CHRONOLOGY

GERALD “JERRY” WELLER FOR CONGRESS

Audit Fieldwork

Interim Audit Report to
the Committee

Response Received to the
Interim Audit Report

Final Audit Report Approved

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September 11, 2001 - March
12, 2002

June 11, 2002

July 23, 2002

August 15, 2002



contributions which the Interim Audit Report and supporting
documents identified as excessive contributions.

The Commission should not view the Committee’s refund of these
contributions as an acknowledgement that they were excessive
contributions; to the contrary. The Committee does not agree or
acknowledge that these contributions constituted excessive
contributions under the FECA, and reserves its rights and does not
waive any of its rights or arguments in the event these contributions
become the grounds for subsequent action by the Commission.”

Cc. MISSTATEMENT OF FINANCIAL ACTIVITY

Sections 434(b)(1) and (4) of Title 2 of the United States Code state, in
part, that a political committee shall disclose the amount of cash on hand at the beginning
of the reporting period and the total amount of all receipts and all disbursements for the
reporting period and calendar year.

The Audit staff's reconciliation of the GWFC’s reported financial activity
to its bank activity for calendar year 2000 revealed misstatements of its reported
disbursements. GWFC should have reported disbursements totaling $735,699. It
reported total disbursements of $733,307, a net understatement of $2,391. This
misstatement resulted primarily from the following.

¢ GWFC did not report a total of $43,927 in operating disbursements that
included an unidentified disbursement of $17,290 made on November 2,
2000, and several payroll and consulting checks.

e GWFC did not report in-kind disbursements totaling $5,315.

e GWFC over-reported operating disbursements by $45,830, mainly as the
result of one check that should have been reported for $3,600, but was
inadvertently reported as $36,000 and one check in the amount of $12,258
that was reported twice.

GWEC reported cash on hand of $633,913 and should have reported
$633,361, a discrepancy of $551. This misstatement was the result of the discrepancies
noted above as well as minor misstatements related to receipts.

GWFC officials were provided copies of the bank reconciliation at the exit
conference and agreed to file amended reports.

In the LAR, it was recommended that GWFC file comprehensive amended
Summary and Detailed Summary pages for calendar year 2000, as well as appropriate
Schedules B, by reporting period, to correct the misstatements noted above.

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MISSTATEMENT OF FINANCIAL ACTIVITY — 2 U.S.C. §434(b)(1) and (4). The
Audit staff's review of GWFC’s financial activity revealed a net misstatement of disbursements
and ending cash on hand totaling $2,391 and $551 respectively.

In response to the interim audit report, GWFC filed amended disclosure reports which
materially corrected the misstatements noted above.

TIMELY DEPOSIT OF CONTRIBUTIONS — C.F.R. §102.8(a). During its review of
contributions from individuals, political action committees and all individual contributors who
gave in excess of $1,000, the Audit staff noted that many deposits were not deposited in a
timely manner. The number of days between check date and deposit date ranged from 26 to
145 days.

in its response to the interim audit report, GWFC outlined new procedures implemented
to correct this problem.

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FEDERAL ELECTION COMMISSION
WASHINGTON DU 240 ‘01-02

August 16, 2002

Mr. Roger C. Forcash, Treasurer
Gerald C. “Jerry” Weller For Congress
P.O. Box 15283

Washington, D.C. 20003

Dear Mr. Forcash:

Attached please find the Report of the Audit Division on Gerald C. “Jerry” Weller
for Congress. The Commission approved the report on August 15, 2002.

The Commission approved Final Audit Peport will be placed on the public record
on August 22, 2002. Should you have any questions regarding the public release of the
report, please contact the Commission's Press Office at (202) 219-4155.

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

should be directed to Rhonda Gillingwater or Russ Bruner of the Audit Division at (202)
694-1200 or toll free at (800) 424-9530.

Sjncerely,

Assistant Staff Director
/ Audit Division

Attachment as stated

cc: Paul E. Sullivan, Esq.

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surprised that it had not cleared the bank. GWFC officials agreed to refund any
contributions that were from prohibited sources.

Subsequently, GWFC submitted a document addressing two of the
contributions. GWFC states that one of the contributing companies is in fact registered as
an LLC in the State of Illinois and is not treated as a corporation, however, they did not
submit any documentation from the contributing company supporting the affirmation as
required by 11 CFR 110.1(g)(5)°. Furthermore, GWFC states that representatives at
Hoffman Transportation were contacted and they stated that at the time of the
contribution it was a sole proprietorship. Hoffman Transportation has, according to the
Illinois Secretary of State, been a corporation since 1989.

For the remaining apparent incorporated entities, GWFC did not make any
comment. Finally GWFC stated,

“In January of 2001, the Committee became aware of a number of
difficulties related to their compliance systems. The vast majority of the
problems were determined to be the failure of the treasurer to properly
execute the duties for which she was retained. Several actions were taken.
First, the treasurer was immediately terminated from her position as
treasurer of the Committee and all associated recordkeeping and document
retention services. The Committee then retained alternative professional
staff who conducted an internal review and audit of the Committee’s
activities. Based upon findings from that review, recommendations for
compliance systems were developed and implemented by the Committee.
Those procedures have been in operation since the summer of 2001.” It
continues; “The Committee staff now retrieves contribution checks on a
frequent and periodic basis. Checks are reviewed by professional staff for
potential prohibition and excessive contributions. Contributions are
batched with a full accounting trail, to include information pertaining to

‘best efforts’.

GWFC’s responses fail to resolve any of the eight prohibited contributions
totaling $13,150.

In the Interim audit report, (LAR), the Audit staff recommended that,
within 30 calendar days of service of the report, GWFC demonstrate that the 8
contributions in question were not from prohibited sources. Regarding the LLC included
in this finding, such evidence was to include information from the contributing entity that
verifies that they had not elected to be treated as a corporation for IRS purposes, such as
IRS Form 8832 (Entity Classification Election), and which affirms that they were eligible

Counsel also referenced Advisory Opinion 1998-15 that addressed Illinois Limited Liability
Companies. That Opinion was one of a series issued prior to the 1999 promulgation of 11 CFR 110.1
(g)-Contributions By Limited Liability Companies. The contribution at issue is governed by the
regulation, not the Advisory Opinion.

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period were Ms. Carol Lindamood (7/15/96 — 1/22/99), Ms. Shelly Carson (1/29/99 -
2/2/00) and Ms. Lauren Dees (2/3/00 ~ 1/12/01). The current treasurer is Mr. Rodger
Forcash. GWFC maintains its headquarters in Washington, D.C.

To manage its financial activity, GWFC maintained two bank accounts.
From these accounts, approximately 640 disbursements were made, totaling $982,527".
GWFC’s receipts were comprised of approximately 3,140 contributions from individuals,
totaling $778,000; 730 contributions from political committees, totaling $689,000; and,
interest totaling $60,468. Accounting, recordkeeping and reporting functions were
performed by paid campaign staff and consultants, which utilized commonly available
campaign software. The Audit staff is not aware of any FEC seminars attended by
GWEC personnel.

D. AUDIT SCOPE AND PROCEDURES

In maintaining its disbursement records, GWFC satisfied the minimum
recordkeeping requirements of 11 CFR §102.9; however, for contributions from
individuals, the Audit staff's verification of reported occupation and name and address of
employer was limited by the lack of external documentation, such as contributor response
devices.

Following Commission approved procedures, the Audit staff evaluated
various risk factors and, as a result the audit included testing of the following general
categories:

1. The receipt of contributions or loans in excess of the statutory
limitations (see Finding II.B.);

2. the receipt of contributions from prohibited sources, such as those
from corporations or labor organizations (see Finding II.A.);

3. proper disclosure of contributions from individuals, political
committees and other entities, to include the itemization of
contributions when required, as well as, the completeness and
accuracy of the information disclosed;

4. proper disclosure of disbursements including the itemization of
disbursements when required, as well as, the completeness and

accuracy of the information disclosed;

5. proper disclosure of campaign debts and obligations;

? This amount is under reported disbursements by $866. See Finding II.C.

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AO1-02
FEDERAL ELECTION COMMISSION

WASHINGTON, DC 240+

REPORT OF THE AUDIT DIVISION
ON
GERALD C, “JERRY” WELLER FOR CONGRESS

L BACKGROUND
A. AUDIT AUTHORITY

This report is based on an audit of Gerald C. “Jerry” Weller for Congress
(GWFC), undertaken by the Audit Division of the Federal Election Commission (the
Commission) in accordance with the provisions of the Federal Election Campaign Act of
1971, as amended (the Act). The audit was conducted pursuant to Section 438(b) of Title
2 of the United States Code that states, in part, that the Commission may conduct audits
and field investigations of any political committee required to file a report under Section
434 of this title. Prior to conducting any audit under this subsection, the Commission
shall perform an internal review of reports filed by selected committees to determine if
the reports filed by a particular committee meet the threshold requirements for substantial
compliance with the Act.

B. AUDIT COVERAGE

The audit covered the period from January 1, 1999 through December 31,
2000. GWFC reported a beginning cash balance of $93,719; total receipts of $1,514,991;
total disbursements of $976,798; and a closing cash balance of $633,912."

Cc. COMMITTEE ORGANIZATION

GWFC registered with the Clerk of the U.S. House of Representatives on
November 29, 1993, as Gerald C. “Jerry” Weller for Congress, the principal campaign
committee for Gerald C. Weller, Republican candidate for the U.S. House of
Representatives from the State of Illinois, 11" District. The Treasurers during the audit

} These figures do not foot as the result of an amendment to the 2000 Pre-primary report adjusting
beginning cash by $2,000.

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were made by corporations may be, within ten days of the treasurer's receipt, either
deposited into a campaign depository or returned to the contributor. If any such
contribution is deposited, the treasurer shall make his or her best efforts to determine the
legality of the contribution. The treasurer shal] make at least one written or oral request
for evidence of the legality of the contribution. Such evidence includes, but is not limited
to, a written statement from the contributor explaining why the contribution is legal, or a
written statement by the treasurer memorializing an oral communication explaining why
the contribution is legal. If the contribution cannot be determined to be legal, the
treasurer shall, within thirty days of the treasurer's receipt of the contribution, refund the
contribution to the contributor.

Sections 103.3(b)(2) and (4) of Title 11 of the Code of Federal
Regulations provide, in part, that the treasurer shall refund any contribution determined to
be illegal to the contributor within thirty days of the date on which the illegality is
discovered. Further, any contribution which appears to be illegal and which is deposited
into a campaign depository shall not be used for any disbursements by the political
committee until the contribution has been determined to be legal. The political
committee must either establish a separate account in a campaign depository for such
contributions or maintain sufficient funds to make all such refunds.

During the review of contributions from individuals, the Audit staff
identified 7 contributions, totaling $8,150, made by 7 business entities. The Audit staff
utilized the Illinois Secretary of State’s website to verify the corporate status of these
entities; and all the entities appear to be active corporations or limited liability companies
(LLC’s). In addition, it appears that GWFC deposited a check written to the National
Republican Congressional Committee Trust (non-federal account) for $5,000 by T.LP.
Educational Fund-Hotel Employees and Restaurant Employees PAC®. Although GWFC
reported refunding the contribution, the refund check never cleared the bank.

GWEC did not maintain a separate account for questionable contributions
although it did maintain a sufficient balance to cover the refund of these contributions
throughout the election cycle. On its 2002 Apnil 15" Quarterly Report, GWFC reported a
cash balance of $8,185 on March 31, 2002*.

The Audit staff advised GWFC’s legal counsel of this matter at an exit
conference. Counsel stated that he would review and investigate these items. As for the
check payable to the NRCC, he was unsure why this had happened and stated that he
would check into the problem. One official did ask about the refund and seemed

3 This PAC may be a non-federal PAC associated with the federally registered PAC, Hotel Employees
Restaurant Employees International Union TIP - To Insure Progress (T.I.P. PAC). T.I.P. PAC did
not report this contribution. The committees share the same address.

‘ On its 2001 Mid-Year Report, GWFC reported transferring $610,559 in apparent excess campaign
funds to Jerry Weller for Congress, the Candidate's principle campaign committee for the 2002
election.

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FEDERAL ELECTION COMMISSION

WASHINGTON DC 20405

August 22, 2002

MEMORANDUM

TO: RON M. HARRIS
PRESS OFFICER
PRESS OFFICE

FROM: JOSEPH F. STOLTZ
ASSISTANT STAFF D{RECTOR
AUDIT DIVISION /

SUBJECT: PUBLIC ISSUANCE OF THE AUDIT REPORT ON
GERALD C. “JERRY” WELLER FOR CONGRESS COMMITTEE

Attached please find a copy of the audit report and related documents on
Gerald C. “Jerry” Weller for Congress, which was approved by the Commission on August
15, 2002.

All parties involved have received informational copies of the report and the report
may be released to the public.

Attachment as stated

cc: Office of General Counsel
Office of Public Disclosure
Reports Analysis Division
FEC Library


aggregated with other contributions from the same contributor, exceed the contribution
limitations of 11 CFR 110.1. If any such contribution is deposited, the treasurer may
request redesignation or reattribution of the contribution by the contributor in accordance
with 11 CFR 110.1(b) or 110.1(k), as appropriate. If a redesignation or reattribution is
not obtained, the treasurer shall, within sixty days of the treasurer's receipt of the
contribution, refund the contribution to the contributor.

Section 103.3(b)(4) of Title 11 of the Code of Federal Regulations states,
in relevant part, that any contribution which appears to be illegal under 11 CFR
103.3(b)(3), and which is deposited into a campaign depository, shall not be
used for any disbursements by the political committee until the contribution has been
determined to be legal. The political committee must either establish a separate account
in a campaign depository for such contributions or maintain sufficient funds to make all
such refunds.

Section 110.1(k) of Title 11 of the Code of Federal Regulations states, in
part, that any contribution made by more than one person, except for a contribution made
by a partnership, shall include the signature of each contributor on the check, money
order, or other negotiable instrument or in a separate writing and if a contribution made
by more than one person does not indicate the amount to be attributed to each contributor,
the contribution shall be attributed equally to each contributor. If a contribution to a
candidate or political committee, either on its face or when aggregated with other
contributions from the same contributor, exceeds the limitations on contributions set forth
in 11 CFR 110.1(b),(c) or (d), as appropriate, the treasurer of the recipient political
committee may ask the contributor whether the contribution was intended to be a joint
contribution by more than one person. A contribution shall be considered to be
reattributed to another contributor if the treasurer of the recipient political committee asks
the contributor whether the contribution is intended to be a joint contribution by more
than one person, and informs the contributor that he or she may request the return of the
excessive portion of the contribution if it is not intended to be a joint contribution, and
within sixty days from the date of the treasurer’s receipt of the contribution, the
contributors provide the treasurer with a written reattribution of the contribution, which is
signed by each contributor, and which indicates the amount to be attributed to each
contributor if equal attribution is not intended.

Section 110.1(b)(5) of Title 11 of the Code of Federal Regulations states,
in relevant part, that the treasurer of an authorized political committee may request a
written redesignation of a contribution by the contributor for a different election if the
contribution exceeds the limitation on contributions set forth in 11 CFR 110.1(b)(1). A
contribution shall be considered to be redesignated for another election if the treasurer of
the recipient authorized political committee requests that the contributor provide a written
redesignation of the contribution and informs the contributor that the contributor may
request the refund of the contribution as an alternative to providing a written
redesignation and within sixty days from the date of the treasurer's receipt of the

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to make these contributions pursuant to 11 CFR 110.1(g). Absent such evidence, it was
recommended that GWFC refund these contributions and provide evidence of such
refunds (copies of the front and back of the negotiated refund check) for review.

In response to the LAR, GWFC refunded all the questionable contributions,
including a check to replace the original refund to T.I.P. Educational Fund-Hotel
Employees and Restaurant Employees PAC and provided copies of the (front only)
checks®. GWFC agreed to provide copies of cancelled checks and bank statements as
they become available. In addition, GWFC’s response also included a written segment
that states, in part,

“The Committee continues to rely upon the position it asserted in its
March 22, 2002 correspondence and follow-up materials related to
the LLC issue. However, for purposes of expeditiously resolving
this issue, the Committee has issued refund checks for the
contributions in question.

The Commission should not view the Committee’s refund of these
contributions as an acknowledgement that they were received from
prohibited sources; to the contrary. The Committee does not agree or
acknowledge that these contributions constituted prohibited
contributions under the FECA, and reserves its rights and does not
waive any of its rights or arguments in the event these contributions
become the grounds for subsequent action by the Commission.”

B. APPARENT EXCESSIVE CONTRIBUTIONS

Sections 441a(a)(1)(A) and (2)(A) of Title 2 of the United States Code
state, that no person shall make contributions to any candidate and his authorized political
committees with respect to any election for Federal office which, in the aggregate, exceed
$1,000 and that no multi-candidate political committee shall make contributions to any
candidate and his authorized political committees with respect to any election for Federal
office which, in the aggregate, exceed $5,000. Section 110.1(b) of 11 CFR explains that
with respect to any election means that if the contribution is not designated in writing by
the contributor for a particular election then the contribution applies to the next election
for that Federal office after the contribution is made. A contribution is considered made
when the contributor relinquishes control over the contribution by delivering the
contribution to the Candidate, the political committee, or an agent of the committee. A
contribution that is mailed is considered made on the date of the postmark.

Section 103.3(b)(3) of Title 11 of the Code of Federal Regulations states
that the treasurer shall be responsible for examining all contributions received for
evidence of illegality and for ascertaining whether contributions received, when

° Refund checks were issued from an account of Jerry Weller for Congress Inc., the 2002 re-election

committee of Gerald C. Weller. See also, Footnote 4.

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6. the accuracy of total reported receipts, disbursements and cash
balances as compared to campaign bank records (see Finding

ILC.);

7. adequate recordkeeping for campaign transactions; and

8. other audit procedures that were deemed necessary in the situation
(see Finding II.D).

Unless specifically discussed below, no material non-compliance was
detected. It should be noted that the Commission may pursue further any of the matters
discussed in this report in an enforcement action.

Il. AUDIT FINDINGS AND RECOMMENDATIONS

A. RECEIPT OF APPARENT PROHIBITED CONTRIBUTIONS

Section 441b(a) of Title 2 of the United States Code states, in relevant
part, that it is unlawful for any corporation organized by authority of any law of Congress,
to make a contribution in connection with any election to any political office, or for any
corporation or labor organization, to make a contribution in connection with any election
to federal office and that it is unlawful for any candidate, political committee or any
person knowingly to accept or receive any contribution prohibited by this section.

Section 110.1(g) of Title 11 of the Code of Federal Regulations defines a
“limited liability company” (LLC) as a business entity that is recognized as a limited
liability company under the laws of the state in which it is established. A contribution by
an LLC that elects to be treated as a partnership by the Internal Revenue Service pursuant
to 26 CFR 301.7701-3, or does not elect treatment as either a partnership or a corporation
pursuant to that section, shall be considered a contribution from a partnership pursuant to
11 CFR 110.1(e). An LLC that elects to be treated as a corporation by the Intemal
Revenue Service, pursuant to 26 CFR 301.7701-3, or an LLC with publicly-traded shares
shall be considered a corporation pursuant to 11 CFR Part 114. A contribution by an
LLC with a single natural person member that does not elect to be treated as a corporation
by the Internal Revenue Service pursuant to 26 CFR 301.7701-3 shall be attributed only
to that single member. An LLC that elects to be treated as a partnership, or with a single
natural person member that does not elect to be treated as a corporation, that makes a
contribution shall, at the time it makes the contribution, provide information to the
recipient committee as to how the contribution is to be attributed, and affirm to the
recipient committee that it is eligible to make the contribution.

Section 103.3(b)(1) of Title 11 of the Code of Federal Regulations states,
in part, that the treasurer shall be responsible for examining all contributions received for
evidence of illegality. Contributions that present genuine questions as to whether they

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FEDERAL ELECTION COMMISSION

WASHINGTON. DC 20465

GERALD C. “JERRY” WELLER FOR CONGRESS
EXECUTIVE SUMMARY

Gerald C. “Jerry” Weller for Congress (GWFC) registered with the Clerk of the U.S.
House of Representatives on November 29, 1993, as Gerald C. “Jerry” Weller for Congress, the
principal campaign committee for Gerald C. Weller, Republican candidate for the U.S. House
of Representatives from the State of Illinois, 1 1" District

The audit was conducted pursuant to 2 U.S.C. §438(b), which states that the
Commission may conduct audits of any political committee whose reports fail to meet the
threshold level of compliance set by the Commission.

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

APPARENT PROHIBITED CONTRIBUTIONS — 2 U.S.C. §441b(a). A review of
GWFC’s receipts records identified 7 contributions, totaling $8,150 made by 7 business
entities. All the entities appear to be active corporations or limited liability companies. GWFC
also appears to have deposited into its account, a check written to the National Republican
Congressional Committee Trust (non-federal account) for $5,000 by T.1.P. Educational Fund-
Hotel Employees and Restaurant Employees PAC. Although GWFC reported refunding the
contribution, the refund check never cleared the bank.

In response to the interim audit report, GWFC refunded all prohibited amounts to
contributors.

APPARENT EXCESSIVE CONTRIBUTIONS — 2 U.S.C. §441a(a)(1). During the review
of GWFC’s receipt records the Audit staff identified $86,052 and $9,085 in contributions from
individuals received in excess of the limitation for the primary election and general election
respectively. In addition, GWFC received a total of $6,700 of contributions in excess of the
limitations from political action committees.

In response to both the exit conference and the interim audit report, GWFC refunded all
excessive amounts to the contributors.

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At the exit conference, GWFC officials were informed of the excessive
contributions discussed above and provided with documentation and spreadsheets to
support the Audit staff's work. GWFC officials stated they realized that the lack of
designation information was a problem. They stressed that new procedures which had
been implemented subsequent to this election cycle would insure that this type of problem
would be avoided in the future.

Subsequent to the exit conference, GWFC sent copies (front only, non-
negotiated) of refund checks for a total of $80,637 for excessive contributions from
individuals. GWFC did not refund any of the excessive contributions from the five
PACs.

In the IAR, the Audit staff recommended that GWFC provide evidence
demonstrating that the remaining contributions are not excessive. Absent such a
demonstration, it was recommended that GWFC refund the remaining contributions and
provide evidence of such refunds (photocopies of the front and back of the negotiated
refund checks) for review. Additionally, GWFC was asked to supply copies of the
negotiated checks for the $80,637 in refunds that have already been made.

In response to these recommendations, GWFC refunded the remaining
contributions that had been listed as excessive and also provided copies of cancelled
checks. Supporting bank statements were also provided for those checks that have
already cleared and GWFC representative agreed to provide copies of cancelled checks
and corresponding bank statements as they become available. During the review of these
cancelled checks it was noted that one check had been endorsed by the contributor, to the
“Jerry Weller for Congress, 2002 general election”, but the contributor had already given
the limit for the election cycle. Additionally, it appears that GWFC wrote two separate
checks to each of five contributors, in effect repaying the contributor twice the excessive
amount. The Audit staff informed a GWFC representative of these problems and was
assured that a new refund check would be issued to the contributor with a copy of the
check provided and that he would inquire into the reason for the duplicate refund checks.

In addition, GWFC’s written response further addressed this
issue and states, in part,

“The Committee continues to rely upon the position it asserted in its
March 22, 2002 correspondence and follow-up materials related to
the excessive contributions issue. However, for purposes of
expeditiously resolving this issue, the Committee has refunded those

Based on an analysis of the contributions and disbursements databases provided by GWFC, empioying
the election designations.contained therein, or absent such designations, the transactions dates, the
2000 Primary activity was not funded by contributions designated for the 2000 General, including any
excessive contributions identified by the Audit staff.

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TABLE OF CONTENTS

GERALD C. “JERRY” WELLER FOR CONGRESS

Page

Executive Summary 1
Final Audit Report 3
Background 3
Findings 5
Transmittal to Committee 15

Chronology 17


REPORT OF THE AUDIT DIVISION
ON THE

Gerald C. “Jerry” Weller for Congress
Committee

Approved August 15, 2002

FEDERAL ELECTION COMMISSION
999 E STREET, N.W.
WASHINGTON, D.C.



contribution, the contributor provides the treasurer with a written redesignation of the
contribution for another election, which is signed by the contributor.

Section 110.1(1)(5) of Title 11 of the Code of Federal Regulations states,
in part, that if a political committee does not retain the written records concerning
redesignation or reattribution, the redesignation or reattribution shall not be effective, and
the original designation or attribution shall control.

1. Contributions from Individuals

GWFC’s contribution records consisted of a database containing
contributor information and copies of most deposits slips with copies of contribution
checks. A review of contributions from individuals disclosed a problem regarding
GWFEC’s receipt of excessive contributions.

a. Primary Election Contributions

GWFC received contributions from individuals, totaling $86,052,
in excess of the contribution limitation for the primary election. These contributions were
received prior to the primary election and GWFC designated them to both the primary
and general elections without proper written authorization from the contributors.

b. General Election Contributions

GWFC received contributions from individuals, totaling $9,085, in
excess of the contribution limitation for the general election. The excessive contributions
resulted from a lack of control procedures that should have triggered the required actions
from GWFC staff to seek either a reattribution to another individual or redesignation of
the excessive portions. In addition, one item in the amount of $2,500 was written to
another committee but had been deposited into a GWFC account. Because the check was
not meant for GWFC, the entire amount should be refunded.

2. Contributions from Political Action Committees

The Audit staff's review of contributions from political action
committees (PACs) revealed that GWFC had accepted a total of $6,700 in contributions
in excess of the limitation from five PACs that were designated to, but dated after the
primary election. GWFC reported no primary debt.

GWEC did not maintain a separate account to deposit questionable
contributions but did consistently maintain sufficient balances to cover the amounts
deposited in excess of the limitations until June 1, 2001 78

On its latest disclosure report covering the period through June 30, 2002. reported ending cash on
hand totaling $8,185. See also, footnote 4.

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In response to the IAR, GWFC did file reports materially correcting the
problems noted above.

D. TIMELY DEPOSIT OF CONTRIBUTIONS

Section 102.8(a) of Title 11 of the Code of Federal Regulations states, in
part, that every person who receives a contribution for an authorized political committee
shall, no later than 10 days after receipt, forward such contribution to the treasurer.

Section 103.3(a) of Title 11 of the Code of Federal Regulations states, in
part, that all deposits shall be made within 10 days of the treasurer's receipt.

During our sample review of contributions from individuals, the Audit
staff noted that 16% of the contributions tested were not deposited in a timely manner.
The Audit staff compared the date on the check to the date of deposit as recorded on
GWFC’s database. The number of days between check date and deposit date ranged from
26 to 145 days. Similar problems were noted during our reviews of contributions from
other political committees and the review of all contributors who gave in excess of
$1,000.

This matter was discussed with GWFC’s legal counsel and committee
officials before and at the exit conference. GWFC’s legal counsel stated that he was
aware of this problem. He also stated that after the General election, GWFC returned
many contributions from political action committees due to the length of time that they
had been held without deposit. GWFC’s legal counsel also stressed that this problem had
been remedied with new accounting procedures put into place in 2001.

It was noted in the LAR that because GWFC had stated that it had
established procedures to correct this problem, the Audit staff recommended that no
further action be taken.

In its written statement, GWFC stated that it agreed with the Audit staff's
recommendation.

Page 13 of 17
Approved 08/15/2002