FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

January 31, 2012 

MEMORANDUM 

TO: 

FROM: 

Tom Hintermister 

Assistant Staff Director 

Christopher Hughey ^IKX 

Deputy General Counsel ^ 

Lawrence L. Calvert, Jr. 

Associate General Couni 

Lorenzo Holloway ^ C 

Assistant General Counsel Cj 

For Public Finance and Audit Advice 

Danita C. Lee /VS ^< OXAttorney 

Allison T. Steinle A1S 

Attorney 

SUBJECT: Draft Final Audit Report - Democratic Executive Committee of Florida 

(LRA 805) 

L INTRODUCTION 

The Office of the General Counsel has reviewed the proposed Draft Final Audit 

Report ("DEAR") on tiie Democratic Executive Committee of Florida ("DECF"). Our 

comments in this memorandum focus on Finding 1 (Excessive Coordinated Party 

Expenditures) and Finding 3 (Allocation of Expenditures). We concur with any findings 

not specifically discussed in this memorandum. If you have any questions, please contact 

Danita Lee or Allison Steinle, the attomeys assigned to this audit. 
Memorandum to Tom Hintermister 

Draft Final Audit Report - Democratic Executive Committee of Florida 

(LRA 805) 

Page 2 

II. EXCESSIVE COORDINATED PARTY EXPENDITURES (Finding 1) 

A. Background 

The DECF made disbursements totaling $95,108 on behalf of congressional 

candidate Annette Taddeo. Two disbursements for media advertisements totaled 

$82,400. Two disbursements for direct mail pieces totaled $12,708. The coordinated 

party expenditure limit in the 2008 U.S. House of Rq)resentatives election in Florida was 

$42,100. The Democratic Congressional Campaign Committee ("DCCC") authorized the 

DECF to spend $17,900 of its limit. Thus, tiie auditors determined tiiat DECF's total 

coordinated party expenditure limit for Taddeo was $60,000. The Interim Audit Report 

("lAR") concluded that the DECF exceeded its coordinated party expenditure limit with 

respect to Taddeo by $35,108. Consequently, the lAR concluded that the DECF made an 

excessive in-kind contribution to Taddeo. 

In response to the lAR, the DECF states that its disbursements for the two direct 

mail pieces totaling $12,708 should not be counted towards the coordinated party 

expenditure limit because the disbursements qualify for the volunteer materials 

exemption. While the DECF concedes that the media advertisements totaling $82,400 

were coordinated party expenditures, it also argues that it did not make an excessive inkind contribution because, although no written records exist, the DCCC intended to 

assign additional coordinated spending authority to the DECF and had not made any 

additional coordinated expenditures on behalf of Taddeo. In support of this argument, 

the DECF has provided a letter dated September 22,2011 fix>m the Chief Operating 

Ofticer of tiie DCCC, which states tiiat tiie DCCC "[knows] of no reason why any 

requested or needed transfer of authority would have been withheld at the time" and 

"aftirm[s] [tiie DECF's] autiiority to make an additional $23,258 in coordinated 

expenditures in support of Ms. Taddeo, up to what would have been the remainder of our 

limit in this election."' 

Finding 1 presents two issues, which we discuss below. The first issue is whether 

the DECF disbursements for two direct mail pieces qualify for the volunteer materials 

exemption. The second issue is whether DECF received an additional assignment of the 

DCCC's coordinated party expenditure authority. 

B. Direct Mail Expenditures Should Not Be Counted towards the 

Coordinated Party Expenditure Limit 

The proposed DEAR concludes that tiie two direct mail pieces supporting Taddeo 

qualify for tiie volunteer materials exemption. See 11 C.F.R. §§ 109.37 and 109.21. 

' . In its response to the lAR, the DECF states that it is providing a letter from Brian Svoboda, 

counsel to the DCCC. However, the letter attached to the response is from Kristie L Mark, Chief 

Operating Officer of the DCCC, not Mr. Svoboda. 
Memorandum to Tom Hintermister 

Draft Final Audit Report - Democratic Executive Conunittee of Florida 

(LRA 805) 

Pages 

Specifically, tiie auditors conclude tiiat the DECF's disbursements for tiie direct mail 

pieces should not be counted towards the coordinated party expenditures limit because 

the DECF demonstrated that volunteers were used for each mail piece. 

The DECF has provided a cell phone picture provided by an individual who stated 

via e-mail that he was present at the mailings of the direct mail pieces. The picture 

appears to show volunteers sorting and bundling unidentifiable mail pieces. The DECF 

claims that this documentation is sufficient to demonstrate *for each mailing identified by 

the Audit Division, that sufficient volunteer activity occurred, including the bundling and 

sorting of the mail and placing the mail in trays for delivery to the post ofQce." 

Ratiier tiian conclude that the DECF demonstrated tiiat the mailers qualified for 

the volunteer materials exemption, we think the better approach would be to decline to 

reach a conclusion on the issue, consistent with the Commission's statement in the Final 

Audit Report ("FAR") on tiie Tennessee Republican Party Federal Election Account. In 

that FAR, the Commission concluded that there existed a "lack of clarity regarding the 

amount of volunteer involvement needed to qualify for the volunteer materials 

exemption" and did not approve a finding that certain mail pieces qualified for the 

exemption. The Commission has subsequentiy considered the volunteer materials 

exemption in the enforcement context, and has still not reached a consensus on what 

amount of volunteer involvement and documentation qualify mail pieces for the 

exemption. See MUR 6434 (Indiana Democratic Party). Moreover, the picture here was 

not accompanied by any affidavits or sworn statements by the individual who took it, and 

the specific mail pieces in question are not identifiable in the picture. In the absence of 

any additional Commission guidance clarifying the application of the volunteer materials 

exemption, we do not think a finding concerning the exemption should be pursued here, 

but we also do not think there is a basis for firmly concluding that the exemption applied. 

Accordingly, we recommend that the auditors simply note in tiie audit report that there 

exists a "lack of clarity regarding the amount of volimteer involvement needed to qualify 

for the volunteer materials exemption," and fbr that reason, the disbursements for tiie two 

direct mail pieces have not been counted towards the coordinated party expenditure limit. 

C. DECF Did Not Have Additional Coordinated Party Spending Authority 

The proposed DEAR concludes that the DECF exceeded its coordinated party 

expenditure limit by $22,400. 

A political party committee may assign its coordinated party expenditure 

authority to another political party committee as long as the assignment is made in 

writing, states the amount of authority assigned, and is received by the assignee 

committee before any coordinated party expenditure is made pursuant to the assignment. 

11 C.F.R. § 109.33(a). A political party committee that is assigned authority to make 

coordinated party expenditures must maintain the written assignment for at least three 

years. 11 C.F.R. § 109.33(c), 
Memorandum to Tom Hintermister 

Draft Final Audit Report - Democratic Executive Committee of Florida 

(LRA 805) 

Page 4 

The DECF has provided the auditors with written documentation showing that the 

DCCC autiiorized tiie DECF to spend $17,900 of tiie DCCC's coordinated party 

expenditure limit. A letter firom tiie DCCC's Chief Operating Officer to tiie DECF's 

Executive Director, dated October 28,2008, assigns tiie DECF up to $17,900 of its 

coordinated spending authority. The letter states that it "sets fortii in full the agreement 

... concerning [the assigned coordinated party spending authority]." The DCCC's Chief 

Operating Officer asks the DECF's Executive Director to confirm tiie agreement by 

signing two copies of tiie letter and returning one to tiie DCCC. The DECF's Executive 

Director signed and dated tiie letter on November 6,2008. 

The DECF has not provided any otiier documentation showing that tiie DCCC 

properly autiiorized additional spending autiiority in tiie amount of $22,400. Rather, tiie 

DECF has stated only titiat it believed that it had additional spending authority because it 

had been coordinating witii the DCCC and because the DCCC had spent only $1,754 of 

its coordinated party expenditure limit, and because it obtained a letter dated September 

22,2011 fiiom tiie DCCC's Chief Operating Officer, which "affirm[s] [tiie DECF's] 

authority to make an additional $23,258 in coordinated expenditures in support of Ms. 

Taddeo, up to what would have been the remainder of our limit in this election." 

A committee must show, in writing, that it received an assignment of spending 

authority fix)m the assignor committee before any coordinated party expenditure was 

made. 11 C.F.R. § 109.33(a). If an assignment letter between the DCCC and tiie DECF 

existed but the DECF failed to keep its own copy, then this migiht be an issue of 

inadequate recordkeeping. The Explanation and Justification for section 109.33 notes 

that "recordkeeping [rather than reporting] is less burdensome for political party 

committees and should provide sufficient documentation of assignments of coordinated 

party expenditure authority should questions arise...." Explanation and Justification for 

11 C.F.R. § 109.33 (May a Political Party Committee Assign Its Coordinated Party 

Expenditure Authority to Another Political Party Committee?), 68 Fed. Reg. 445 (Jan. 3, 

2003). In this case, however, not only has the DECF acknowledged that it has no 

contemporaneous record of receiving additional spending authority, but the DCCC has no 

such contemporaneous record either, even thougih its apparent practice was to require 

state party officials to sign and return one copy of letters assigning coordinated spending 

authority. Indeed, the DECF's own statements made prior to the lAR indicated that it 

had apparently assumed that it had additional spending authority because the DCCC had 

spent so little. The content of the only contemporaneous written record presented (the 

October 28,2008 letter) makes clear that the DECF was authorized to spend only 

$17,900 while also noting that the authorization letter represented the full agreement 

between tiie two committees. While the DECF has provided a letter fix)m the DCCC's 

Chief Operating Officer affirming the DECF's authority to make an additional $23,258 in 

coordinated party expenditures in support of Taddeo, this assignment was received by the 

DECF over three years after the expenditures in question were made, and therefore was 

not a valid assignment. See 11 C.F.R. § 109.33(a). Thus, we concur with tiie auditors 

that the DECF's coordinated party expenditure limit totaled $60,000 in the absence of 
Memorandum to Tom Hintermister 

Draft Final Audit Report - Democratic Executive Committee of Florida 

(LRA 805) 

Page 5 

contemporaneous written authorization from the DCCC increasing the DECF's 

coordinated party expenditure limit. 

m. ALLOCATION OF EXPENSES (Finding 3) 

A. Background 

The proposed DEAR concludes that the DECF's non-federal account overfunded 

its share of allocable activity by $71,951. The auditors conclude that the DECF 

improperly made expenditures directiy from its non-federal account and that some other 

activity was improperly allocated. Finding 3 presents two issues that we discuss below: 

(1) the proper aJlocation of a consulting fee for translation services; and (2) the proper 

allocation of rent for the DECF's headquarters. 

B. DECF Improperly Allocated Consulting Fee 

The DEAR identified an invoice for activity described as "Consulting Fee for 

Creole Translators/Haitian American G.O.T.V." The invoice for $17,240 also had an 

email conununication attached. Neither the invoice nor the email set forth the specific 

services or product provided. The DECF originally stated that the $17,240 expenditure 

was for non-Federal activity. It did not, however, provide a copy of any particular item 

that was translated or any other description of the work performed. The lAR concluded 

that, absent a printed copy of the item translated or other documentation regarding the 

services associated with tiie invoice, the expenditure should have been paid with Federal 

funds.^ 11 C.F.R. § 300.33(c). The lAR provided tiie DECF witii an opportunity to 

demonstrate that the invoiced activity named only a non-Federal candidate and was not 

get-out-tiie-vote activity ("GOTV"). The lAR fiirther provided tiiat if tfie DECF was 

unable to make such a showing, the DECF could provide a copy of the specific 

communications translated or describe the services provided to enable the Commission to 

determine whether the activity should have been paid with allocated or 100% Federal 

funds. 

In response to the lAR, the DECF now acknowledges that the expense should not 

have been paid from its non-Federal account, but argues that the appropriate Federal 

allocation should have been 28% Federal funds and 72% non-Federal funds. The DECF 

states that the purpose of the expense was to send translators to polling places **to provide 

non-partisan translation assistance to Creole and Haitian speaking voters who were 

already at the polling place and required English translation services." The DECF argues 

that because the translators **were there merely as a bridge between voters already present 

at the polls that needed a translator to understand voting procedures and voting rights, or 

to interact with voting officials," the activity was not GOTV as defined by the 

Commission during the 2008 election cycle, but rather an ordinary operating expense that 

' While 11 C.F.R. § 300.33(c) allows state party committees to allocate certain GOTV expenses 

between their Federal and Levin accounts, the DECF did not maintain a Levin account. 
Memorandum to Tom Hintermister 

Draft Final Audit Report - Democratic Executive Committee of Florida 

(LRA 805) 

Page 6 

was subject to the allocation ratio at 11 C.F.R. § 106.7(d)(2). The auditors have accepted 

this argument, and the proposed DEAR concludes that the DECF has demonstrated that 

the expense was a shared activity that should have been allocated based on the 

administrative ratio of 28% Federal and 72% non-Federal. 

In 2008, GOTV was defined as "contacting registered votera by telephone, in 

person, or by other individualized means, to assist them in engaging in the act of voting." 

11 C.F.R. § 100.24(aX3) (2008). The Commission regulations went on to provide two 

examples of GOTV activity: (1) providing voters with information such as the date of the 

election, when polling places were open, and where polling places were located; and (2) 

offering to transport voters to the polls. Id. This list, however, was non-exhaustive. 

Explanation and Justification for Definition of Federal Election Activity, 71 Fed. Reg. 

8,926,8,928-30 (Feb. 22,2006). 

Here, it appears that the DECF was engaged in the act of contacting registered 

voters and offering tiiem translation services. While the Commission regulations and 

regulatory history do not define the term "contact," the plain meaning of the word 

suggests that it encompasses any method intended to reach out to voters on an 

individualized basis and offer to assist them in the act of voting. Because the DECF does 

not claim that it was acting in conjunction with any Florida State program or Florida 

voting officials, it appears that the DECF's translatora would either have to approach 

individual voters to inquire if they would like translation assistance, or otherwise make 

known to individual voters in some way, most likely outside of the polling place, that 

translation assistance was available. We believe that this type of activity qualifies as 

"contacting." 

Moreover, while the Commission's regulations in 2008 excluded the mere 

"encouragement" to vote from the definition of GOTV, tiiey still included the basic 

requirement that the activity be to "assist" registered voters in the act of voting. See id. 

Contrary to the DECF's arguments, nothing in the regulatory history suggests that tiie 

definition of GOTV was limited to the actual acts of getting voters to the polls. Rather, 

the definition of GOTV was limited to tiie act of assisting registered voters in the act of 

voting. 

Accordinglly, we believe that providing translation assistance at the polls to help 

voters "understand voting procedures and voting rights" was contacting registered voters 

for the purpose of assisting them in the act of voting, and therefore, fell under the 

Commission's definition of GOTV during the 2008 election cycle. We disagree witii the 

auditors' conclusion that the DECF has demonstrated that the expense was a shared 

activity that should have been allocated based on the administrative ratio of 28% Federal 

and 72% non-Federal. We conclude tiiat tiie expendittire was for GOTV activity, and 

therefore, should have been paid with 100% Federal funds given that the DECF did not 

maintain a Levin account. 
Memorandum to Tom Hintermister 

Draft Final Audit Report - Democratic Executive Committee of Florida 

(LRA 805) 

Page 7 

C. DECF Improperly Allocated Rent 

The DEAR found tiiat tiie DECF paid rent on its headquarters totaling $212,313. 

The DECF paid 50% of tiie rent (or $106,156.50) witii a check drawn on its non-Federal 

account. The DECF paid the remaining 50% of the rent ($106,156.50) with a check 

drawn on its Federal account but as an allocated payment containing 28% Federal funds 

and 72% non-Federal fimds. As a result, tiie DECF paid 86% of tiie rent for its 

headquarters witii non-Federal funds. The auditors conclude that 100% of the rent (or 

$212,313) should be allocated 28% Federal and 72% non-Federal because the entire 

building is used by the DECF for both Federal and non-Federal activity. The auditors 

further conclude that the DECF's non-Federal account overpaid its share of the rent by 

$28,482. 

In response to the lAR, the DECF states that it properly paid the rent on its 

headquarters. It asserts that the allocation regulations are inapplicable to the portion of 

rent paid from its non-Federal account because the Florida State House and Senate 

caucus committees are not party committees. The DECF states that the caucus 

committees are autonomous units of the DECF and that their sole purpose is to influence 

non-federal elections. The DECF asserts that there exists a distinction between '*party 

staff' and "caucus staff' and states that the allocation regulations cover only those 

activities undertaken by party staff and therefore caimot be applied to office space 

utilized by caucus committee staff. The DECF argues that the Commission should make 

this conclusion notwithstanding the fact that Florida law requires it to serve as "fiscal 

agent" for the caucus committees.^ 

A state party committee may either pay administrative costs, including rent, from 

its Federal account, or allocate such expenses between its Federal and non-Federal 

accounts, except that any such expenses directiy attributable to a clearly identified 

Federal candidate must be paid only from the Federal account. 11 C.F.R. § 106.7(c)(2). 

The DECF rents tiie building that houses its headquarters. The DECF's rent payments 

for its headquarters are an administrative cost. A state party committee's rent payments 

are explicitiy enumerated in the regulations as an allocable administrative cost. Id. The 

DECF's rent payments, therefore, must be allocated. 

While we recognize tiiat the "caucus committees" engage in activity supporting 

the election and reelection of state legislators, it appears that the caucus committees here 

are merely projects or activities of the DECF rather than separate legal entities. See 

' The DECF notes that in 20II, Florida revised its statutes to permit a caucus committee to establish 

a legal existence (as an affiliated committee) separate from the state executive committee of its political 

party. The Florida law in effect during the time period covered by the audit (2007-2008), however, did not 

provide for the establishment of affiliated party conunittees. Therefore, the 2011 provisions cited by the 

DECF are inapplicable. More importantly, the 2011 Florida legislation underscores an important point in 

this case: prior to that legislation, caucus committees were not separate legal entities, like the Democratic 

Senatorial Campaign Committee or die National Republican Congressional Ck>mmittee at the Federal level, 

but instead were merely activities or projects of the state party committees. 
Memorandum to Tom Hintermister 

Draft Final Audit Report - Democratic Executive Conunittee of Florida 

(LRA 805) 

Page 8 

supra n.3. The DECF has not provided any contrary infonnation to the auditors. In fact, 

according to the DECF, it provides office space in its headquarters building, and "each 

staff member for each Caucus Committee is an employee of tiie DECF." The allocation 

regulations specifically identify rent as an allocable administrative expense of state party 

committees and provide a fixed allocation ratio; they do not provide for any different 

ratio based on tiie actual amount of space dedicated to particular projects or activities, 

with the exception that any administrative expense directly attributable to a clearly 

identified Federal candidate must be paid witii entirely Federal funds. "[W]hile the 

Commission recognizes that non-Federal activity consumes a large portion of State party 

tune and finances, there is no doubt that Federal candidates benefit from such party 

committees' efforts to reacti and motivate potential voters. Therefore, the [regulations] 

require allocation of administrative costs." Explanation and Justification for Allocation 

of Expenses between Federal and Non-Federal Accounts by Party Committees, Otiier 

Than for Federal Election Activities, 67 Fed. Reg. 49,078 (July 29,2002). Thus, we 

concur with the auditors that the DECF failed to properly allocate tiie rent for its 

headquarters resulting in the non-Federal account overpaying its share of the rent by 

$28,482.