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• FEDER~-\L ELECTION COf\1,\\ISSIO~ ..

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\\ "'HI'<'I()'- I )I ~l qtd

February 14, 1979

MEMORANDUf4

TO:

THROUGH:

FROM:

SUBJECT:

FRED S. EILAND

PRESS OFFICE

BOB COSTA ~~

JUDY HAWKINS

PUBLIC ISSU~~CE OF AUDIT REPORT - HOLLAND IN CONGRESS COMMITTEE (SCjS)

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Attached please a copy of the final audit report for

the Holland In Congress Committee (Se/S) which was approved

by the Commission on January 25, 1979 •

As of this date, February 14, 1979, all informational

copies of the report have been received by all parties involved

and this report may be released to the public. With the release

of this report, the 5th District of South Carolina is complete.

cc: FEC Library

RAD

~ublic Records

Attachment as stated
• FEDERAL ELECTION COMMISSION

1\.!!") '" '11U II ""' \\' \"HI'C1O~ .{) ( .!04b \

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REPORT OF THF AUDIT DIVISION

Ott THE

HOLLAtlD IN CONGRESS COr~1IT'!'EE

I. Backqround

A. Overview

~his re~ort is based on an audit of the Polland In

Congress Committee (lithe CoITimittee"), undertaken by the J1udit

Division of the Federal Election Commission in accordance with

the Commission's audit policy to deterMine whether there has

ceen·cornoli:cm-ce- -'\ftth· -th-e··p-rov-i-s-i-e-n·s- -9·~ --the- -F.ed-er.al- F_l.e.c.tion

Campaign"'Act of 1971, as amencen ("the ~ct"). ~he audit was

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

United States Code which directs the Co~ission to make froM

time to time audits and field investigations with respect to

reports and stateMents filed under the provisions o~ the ~ct.

The Committee reqistered wi~~ the Office o~ the Clerk

of the Cnited States House·of ~epresentatives on Fehruary 4, 1~74

in support of Kenneth L. ~ollana for the office o~ Pepresentative

of the 5th Conqressiona1 District of ~O\lth Carolina. On June 1, 19?~, the Committee was desiqnated by the Candidate as his

principal c~paiqn committee for the 1976 election. ~he ~~Mrnittee

maintains its headquarters in Camden, South rarolina.

~he audit covered the period from January 1, 19'75,

the effective date of the Act as amended, throu~h June 3~, 1977,

the final coverage date of the latest report ~i1ed by the ~omrnittee. l/

Durina this neriod the Committee reoorted a beqinninq cash ~alance

of S2~527.32~ total receipts of sl~i,8~e.77, total expenditures of

$162,054.56 and a closing cash balance of ~2,28l.52.

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1/ ~he report filed for the second quarter of 1977 indicates

a closing date of July 1, 1977 •
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This audit report is based on documents and working

papers which support each of the factual statements. They form

part ot 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.

B. Key Personnel

The principal officers of the Committee were ~argaret

B. Bethea, Chai~an, and James D. Green, Treasurer.

c. Scope

The audit included such tests as verification of reported receipts and expenditures and individual transactions: rev~ew of required supporting documentation; analysis of Committee

debts and obligations; and, such other audit procedures as deemed

necessary under the circumstances.

IZ.- -Audito-r-_'__s ~_tatement and Description of Findings

It is the opinion of the Audit staff, based upon examination

of the reports and statements filed and the records presented, that, except for the deficiencies noted below, the reports and

statements of the Holland In Congress Committee fairly present ~he

financial activities of the Committee for the period covered by

the audit. Further, except as noted below, no material problems

in complying with the Federal Election Campaign Act were discovered

during the course of the audit.

A. Matters Referred to Office of General Counsel

1. Corporate Contributions

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

that it is unlawful for any political committee knowingly to

accept or receive any contribution from any corporation.

Section 103.3(b) of Title 11, Code of Federal Regulations requires that contributons which appear to be illegal shall be,

within 10 days (1) returned to the contributor: or (2) deposited into the campaign depository, and reported in which case the

treasurer shall make and retain a written record noting the basis
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for the appearance of illegality. The treasurer shall make his or

her best efforts to determine the leqality of the contribution.

Refunds shall be made ~hen a contribution cannot be determined

to be legal within a reasonable time, and the treasurer shall so

note by amending the current report or noting the change on the

candidate's or committee's next required report.

Our examination of the Committee's contribution records

revealed that the Committee received 18 contributions from 16

possible incorporated entities totaling $1,395. Four (4) o€ the

contributions totaling S950 were in excess of SlOO.

This matter was referred to the Office of ~eneral Counsel

on January 25, 1978 where Matter ~nder Review 525-78 was initiated.

Nine (9) contributions from eight (R) incorporated entities were

refunded by the Committee and evidence of the refunds was provided.

The Committee supplied sufficient additional information to

document that the remaining contributions were not drawn from

corporate sources.

-On- Augu-s-t 1-4- i 1-9-1-8-, -t--he- GGmrn-i.-s-s-i.-Q-R- -f-O-u-nd- -r-eas-o-nable

cause to believe that the Committee had violated Section 441b(a)

of Title 2 of the United States Code by accepting contributions

from eight (8) incorporated entities.

2. Fundraising A~tivities

Section 434(b) (3), (6), (9) and (11) of mitle 2 of the

United States Code requires a committee to report: the total sum

of individual contributions made to such committee durina the

reporting period; the total amount of proceeds from the sale of

tickets to and mass collections at each dinner, luncheon, rally

and other fundraising events: the identification of each person

to whom expenditures have been mane by such committee within the

calendar year in an aggregate amount in excess of ~lOO, including

the amount, date and purpose of each such expenditure: and, the

total sum of expenditures made by such conunittee during the

calendar year.

Section 437b(a) (2) of '!'itle 2 of the United ~tates

Code requires a committee to deposit all contributions received

by the cOMmittee in its designated campaign depository and that

no expenditure in excess of ~lOO to any person in connection with

a single purchase or transaction rna! be made by such committee

except by check drawn on its designated campai9n depository •
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Our examination of the Committee's records of fundraising

events revealed that:

a. The Committee did not d~posit $2,728.01 received

from four (4) fundraisers out of $36,971.79 received from all

fundraisinq events during the period of the audit. Sl,836.0l of

this amount was used to pay expenses at these events including

four (4) contributor checks totalina S475 which were cashed.

$892 was used to pay the Candidate's filing fee.

b. ~he Committee did not report Sl,499.6l of the

amount not deposited.

c. $2,115.37 (including $923.17 not reported) of

the funds not deposited by the Committee was used to make five

(5) cash expenditures each in excess of SlOO and each involvina

a single purchase or transaction.

We recommended to the Committee that they file a

comprehensive amendment to disclose the ~l,499.6l in unreported

receipts and expenditures. On ,January 16, 1978, the Commission

receivecl l:ne- Commi-t:t-e-e-'-s--- ame-n-d-e-d---y-ep-o-rts-; ~h-e- --eemmi-~tee-- --a-1-s9-

provided a written explanation disciosing the details surroundina

the undeposited contributions and the cash expenditures.

This matter was referred to the Office of ~eneral Counsel

on January 25, 1978 where Matter l:nder PeVieltl 525-78 was initiated.

On August 14, 1978, the Commission found reasonable cause to believe

that the Committee violated Section 437b(a) (1) of Title 2 of the

United ~tates Code for failure to deposit all contributions into a

designated campaign depository and for failure to make all committee

expenditures by means of checks drawn on a campaign depository.

3. Timely Depositinq of Contributions

Section 103.3(a) of Title 11, Code of Federal Regulations

requires that all contributions received by a committee shall be

deposited in a checking account in the appropriate campaign depository, by the treasurer of the committee or his or her aqent

within 10 days of the treasurer's receipt thereof.

Our examination of the Committee's contribution records

revealed that a total of S19,383.7l (11.82% of total contrihutions)

was not deposited within the 10 days as required •
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Our review consisted of exa~ination of the dates on copies

of contributor checks and deposit tickets attached th~reto. Althouqh

we allowed extra time for the late receipt of these contributions

due to ~ail and/or other possible delays, we still found that these

deposits were untimely.

During our examination we noted in particular two (2)

transactions in which the contributions were not deposited for

between three and one-half (3~) to seven (7) ~onths.

a. On June 28, 1975, the Committee received an ~ROO

contribution, of which S300 was not deposited until January 2R,

1976. ~e were unable to determine if this contribution was

received in the form of a check, money order or cash.

b. On October 14, 1975, the'Committee received S3,525

from a fundraiser of which Sl,650 in checks was deposited on

November 6, 1975; ~300 in cash was deposited on January 28, 1976; _~~a~ _in __~~~_h was deposited on April 13, 1976 and ~~92 was never

deposited (see FlIiaing -~. Part -Za, for fur-th-e-r- -exp-l-an-ati-o-n-)-.-

On January 25, 1978, this matter was referred to the

Office of General Counsel where ~atter Under Review 525-78 was

initiated. On August 24, 1978, the Commission found reasonable

cause to believe that the Committee violated Section 437b(a) (1)

of Title 2 of the United States Code for failure to deposit the

contributions within a reasonable time. -

On September 8, 1978 the Commission closed the file

on these matters after receiving a signed conciliation a~reement

from the Treasurer of the Committee together with the paYMent of

a $200 civil penalty.

B. Receipts and Expenditures Not Report~

~ection 434 (b) (R) of Title 2, r·nited !=;tates Code,

requires a committee to disclose the total sum of all receipts

made by or for such committee during the reporting period.

Section 434(b) (11) of Title 2, rnited States Code, requires

a committee to disclose the total sum of expenditures made by

such committee during the calendar year•
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Our examination of the Committee's records of contributions and expenditures revealed that the Committee understated

their receipts and expenditures by $2,190.49 as a result of not

reporting certain tr~nsactions.

We were able to determine that the understatement

in receipts resulted from unreported contributions totaling $2,830.49 (inc1udinq $1,499.61 from fundraising events), less

the incorrect reporting of bank adjustments and the return of

unpaid contributor checks totaling $640.

The understatement of expenditures resulted from

unreported expenditures totaling $3,198.63 (including Sl,499.61

from fundraising events), less an overstatement of eXDenditures

totaling $1,008.14, which the Committee reported in an attempt

to correct its receipts and expenditures to agree with the

correct ending cash balance.

We recommended to the Committee that they file

comprenensive- -amendmene-s f-o-r- -t-h-e- aud-it -per-i-ed-i;;e- --i-ns-l-ucl-e the

required information. On January 16, 1978, the Commission

received the Coromittee's amended reports•

Recommendation

Since the Committee has amended their reports to disclose

this information, no additional action is recommended.

C. Itemization of Individual Contributions

Section 434(b) (2) of Title 2, United States Code,

requires a committee to disclose the full name, mailing address,

and the occupation and the principal place of business, if any,

of each person who has made one or more contributions within

the calendar year in an aggregate amount in excess of ~lOO,

together with the amount and date of such contributions.

Our examination of the Committee's contribution records

revealed that the Committee did not itemize 24 contributions,

(16.7% of itemizable contributions) totaling Sl,630 (4.4~ of the

dollar value of itemizable contributions), of ~lOO or less from

15 contributors whose aggregate contributions exceeded S100.

The Committee was unable to provide a reason for the omission

of these contributions from the reports•
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The examination also revealed that five (5) additional

contributions (3.5% of itemizahle contributions) from five (5)

ccntributors, totalinQ $1,300 (3.5% of the rlollar value of ite~izab1e contributions),'each in excess of S100 were not itemized.

Aqain, t1"'e Committee was unable to provide a reason for the

ommission of these contributions from the report.

We recommended to the Committee that they file

comprehensive amendments for the audit period to include the

required info~ation. On January 16, 1978, the Commission

received the Committee's amended reports.

Recommendation

Since the Committee has amended their reports to disclose

this information, no additional action is recommended.

D. Itemization of Transfers Received

Section 434(b) (4) of ':':'itle 2, rrnited States Code,

requir-e-s a commi-t-t-ee- -1;;9- -G-i-sc-lo-se--the- name_and __addr~ss Qf_ ~ll

political committees from which transfers are received, together with the amounts and dates of the transfers•

Our examination revealed that the Committee did not

itemize :9 transfers (23.5% of all transfers) from 28 political

action committees totaling S3,890 (5.0% of the dollar value of

all transfers). With the exception of two (2) transfers from

two (2) political action committees totaling S400, all transfers

were SlOO or less. The treasurer of the Committee explained that,

due to a misunderstanding of the statutory requirements, the Co~mittee only itemized contributions from political committees

which in the agqregate exceeded S100.

We recommended to the Committee that they file

comprehensive amendments for the audit period to include the

required information. On January 16, 1978, the Commission

received the Committee's amended reports.

Recommendation

Since the Committee has amended their reports to disclose

this information, no additional action is recommended •
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Retention of Supporting nocumentation

for Expenditures

Section 432(d) of Title 2, United States Code,

provides that it shall he the duty of the treasurer to obtain

and keep a receipted bill for every expenditure made by or on

behalf of such committee in excess of SlOO in amount, and for

any such expenditures in a lesser amount, if the aggregate amount

of such expenditures to the same person during a calendar year

exceeds $100.

Section 102.9(c) (4) of ~it1e 11, Code of Federal

Regulations provides that when a receipted bill is not available,

the treasurer may keep the cancelled check and bill, invoice or

other contemporaneous memorandum.

The Committee made at least 163 expenditures for

which it was required to maintain supporting documentation.

That total included 27 expenditures totaling $10,479.63 (16.6%

of total items requiring such documentation and 6.8% of the

total- --do~~-arY_a_l_ue -o-fs_uc_hitemsl__ for _which_the __Committee}:lag.

not kept a receipted bill, invoice or other contemporaneous memoranda as required. However, with the exception of two (2)

expenditures totaling $1,136.52, the Committee records did contain

a cancelled check in support of each of those expenditures.

We recommended to the Committee that they obtain

supporting documentation for the above stated expenditures and

provide copies of them to the Commission.

Committee officials have since obtained the required

documentation in support of 24 of the 27 items noted as inadequately

supported. As a result, three (3) committee expenditures totaling $679.17 remain inadequately supported. However, in the opinion of

the Audit staff, the remaining unsupported expenditures are immaterial

and the Committee has used its best efforts to obtain this information.

Recommendation

We recommend that the Committee be deemed to be in compliance

with the Act and that no additional action be taken on this matter•
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Itemization of Exoenditures A re atinq

in Excess of 100 in a Calendar Year

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Section 434(b) (9) and ~lO) of Title 2, Pnited States

Code, requires that the Committee rlisclose the identification

of each person to whom expenditures in ~n aggregate amount in

excess of $100 have been made during a calendar year, together

with the amount, date, and purpose of each such expenditure.

Our examination of the Committee's expenditure records

revealed that the Committee failed to itemize 15 expenditures

totaling $3,743.55, (9.2% of the total itemizable items and 2.6*

of the total dollar value of such items) made to eleven individuals

that were each in excess of, or aggregated in excess of, S100.

The Committee was unable to provide a reason for the omission

of the expenditures from the report.

We recommended to the Committee that they file

comprehensive amendments for the audit period to include the

required information. On January 16, 1978, the Commission

received the Committee's amended reports.

Recommendation

Since the Committee has amended their reports to disclose

this information, no additional action is recommended •
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FEDERAL ELECTION CO~""1ISSI0N

1t.!!) '" '" JiU t 1 '" \A

\\',,\ "'HI~C 'O\; ,[) l . 204h \

ADDITIONAL INFORMATION REGARDING '!HIS ORGANIZATION

MAY BE lOCATED IN A OOMPLETED OOMPLIANCE ACtION

FILE RELEASED BY 'lBE aMnSSION AND MADE PUBLIC IN

'!HE PUBLIC REOORDS OFFICE. IDR nus PARTICULAR

ORGANIZATION'S COMPLETED OOMPLIANCE ACl'ION FILE

SIMPLY ASK FUR '!HE PRESS StM-fARY OF MUR 4J .5-J.~ •

'!HE PRESS StMfARY WILL PROVIDE A BRIEF HIS'IDRY OF

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

Audit 4; 13 I.'