift.1ed

.........nd,..,..adj ......,.

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2. Federal Funds Receiyed in Excess ofEntitlement

Section 9034.1(b) ofTitle 11 ofthe Code ofFederal Regulations

states that ifon the date ofineligibility a candidate has net outstanding campaign .

obligations as defmed under 11 CFR §9034.S, that candidate may continue to receive

matching payments for matchable contributions received and deposited on or before

December 31 ofthe Presidential election year provided that on the date ofpayment there

are remaining net outstanding campaign obligations, Le., the sum of contributions

received on or after the date ofineligibility plus matching funds received on or after the

date ofineligibility is less than the candidate's net outstanding campaign obligations.

This entitlement will be equal to the lesser of: (1) the amount of contributions submitted

for matching; or (2) the remaining net outstanding campaign obligations.

Section 9038.2(b)(I)(i) and (iii) ofTitle 11 ofthe Code ofFederal

Regulations entitled Basis for Repayment • Payments in Excess ofCandidate's

Entitlement states in part, the Commission may determine that certain portions ofthe

payments made to a candidate from the matching payment account were in excess ofthe

aggregate amount ofpayments to which such candidate was entitled. Examples ofsuch

excessive payments include, but are not limited to, the following: payments made to the

candidate after the candidate's date ofineligibility where it is later detennined that the

candidate had no net outstanding obligations as defined in 11 CFR §9034.S and payments

or portions ofpayments made on the basis ofmatched contributions later determined to

have been non-matchable.

a. Amounts Received In Excess ofEntitlement Based on the

Primary Committee's NOCO

As noted earlier, in the ECM the Audit staff calculated that

the Primary Committee had a deficit of$2,713,354 on February 14, 1996, the Candidate's

date ofineligibility. To this deficit the Audit staffapplied matching fund payments,

contributions and other funds received after February 14, and detennined that the Primary

Committee had received matching fund payments over and above the amount necessary

to liquidate all obligations for qualified campaign expenses and winding down costs.

These matching fund payments totaled $686,234. The ECM concluded that absent a

showing that this calculation was not correct, the Audit staff would recommend that the

Commission determine that an equal amount was payable to the U.S. Treasury.

Based on the revised NOCO calculation presented above,

an updated calculation ofmatching funds received in excess ofthe Candidate's

entitlement follows.

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Net Outstanding Campaign

Obligations (Deficit) as of

2/14/96

Net Private Contributions

Received 2/15/96 to 4/15/96

Matching Funds Received

2115/96 to 4/15/96

Matching Funds Received in Excess

ofEntitlement as of4/1 5/96

Matching Funds Received (5/1/96 + 5/15/96)

($6,526, 5/1/96 + $65,960,5/15/96)

Total Matching Funds Received in Excess

ofEntitlement

Recommendatiop ##1

63,563

3265.304

($3,031,711)

$3.328.867

$ 297,156

$ 369642

The Audit staffrecommends that the Commission detennine the Primary

Committee is required to repay the U.S. Treasury 5369,642 pursuant to 11 CFR

§9038.2(b)(1).

b. 100% vs. Ratio Repayment

The Primary Committee received matching funds that were

certified by the Commission before the Candidate's date ofineligibility but paid after that

date. This occurred because in 1996, the Presidential Primary Matching Payment

Account faced a shortfall during the first few months of 1996. Due to this shortfall, as of

the Candidate's date ofineligibility $2,872,866 in matching funds had been certified by

the Commission which the U.S. Treasury was unable to pay. The Primary Committee did

not receive payment in full until April 1S, 1996.

In the ECM the Audit staff calculated that the Primary

Committee had received matching funds in excess ofentitlement totaling $686,234.

Working backwards from the last matching fund request certified by the Commission,

$221,310 ofthe excess was certified before the Candidatets date ofineligibility. In

response to the ECM, the Primary Committee argued that ifthe Commission refuses to

capitalize and depreciate the Gramm Campaign's capital assets at their fair market value,

Page 12
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then this amoWlt should be repaid at a rate of33.731

as opposed to the full repayment the

Audit staffhad requested. In support ofits position the PrimaJy Committee argues that the

Commission's regulations and E"" J do not require a 1000.4 repayment, the Secretary of

Treasury is required to take equitable considerations into account when distributing

matching funds, that there is DO evidence that Congress intended to impose a 100%

repaym~t under these circumstances, that it would be inequitable to do so, and th~t the -

ratio repayment would be consistent with the policy behind the Act and not prohibited by

the Commission's regulations.

The Primary Committee's argument is no longer relevant.

As discussed above, changes to amounts ofcapital assets for NOCO purposes and other

adjustmentsresults in a recommended repayment of$369,642 (vs. the 5686,234 in the

ECM). J\.pproximately S46S,OOO in matching funds was certified and paid to the Primary

Campaign after the Candidate's DOl (2114/96). Notwithstanding the above, it is clear in

the Commission's regulations, the associated E & J

9

, and long standing Commission

policy that the Candidate may continue to receive matching fund payments only ifon the

date ofpayment there are remaining net outstanding campaign obligations. This

condition applies regardless ofthe date ofthe underlying certification. To do otherwise

would result in the payment ofpublic funds to a campaign that had no qualified campaign

expenses to which the fimds could be applied.

c. Refunded Contributions

Subsequent to the Candidate's date ofineligibility, the

Primary Committee received correspondence from certain contributors requesting·8

refund oftheir contributions. Twenty-five contributors requested a total ofS12,960 be

refunded. The Primary Committee complied with the contributorst requests, however, 21

ofthe contributions had been matched. The amount ofmatching funds associated with

these contributions was $4,700. Subsequent to the conference held at the end of

fieldwork, the Audit staffsupplied a list ofthe contributions to Primary Committee

representatives. They indicated that a repayment would be made.

In the ECM, the Audit staffrecommended that the

Primary Committee provide evidence that it had not received matching fund

payments in excess ofentitlement. Absent such evidence, the Auditstaffstated that

it would recommend the Commission determine that $4,700 was repayable to the

u.s. Treasury.

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This percentage representsthe repayment ratio calculated by the Primary Committee. (See II

eFR §903a.J(eXI).)

In particular sec 11 CFR §§9034.I(bX2), 9036.4(c)(2), 9034.5(1), and the associated distussions

contained in the Commission's Explanation and Justification.

Page 13
12

In response to the ECM the Primary Committee submitted

a check for $4,700.

RecommegdatioQ ##2

The Audit staffrecommends that the Commission detennine that the

Primary Committee is required to repay $4,700 to the U.S. Treasury pursuant to II

CFR §9038.2(b)(1)(iii). As noted above the amount has been repaid.

3. Stale-dated Checks

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Section 9038.6 ofTitle 11 ofthe Code ofFederal Regulations

states that ifthe committee has checks outstanding to creditors or contributors that have

not been cashed, the committee shall notify the Commission ofits efforts to locate the

payees, ifsuch efforts are necessary, and its efforts to encourage the payees to cash the

outstanding checks. The committee shall also submit a check for the total amount. ofsuch

outstanding checks, payable to the United States Treasury.

The Audit staffperfonned bank reconciliations through March 31,

1996. In addition, bank records were reviewed for the period April 1, 1996 through

September 30, 1996 to detennine total outstanding checks. From these reviews, the

Audit staffidentified 81 checks, totaling 533,006 which had not been negotiated. Of

these, 64 checks totaling 529,230, were for contribution refunds.

At a conference held at the end offieldwork, the Audit staff

provided representatives ofthe Primary Committee with schedules ofthe stale-dated

checks. The matter was discussed with the Primary Committee's representatives, who

agreed that a payment to the U.S. Treasury would be necessary. In the ECM it was noted

that absent a demonstration that the payments had been made or that no obligation

existed, the Audit staffwould recommend that the Commission determine that $33,006

was payable to the U.S. Treasury.

In response to the ECM, the Primary Committee submitted a check

in the amount of$33,006.

Recommendatiog ##3

The Audit staffrecommends that the Commission determine that the Primary

Committee is required to pay the U.S. Treasury 533,006 pW'Suant to 11 CFR §9038.6. As

noted the payment has been made.

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IV. ProL GRAMM FOR PRESIDENT COMPLIANCE COMMllTEE. INC.

A. AUDIT FINDING AND RECOMMENDATION· AMOUNTS DUE THE

UNITED STATES TREASURY

1. Stale-dated Checks

Section 9007.6 ofTitle 11 ofthe Code ofFederal Regulations

states that ifthe committee has checks outstanding to creditors or contributors that have

not been cashed, the committee shall notify the Commission ofits efforts to locate the

payees, ifsuch efforts are necessary, and its efforts to encourage the payees to cash the

outstanding checks. The committee shall also submit a check for the total amount ofsuch

outstanding checks, payable to the United States Treasury.

The Audit staffreconciled the Compliance Committee's bank

account through March 1996. In addition, a review was made ofamounts redesignated to

the Phil Gramm for President Audit Fund, and ofamounts refunded to contributors. The

refund checks were then traced to the Compliance Committeets bank statements to

detennine ifthe checks were still outstanding as ofSeptember 30, 1996. The Audit staff

identified 14 stale-dated refund checks totaling S10,015.

This matter was discussed with a Compliance Committee

representative who agreed that a payment to the United States Treasury was due. In the

ECM it was noted that absent a demonstration that the payments had been made or that

no obligation existed, the Audit staffwould recommend that the Commission determine

that $JO,015 was payable to the U.S. Treasury.

In response to the ECM, the Compliance Committee submitted a

check in the amount ofS10,01S.

Recommeodation t#4

The Audit staffrecommends that the Commission determine that the Compliance

Committee is required to pay the U.S. Treasury S10,015 pursuant to 11 CPR §9007.6. As

noted the payment has been made.

v. PHIL GRAMM FOR PRESIDENT AUDIT nIND

The Audit staffdid not detect any material non-eompliance during the audit ofthe

Audit Fund.IO

10 After III refunds for contributions not redesiJlllted to the Phil Gramm for President Audit Fund

were made, an amended Statement ofOrganization was filed which changed the Phil Gramm for

President Compliance Committee, Inc. to the Phil Gramm (or President Audit fund. The bank

account remained the same.

Page 15
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FUND REsiDUAL MONIES

ua1 monies exist in the Audit Fund after payment ofall fines and

! pursuant to the Act, ifany, the Audit Fund must take the

any residual monies to contributors on either a pro-rata basis or

first-out basis;

~e any residual monies to the United States Treasury;

ute any residual monies to any organization described in Section

»fTitle 26 ofthe United States Code; o,r

rany residual monies to any national, state, or local committee of

tical party so Jong as such monies are not used in connection with

era) election.

[IE TO THE UNITED STATES TREASURY

, is a recap ofthe amounts subject to the payment and repayment

,§9038(b) and 11 CFR §§9038.6 and 9007.6:

y COMMI1TEE:

'edera1 Funds Received in Excess of

~ntitlement

~tching Fund Payments in

~xcess ofCandidate's

~ntitJement

lefunded Contributions Matched

tale-dated Checks

lY COMMlTIEE

~CE COMMllTEE

tale-dated Checks

Page 16

$369,642

S 4,700

$ 33,006

5407.348

$ 10.015
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TOTAL AMOUNT PAYABLE

Amount paid as of2l18/97

Amount Due

Page 17

IS

$ 417}63

$ (47.721)

$369.642
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WASHINGTON. 0 C. 204bJ

FEDERAL ELECTION COMMISSION

Lawrence Noble 4-

General CoUnsel -rt r

,

,

Kim Bri~-eoleman I""", ,}..l

'\.~ ".. -r.J'r"~_" ~~

Associate fenera1 COUDSeJ

Rhonda J. Vosdingh~

Assistant General Counsel

FROM:

TO: RobertJ. Costa

Assistant StaffDirector

Audit Divisi

MEMORANDUM

June 11, 1997

THROUGH: John c. S

StaffD'··-......

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Delbert K. Rigsby bIcfl

Attorney

SUBJECT: Proposed Audit Report on Phil Gramm for President, Inc., Phil Gramm for

President Compliance, Inc., and Phil Gramm for President Audit Fund (LRA

#463)

I. INTRODUcnON

The Office ofGeneral Counsel has reviewed the proposed Audit Report on the Phil

Gramm for President, Inc. (the "Primary Committee"), the Phil Gramm for President

Compliance, Inc., aDd the Phil Gramm for President Audit Fund submitted to this Office on

April 14, 1997. The following memorandum summarizes our comments on the proposed Report.

This Office concurs with findings in the proposed Audit Report that are not discussed

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Memorandum to Robert J. Costa

Audit Report

Phil Gramm for President, Inc.

(LRA#463)

Page 2

separately in the following memorandum. I Ifyou have any questions concerning our comments,

please contact Delbert K. Rigsby, the attomey assigned to this audit.

II. DETERMINATION OF NET OUTSTANDING CAMPAIGN OBLIGATIONS

(III.A.I)

The proposed Report includes a statement ofthe Primary Committee's net outstanding

campaign obligations ("NOCO") as ofFebruary 14, 1996, which was the candidate's date of

ineligibility (the &&001") for matching funds. The Primary Committee disagrees with the

valuation ofcapital assets and the estimate for winding down costs contained in the NOCO

statement. The proposed Report values the Primary Committee's capital assets at 60% ofthe

purchase price by applying the 400/0 depreciation rule set forth in 11 C.F.R. § 9034.S(c)(I). The

Primary Committee argue,s that the Commission's Explanation and Justification (the "E & j") for

11 C.F.R. § 9034.S(c)(I), contained in 60 Fed. Reg. 31868 (June 16, 1995), suggests that the

Commission intended for this regulation to apply to committees that transferred capital assets

from the primary campaign committee to the general campaign committee. Therefore. the

Primary Committee argues that since the campaign did not participate in the general election, this

regulation should not apply to them.

The proposed Report concludes that 11 C.F.R. § 9034.S(c)(1) provides for a 40%

depreciation ofassets that are received by a primary campaign committee prior to the candidate's

DOl and subsequently sold to the general campaign or to another entity. The proposed Report

concludes that the phrase "to another entity" means that the Commission did not intend to limit

this regulation to Committees that participated in both the primary and general elections. This

Office concurs with the proposed report's interpretation of II C.F.R. § 9034.5(c)(I). The plain

language ofthe regulation and the E & J evidences the Commission's intent to create a universal

standard for depreciation ofcapital assets and not limit the application ofthe rule to instances in

which capital assets were transferred from the primary campaign 'committee to the general

campaign committee. The language of II C.F.R. § 9034.S(c)(I) states that the fair market value

of capital assets shall be considered to be the total original cost ofsuch items when acquired less

40% to account for depreciation.

This Office concurs with the proposed report that the current version of 11 C.F.R.

§ 9034.5(c)(1)(August 16, 1995) should be applied to capital assets purchased after the effective

date ofthe regulation and that capital assets purchased prior to August 16, 1995 should be

subject to the previous regulation. See Memorandum from the Office ofGeneral Counsel to

Audit Division on Proposed Report for Alexander for President, Inc., et ai, May 28, 1997.

Since this document concerns the audit of a publicly financed presidential candidate, this Office

recommends that the Commission consider this document in open session. JJ C.F.R. § 9038.I(e). See also

II C.F.R. § 2.4 (discussion is not exempt from disclosure under the Commission's Sunshine Regulations).

Parenthetical references are to the placement ofthe findings in the proposed Report.

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MCIDOI8dum to RobertJ. Costa

Audit Report

Phil Gramm for PresideDt, Inc.

(LRAN63)

Pqe3

In regard to capital assets purchased prior to August 16, 1995, the proposed Report states

that the Primary Committee's valuation ofthose assets are accepted with minor exception. An

issue in this valuation is whether the Primary Committee provided documentation ofany efforts

to sell the telephone systems to buyers other than AT&T and Friends ofPhil Gramm, Senator

Gramm's Senate campaign committee. The contract with AT&T provided that AT&T would

repurchase the AT&T Definity telephone system at 25% ofthe original cost. Additionally, the

Primary Committee sold a smaller telephone system, the AT&T Merlin system, to Friends of

Phil Gramm at 25% ofthe purchase price by relying upon AT&T's valuation ofthe Definity

system for repurchase at 25% ofthe original cost. This Office believes that the repurchase price

for the Definity telephone system, which was set forth in the contract between AT&T and the

Primary Committee, does not necessarily equal the depreciated value ofthe telephone system.

The fair market value could have been higher than AT&T's repurchase price ifthe Primary

Committee had approached other buyers who may have offered a higher price.

Under the previous regulation 11 C.F.R. § 9034.S(c)(I), primary committees were

required to provide documentation ofthe fair market value ofa capital asset whenever they

claimed a depreciation percentage higher than 4001'0. This Office is concerned that primary

committees could attempt to sell assets at a price lower than the actual fair market value, which

would result in their NOCO statements reflecting a larger deficit and enabling them to secure

more pubic funds than they are entitled. Nevertheless, in this case, it appears that the Audit staff

was reasonable in accepting the Primary Committee's valuation ofthe telephone systems, and

this Office concurs with the proposed report. See Memorandum from Office ofGeneral Counsel

to Audit Division on Proposed Report for Alexander for President, Inc.,et al, May 28, 1997. This

Office also recognizes that this particular concern will not arise in the future since II C.F.R.

§ 9034.5 (c)(I) now provides for a standard 40% depreciation of capital assets.

The proposed Report states that there is a difference of$36,000 between the Audit staWs

and the Primary Committee's valuation ofcapital assets purchased after August 16, 1995. The

proposed Report should specify the reasons for this difference. For example, it should be noted

whether the difference is based on the Primary Committee's argument that the 40% standard

depreciation ofcapital assets as set forth in II C.F.R. §9034.5 should not apply to them since

they did not participate in the general election.

III. FEDERAL FUNDS RECEIVED IN EXCESS OF ENTITLEMENT (1Il.A.3)

The proposed Report calculates the Primary Committee's repayment for funds received in

excess ofSenator Gramm's entitlement to be $380,434. In early 1996, the Presidential Primary

Matching Fund Account experienced a shortfall, which resulted in primary campaign conulliuccs

receiving a pro rata share ofthe matching funds in accordance with the rules set forth in 11

C.F.R. § 9037.2(c). The Primary Committee disagrees with the calculation repayment for all

matching funds received in excess ofentitlement and argues that the late payment of matching

Page 21
Memorandum to Robert J. Costa

Audit Repon

Phil Gramm (or President, Inc.

(LRA #463)

Page 4

funds should be taken into account in detennining the repayment amount. The Primary

Committee argues that the matching funds due prior to the date ofineligibility should be repaid

on a repayment ratio ofapproximately 33%, which is the repayment ratio used for non-qualified

campaign expenses. See 11 C.F.R. § 9038.2(b)(2)(iii). Additionally, the Primary Committee

argues that 11 C.F.R. § 9038.2 does not require a 100% repayment on such funds, that it would

be inequitable for the Commission to require 100% ofthose funds to be repaid and that the

Commission has the discretion to permit a lower repayment ratio on such funds. The proposed

Report concludes that the Primary Committee's opposition to the 100% repayment ofmatching

funds in excess of entitlement is no longer relevant since the Primary Committee stated it would

not pursue this issue ifthe capital assets were adjusted at an amount closer to the fair market

value. See supra Section II.

The Primary Committee argues that the Commission should make a proportional

adjustment to its repayment obligation for receiving funds in excess of entitlement to account for

its entitlement to public funds during the candidate's period ofeligibility that were not paid

during eligibility. Generally, a candidate eligible to receive public funds will be entitled to funds

to the extent that the candidate has matchable contributions. 11 C.F.R. § 9034.1(a). However,

matching funds that are certified may not be paid in full ifthere is a shortfall in the Presidential

Primary Matching Fund Account. 11 C.F.R. § 9037.1. Therefore, after the date ofineligibility,

ifthe candidate does not receive all matching funds due to a shortfall, the Commission may

revise the amount previously certified for payment. 11 C.F.R. § 9036.4(c)(2).

This Office agrees that 100% ofthe funds that the Primary Committee received in excess

of entitlement should be repaid to the United States Treasury. The Commission's regulations do

not provide for a repayment ratio ofless than 100% for funds received in excess of entitlement.

II C.F.R. § 9038.2(b)(1). The candidate's repayment obligation for receiving funds in excess of

entitlement is not adjusted on a proportional basis to account for funds that were not paid during

the candidate's period ofeligibility. Advisory Opinion 1996-4 confirms that despite a shortfall

in the Presidential Matching Payment Account, after his or her date ofineligibility, a candidate is

only entitled to the amount ofmatching funds necessary to satisfy his or her net outstanding

campaign obligations. Ifthe candidate has not received the entire amount ofmatching funds on

the regular scheduled date because of a shortfall, he or she must submit a revised NOCO

statement after the date ofineligibility. II C.F.R. § 9034.5(1)(3). Additionally, after the date of

ineligibility, the amount ofmatching funds due to a candidate could be revised ifthe candidate

has lower net outstanding campaign obligations than the amount of previously certified but

unpaid matching funds. See 11 C.F.R. §§9036.4(c)(2) and 9034.5(f). The revised NOCO

statements allow for any adjustments that may be necessary to account for the change in financial

position due to the longer time periods between matching fund submission dates and payment

dates. See Explanation and Justification of 11 C.F.R. § 9034.5(1), 55 Fed. Reg. 34131.

Page 22
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Memonmdum to RobertJ. Costa

Audit Report

Phil Qr8IIIJIl for Presideat, IDe.

(LRAN63)

PlIeS

Thus, this Office concludesthat the proposed Report's recommendation that the Primary

Committee repay 100 % offederal funds received in excess ofentitlement to the U.8. Treasury is

consistent with the intent ofthe regulations. -

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FEDERAL ELECTION COMMISSION

WASHINGTON. D.C. 20463

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July 3, 1997

Mr. Keith Davis, Treasurer

Phil Gramm for President, Inc.

Phil Gramm for President Compliance Committee, Inc.

Phil Gramm for President Audit Fund

228 South Washington Street

Suite 200

Alexandria, VA 22314

Dear Mr. Davis:

Attached please find the Audit Report on Phil Gramm for President, Inc., Phil

Gramm for President Compliance Committee, Inc., and Phil Gramm for President Audit

Fund. The Commission approved this report on June 26, 1997. As noted on page 4 of

this report, the Commission may pursue any ofthe matters discussed in an enforcement

action.

In accordance with 11 CFR 9038.2(c)(I) and (dXl), the Commission has made a

detennination that a repayment to the Secretary ofthe Treasury in the amount of

$417,363 is ~~uired within 90 calendar days after service ofthis report (October 6,

1997). The audit report also notes that $47,721 has been paid, leaving a balance of

$369,642.

Should the Candidate dispute the Commission's determination that a repayment is

required, Commission regulations at 11 CFR §9038.2(c)(2) provide the Candidate with an

opportunity to submit in writing. within 30 calendar days after service ofthe

Commission's notice (August S, 1997), legal and factual materials to demonstrate that no

repayment, or a lesser repayment, is required. Further, 11 CFR §9038.2(c)(ii) permits a

Candidate who has submitted written materials to request an opportunity to address the

Commission in open session based on the legal and factual materials submitted.

The Commission will consider any written legal and factual materials submitted

within the 30 day period when deciding whether to revise the repayment determination.

Such materials may be submitted by counsel iftbc Candidate so elects. Ifthe Candidate

decides to file a response to the repayment detennination, please contact Kim L. BrightColeman ofthe Office ofGeneral Counsel at (202) 219-3690 or toll free at (800) 424-

9530. Ifthe Candidate does not dispute this detennination within the 30 day period

provided, it will be considered final.

Paqe 25
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The Commission approved Audit Reporrwill be placed on the public record on

July 10, 1997. Should you have any questions regarding the public release ofthis report,

please contact Ron Hams ofthe t:tlmmission's Press Office at (202) 219-4155.

Any questions you may have related to matters covered dwing the audit or in the

audit report should be directed to Joe Stoltz or Russ Bruner ofthe Audit Division at (202)

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

rt J. Costa

Assistant StaffDirector

Audit Division

Attachment as stated

paqe 26
FEDERAL ELECTION COMMISSION

WASHINGTON. D.C. 20463

...

o-=I

July 3, 1997

Senator Phil Gramm

cia Mr. Keith Davis, Treasurer

Phil Gramm for President, Inc.

Phil Gramm for President Compliance Committee, Inc.

Phil Gramm for President Audit Fund

228 South Washington Street

Suite 200

Alexandria, VA 22314

Dear Senator Gramm:

Attached please find the Audit Report on Phil Gramm for President, Inc., Phil

Gramm for President Cnmpliance Committee, Inc., and Phil Gramm for President Audit

Fund. The Commission approved this report on June 26, 1997. As noted on page 4 of

this report, the Commission may pursue any ofthe matters discussed in an enforcement

action.

In accordance with 11 CFR 9038.2(c)(1) and (d)(I), the Commission has made a

determination that a repayment to the Secretary ofthe Treasury in the amount of

$417,363 is required within 90 calendar days after service ofthis report (October 6,

j 997). The audit report also notes that $47,721 has been paid, leaving a balance of

$369,642.

Should you dispute the Commission's determination that a repayment is required,

Commission regulations at 11 CFR §9038.2(c)(2) provide you with an opportunity to

submit in writing, within 30 calendar days after service ofthe Commission's notice

(August S, 1997), legal and factual materials to demonstrate that no repayment, or a lesser

repaymen~ is required. Further, II CFR §9038.2(c)(ii) permits a candidate who has

submitted written materials to request an opportunity to address the Commission in open

session based on the legal and factual materials submitted.

The Commission will consider any written legal and factual materials submitted

within the 30 day period when deciding whether to revise the repayment determination.

Such materials may be submitted by counsel if you so elect. If you decide to file a

response to the repayment determination, please contact Kim L. Bright..Coleman ofthe

Office ofGeneral Counsel at (202) 219-3690 or toll free at (800) 424-9530. If yO\! do not

dispute this determination within the 30 day period provided, it will be considered final.

Page 27 ,
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The Commission approved Audit Report will be placed on the public record on

July 10, 1997. Should you have any questions regarding the public release ofthis report,

please contact Ron Hams ofthe Commission's Press Office at (202) 219-4155.

Any questions you may have related to matters covered during the audit or in the

audit report should be directed to Joe Stoltz or Russ Bruner ofthe Audit Division at (202)

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

Sincerely,

I·H+-I~O·

(0 I- Robert J. Costa

Assistant StaffDirector

Audit Division

Attachment as stated

Page 28
9

GI

CHRONOLOGY

PIDL GRAMM FOR PRESIDENT, INC.

PHIL GRAMM FOR PRESIDENT COMPLIANCE COMMITIEE, INC.

AND

PHIL GRAMM FOR PRESIDENT AUDIT FUND

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Audit Fieldwork

Exit Conference Memorandum

to the Committee

Response Received to the

Exit Conference Memorandum

Audit Report Approved

Page 29

5120/96 - 9125196

1215/96

2/18/97

6/26/97
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