Perkins Coie 

700Thirteenth Street, N.W., Suite 600 

Washington, D.C. 20005-3960 

Brian G. Svoboda 202.654.6200 

PHONE: (202)434-1654 . ^ 

^ ' FAX: 202.654.6211 

FAX: (202)434-1690 ., V 

www.perl(Inscoie.com 

EMAIL: BSvoboda@perkinscoie.com 

July 26,2011 

BY ELECTRONIC AND U.S. MAO. 

Mr. Thomas Hintermister 

Acting Assistant StaffDirector 

Audit Division 

Federal Election Conimission 

999 E Street, N.W. 

Washington, DC 20463 

. Re: Chris Dodd for President, Inc. 

Response to Final Audit Report 

Dear Mr. Hintermister: 

We write in response to the Draft Final Audit Report of the Audit Division on Chris Dodd for 

President, Inc. ("the Committee"). We appreciate the review of the Committee's response to the 

Preliminary Audit Report, and the changes that resulted. But the Draft Final Audit Report 

persists in erroneously contending that the Committee received a prohibited union treasury 

contribution; that it failed to resolve its general election contributions appropriately; and that it 

misstated receipts through use of a brokerage account. We ask the Commission to correct these 

findings, and we request the opportunity to discuss these matters in a hearing. 

A. There Is No Sound Basis for a Finding of a Union Treasury Contribution 

Finding 2 continues to allege that the Conimittee received a prohibited union treasury . 

contribution of $15,423 from the Intemational Association of Firefighters - even though the 

union's separate segregatedfimd, FIREPAC, billed the Committee a lesser amount of $12,088; 

even though the Committee overpaid FIREPAC in an abundance of caution; and even though 

FIREPAC disclosed the Committee's debt and later deposited the fimds into its own account. 

See Draft Final Audit Report at 10-12. While the Committee paid its debt to FIREPAC later than 

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Perkins Coie LLP 
Mr. Thomas Hintermister 

July 26,2011 

Page 2 

it would have preferred, there is no sound basis for finding that it received a contribution from 

the union itself.' 

B. The Committee Timely Resolved the Overwhelming Majority of Its Individual 

Contributions 

Echoing the Preliminary Audit Report, the Draft Final Audit Report claims: 

During audit fieldwork, the Audit staff identified contributions designated for the General 

election totaling $244,050 ... for which [the Committee] did not provide the required 

redesignation letters necessary to transfer the funds to [the Senate campaign]. 

Draft Final Audit Report at 13. Later, however, the Draft Final Audit Report acknowledges that 

all but $7,100 of these contributions have been resolved. The final audit report should make 

clear that - for the bulk of these contributions - the Committee timely obtained redesignations 

and issued refunds. 

The finding of excessive individual contributions arose from audit error. The Committee raised 

funds for the general election and kept them in an investment account. When the Committee 

received permission to redesignate its general election contributions to the candidate's Senate 

campaign, see Advisory Opmion 2008-04, it transferred the timely redesignated contributions 

from its brokerage account to the Senate campaign's brokerage account. This transfer was done 

by joumal entry. 

The auditors initially claimed that, because the fair market value of the Committee's brokerage 

account at the time of transfer fell below the total amount of general election contributions, the 

Conunittee was unable to transfer all of the redesignated funds. To identify the excessive 

contributions that supposedly resulted, the auditors do not appear to have looked to the actual 

written redesignations. Instead, they used an accounting mettiod. This is why - in language 

removed from the Draft Final Audit Rqport, at the General Counsel's urging - the Preliminary 

Audit Report said that the "loss and subsequent losses are the basis for the excessive 

contributions of $244,050 identified during audit fieldwork discussed in fmding 2." Preliminary 

Audit Report at 7. 

' The Draft Final Audit Report presents no fectual basis for its gratuitous claim that the Committee "did not consider 

resolution of the contribution a high-priority obligation" - and tiiere is none. Draft Final Audit Report at 12. 

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Mr. Thomas Hintermister 

July 26,2011 

Page 3 

When the Committee reviewed the list of excessive contributions provided by the auditors, it 

quickly verified that it had obtained written redesignations for $74,800 of them.^ The Committee 

produced copies of these letters to the auditors in its response to the Preliminary Audit Report. 

The Committee also showed that another contribution on the list had been refunded in September 

2007; that still another had been retumed for nonsufficient funds; and that refund checks for the 

bulk of the remainder were issued before the Advisory Opinion 2008-04 deadline. See Draft 

Final Audit Report at 14. 

Thus, the Draft Final Audit Report confirms that - of the $244,050 in individual contributions 

that were supposedly excessive - only $7,100 remain unresolved. See id Yet the Final Audit 

Report persists in its claim of excessive contributions. It says incorrectly that the Committee 

"did not provide the required redesignation letters," id at 13; that "[e]xcessive contributions 

totaling $160,050 were resolved in an untimely manner," id at 14; and that "there are 

contributions of $173,210" that the Committee "has not transferred to" the Senate campaign. 

This continued claim is mistaken and should be changed. 

C. The Draft Misstatement Finding Errs in Its Treatment of Brokerage Account Losses 

This audit began before the Commission considered the Audit Report on Friends of Weiner, the 

principal campaign committee of Anthony Weiner's 2004 House campaign. In that audit, the 

Audit Division ultimately retreated fix>m an initial contention that a committee must report 

imrealized gains and losses. A similar misunderstanding of the law initially shaped this audit. It 

drove the auditors' now-discarded finding of excessive contributions that was supposed to have 

resulted from the brokerage account's drop in value. See Legal Analysis Draft Filial Audit 

Report (May 24,2011), at 3. It also drove the remaining finding of misstatement that was based 

on losses in the brokerage account. See Draft Final Audit Report at 17. 

At the Exit Conference, the auditors presented the misstatement owing to the brokerage account 

as "Net Investment Adjustments ... Monthly Profit/Loss." As the Committee noted in its 

response to the Exit Conference, the auditors' supporting schedules indicated that these amounts 

were calculated based on fluctuations in value. The Preliminary Audit Report was the first time 

the auditors referred to "realized losses." Preliminary Audit Report at 12. 

^ The Coinmittee disputes the Draft Final Audit Report's contention that the redesignation letters were "not 

previously available" befbre the response to the Preliminary Audit Report. Draft Final Audit Report at 14. The 

Draft Final Audit Report acknowledges tiiat the Committee's records "were materially complete" at the start of 

fieldwork. Id. at 1. 

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July 26,2011 

Page 4 

Yet even assuming that the current misstatement fmding reflects the sum of realized losses - in 

other words, the accumulation of losses from actual sales of stock, as opposed to mere 

fluctuations in value - the statute and regulations still provide no explicit guidance on how these 

must be reported. The statute requires disclosure of, inter alia, "dividends, mterest and other 

forms of receipts" and"... any other disbursements." 2 LJ.S.C. §§ 434(b)(2)(J), (4)(G). Yet 

neither the statute nor the regulations explicitly refers to the disclosure of losses, especially 

within a brokerage account. 

Even the Draft Final Audit Report shows the lack of clarity on this issue. The auditors say that 

the undisclosed losses resulted in an "understatement of receipts." See Draft Final Audit 

Report at 16 (emphasis added). But the General Counsel's legal analysis says that "[r]ealized 

capital losses must be reported as 'other disbursenients* in the reporting period in which they are 

realized" - which is inconsistent with the auditors' proposed finding of misstated receipts. See 

Legal Analysis Draft Final Audit Report (May 24,2011), at 4 (emphasis added). 

The Commission should not find that the Committee violated the law on such an ambiguous 

question, when the auditors changed the legal standard in the middle of the audit, and when there 

is still no clear agreement about how the Committee specifically should have rq)orted this 

activity. This is especially tme here, where the invested funds were segregated so as not to be 

used in the primary election. One could easily tell from the Committee's reports how much 

Senator Dodd had raised for the general election - and how much he would have available when 

nominated, or would have to dispose of when he lost. 

We appreciate the Commission's attention to these matters. 

Very truly yours, 

Marc E. Elias 

Brian G. Svoboda 

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