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REPORT OF THE AUDIT DIVISION

ON THE

COMITE' M-1IGOS DE JAI~1E BENITEZ

I. Background

A. Overview

This report is based on an audit of the Comite'

Amigos de Jaime Benitez ("the Committe'e"), undertaken by the

Audit Division of the Federal Election Commission in accordance

with the Commission's audit policy to determine whether there

has been compl1ancewith the provisions of the ·Feder-al ·Election

Campaign Act of 1971, as amended ("the Act"). The audit was

conducted pursuant to Section 438(a) (8) of ~it1e 2 of the

United States Code which directs the Commission to make from

time to time audits and field investigations with respect to

reports and statements filed under the provisions of the Act.

The Committee registered with the Federal ~lection

Commission on AF~i1 5, 1976 in support of Jaime Benitez for

election to the office of Resident Commissioner of Puerto Rico.

On April 5, 1976, the Committee was designated by the Candidat(~

as his principal campaign committee for the 1976 election. ~h(!

Committee maintains its headquarters in San Juan, Puerto Rico •

The audit covered the period from June 8, 1976 through

September 30, 1977. During this period the Committee reported

a beginning cash balance of $-0-, total receipts of $29,678.38,

total expenditures of $24,405.25 and a closing cash balance on

December 31, 1976 of $5,273.13. 1/

This audit report is based on documents and working

papers which support each of the factual statements. They form

part of the record upon which the Commission based its decisions

on the matters in the report and were available to Co~~issioncrs

and appropriate staff for review•

l/ The Committee failed to file FEC Form 3a covering the

period January 1, 1977 through March 31, 1977, (see Finding

J.). In addition, due to reporting errors as detailed in

Findings Band G, reported totals were significantlv misstated • ..,,~.; ...,."'~-' ...

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B. Key Personnel

The principal officers of the Committee were

Dr. Victor Gutierrez, Chairman, and Mr. Jose Alegria,

Treasurer.

<:. Scope

Except as set forth in Findings A and B, the audit

included such tests as verification of total 'reported receipts and

expenditures and individual transactions; review of required

supporting documentation; analysis of Committee debts and obligations: and such other audit procedures as deemed necessary under

the circumstances.

II. Auditor's Statement and Description of Findings

Based on the examination of disclosure reports and records

pr_esent_ed, i_t_i_sth~ _QP1IJ.i_9Jl 9f th~l\'lJ~Jt staff that the Comi te'

Amigos de Jamie Benitez has not conducted Its actIvities in compliu~cc with the Federal Election Campaign Act of 1971, as

amc~2cd, in certain material aspects noted below: and as noted

in the preceding paragraph, the scope of our work was not sufficient to enable us to express an opinion on the representations

con~~ined in the Committee's disclosure reports for the audit

period.

c 1.... Recordkeeping for Receipts

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Section 432(c) (1) and (2) of Title 2, United States

Code, states that the treasurer of a political committee shall kcpp

a de~~iled and exact account of all contributions made to or for

such conmittee, to include the identification of every person makinu

a co~tribution in excess of $50 with the date and amount thereof,

and, i~ a person's contributions aggregate in excess of $100 during

a calc~dar year, the account shall include occupation and the

pri~ci~3l place of business (if any).

Section l04.12(b) of ~itle 11, Code of Federal Regulations,

req~ir0s, in part, that each political COMmittee required to file

rc~c~t3 under the Act shall: 1) maintain records with respect to the

~~t~0YS reported, including vouchers, worksheets, receipts, bills

a~d ~ccounts which shall provide in sufficient detail the necessary

in:c~~ution and data from which the filed reports may be verified;

an~ 2) keep those records available for audit or inspection by the

Cc~~ission or its authorized representatives for a period of not

less than three (3) years.
-3-

* This deposit was reflected on the bank statement at October 29,

1976 .

In addition, our revie\'1 of the Committee's bank record:;

revea1cd two (2) large cash deposits during the week just prior

to the general election, as follows:

$6,380.00

$6,660.00

TOTAL

DEPOSIT

-0-

$1,550.00

CHECKS

$5,110.00

$6,380.00

CASH

10/27/76

11/3/76*

It is the opinion of the AuJit staff that these two (2)

large deposits, and the bank deposit of $1,805 on f!ovember 26,

1976 (the only bank credit for the period Nov0mbcr 1 - Oecember 31,

1976), which total $14,845, represent the bulk of the $15,135 of

receipts for which the Committee apparently maintained no records.

The Committee also failed to retain deposit receipts

for four (4) deposits (July 28, S~ptcmbcr 17, October 6 and

~lovcmb('r 26, 1976), totalling $17,440.00.

During our audit we examined the Committee's receipt

record:;, covering the period June H, 1976 to October 30, 1976,

which ('onsisted of listings of the contributors' names and the

amount:j and dates of the contributions. Receipt records could

not be' located for the period Novcr.lber 1 - December 31, 1976.

A comparison was made bet\vccn available receipt records and total

reportable receipts shown in the bank records from June 8, 1976,

throuCJh September 30, 1977. Accordinq to the Committec's bank

records, receipts totalled $37,812.99. However, available contributor records totalled only $22,677.99, thus 1cavinq a total

of $15,135 of receipts which were undOCUMented (40.03~ of total

receipts).

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'~hcn questioned, the Treasurer ~~s not able to identify

the source of the large CZ-lsh deposits or to pxp]ain the large O':0::-.:1~:

discrepancy in receipt records. The Treasurer was also unsure

~hethcr or not the contributors of these funds were included in

the contributor lists reviewed by the ~udit staff for the period

ending October 30, 1976 •

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In our letter of March 10, 1978, we recommended that

the Committee and/or the Candidate make a reasonable effort to

identify the sources of the unsupported contributions and furnish

pither copies of the documentation obtained or evidence of their

l'frorts to obtain the documentation to the Audit staff for review,

within 30 days of notification. No response was received from

either the Committee or the Candidate and in a telephone conversation on April 18, 1978, the Treasurer was indefinite as to when

he would be submitting the requested documentation. Due to the

lack of response and prospects for any response, this finding

was referred to the Office of General Counsel on April 25, 1978 •

B. Reportinq of Receipts

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Section 434(b) (2) through (8) of Title 2, United St~tcs

Code, requires reports filed under the Act to contain certain information with respect to receipts, including the total sum of individual contributions not otherwise itemized, the itemization of

certain other types of receipts, and the total sum of all receipts

made by or for the committee during the reporting period.

During the course of our audit, an examination of the

CONmittce's bank records revealed a total of $18,088.28 2/ in

receipts which the Committee did not report. This represents

47.84~ of the Committee's total reportable receipts. Because

of the recordkceping problem discussed in Finding A, $15,135.00

of these unreported receipt~ remain unidentified as to their

source. It is the opinion of the Audit staff that, based on

our review of the available records, the balance of the unreported

receipts ($2,953.28) 2/ is comprised of contributions from

individuals. -

Our audit also revealed that the Committee reported,

and included in its receipt totals, general election expenditures

made on its behalf by the State Popular Democratic Party totalling

$9,953.67 which were not required to be reported by the Committee.

Of this amount, $500 that \~~S itemized by the C0;.u~ittC'e on

Schedule A ~as not included in its receipt totals•

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We recommended that the Committee file a co~prehensive

olmenc1mcnt for If)76 rcf1ectinq ,'"tn adjustment in Committee receipts

for the period of $8,134.61. On February 1, 1978, we received

the Committcp'~, 1976 comprehl'tlsive amendmcnt which reflected the

cor.rect sumr.hlry page total for receipts.

In our letter to thea Committee of t-tarch 10, 1978, we

recommcnded that the Committ(\(~ file a supplementary amendment,

itemizing where necessary the' undocumented receipts discllssed in

Finding A for which records W0rc obtained. Because of the lack

of response from the Committee and Candidate to our reauest for

records made for Finding A, this findinq was referred to the Office

of General Counsel on April 25, 1978.

C. Apparent Corporate Contributions

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Section 441b(a) of Title 2, United States Code, states

in part.,. tb.at. i..t: i?\JnJ~wf~J- fqr any corporation to ~ake a contribution to a political committee in connection with any Federal

election, or for any candidate, political committee, or other

person to kno\oJinqly accept any such contribution.

During the course of our audit, we determined that the

Committee had reccived four (4) apparent corporate contributions

totalling $310. The corporate status of these business entities

was confirmed with the Secretary of Statc's Office, San Juan,

Puc'rto Rico, durii1g the audit. The Trcafiurer stated he \-w·as uncn'Jdl 4C

th~t the Committee had accepted any corporate contributions and

f01t that thcs~ had been accepted due to clerical oversight.

In our letter to the Conr.littce of i·larch 10, 1978, we

rcco~~endcd that the Committee refund th0sC contributions to the

parties involved and furnish documentation of the refunds to the

Audit stn~f within 30 days of notification. Because of the lack

of response from the Committee to this rC'commcndation, and in

accordance \.;i th established Commission policy, this finding \vas

also referred to the Office of General Counsel on April 25, 1978.

D. ~('!)ortinq of Committec Activity Under Cilndid~te's !Tame

Sections 434(a) (1) and (b) of Title 2, United States

Code, rc(!uirc political committees supporting candidate (5), and

each candidate for election to Federal office, to file with the

COwmission reports containing information on their receipts,

expenditures, and beginning and cnc1inQ cash •
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Recommendation

Because the COffii':":ittee has satisfactorily complied with our

recommendation, no further action on this finding is recommended.

We recor~unendr:!c1 that the Committee and the Candidate submit

comprehensive amendments for 1976 transferring all campaign activity

from Candidate reports to reports properly reflecting the activity

under the name of the Committee. On February 1, 1978, we received

comprehensive amendments from the Candidate and the Committee

correctly reflecting the transfer of receipt and expenditure

activity totals from the Candidate to the Committee.

E. Rcportir:q of Debts and Obligations

During the course of our audit it was determined that

the Committee's receipt and expenditure activity, except for

$50 in receipts, had been reported to the Commission on reports

reflecting only the Candidate's name. In discussions with the

Treasurer it was determined that the Candidate raised and spent

no funds himself, and that all campaign-related activity occurred

through the Committee. Information on Committee receipt and

expenditure acti·,ity was sent to the Resident Commissioner's

office in WashinrJton where the FEC reports were prepared and

filed under th~ Candidate's name.

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Section 434(b) (12) of ~itle 2, United States Code,

states that reports filed by political committees shall disclose

the amount and nature of debts and obligations owed by the

committee, and re~uirc~; that these debts and obligations be

continuously rcporte2 until extinguished, together with a statement of circumstances under which they were extinguished •

Section l04.8(b) of Title 11, Code of Federal Regu13tions,

requires in part, tha·: Cl debt, obligation, or other promise to pay

in excess of $500 be r,~ported as of the time of the transaction.

Our c:':c:lnina :':.ion of Committee records revealed an undisclosed obligation to t:10 Committee's media firm which attained

reportable status as o~ July 31, 1976, and which required continuous reporting throU~;1 the year-end 1976 report at which time the

balance owed was $7,9~3.83. Since that time, the Committee has

made no additional pajrcnts on this oblig~tion. At no time <luring

this period did the CO~~littec or the Candidate disclose this

obligation in reports to the Co~~ission. The Treasurer indicated

this omission was due to a misunderstanding of the reporting

requirements for debts and obligations.

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On February 1, 1978, the Committee filed a report

(as of September 30, 1977) disclosing the obligation on Schedule

C as reauired. In our letter to the Cor.mlittee of Harch 10, 1978,

we reco~endcd that the Committee, within 30 days of notification,

file a comprehensive amendment for 1976 to include the appropriate

Schedule C, disclosing the total obligation, payments to date,

and balance outstanding on the above-mentioned obligation. Furthermore, the Conunittce \-las advised that it must continue to file

reports until the debt is extinguished (in accordance with Section

434 (b) (12) of rritle 2 of the United State's Code), and that any

settlement of the obligation with the corporate vendor at less than

the value of the services is subject to Commission review, (per

Section l14.l0(c) (3) of Title 11, Code of Federal Regulations).

Recommcndlltion

To date the Comnlittee has not disclosed the debt as required

in it:.~ 197ficQJTIpr~hen~ive amendment. Ho\vever, since the existence

of the debt has be~~' dIs~lb~ed' {~'thc report tiied foi the period

ending September 30, 1977, \vc recommend no further action in this

matter.

F. It0mization of Contributions ~- --

S0ction 434(1) (2) of Title 2, Vnited States Code,

requires a cor:unittee to include in its reports the full name and

address, occupation antI principal place of business of each person

making a contribution(~;) in excess of or aggregating in excess of

$100 wi thin a calendar y('ilr, together \o;i th the amoun t and da te

of such contribution (~~) .

Our review of the Committee's available receipt records

revealed nine (9) contril)utions from as many contributors in excess

of $100 or aggregatincJ in excess of $100 which were not itemized

by the Committee as rpqui~ed in its reports. These contributions

ranged in amount from $SG to $500 and totalled $1,400. ~he

Treasurer attributed Lhc'se omi~-:sions to clerical oversight in

the prepar3tion of thl~ reports.

In addition, of the 31 contribution~; itcrnizcl1 on the

Candidate's reports:

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3 contributions (9.67~) failed to reflect an address,

11 contributions (35.48~) failt"'c1 to rc~lect the

in(1i\"idllal's OccuF3tion,
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19 contributions (61.29%) failed to reflect the

individual's principal place of business.

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\"]p recommended that the Committee file a comprehensive

amendment for 1976 itemizing the previously omitted contributions,

and reflecting the omitted address, occupation, and principal

place of bu~iness information for those itemized contributions

noted abov0. On February 1, 1978, we receiv~d the Committee's

comprehensiv.'" amendment which materially complied \vith our

recommendation.

Recomrncndulioll

Because the Committee has satisfactorily complicu in this

rna tter, no further action is recommendc·d.

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G. R0porting and Itemiz~tion of Expenditur0s

Section 434 (b) (9) and (11) of Title 2, United States CC)c!."

requires that a committee disclose in its reports the identification

of each person to whom expenditures have been madc by such cor.lmittce

within the calendar year in an aggregatc amount in excess of $100,

the amount, datc and purposc of each such expenditure: and, the

total sum of cx[>cnditures made by such committee during the ca1cnd3~

year.

During the course of the audit, our examination of the

Conuni ttce' s {::,xpendi tures revealed 12 c:·:penc1i tures in e::ccss of $100

which the Committee neither itemized as required, nor included in

its total rC'ported expenditures. 'rhcse 12 0:-:penditures (36.36~ of

the total number of itemizab1e expenditures) ranged in amount from

$411 to $3,000 and totalled $13,146 (35.l3~ of total itemizab1e

expenditures). The Treasurer attributed these omissions to a lack

of co-ordination between the campaign office in San Juan and the

Resident Commissioner's office in Washington where the FEe reports

\';crc prepar0d.

\\(... recommended that the Committee file a 1976 comprehensive amend~{~nt itemizing these previously omitted expenditures anrl

adjusting it~ year-to-datc totals accordingly. On rcbruary 1,

1978, the ComPlittec filed its comprehensive amendment for 1976

including the expenditures noted above.

•

BeCause the Cor.unittcc has satisfactorily complied in this

r.1.:l t ter, no further action is rccor.1r.:cnc1cd •
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-9-

Disclosure of Committee Depository

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Section 433(b) (9) of Title 2, United States Code,

requires that a committee reveal in its statement of organization

a listing of all banks, safety deposit boxes, or other repositories

used by the committee.

Our review of the Committee's bc:lnk records rcvc·aled the

use of a depository which was not reported as required by the

Committee on its Statement of Organization, in any amendments

submitted thereto, nor on the Statement of Candidate. Furthermore,

the depository disclosed by the Candidate on his Statem0nt of

Candidacy and the Committee in its Statement of Organization was

never used by the Committee during the period under audit.

In our letter to the Cormnitte'e of r~arch 10, 1978, we

recommended that the Committee file an aMended Statement of

Organization disclosing th0 depository used within 30 days of

notificat-ion. \']0- also recomMended ,that -the -Candidate --file an

amended Statement of Candidacy designating the account as the

Committee depository. Because of the lack of response to our

recommendation on this finding, this natter \vas included in the

referral to the Office of Ccneral Counsel on April 25, 1978.

I. Disclosure of Fllnc1raising Acti ~.'·i ty

Section 434(b) (6) (A) and (B) of Title 2, United Stat0s

Code, requires that reports filed by co~~ittees under the Act

shall disclose the total amount of proceeds from the sale of

tickets to each dinner, rall~', and other fundraising event, and

mass collections made at such events.

During the course of our audit, it was determined that

a major fundraising banquet \'las held by the Cornnittee in September

1976, at the Caribc Hilton, Sun Juan, "hich was not disclosed by

the Committee as required on Schedule D. ~he Treasurer stated

that a deposit of $12,410 ma~e to the Co~mittee's account on

September 17, 1976, repr0scn~cd the bulk of proceeds collected

from the dinner.

\':e recon~~enc1c(l th.:lt the Con:':1it~ee file its 1976

comprehensive amendment to i~clude the ap~ropriate Schedule D

disclosing the total of proceeds from the fundraising activity

referred to above. On Februa~y 1, 1978, t~e Co~mittee filed

its 1976 cc~prchensive a~C11G~ent disclosing the fundraiser as

recommended •
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Hccornmendation

Because the Committee has complied in this mutter, no

further action is reconunended.

J. Filinq of Reports in Non-rlcction Year

Sr~ctions 104.1(a), (c) (2) and (c) (3) (i) of Title' 11,

Code of Federal Requlations, require Ouch political conul\ittcc

to file quarterly reports of contributions arid expenditures

until ~ll debts and obliqations relating to that cornmitle0's

Feder3l election activity arc extinguished and the committee

has filed a valid I,1otice of Termination. In any non-election

year such committee shall only be required to file quarterly

reports for a calendar quarter during which contributions

received or expenditures made, when added together, exceed $5,000.

If the level of activity docs not exceed $5,000 per calendar

quarter, the political cor.unittee shall notify the Commission on

FEC For:a 3a, or by leet.er conti'fining -the-s-amc information,- at the

close of the first qU3rter in \vhich the exemption applies.

Our review of th~ Committee's reports filed with the

COInI:lission revealed no FEC Form 3a or letter C'qui.\·ulent filed

by t=~c Committee for the fj r~;t quart0~ 1977. Btlnk records for

t he por i od i ndi c a tC(1 $ 9 • 00 () f e:-:penc1 i u reac t i v i t y a nd no r e c c i p t

activity.

~hc Conmillpc was formallv notified of this findinq

in a letter dated !'l(lr(~h 10, 1978, in ·.·::1ich it \-la5 recommcndc~l

th.:lt the Committee fi le the omitt0tl !"'EC Form 3a for the first

quarter of 1977, wit-hin 30 clays of nc~i:ic~tion. Rccausa of the

Cornmittcc's [ailuro to respond to ()U~· rccopu~cndation this findinq

was referred to the Office of General Counsel on April 25, 1978.

K. Other ~~(l ttc'rs

Prescnt(:'l bt'lo\oJ is a Jl1lltt("\!· [()~. \vhich the Audit sta:f

reco~~cndcd no further action:

Our exa;:-:ina tion of the Co:"':'~ i t c·o::·'~; ~~n 1 lcitation Iitcra turc

consisting of a m~ss ml,ili.n~l letter .:1:1d i1 l)(··..,:q<l!~Cr ad solicitation,

rcv(?.:llcd that nei+:.her contuinl"d the !:0~i~ic:llion required by

Section 435(b) of Title 2 of tIll.... Unit.t,--'cl S~~lt('S Coda. The COn'~ittc\.;

\-!as 3d..... ised of th~ rC'(fuired noti.fic:1:'1.C':'\ for ,111 solicitation

litcr~tur0 in acccr-~1.:H1CC \-:i.th lhi:> ~~t,-':·_· iO:1 of t!:c i\ct •
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Summary

Ou.' t () t.h0 lack of response to our reconuncndations in

Findinq~'J J\, H, C, II und J, the matters contained therein were

refcrr(~d to the Commis~;ion's Office of General Counsel on

1\pril 2S, 1()73, an<l combi TH'c1 with other matters in MUR 505 (78)

re<J Ll r<.1 i nq the Comm i t t:C'P.

On l\uqust 21, 197R, tlctinq upon the recommendation of the

Of f ice of (~l'nera1 Coun~~f' 1., the' Conunission fotind reasonable cause

to believe that thl' Commit.tr(1 hud violated those sections of the

Act pertaining to the I·'indinc.fs cited in the previous paragraph.

Efforts were begun at that time to obtain a conciliation agreerncnl

with the Committee, which provided for a civil penalty of $4,500.

During the conciliation period the Conunittee submitted (on Septcm},l·t11, 1978), documentation \vhich materially complied with the requit'I'-

ments of the i\ct regarding F'indin<js C, I! & J. Regarding the

rccordkeeping and reporting of rcc0ipts discussed in Findings A & H,

a·t a meeting on Octob('\t" 12·,. 1-978, ·with· Commission staff,· the

Conunittce Treasurer aqrecd to provide records for the subject

receipts. In subsequent tc101'honc calls with the General Counsel's

staff, he also indicated 0fforts w('re under''''~lY to raise funds

to pay the Commi t tee' s 1 97 6 c",mpaiqn debt (to enilble them to

terminate their reportinq obliqatinn) and to pay the civil penalty

provided for in the cone ili:1 t ion aq rC'f'InCn t.

However, subs..C'qu('ntl~' no dOCul'lt'nllltion regarding any

fundraisinq c"V('nt or furthl'r L'ffort:~ to roach conciliation was

received fror~l the Conunitt.l"'. F{'her('fnt-e, based on the recomcndation of the Office of G0nC'~-111 CO\ln:~l'l, the Commission voted on

Janu.:lry 10, 1979, by 6-0, to find probabl(' CllUSC to believe that

the Comi t c' i\!ni q as de l.1 a i rn l \ r (\ n i. t e z vi 0 1. t cd :

1) 2 u. S •c. 432 (c) (1) a nc1 ( 2), it n(l 4:3 ~l (b) (2) - (8) by

failing to adequately ruprq-t ~lnd }~L'l\P records of receipts:

2) 2 U.S.C. 44lh(a) by itccf'ptinq ill\'1q:ll corporate

contributions:

•

3)

Conunittce

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4) 2 U.S.C. 435(b) by failing to include the required

notification for solicitation literature; and

5) 2 U.S.C. 434(a) (1) by failing to file the 1977 Quarterly

and Year End Reports and April 10, 1978, Quarterly Report.

Furthermore, the Commission also on the same date autho.· ized

the General Counsel to institute civil suit with respect to

the items noted above.
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FEDERAL ELECTION COI\\,\,USSION

H.!'i ~II{H I ,,\\

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ADDrrIONAL INFORMATION REGARDING ntIS ORGANIZATION

MAY BE I.DC'ATED m A CDMPLETED OOMPLIANCE ACIION

FlIE· RELEASEIf·BY THEcn+1ISSION~ AND MADE .PUBLIC IN

'DE PUBLIC RECDRDS OFFICE. FUR 'lHIS PARTICULAR

ORGANIZATION'S OOMPLETED OOMPLIANCE ACrION FILE

SlMPLY }SK FUR '!lIE PRESS StMfARY OF MlJR /1 ~C's-

'!BE PRESS st»1ARY WIIL PROVIDE A BRIEF HISmRY OF

'!BE CASE AND A sm+1ARY OF ntE ACl'IONS TAKEN, IF f.m..

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