Part I
Background

Authority for Audit

This report is based on an audit of Joe Lieberman for President 2004, Inc. (JLFP),
undertaken by the Audit Division of the Federal Election Commission (the Commission)
as mandated by Section 9038(a) of Title 26 of the United States Code. That section states
“After each matching payment period, the Commission shall conduct a thorough
examination and audit of the qualified campaign expenses of every candidate and his
authorized committees who received [matching] payments under section 9037.” Also,
Section 9039(b) of the United States Code and Section 9038.1(a)(2) of the Commission’s
Regulations state that the Commission may conduct other examinations and audits from

time to time as it deems necessary.

Scope of Audit

This audit examined:

The receipt of excessive contributions and loans.

The receipt of contributions from prohibited sources.

The disclosure of contributions and other receipts.

The disclosure of disbursements, debts and obligations.
The recordkeeping process and completeness of records.
The consistency between reported figures and bank records.
The accuracy of the Statement of Net Outstanding Campaign Obligations.
The campaign’s compliance with spending limitations.
Other campaign operations necessary to the review.

CEI AWARWN

Inventory of Campaign Records
The Audit staff routinely conducts an inventory of campaign records before it begins the
audit fieldwork. JLFP’s records were materially complete and the fieldwork began

immediately.



Facts and Analysis

The Candidate’s date of ineligibility (DOI) was February 3, 2004. The Audit staff
reviewed JLFP’s financial activity through December 31, 2005, analyzed estimated
winding down costs, and prepared the Statement of Net Outstanding Campaign
Obligations that appears below.

JOE LIEBERMAN FOR PRESIDENT, INC.

Statement of Net Outstanding Campaign Obligations
As of February 3, 2004 (Prepared through December 31, 2005)

Assets
Cash on Hand $757,920
Account Receivables:

Matching Funds (a) 206,251

Press Receivables 63,976

Other Receivables 228.863
Total Account Receivables 499,090
Capital Assets 43,913
Total Assets 1,300,923

Obligations

Account Payables for Qualified Campaign 849,306
Expenses at 02/03/04

Actual Winding Down Costs: 02/04/04 - 12/31/05 732,714

Estimated Winding Down Costs: 01/01/06 - 3/31/06 (b) 21,250

Total Wind down Cost through 3/31/06 753,964

Total Obligations 1,603,270

Net Outstanding Campaign Obligations $302,347)

(a) That portion of matching funds certified on 1/30/04 but not paid until 3/5/04 due to the temporary shortfall in
Presidential Primary Matching Payment Account.

(b) Estimated winding down costs includes record storage. Further, the Audit staff will continue to review JLFP’s
disclosure reports to compare actual figures with the estimated figures.


Overview of Financial Activity

(Audited Amounts)

Cash on hand @ January 13, 2003 $0
o Contributions from Individuals $ 14,101,150°
© Matching Funds Received 4,257,831°
o Contributions From Other Political

Committees 256,616
o Offsets to Operating Expenditures 286,150
Total Receipts $ 18,901,747
o Operating Expenditures $18,578,033
o Contribution Refunds 89,946
o Other Disbursements 11,140
Total Disbursements $ 18,679,119
Cash on hand @ May 31, 2004 $ 222,628

* Approximately 43,200 contributions from more than 33,000 individuals.
5 JLFP made 6 matching fund submissions totaling $4,278,406 and received $4,267,797, which represents 23% of

the maximum entitlement ($18,655,000).


Part II
Overview of Campaign

Campaign Organization

Important Dates Joe Lieberman for President, Inc.
¢ Date of Registration January 13, 2003
e Eligibility Period ” November 12, 2003 — February 3, 2004
e Audit Coverage January 13, 2003 — May 31, 2004°
Headquarters Washington, D.C.
Bank Information
e Bank Depositories Two
e Bank Accounts Four
Treasurer
e Treasurer When Audit Was Conducted Francisco Borges
e Treasurer During Period Covered by
Audit Francisco Borges

Management Information

e Attended FEC Campaign Finance Seminar | No

¢ Used Commonly Available Campaign

Management Software Package Yes
¢ Who Handled Accounting and
Recordkeeping Tasks Paid Staff

? The period during which the candidate was eligible for matching funds, beginning on the date of certification of
eligibility and ending on the date the candidate announced his withdrawal from the campaign. See 11 CFR
§9033.

3 Limited review of receipts and expenditures was performed after May 31, 2004 to determine whether the
candidate was eligible to receive additional matching funds.


Part IV
Findings and Recommendations

| Finding 1. Net Outstanding Campaign Obligations

Summary

The Audit staff's review of JLFP’s financial activity through December 31, 2005, and
estimated winding down costs necessary to terminate the campaign indicated that JLFP
did not receive matching fund payments in excess of the Candidate’s entitlement. In
response to the preliminary audit report, JLFP concurred with the Audit staff’s
conclusion and also provided documentation that certain components included in the
NOCO required adjustments. The Audit staff reviewed the documentation and has made

the necessary adjustments.

Legal Standard
Net Outstanding Campaign Obligations (NOCO). Within 15 days after the
candidate’s date of ineligibility (see definition below), the candidate must submit a
statement of “net outstanding campaign obligations”. This statement must contain,
among other things:
e The total of all committee assets including cash on hand, amounts owed to the
committee and capital assets listed at their fair market value;
¢ The total of all outstanding obligations for qualified campaign expenses; and
e Anestimate of necessary winding-down costs. 11 CFR §9034.5(a).

Date of Ineligibility. The date of ineligibility is whichever of the following dates occurs
first:
e The day on which the candidate ceases to be active in more than one state;
¢ The 30th day following the second consecutive primary in which the candidate
receives less than 10 percent of the popular vote;
¢ The end of the matching payment period, which is generally the day when the
party nominates its candidate for the general election; or
e In the case of a candidate whose party does not make its selection at a national
convention, the last day of the last national convention held by a major party in
the calendar year. 11 CFR §§9032.6 and 9033.5.

Entitlement to Matching Payments after Date of Ineligibility. If, on the date of
ineligibility, a candidate has net outstanding campaign obligations as defined under 11
CFR §9034.5, that candidate may continue to receive matching payments provided that
he or she still has net outstanding campaign debts on the day when the matching
payments are made. 11 CFR §9034.1(b).


FEDERAL ELECTION COMMISSION
WASHINGTON, D.C. 20463

April 19, 2006

MEMORANDUM

TO: ROBERT W. BIERSACK
PRESS OFFICER
PRESS OFFICE

FROM: JOSEPH F. STOLTZ

ASSISTANT STAFF ECTOR
AUDIT DIVISION /

SUBJECT: | PUBLIC ISSUANCE OF THE REPORT OF THE AUDIT DIVISION ON
JOE LIEBERMAN FOR PRESIDENT, INC.

Attached please find a copy of the final audit report and related documents on Joe
Lieberman for President, Inc. that was approved by the Commission on April 10, 2006.

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

Attachment as stated

ce: Office of General Counsel
Office of Public Disclosure
Reports Analysis Division
FEC Library
Web Manager


contributors. The contribution was then split between contributors according to the
reattribution documentation and submitted for matching. However, JLFP never amended
its reports to reflect this action. Instead, the Schedules A only reflected the original
contributor and contribution amount. As disclosed, certain contributions incorrectly

appeared to be excessive.

Subsequent to the exit conference, JLFP filed amended reports that materially corrected
the itemization errors discussed above.


Shown below are adjustments for funds received after February 3, 2004, based on the
most current financial information available:

Net Outstanding Campaign Obligations (Deficit) as of 2/3/2004 ($302,347)

Private Contributions Received 2/4/04 through 5/27/04 22,577
Matching Funds Certified and Received 2/7/04 through 8/2/04 273,766
Remaining Entitlement as of August 3, 2004 ($6,004)

As presented above, JLFP has not received matching fund payments in excess of the
amount to which the Candidate was entitled.

Committee Response to Preliminary Audit Report

In response to the preliminary audit report, JLFP’s representatives provided
documentation that certain components included in the NOCO required adjustments. The
Audit staff reviewed the documentation and has made the necessary adjustments®. As
noted above, JLFP did not receive matching funds in excess of its entitlement.

| Finding 2. Itemization of Contributions

Summary
The Audit staff’s sample review of contributions from individuals projected that JLFP

failed to itemize contributions totaling $474,388. These errors related to contributions
that were properly reattributed to another contributor but not disclosed as such.
Subsequent to the exit conference, JLFP filed amended reports that materially corrected

the itemization errors.

Legal Standard
Itemization Required for Contributions from Individuals. An authorized candidate

committee must itemize any contribution from an individual if it exceeds $200 per
election cycle, either by itself or when combined with other contributions from the same

contributor. 2 U.S.C. §434(b)(3)(A).

Handling Reattributed Contributions. If an itemized contribution is made by more
than one person in a single written instrument, the treasurer shall report the amount to be
attributed to each contributor. If the itemized contribution is reattributed by the
contributor(s) in accordance with 11 C.F.R. 110.1(k), the treasurer shall report the
reattribution on Schedule A of the report covering the reporting period in which the
reattribution is received. 11 C.F.R. §104.8(d)(1) and (3)

Facts and Analysis
Our sample review of contributions from individuals identified a material number of

itemization errors. The sample results projected that $474,388 in contributions were not
itemized. These errors occurred when JLFP received reattribution documentation from

© NOCO accounts receivable and capital assets were adjusted. JLFP demonstrated that an account
receivable was not collectible and that the value of its phone system required a downward adjustment.



Part III
Summaries

Findings and Recommendations

Finding 1. Net Outstanding Campaign Obligations

The Audit staff's review of JLFP’s financial activity through December 31, 2005, and
estimated winding down costs necessary to terminate the campaign indicated that JLFP
did not receive matching fund payments in excess of the Candidate’s entitlement. In
response to the preliminary audit report, JLFP concurred with the Audit staff’s
conclusion and also provided documentation that certain components included in the
NOCO required adjustments. The Audit staff reviewed the documentation and has made
the necessary adjustments. (For more detail, see p. 5)

Finding 2. Itemization of Contributions

The Audit staff’s sample review of contributions from individuals projected that JLFP
failed to itemize contributions totaling $474,388. These errors related to contributions
that were properly reattributed to another contributor but not disclosed as such.
Subsequent to the exit conference, JLFP filed amended reports that materially corrected
the itemization errors. (For more detail, see p. 7)

Summary of Amounts Owed to the U.S.
Treasury

No amounts are owed to the United States Treasury.


Table of Contents

Part I. Background
Authority for Audit
Scope of Audit
Inventory of Campaign Records

Part II. Overview of Campaign
Campaign Organization
Overview of Financial Activity

Part III. Summaries
Findings and Recommendations
Amounts Owed to the United States Treasury

Part IV. Findings and Recommendations
Finding 1. Net Outstanding Campaign Obligations
Finding 2. Itemization of Contributions

Page

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Report of the
Audit Division on
Joe Lieberman for President, Inc.

January 13, 2003 - May 31, 2004



Report of the Audit Division on

Joe Lieberman for President, Inc.
January 13, 2003 - May 31, 2004

Why the Audit About the Committee (p. 2)

Was Done Joe Lieberman for President, Inc. is the principal campaign
committee for Senator Joseph Lieberman, a candidate for the
Democratic Party’s nomination for the office of President of
the United States. The Committee is headquartered in
Washington, DC. For more information, see chart on the
Campaign Organization, p. 2.

Federal law requires the
Commission to audit
every political
committee established
by a candidate who
Teceives public funds for

the primary campaign.! Financial Activity (p. 3)

The audit determines ¢ Receipts

whether the candidate o Contributions from Individuals $ 14,101,150
was entitled to all of the o Matching Funds Received 4,257,831
matching funds o Contributions from Other Political 256,616
received, whether the Committees

campaign used the o Offsets to Operating Expenditures 286,150
matching funds in o Total Receipts $18,901,747
accordance with the law,

whether the candidate is ¢ Disbursements

entitled to additional o Operating Expenditures $18,578,033
matching funds, and o Contribution Refunds 89,946
whether the campaign o Other Disbursements 11,140
otherwise complied with o Total Disbursements $18,679,119
the limitations,

prohibitions, and Findings and Recommendations (p. 4)
disclosure requirements ¢ Net Outstanding Campaign Obligations (Finding 1)

of the election law. ¢ Itemization of Contributions (Finding 2)
Future Action

The Commission may

initiate an enforcement

action, at a later time,

with respect to any of

the matters discussed in

this report.

' 26 U.S.C. §9038(a).