Final Audit Report of the 

Commission on 

Ted Lieu for Congress 

(Februaiy 18, 2014 - December 31, 2014) 

Why the Audit 

Was Done 

Federal law permits the 

Commission to conduct 

audits and field 

investigations of any 

political committee that is 

required to file reports 

under the Federal 

Election Campaign Act 

(the Act). The 

Commission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold 

requirements for 

substantial compliance 

with the Act.' The audit 

determines whether the 

committee complied with 

the limitations, 

prohibitions and 

disclosure requirements 

of the Act. 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to the matter 

discussed in this report. 

About the Campaign (p. 2) 

Ted Lieu for Congress is the principal campaign committee for 

Ted Lieu, Democratic candidate for the U.S. House of 

Representatives from the state of Califomia, 33"* District, and is 

headquartered in Encino, Califomia. For more information, see 

the Campaign Organization chart, p. 2. . 

Financial Activity (p. 2) 

Receipts • 

o Contributions from Individuals $ 1,686,988 

o Contributions from Political 

Committees 543,129 

o Contributions from the 

Candidate . 5,200 

o Transfers from Other Authorized 

Committees 46,300 

o Loans from the Candidate 76,000 

o Offsets to Operating 

Expenditures 11,357 

o Other Receipts 87,810 

Total Receipts $ 2,456,784 

Disbursements 

o Operating Expenditures $2,115,224 

o Loan Repayments to the 

Candidate 76,000 

o Contribution Reftmds 17,600 

o Other Disbursements 133,500 

Total Disbursements $ 2,342,324 

Commission Finding (p. 3) 

• Misstatement of Financial Activity 

52 U.S.C. §30111(b). 
Final Audit Report of the 

Commission on 

Ted Lieu for Congress 

(February 18, 2014 - December 31, 2014) 
Table of Contents 

Page 

Part 1. Background 

Authority for Audit 1 

Scope of Audit 1 

Audit Hearing 1 

Part II. Overview of Campaign 

Campaign Organization 2 

Overview of Financial Activity 2 

Part III. Summary 

Commission Finding 3 

Part IV. Commission Finding 

Misstatement of Financial Activity 4 
Parti 

Background 

Authority for Audit 

This report is based on an audit of Ted Lieu for Congress (TLFC), undertaken by the 

Audit Division of the Federal Election Commission (the Commission) in accordance with 

the Federal Election Campaign Act of 1971, as amended (the Act). The Audit Division 

conducted the audit pursuant to 52 U.S.C. §30111(b), which permits the Commission to 

conduct audits and field investigations of any political committee that is required to file a 

report under 52 U.S.C. §30104. Prior to conducting any audit under this subsection, the 

Commission must perform an intemal 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. 52 U.S.C. §30111(b). 

Scope of Audit 

Following Commission-approved procedures, the Audit staff evaluated various risk 

factors and as a result, this audit examined: 

1. the receipt of excessive contributions and loans; 

2. the receipt of contributions froni prohibited sources; 

3. the disclosure of contributions received; 

4. the disclosure of individual contributors' occupation and name of employer; 

5. the consistency between reported figures and bank records; 

6. the completeness of records; and 

7. other committee operations necessary to the review. 

Audit Hearing 

TLFC declined the opportunity for a hearing before the Conunission on the matter 

presented in this report. 
Part II 

Overview of Campaign 

Campaign Organization 

Important Dates 

• Date of Registration February 6,2014 

• Audit Coverage February 18,2014 - December 31,2014 

Headquarters Encino, California 

Bank Information 

• Bank Depositories Two 

• Bank Accounts One Checking, One Savings 

Treasurer 

• Treasurer When Audit Was Conducted Jane Leiderman 

• Treasurer During Period Covered by Audit Jane Leiderman 

Management Information 

• Attended Commission Campaign Finance 

Seminar 

No 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 

Overview of Financial Activity 

Cash-on-hand @ Fehruary 18,2014 SO 

Receipts 

o Contributions from Individuals 1,686,988 

o Contributions from Political Committees 543,129 

o Contributions from the Candidate 5,200 

o Transfers from Other Authorized 

Committees 46,300 

o Loans from the Candidate 76,000 

o Offsets to Operating Expenditures 11,357 

o Other Receipts 87,810 

Total Receipts $ 2,456,784 

Disbursements 

o Operating Expenditures 2,115,224 

o Loan Repayments to the Candidate 76,000 

o Contribution Refunds 17,600 

o Other Disbursements 133,500 

Total Disbursements ^ $ 2342324 

Cash-on-hand @ December 31,2014 $ 114,460 
Part III 

Summary 

Commission Finding 

Misstatement of Financial Activity 

During audit fieldwork, a comparison of TLFC's reported financial activity with its bank 

records revealed a misstatement of receipts and disbursements for calendar year 2014. 

TLFC understated its receipts by $87,748 and understated its disbursements by $92,802. 

In response to the Interim Audit Report recommendation, TLFC filed tended disclosure 

reports that materially corrected the misstatements for calendar year 2014. As such, 

TLFC has corrected the public record and had no additional comments in response to the 

Draft Final Audit Report. 

The Commission approved the finding that TLFC misstated its financial activity for 

calendar year 2014. (For more detail, see p. 4.) 
Part IV 

Commission Finding 

Misstatement of Financial Activity 

Summary 

During audit fieldwork, a comparison of TLFC's reported financial activity with its bank 

records revealed a misstatement of receipts and disbursements for calendar year 2014. 

TLFC understated its receipts by $87,748 and understated its disbursements by $92,802. 

In response to the Interim Audit Report recommendation, TLFC filed amended disclosure 

reports that materially corrected the misstatements for calendar year 2014. As such, 

TLFC has corrected the public record and had no additional comments in response to the 

Draft Final Audit Report. 

The Commission approved the finding that TLFC misstated its financial activity for 

calendar year 2014. 

Legal Standards 

A. Contents of Reports. Each report must disclose; 

• the amount of cash-on-hand at the beginning and end of the reporting period; 

• the total amount of receipts for the reporting period and for the election cycle 

including other forms of receipts; 

• the total amount of disbursements for the reporting period and for the election cycle; 

• transfers to other committees authorized by the same candidate; 

• any other disbursements; and 

• certain transactions that require itemization on Schedule A (Itemized Receipts) or 

Schedule B (Itemized Disbursements). 52 U.S.C. §30104(b)(l), (2), (3), (4) and (5). 

B. Categories of Receipts for Authorized Committees. 

An authorized committee of a candidate for Federal office shall report the total amount of 

other receipts received during the reporting period and during the election cycle. 

11 C.F.R. §104.3(a)(3)(x). 

C. Categories of Disbursements for Authorized Committees. 

An authorized committee of a candidate for Federal office shall report the total amount of 

transfers to other committees authorized by the same candidate m^e during the reporting 

period. 11 C.F.R. §104.3(b)(2)(ii). 

D. Joint Fundraising by Committees. 

The participants in a joint fundraising effort under this section shall either establish a 

separate committee or select a participating committee, to act as fimdraising 

representative for all participants. The fundraising representative shall be a reporting 

political committee and an authorized committee of each candidate for federal office 

participating in the joint fundraising activity. 11 C.F.R. §102.17(a)(l)(i). 
Facts and Analsrsis 

A. Facts 

As part of audit fieldwork, the Audit staff reconciled TLFC's reported activity with its 

bank records for calendar year 2014. The reconciliation revealed that TLFC misstated its 

receipts and disbursements. The following chart outlines the discrepancies between 

TLFC's 2014 disclosure reports and its bank records, and the succeeding paragraphs 

explain why the discrepancies occurred. 

2014 Campaign Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance @ 

February 18,2014 

$0 $0 . $0 

Receipts $2,369,036 $2,456,784 $87,748 

Understated 

Disbursements $2,249,522 $2,342,324 $92,802 

Understated 

Ending Cash Balance @ 

December 31,2014 

$121,864-^ $114,460 $7,404 

Overstated 

The understatement of receipts resulted from the following: 

• Contributions for Lieu Victory Fund,^ not reported 

• Other receipts, not reported 

Understatement of Receipts 

The iinderstatement of disbursements resulted from the following: 

• Transfers of Lieu Victory Fimd contributions, not reported 

• Other disbursements, not reported 

• Under-reported disbursements 

• Over-reported disbursements 

Net Understatement of Disbursements 

$ 86,750 

998 

X «7.748 

$ 86,750 

7,540 

2 

(1.490) 

» ^2.802 

The $7,404 overstatement of the ending cash balance resulted from the misstatements 

described above, as well as from a $2,350 mathematical discrepancy in calculating the 

ending cash balance. 

Regarding the $86,750 in receipts and disbursements that were not reported by TLFC, the 

Audit staff determined that TLFC processed credit card contributions designated for the 

TLFC miscalculated its ending cash balance. It should be S119,S 14 (a difference of S2,3S0). Using the 

correct ending cash balance ($119,314), the discrepancy is S5,054. 

On April 17,2014, TLFC entered into a joint fiindraising agreement with the Democratic State Central 

Committee of CA - Federal. The agreement established both committees as participants and a new 

committee. Lieu Victory Fund, was formed to serve as the fiindraising representative. TLFC did not 

disclose Lieu Victory Fund as a Joint fiindraising representative or the depository established to receive 

and distribute proceeds on its Statement of Organization, received on Februaiy 7,2014. TLFC and Lieu 

Victory Fund share the same treasurer, Jane Leiderman. 
Lieu Victory Fund. Per the'TLFC treasurer, these credit card contributions were received 

on donation forms designating the Lieu Victory Fund as the recipient committee. The 

treasurer further informed the Audit staff that the Lieu Victory Fund had no way to 

accept/deposit credit card contributions because it had not established a credit card 

merchant account. Alternatively, the Lieu Victory Fund used TLFC's credit card 

merchant account to process its credit card contributions and then periodically transferred 

these contributions in bulk to the Lieu Victory Fund. TLFC did not report the receipt of 

these credit card contributions or the transfer (disbursement) to the Lieu Victory Fund. 

However, TLFC did report the subsequent transfers of net proceeds from Lieu Victory 

Fund (including memo entries of the gross amounts), and the Lieu Victory Fund itemized 

each of the credit card contributions on its disclosure reports. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the misstatement during the exit conference and provided the 

treasurer with supporting documentation. The treasurer stated that the credit card 

contributions deposited into the TLFC account were accurately reported by Lieu Victory 

Fund and that $46,000 of the $86,750 in contributions actually wound up coming back to 

TLFC as its share of proceeds from the joint fundraiser. The treasurer added that the 

proceeds had also been properly reported by TLFC. • 

In response to the exit conference, the treasurer stated that the decision to utilize the 

TLFC merchant accpunt to process Lieu Victory Fund contributions was made when "the 

campaign was in full mode and all the money needed to be processed immediately." She 

further added that, as the TLFC treasurer, it was acceptable to use the TLFC merchant 

account for the following reasons: 

• Contributors would see the name "Lieu" on their credit card statements and this 

would allow them to better identify the contribution to Lieu Victory Fund; 

• Most of the contributions were eventually transferred back to TLFC when Lieu 

Victory Fund disbursed its proceeds to the fundraiser participants; 

• TLFC transferred funds to reimburse Lieu Victory Fund the same day that the 

credit card contributions were processed by the TLFC merchant account. The 

treasurer further stated that TLFC did not misuse the funds nor did it use any of 

the funds intended for Lieu Victory Fund. 

Altematively, the treasurer stated that she could have processed the credit card 

contributions through her company's merchant account and made a disbursement to Lieu 

Victory Fund. But, she thought this method may cause complications with contributors 

not being able to easily identify a charge to their credit cards. 

In accordance with 52 U.S.C. §30104(b)(2), an authorized committee must report all of 

its receipts and disbursements, including, more specifically, transfers of funds to a 

candidate's other authorized committees. Although the funds received may or may hot 

ultimately be characterized as contributions to TLFC, they were, nevertheless, at least 

reportable as receipts. As a registered and, therefore, a reporting committee, TLFC was 

required to report, at a minimum, the receipt of these contributions as "other receipts." 

52 U.S.C. §30104(b)(2)(J); 11 C.F.R. §104.3(a)(3)(x). Regarding the disbursements 

/ 
(transfers) to Lieu Victory Fund, a joint fundraising representative is considered an 

authorized committee of each candidate who participates in the joint fundraising 

arrangement. 11 C.F.R. §102.17(a)(l)(i). An authorized committee of a candidate is 

required to report transfers of funds made to other authorized committees of the same 

candidate. 11 C.F.R. §104.3(b)(2)(ii). Thus, TLFC was required to report its 

disbursements of funds to Lieu Victory Fund. 

The Interim Audit Report recommended that TLFC amend its disclosure reports to 

correct the misstatements noted above and reconcile the cash balance on its most recent 

report to identify any subsequent discrepancies that could affect the recommended 

adjustments. Further, TLFC was recommended to adjust the cash balance, as necessary, 

on its most recent report, noting that the adjustment was the result of prior-period audit 

adjustments. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, TLFC filed amended disclosure 

reports that materially corrected the misstatements for calendar year 2014. TLFC also 

filed an amended Statement of Organization identifying Lieu Victory Fund as a joint 

flmdraising representative. 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged TLFC's corrective actions in response to the 

Interim Audit Report recommendation. 

E. Committee Response to the Draft Final Audit Report 

TLFC's response to the Draft Final Audit Report provided no additional comments 

relating to this matter. 

Commission Conclusion 

On August 18,2016, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended that the Commission find that 

TLFC misstated its financial activity for calendar year 2014. 

The Commission approved the Audit staffs recommendation.