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CONGRESSIONAL AUOI, REPORT

Candidate:'':Jrrmittee: Rudasill, Elbert - 3/29/79

State:

District:

Location:

North Carolina

02

Rocky Nount

L. H. Fountain

Political ?ar~y Affilia~icn:

Major O~ocn;n!(s):

Other C~r.cica:as ~uci:ec:

Democrat

L. H. Fountain - 5/11/78

J. Russell Kirby

Heur'y Thor'pe - 5/1/78

'Iotas Cast: Gcnerai ~~ection - N/A

PrirnaY"J El ec:; on

Total Rec:i~ts for ?ericd:

Totai Ex~end~:~res for ?ericd:

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L. H. Fountain 38,274 - 51.6

J. Russell Kirby 24,639 33.2-:

Elbert Rudasill 4,381 5.9:

Henry B. Thorpe,Jr. 6,865 9.3"

$8,002.50

$7,952.80

First Elec:ad (if appi~c~bl~):
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THROUGH:

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SUBJECT:

FELJERAI ELECTION COMMISSION

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~iarch 22, 1979

FRED EILAND

PRESS OFFICE

BOB COSTA ~'-::" JUDY HAWKINSI~NWPUBLIC ISSU1\NCE OF FINAL AUDIT REPORT - RUDASILL FOR CONGRESS CO~~ITTEE (NC/2)

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Attached please find a copy of the final audit report

for the Rudasill for Congress Committee (NC/2) which was

approved by the Commission on January 26, 1979.

As of this date, March 22, 1979, two copies of the

report have been transmitted (1 certified return receipt

requested, and 1 first class mail); however, neither the

return receipt or the first class have been returned. Since

copies of the report weremai1edonJanuary29.1979.itis

my opinion that effective receipt has occurred and therefore

the audit report may be released publicly.

Attachment as stated

cc: FEC Library

Reports Analysis Division

Public Record V--'

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FEIJlRAL ELECTION COMMISSION

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REPORT OF THE AUDIT DIVISION

ON

RUDASILL FOR CONGRESS COMMITTEE

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I. Background

A. Overview

This report is based on an audit of the Rudasill

for Congress Committee (tithe Committee") undertaken by the

Audit Division of the Federal Election Commission in

accordance with the Commission's audit policy to determine wh~ther there has been compliance with the provisions of

the -·-Federal Election Campa-ign Act of- ·1971,-as --amended -(lithe

Act"). The audit was conducted pursuant to Section 438(a) (8)

of Title 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 Election

Commission on March 6, 1976, in support of Elbert G. Rudasill,

Candidate for election to the Office of United States Representative from the Second Congressional District of North Carolina.

The Committee maintained its headquarters in Henderson, North

Carolina.

The audit covered the period from f1arch 10, 1976

through December 31, 1977. During this period the Committee

reported a beginning cash balance of $-0-, total receipts of

$8,002.50, total expenditures of $7,952.80 and a closing cash

balance of $49.70. !/

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 Commissioners

and appropriate staff for review.

!/ The reported totals are for the period March 10, 1976

through September 6, 1976 and have been adjusted for

'. mathematical errors by the Audit staff. However, we

~!O·~~.~cre unable to vcrif¥ these totals. See Finding 0(1; _. :.for further cxplanat~on.

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B. Key Personnel

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The principal officers of the Committee during the

period covered by the audit were Charles Jeffress, Chairman,

Elizabeth Blackwell, Treasurer from March 1, 1976 to July 5,

1976; Barbara C. Harris, Treasurer from July 6, 1976 to August

31, 1976; and Elbert G. Rudasill, Treasurer, from September 1,

1976 Lo present. ~/

c. Scope

Except as set forth in Findings A, a, and C, 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 .obligatJQJ1?i ~t:!g. such other audi t procedures as

deemed necessary under the circumstances•

II. Auditor's Statement and Description of Findings

Bused on the examination of disclosure reports and records

presented, it is the opinion of the Audit staff that the Rudasill

for Congress Committee has not conducted its activities in

COffil)liance with the Federal Election Campaign Act of 1971, as

amended, 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 contained

in the Committee's disclosure reports for the audit period.

~. Rccordkeeping for Receipts

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

Code, states that the treasurer of a political committee shall

keep a detailed and exact account of all contributions made to

or for such committee, to include identification of every person

making a contribution in eXCCSR of $50 with the date and amount

thereof and, if a person's contributions aggregate more than

$100, the account shall include occupation, and the principal

plac~ of business (if any).

~/ See Finding D(2) for further explanation •
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Section l04.l2(b) of Title 11, Code of Federal

Regulations, requires in part, that each political committee

and candidate required to file reports under the Act shall:

1) maintain records with respect to the matters reported,

including vouchers, worksheets, receipts, bills and accounts,

which shall provide in sufficient detail the necessary information and data from which the filed reports may be

verified, ilnd 2) keep those records available for audit or

inspection by the Commission or its authorized representative

for a period not less than three (3) years.

During our audit we examined the Committee's receipt

records which consisted of a looseleaf notebook containing

the contributors' names and addresses, dates and amounts of

contribution(s), covering the period from March through September

1976. We were unable to compare the bank records for the audit

period to the Committee's other contributor records since only

part of the bank records were available. A comparison was made

bet\veen available receipt records and receipts contained in the

·Committee·I·s report·s. Our test rC.vc.aled t.h..a.t....the Committee did

not have records to support a total of $1,645.<),6·"in reported

receipts. We discussed this with the Candidate, and he stated

that this amount probably represented contributions from himself

to the campaign. However, since both the bank and contributor

records were incomplete, we were unable to verify this.

On February 23, 1978, We' requested the Candidate to

provide copies of the missing bank records for our examination.

On r-larch 10, 1978, the Candidate ll1-ovided one (1) statement and

the accompanying checks. At that time he agreed to obtain the

additional bank records from the Conmlittee I s deposi tories and

provide them for our examination. Ilowcver, as of this date, the

Candidate has not provided any additional records. Despite efforts,

the staff has been unable to make any contact with the Candidate

since March 10, 1978.

B. Recordkeeping for Expenditures

Section 432(c) (3)and (4) and Cd) of Title 2, United

States Code, states that a treasurer of a political committee

shall keep a detailed and exact account of all expenditures made

by or on behalf of such committee, to include identification of

every person to whom any expenditure is made, the date and amount

thereof. Further, the treasurer shall obtain and keep a receipted

bill, stating the particulars for every expenditure made in excess

of, or in the aggregate in excess of $100 in a calendar year.

Section 10~.9(c) (4) of Title 11, Code of Federal Regulations states

that when a receipted bill is not available, the treasurer may keep

the cancelled check(s) showing payment of the bill: and the bill,

invoice or other contemporaneous memorandum of the transaction .
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Section l04.l2(b) of Title 11, Code of Federal

Regulations requires in part, that each political conunittee

required to file reports under the Act shall: 1) maintain

records with respect to the matters reported, including

vouchers, wfJrksheets, receipts, bills and accounts, which

shall providp in sufficient detail the necessary information

and data fr(JlT\ which the filed reports may be verified, and 2)

keep those rl '~ords available for audit or inspection by the

Commission or- its authorized representatives for a period not

less than thr'l'e (3) years•

During our audit we examined the Committee's

expenditure records which consisted of check stubs, cancelled

checks, 3/ paid bills, receipts and other memoranda. We

compared-the check stubs from one of the Committee's bank

accounts and other available supporting documentation to the

expenditures itemized on the Committee's reports. Our test

revealed that the Committee was unable to provide cancelled

checks for- 30 of the -4-1 itemized· -expenditures. totaling. $4 ,3~4. 47

(74.6'':' of itcmi~ed expenditures) and was unable to provide any

other supportinq documentation for five (5) of the 30 expenditures

totaling $2,066.29 (35.7~ of itemized expenditures). However,

due to the incompleteness of the records we were unable to

perform any other tests to verify that the Committee had

reported all of their activity or that the reported activitiy

was properly disclosed.

On february 23, 1978, we requested the Candidate to

provide copies of the missing bank records and other supporting

documentation for our examination. On Harch 10, 1978, the

Candidat0 provided one (1) bank statement and the accompanying

checks (included in totals above) and documentation for nine (9)

expenditures (included in totals above). At that time he agreed

to obtain the additional bank records from the Committee's banks

and provide them for our examination. lie also agreed to attempt

to obtain the missing documentation and sub~it them to us for

examination. However, as of this date, the Candidate has not

provided any additional records and despite efforts, the staff

has bee:! unable to make any contact wilh the Candidate since

r-larch 10, lC)78.

\~e notvl1 that none of the records (inclUding bank statements, c~nccllec1 checks, deposit ticke:.s, debit and

Cl-0\,.li l I:l\o\;:o,or3n<.1~, and check stubs) for 3. second bank

accounl \'w'l'\rc available and that the banr~ records

(i:1cl ud il'HJ bunk statements, cancelled checks, deposi t

ticr:c t-~;, ;lull dcbi t and crcdit memoranda) from the first

bank a('('()~lnt \vcrc' mutpri:llly incompll"ltc.
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Reporting of Receipts and Expenditures

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

Code requires each treasurer of a political committee supporting

a candidate for election to Federal office to file with the

Commission reports containing specific information on their

receipts, pxpcnditures and beginning cc3sh for a reporting period.

During our examination we revi.ewed records and

documents apparently indicating that tht' Can"didate had made

contribution~i to the Conunittce and made campaign related

expenditur(}~i that had been reported by the Committee. We

reviewed receipted bills, invoices and other memoranda totaling

$2,112.53. The Committee reported $1,578.44 of this amount

as a debt and obligation, hO\oJever, we were unable to verify

if any of the $2,112.53 was ever reported as a receipt or

expenditure by the Committee.

We als'o not-cd a loan dated 'August 10" 1976 from the

Candidate totaling $2,053.37 itemized on the Committee's 30 day

post-primary report. The Candidate explained to us that this

loan represented the amount of cash expenditures made by him

during the reporting period for \.;hich he had hoped to be

reimbursed. lIe indicated that these expenditures were included

on the Committee's report for that period. The Candidate

submitted copies of reciepted bills and invoices for seven (7)

of the nine (9) itemized expenditures totaling $1,181.92, which

were apparently made by him. The Committee/Candidate was unable

to provide dny supporting documentation or evidence of payment

for two (2) of the itemized expenditures totaling $356.00, nor

for $515.45 of the reported unitemizcd expenditures apparently

made by the Candidate.

Uuring discussions with the Candidate regarding

Committee reimbursement of his expenditures, the Candidate

indicated that he and the Treasurer would agree on an

amount "he felt like" rather than the full amount, however,

he stated that he felt that "all amounts personally expended

by him were included on the reports somc\V'hcrc".

However, due to the incompleteness of the records

we were unable to verify that the Cooonittee had reported all

of the C~ndidate's campaign related financial activity or

that the reported activity was prop0rly disclosed •
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Summary

Due to the lack of response to our requests for records noted

above, the matters contained in Findings A, Band C were referred

to the Commission's Office of General Counsel on May 19, 1978 for

their review. On May 23, 1978, Matter Under Review 613-78 was

initiated.

During the period May 23, 1978 through January 18, 1979, the

Office of General Counsel made numerous attempts to contact the

Candida~c to afford him an opportunity to submit the documentation

requested by the Audit staff. No contact was made with the

Candidate and on January 18, 1979, the Commission, by a vote of

5-0, found probable cause to believe that the Rudasill for Congress

Committee violated:

1) 2 U.S.C. 432(c) (1) (2) by failing to maintain records

in sUPFort of $1,645.06 in reported receipts;

2) 2 U.S.C. 432(c) (3) by failing to maintain detailed and

accurate accounts with regard to thirty (30) itemized expenditures;

3) 2 U.S.C. 432(d) by failing to retain adequate supporting

documentation for thirty (30) itemized expenditures; and

4) 2 U.S.C. 437b(a) (1) and (b) relating to eight (8) cash

expenditures in excess of $100.00.

Furt~ermorc, the Commission authorized the General Counsel

to institute civil suit with respect to the items noted above on

Januar~ 18, 1979.

D. Other Matters

Included below are other matters noted during the course

of the audit for which no Commission action is recommended.

1. Durinq a review of Committee reports filed

with the Commis~ion ~e noted that the Committee did not file

any disclosure reports subsequent to September 6, 1976.

Discussions with the Candidate confirmed that no further

reports had been filed, but no explanation was offered for

this o~ission. At our recommendation on March 14, 1978, the

Committee filed reports covering the period September 7, 1976

throug:1 ::>ecembcr 31, 1977. if

7hc reports indicated receipts of $-0- and expenditures of

S 19.t durinq this perioll. Ho\vever, the staff \vas unable to \.~ ~. i :-,~. these ~~oants.
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2. We also noted that the Candidute had not filed

a Statement of Candidacy designating the Committee to serve

as his principal c.:lrnpaign committee, and that the Committee

did not file an amended Statement of Organization when the

treasurer changed in September 1976. The Candidate was

unable to offer an explanation for this omission, but agreed

to file the~ll~ statements. On March 14, 1978, the Commiss ion

r<.~ceived a ~;taternent of Candidacy and an amended Statement

o fOr <j Ll n i z a t· ion.

3. Our examination of the Committee's soliciation

literature, consistin<J of a mass mailing brochure revealed that

it diJ not contain the required notific.:ltion as per Section 435(b)

of 'l'itle 2 of the United States Code. The Committee was advised

of the rcquirC'c1 notification for all solicitation literature in

accordance with this section of the Act .
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FEDERAL ELECTION COM,\,ISSION

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'-VA~HI'G TO".() C. .!04o \

ADDITIONAL INFURMATION REGARDING THIS ORGANIZATION

MAY BE I.OCATED m A OOMPLETED CDMPLIANCE ACrION

FILE RELEASED BY THE <nMISSION-AND-MADE PUBLIC IN

'!HE PUBLIC REOORDS OFFICE. FUR 'lHIS PARTICULAR

ORGANIZATION'S COMPIEl'ED OOMPLIANCE ACI'ION FILE

SlMPLY J.SK FUR '!HE PRESS St»fARY OF MlJR /1 6/..1

'!HE PRESS stM1~RY WIIL PROVIDE A BRIEF HIS'IORY OF

'!HE CASE AND A St»fARY OF THE ACI'IONS TAKEN, IF ANY•

Audit :1ft I~r