Perkins Coie 

700 Thirteenth street, N.W., Suite 600 

Washington, D.C. 20005-3960 

Brian G. Svoboda PHONE: 202.654.6200 

PHONE: (202) 434-1654 ^ 202.654.6211 

P«c: (202)434-1690 www.pericinscoie.com 

EMAIL: BSvol>oda@pcricinscoic.com 

VIA ELECTRONIC AND U.S. MAIL 

April 10,2012 

Mr. Thomas Hintermister 

Assistant Staff Director 

Audit Division 

Federal Election Commission 

999 E Street, N.W. 

Washington, DC 20463 

Re: Paul Tonko for Congress 

Dear Mr. Hintjermister: 

On behalf of Paul Tonko for Congress ("the: Committee"), I write in response to the Interim 

Audit Report of the Commission on Paul Tonko for Congress. Having complied with the Interim 

Audit Report's recommendations, the Committee appreciates the opportunity to provide further 

information regarding its findings. 

BACKGROUND 

The Committee registered with the Commission in 2008. It has not been a respondent in any 

proceeding before the Commission. During the 2010 election cycle, the Committee had 

consolidated its fundraising and compliance functions. Its reports were prepared and day-to-dsiy 

compliance tasks performed by a finance director and an assistant finance director, who were on 

the Committee's permanent staff. This system was not adequate to meet the Committee's 

compliance needs. When the 2010 cycle was over, and when these staff members left the 

Committee, the Committee separated its finance and compliance functions. These functions are 

now performed by different people. Specifically, the compliance functions are now performed 

by an outside consultant who has performed similar work at the Congressional level. The 

Committee did not avail itself of such expertise during the 2010 cycle. 

ANCHORAC F - BEIJIN G • BbLLEVU E - BOISE • CHICAG O • DALLAS • DENVE R • LOS ANGELE S • MADISO N • NE W YORK 

PAl O ALTO • PHOENI X • PORTLAN D • SA N OlEC O • SA N FRANCISC O • SEATTLE • SHAN'CHA I • TAIPEI - WASHINCTON . D.C. 

Perlcihs Coie UP 
Mr. Thomas Hintermister 

April 10,2012 

Page 2 

The Commission notified the Committee of the audit on April 6,2011. Field work began on 

August 8,2011. The Exit Conference was held on September 21,2011. At the Exit Conference, 

only the issue of prohibited contributions was presented as a potential finding. However, on 

January 13,2012, the auditors told the Committee that a later review of the work papers surfaced 

an error in the bank reconciliation, and that the Interim Audit Report would contain an additional 

finding of misstatement of financial activity. The auditors said that the finding was triggered by 

the omission of approximately $9,000 in disbursements during 2009J They said also that this 

was a large enough percentage of the Committee's relatively few disbursements during the offyear to make the finding material. (As the Interim Audit Report indicates, tiie Committee only 

reported $150,456 in disbursements during 2009.) 

FINDINGS 

Finding 1 - "Receipt of Prohibited Contributions" - was generated by a sample review of the 

Committee's receipts. The auditors projected that the Committee received $6,705 in prohibited 

contributions. However, they said also that the estimate "could be as low as $3,047 or as high as 

$14,385." Interim Audit Report at 5. The projection resulted mainly from contributions that 

were received from limited liability companies (LLCs), for which there was insufficient 

documentation of non-corporate status.^ 

Whenever presented by the auditors with an actual, questionable contribution, the Committee has 

either documented its permissibility, or refunded or disgorged it. The Committee has further 

complied with the Interim Audit Report's recommendation by disgorging an additional $1,255 to 

tiie Treasury. The Interim Audit Report does not associate this amount with any particular 

contributions, making it impossible for the Committee to demonstrate that they "were made with 

permissible funds," and indeed acknowledges that the tme amount may have been lower. A copy 

of the disgorgement check accompanies this letter as Exhibit A. 

As discussed above, Finding 2 - "Misstatement of Financial Activity" - resulted from the 

omission of approximately $9,000 in disbursements from reports covering calendar year 2009. 

The omitted disbursements identified by the auditors spanned a period of nine months. They 

ranged from a bank service charge of $1.12, to a $3,900 software expense (of which $1,918.45 

was reported). Moreover, the disbursements identified by the auditors included two that had 

' A spreadsheet provided by the auditors on January 13,2012 presented an "unreported total" of $9,278.88. The 

Interim Audit Report identifies "Disbursements not reported" of $9,179, and an "Unexplained difference" of $107, 

for a total of $9,286. See Interim Audit Report at 7. 

' As the Commission has noted, most LLCs are treated as partnerships under the Intemal Revenue Code. See 

Treatment of Limited Liability Companies Under the Federal Election Campaign Act, 64 Fed. Reg. 37,397,37,398 

(1999). 

77313-O00I/LEGAL23326049.1 
Mr. Thomas Hintermister 

April 10,2012 

Page 3 

already been reported: a $200 disburisement to the Frank Chapman Memorial Institute on Jime 

30,2009, and a disbursement to Carolyn McLaughlin for Common Council that was reported as 

made to "McLaughlin for Council President." The Committee has complied with the Interim 

Audit Report's recommendation by amending its reports. 

We appreciate the opportunity to provide our views on these matters. 

Very tmly yours. 

Brian O. Svoboda 

Attachment 

77313-0001/LEGAU3326049.1