FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

June 5,2009 

MEMORANDUM 

To:	 Judith Ingram 

Press Officer 

From:	 Joseph F. StOltzp! 

Assistant Staff D tor 

Audit Division 

Subject:	 Public Issuance of the Audit Report on Kucinich for President 2008, Inc. 

Attached please find a copy of the audit report on Kucinich for President 2008, Inc., which 

was approved by the Commission on June 03,2009. 

All parties involved have received informational copies of the report and the report may be 

released to the public June 08,2009. 

Attachment as stated 

cc:	 Office of GeneraLCounsel 

Office of Public Disclosure 

Reports Analysis Division 

FEC Library 

lTD Web 
Why the Audit 

Was Done 

Federal law requires the 

Commission to audit 

every political committee 

established by a candidate 

who receives public funds 

for the primary 

campaign. 1 The audit 

determines whether the 

candidate was entitled to 

all of the matching funds 

received, whether the 

campaign used the 

matching funds in 

accordance with the law, 

whether the candidate is 

entitled to additional 

matching funds, and 

whether the campaign 

otherwise complied with 

the limitations, 

prohibitions, and 

disclosure requirements 

of the election law. 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any of the 

matters discussed in this 

report. 

Report of the Audit Division on 

Kucinich for President 2008, Inc. 

December 18, 2006 - March 31, 2008 

About the Committee (p. 2) 

Kucinich for President 2008, Inc. (KFP) is the principal campaign 

committee for Congressman Dennis 1. Kucinich, a candidate for 

the Democratic Party's nomination for the office of President of 

the United States. KFP is headquartered in Columbus, OH. For 

information, see the chart on the Campaign Organization, p. 2. 

Financial Activity (p. 2) 

• Receipts 

o Contributions from Individuals $ 4,401,967 

o Matching Funds Received 83,885 

o Contributions from Political Committees 13,823 

o Offsets to Expenditures 12,120 

o Other Receipts 772 

o Total Receipts $ 4,512,567 

• Disbursements 

o Operating Expenditures $ 4,499,294 

o Contribution Refunds 9,439 

o Other Disbursements 5,400 

o Total Disbursements $ 4,514,133 

Finding and Recommendation (p. 3) 

• Net Outstanding Campaign Obligations 

J 26 U.S.C. §9038(a). 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1
 

Scope of Audit 1
 

Inventory ofCampaign Records 1
 

Part II. Overview of Campaign
 

Campaign Organization 2
 

Overview of Financial Activity 2
 

Part III. Summary
 

Finding and Recommendation 3
 

Amount Owed to the U.S. Treasury 3
 

Part IV. Finding and Recommendation 

Net Outstanding Debts and Obligations 4
 
Part I 

Background 

Authority for Audit 

This report is based on an audit of Kucinich for President 2008, Inc. (KFP) undertaken by 

the Audit Division of the Federal Election Commission (the Commission) as mandated 

by Section 9038(a) of Title 26 ofthe 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: 

I. The receipt of excessive contributions and loans. 

2. The receipt of contributions from prohibited sources. 

3. The receipt oftransfers from other authorized committees. 

4. The disclosure of contributions and transfers received. 

5. The disclosure of disbursements, debts and obligations. 

6. The recordkeeping process and completeness of records. 

7. The consistency between reported figures and bank records. 

8. The accuracy of the Statement ofNet Outstanding Campaign Obligations. 

9. The campaign's compliance with spending limitations. 

10. Other campaign operations necessary to the review. 

Inventory of Campaign Records 

The Audit staff routinely conducts an inventory of campaign records before it begins the 

audit fieldwork. KFP's records were substantially complete and the fieldwork began 

immediately. 
2 

Part II 

Overview of Campaign 

Campaign Organization 

Important Dates Kucinich for President 2008, Inc. 

• Date of Registration December 19, 2006 

• Audit Coverage December 18, 2006 - March 31, 2008 

Headquarters Columbus, Ohio 

Bank Information 

• Bank Depositories Three 

• Bank Accounts Five - Checking Accounts 

Treasurer 

• Treasurer When Audit Was Conducted Gary Kucinich 

• Treasurer During Period Covered by Audit Gary Kucinich 

Manazement Information 

• Attended FEC Campaign Finance Seminar No 

• Accounting and Recordkeeping Tasks Paid Staff 

Overview of Financial Activity 

(Audited Amounts) 

Cash on hand (ii) December 12, 2006 $0 

4,401,967 

83,885L 

0 Contributions from Individuals 

0 Matching Funds received 

0 Contributions from Political Committees 

0 Offset to Expenditures 

0 Other Receipts . 

13,823 

12,120 

772 

Total Receipts $ 4,512,567 

4,499,294 

9,439 

5,400 

$ 4,514,133 

$ -1,5663 

0 Operating Expenditures 

0 Contribution Refunds 

0 Other Disbursements 

Total Disbursements 

Cash on hand @ March 31, 2008 

2 KFP received an additional $986,636 in matching funds after March 31, 2008 for a total of$I,070,521. 

This represents 5% of the maximum entitlement ($21,025,000) for a Presidential candidate. 

] Negative balance reflects adjustments made for outstanding checks totaling $40,055 as of March 31,2008. 
3 

Part III 

Summary 

Finding and Recommendation 

Net Outstanding Debts and Obligations 

A review of KFP' s financial activity through March 31, 2009 and estimated winding 

down costs indicated that KFP did not receive matching fund payments in excess of the 

Candidate's entitlement. (For more detail, see p. 4) 

Amount Owed to the u.s. Treasury 

No amounts are owed to the United States Treasury. 
4 

Part IV
 

Finding and Recommendation
 

I Net Outstanding Debts and Obligations 

Summary 

A review of KFP' s financial activity through March 31, 2009 and estimated winding 

down costs indicated that KFP did not receive matching fund payments in excess of the 

Candidate's entitlement. 

Legal Standard 

A. 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: 

•	 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 

•	 An estimate of necessary winding-down costs. 11 CFR §9034.5(a). 

B. Date of Ineligibility. The date of ineligibility is whichever of the following dates 

occurs first: 

•	 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 ofthe matching payment period, which is generally the day when the 

party nominates its candidate for the general election; or 

•	 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. 

C. Qualified Campaign Expense. Each ofthe following expenses is a qualified 

campaign expense. 

•	 An expense that is: 

o	 Incurred by or on behalf of the candidate (or his or her campaign) during the 

period beginning on the day the individual becomes a candidate and 

continuing through the last day of the candidate's eligibility under II CFR 

§9033.5; 

o	 Made in connection with the candidate's campaign for nomination; and 

o	 Not incurred or paid in violation of any federal law or the law of the state 

where the expense was incurred or paid. 11 CFR §9032.9. 

•	 An expense incurred for the purpose of determining whether an individual should 

become a candidate, if that individual subsequently becomes a candidate, 

regardless of when that expense is paid. 11 CFR §9034.4. 
5 

•	 An expense associated with winding down the campaign and terminating political 

activity. 11 CFR §9034.4(a)(3). 

D. Value of Capital Assets. The fair market value of capital assets is 60% of the 

total original cost of the assets when acquired, except that assets that are received after 

the date of ineligibility must be valued at their fair market value on the date received. A 

candidate may claim a lower fair market value for a capital asset by listing the asset on 

the NOCO statement separately and demonstrating, through documentation, the lower 

fair market value. II CFR §9034.5(c)(I). 

E. Entitlement to Matching Payments after Date of Ineligibility. If, on the date 

of ineligibility (see above), 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). 

Facts and Analysis 

The Audit staff prepared a Statement of Net Outstanding Campaign Obligations (NOCO) 

as of the Candidate's date of ineligibility (DOl) on January 25,2008. The Preliminary 

Audit Report (PAR) included a finding for matching funds totaling $38,609 received in 

excess of entitlement. In response to the PAR, KFP provided documentation and 

justification for adjusting winding down costs and the Audit staff revised the NOCO 

which is presented on the next page. 
6 

Kucinich for President 2008
 

Statement of Net Outstanding Campaign Obligations
 

As of January 25, 2008
 

Prepared through March 31, 2009
 

Cash on Hand $ 30,776 [a]
 

Cash in Bank 128,173
 

Mailing List sold post DOl 7,350
 

Capital Assets 40,726
 

Total Assets	 $ 207,025 

Liabilities 

Accounts Payable for Qualified Campaign Expenses at 1/25/08 $ 967,100 

Actual Winding Down Costs (1/26/08 - 03/31/09) $ 363,705 

Estimated Winding Down Costs (04/01/09 - 6/30/09) 57,784 421,489 [b] [c] 

Total Liabilities	 $ 1,388,589 

Net Outstanding Campaign Obligations (Deficit) as of January 25, 2008	 ($ 1,181,564) 

Footnotes to NOCO Statement: 

[a]	 Amount includes contributions dated prior to DOl and deposited after 001. 

[b]	 Estimated winding Down Costs include storage cost for a three year period. 

[c]	 Winding Down Costs was limited to 10% of the total of the candidate's expenditures subject to the overall 

expenditure limitation as of January 25, 2008 (10% of$4,214,892). 
7 

Candidate's Remaining Entitlement to Matching Funds 

Shown below are adjustments for financial activity after January 25, 2008 through March 

31,2009. KFP has not received matching funds payments in excess of the amount to 

which the Candidate was entitled as presented below: 

Net Outstanding Campaign Obligations (Deficit) as of 1/25/08 ($ 1,181,564) 

Private Contributions and Other Receipts Received (1/26/08 - 3/31/09) 87,574 

Matching Funds Received (1/26/08 - 3/31/09) 1,070,521 

Remaining Net Outstanding Campaign Obligations (Deficit) as of 3/31/09 ($ 23,469) 

Committee Response to Preliminary Audit Report and Audit Staff's 

Assessment 

The PAR included a finding for matching funds totaling $38,609 received in excess of 

entitlement. The Audit staff recommended that KFP provide evidence that it had not 

received matching fund payments in excess of entitlement. Absent such evidence, the 

Audit staff would make a recommendation that the Commission determine that $38,609 

was repayable to the U.S. Treasury. 

In response to the PAR recommendation, Counsel for KFP provided invoices and other 

documentation demonstrating that actual wind down expenses for the period October 1, 

2008 to March 31, 2009 were greater than originally estimated. Most of the increase was 

for legal expenses incurred during this period. Due to the increase in winding down 

expenses, it was determined that KFP has not received funds in excess of entitlement. 

The Audit staff will continue to monitor actual expenses compared to estimates to assure 

that no significant changes occur.