THE FEDERAL ELECTION COMMISSION 

Washington, DC 20463 

June 18.2018 

MEMORANDUM 

To: 

Through: 

From: 

By: 

Subject: 

The Commission 

Alec Palmer 

StafT Director 

Patricia C. Orrock XC fbrPCO 

Chief Compliance Officer 

Thomas E. Hintermister 

Assistant Staff Director 

Audit Division 

Zuzana O. Pacious 

Audit Manager lOp 

Camilla Reminsky 

Lead Auditor 

Audit Division Recommendation Memorandum on O'Malley for President 

(OMFP) 

Pursuant to Commission Directive No. 70 (FEC Directive on Processing Audit Reports), 

the Audit staff presented the Draft Final Audit Report (DFAR) to OMFP on June S, 2018 

(see attachment). In response to the DFAR, the committee did not provide any additional 

comments. OMFP did not request an audit hearing. 

This memorandum provides the Audit staffs recommendation for each finding outlined in 

the DFAR. The Office of General Counsel has reviewed this memorandum and concurs 

with the recommendations. 

Finding 1. Net Outstanding Campaign Obligations 

Review of OMFP's financial activity and estimated winding down costs indicated 

that the Candidate did not receive matching funds payments in excess of his 

entitlement. In response to both the Preliminary Audit Report (PAR) and the 

DFAR, OMFP provided no further comments. 
The Audit staff recommends that the Commission find that the Candidate did not 

receive matching funds in excess of his entitlement. .. 

Finding 2. Payments of Non-Quaiified Expenses 

Review of OMFP's disbursements indicated that OMFP spent $39,834 on behalf 

of the O' Say Can You See Political Action Committee (OP AC). OMFP was 

aware during the campaign that these were not qualified campaign expenses, and 

expected repayment from OP AC forthese expenses. The documents presented by 

OMFP conflrmed that OPAC reimbursed OMFP in full, resulting in the restoration 

of public funds. In response to both the PAR and the DFAR, OMFP provided no 

further comments. 

The Audit staff recommends that the Commission make a determination that no 

repayment is owed to the U.S. Treasury. 

Finding 3. Faiiure to Itemize Offsets to Expenditures 

OMFP did not itemize 14 vendor refunds totaling $8,582, however, subsequent to 

the audit notification, OMFP filed amended reports, which materially disclosed 

these receipts. In response to both the PAR and the DFAR, OMFP provided no 

further comments. 

The Audit staff recommends that the Commission find that OMFP failed to 

itemize vendor refunds totaling $8,582. 

Finding 4. Reporting of Debts and Obligations 

OMFP failed to disclose debts and obligations to one vendor totaling $156,019. In 

response to the PAR, OMFP amended its disclosure reports to materially correct 

the disclosure of debts and obligations. OMFP provided no further comments in 

response to the DFAR. 

The Audit staff recommends that the Commission find that OMFP failed to 

itemize debts and obligations totaling $156,019. 

Finding S. Stale-Dated Checks 

OMFP issued 12 checks totaling $15,197 that did not clear the bank and became 

stale-dated. In response to the PAR, OMFP made a payment of $15,197 to the 

U.S. Treasury. OMFP provided no further comments in response to the DFAR. 

The Audit staff recommends that the Commission find that $15,197 in stale-dated 

checks was payable to the U.S. Treasury. 

If this memorandum is approved, a Proposed Final Audit Report will be prepared within 

30 days of the Commission's vote. 

In case of an objection, Directive No. 70 states that the Audit Division 

Recommendation Memorandum will be placed on the next regularly scheduled open 

session agenda. 
Documents related to this audit report can be viewed in the Voting Ballot Matters folder. 

Should you have any questions, please contact Camilla Reminsky or Zuzana Pacious at 

694-1200. 

Attachment: 

- Draft Final Audit Report of the Audit Division on O'Malley for President 

cc: Office of General Counsel 
Draft Final Audit Report 

of the Audit Division on 

O'Malley for President 

(May 15, 2015 - December 31, 2016) 

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.' The audit 

determines whether the 

candidate was entitled 

to all of the matching 

funds received, 

whether the campaij 

used the matching 

funds in accordance 

with the law 

the can^^te-is.qnti' 

to addi^Mal matcl 

campai 

complied 

limitations, 

prohibitions, ahl 

disclosure requirement 

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. 

About the Campaign 

O'Malley for President is th&mi|^ipal campaign committee for 

Martin Joseph O'Malley, ^imdidqti^r the Democratic Party 

nomination for the of!jpesof>^sidnit^the United States. Tlie 

Committee is headqii^rtS^ in Baltimorei^aryland. For more 

information, see th^hart on the Campai^i^rgamzation, p. 2. 

Financial 

• Receipts 

ntributions fronr 

ql^gv^nds Recei\ 

Con^ibut 

Operati^ Expenditures 

Mduals 

' Political 

g Expenditures 

Repayments 

ntribution Refunds 

Other Disbursements 

Total Disbursements 

$4,574,259 

1,088,929 

500,000 

115,002 

82,577 

S 6360,767 

$ 5,707,052 

500,000 

78,127 

650 

S 6,285,829 

Findings and Recommendations (p. 4) 

• Net Outstanding Campaign Obligations (Finding 1) 

• Payments of Non-Qualified Expenses (Finding 2) 

• Failure to Itemize Offsets to Expenditures (Finding 3) 

• Reporting of Debts and Obligations (Finding 4) 

• Stale-Dated Checks (Finding 5) 

26 U.S.C. §9038(a). 
Draft Final Audit Report 

of the Audit Division on 

O'Malley for President 

(May 15, 2015 - December 31, 2016) 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 

Scope of Audit 

Inventory of Campaign Records 

Part II. Overview of Campaign 

Campaign Organization 

Overview of Financial Activity 

Part III. Summaries 

Findings and Recommendations 

Summary of Amounts Owed to the U.S. Ti 

Part IV. Findings and Recommen 

Finding 1. Net Outstanding Camp^n Obligation^ 

Finding 2. Payments of Non-Qualmld-^xpenses 

Finding 3. Failure to Itemize Offset^o^xpenditures 

Finding 4. Reporting of Debts and 

Finding S. Stale-Dated Checks 
Parti 

Background 

Authority for Audit 

This report is based on an audit of O'Malley for President (OMFP), undertaken by the 

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

Section 9038(a) of Title 26 of the United States Code. That sectipn^states, "After each 

matching payment period, the Commission shall conduct a I 

audit of the qualifi^ campaign expenses of every candidat&j 

committees who received [matching] payments under sectipn^C] 

9039(b) of the United States Code and Section 9038. lj[a!^ of tli 

Regulations state that the Commission may conducji 

time to time as it deems necessary. 

iti^raami 

lination and 

lis authorized 

Also, Section 

imission's 

inatii: [id audits irom 

Scope of Audit 

This audit examined original reports filed by OMFP^nm^ the audit notification letter 

dated November 30,2016.^ The audi^a]^ examined tl^riginal filings of the 2016 

December Monthly and Year-End Rep9^^n}e following^iat«^^re covered by this 

1. the campaign's compliance with limit^ionsj^:..^ti:[b^dns and loans; 

2. the campaign's comdiancp with the litim^|ms^s^dfdate contributions and loans; 

3. the campaign's coimlianq^ith the prombition on alwepting prohibited contributions; 

4. the disclosure (^^^ibutibn^ and loans Reived; 

5. the disclosure^nH^memei)^debts and cmHgations; 

6. the consistency betwecmtepoct^figutes an^ank records; 

7. the accurifcy^^e St^ment^^ Campaign Obligations; 

thec^mpaign^^'eq^li^ spending limits; 

ipleteness of«j^rds; i 

ipaign opernjons nec^sary to the review. 

InventoiyydlXam^ign Records 

The Audit staff ro\Jtmely^^ducts an inventory of campaign records before it begins 

audit fieldwork. Ob^^s records were materially complete and fieldwork commenced 

immediately. 

^ Subsequent to the audit notification, OMFP filed amendments to these reports. These amendments were 

given a limited review to determine if issues noted in the Preliminary Audit Report were corrected by 

OMFP. 
Part II 

Overview of Campaign 

Campaign Organizatit 

Important Dates 

Np^efnbbr 19,2015 Xflbfuary 1,2016 

Date of Registration 

Eligibility Period^ 

Treasurer 

Treasurer When Audtt^as^pducted Terry L^eXierman 

Treasurer During P^i^d Co^'e^ by Audit ^Te^ Lee Lierman 

Management Inforlftatipiiv 

Attended Commi^ion^^ iQg 

Seminar \ 

Paid Staff 

^ On November S, 2015, the Candidate submitted a signed letter (dated November 2,2015), to the Commission 

seeking to become eligible to receive Presidential primary matching iiinds and agreeing that he and his authorized 

committee would comply with the conditions set forth in 11 CFR §9033.1(b). A threshold submission was 

submitted on November 4,2015, and the Commission certified the Candidate as eligible to receive matching 

fonds on November 19,2015. The period during which the Candidate was eligible for matching ftinds ended on 

February 1,2016, the Candidate's date of ineligibility. 

* The Audit staff conducted limited reviews of receipts and expenditures after December 31,2016, to determine 

whether the Candidate was eligible to receive additional matching fiinds. 
Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand ® May 15,2015 $0 

Receipts yC—^ 

o Contributions from Individuals^ 4,574,259 

o Matching Funds Received^ //\ NL088,929 

o Loans Received . \l \ 500,000 

o Contributions from Other Political 

Committees 

o Offsets to Operating Expenditures \ V 82.577 ^ 

Total Receipts 

Disbursements • V • 

o Operating Expenditures ^ \ \ 5,707,052 

o Loan Repayments \ W ^500,000 

o Contribution Refunds \ NX 78,127 

o Other Disbursements \\ 650 

Total Disbursements w/ "N X $6^85,829 

Cash-on-hand @ Deceii][)ber31^ 2(^16^ ^ $92,369 

^ OMFP received approximately 20,107 contributions from 20,011 individuals. 

' As of the Candidate's date of ineligibility, February 1,2016, OMFP had received matching funds totaling 

S946,36S. OMFP received an additional $142,564 by April 7,2016, for a total of $1,088,929. 

^ OMFP filed comprehensive amended disclosure reports on January 31,2017 along with the 2016 Year-End 

Report. These corrections created a mathematical discrepancy of $17,431 in the audited reports pertaining to the 

ending cash-on-hand. See Scope of Audit, p. 1. 
Partni 

Summaries 

Findings and Recommendations 

Finding 1. Net Outstanding Campaign Obligations 

The Audit staffs review of OMFP's financial activity through December 31,2017, and 

estimated winding down costs indicated that the Candidate did not receive matching fund 

payments in excess of his entitlement. 

In response to the Preliminary Audit Report recommendatie 

related to this matter. (For more detail, see p. 6.) 

IFP had no comments 

OMFF 

Finding 2. Payments of NonDuring audit fieldwork, the Audit staffs revi 

OMFP spent $39,834 on behalf of the O' Sa; 

(OPAC). Since these funds were not spent in conn! 

nomination for election, they are centered non-quaf 

calculated repayment to the United Smfefs.^reasury at a 

representatives explained that OMFP 

qualified campaign expenses and ex{ 

The Audit staff analyzed all documentati 

subsequent reimbursemeiffs'ahdxonfirmed 

the public funds wer)3'mstor^>a^ result of 

recommend that thA^^mission make a 

U.S. Treasury. 

Expen» 

disbursemei^-s mdi^ted that 

litical Actioir^mmittee 

ith^e Candidate's 

ipaign expenses. The 

f23.37% is $9,309. OMFP 

^uring the^cuitra%n that these were not 

ibursepfient for these expenses. 

;^these disbursements and 

OPAC^ifibursed OMFP in full. Since 

reimbursement, the Audit staff will 

\tion that no repayment is owed to the 

In respor 

related'lo^his mattef^ 

Fin 

The Audit 

(Offsets to Ex] 

itemize 14 such 

filed amended repoi 

lit Reportlecommendation, OMFP had no comments 

iiUeep.9.) 

o Itemize Offsets to Ebcpenditures 

ir refunds OMFP disclosed on Schedule A-P, Line 20 

I, Rebates, etc.)) and determined that OMFP did not 

ling $8,582. Subsequent to the audit notification, OMFP 

d materially disclosed these receipts. Since OMFP's corrective 

action occurred after ludit notification, the matter is included in this audit report. 

In response to the Preliminary Audit Report recommendation, OMFP had no comments 

related to this matter. (For more detail, see p. 11.) 

Finding 4. Reporting of Debts and Obligations 

During audit fieldwork, the Audit staff noted that OMFP failed to disclose debts and 

obligations to one vendor totaling $156,019. 
In response to the Preliminary Audit Report recommendation, OMFP amended its 

disclosure reports to materially correct the disclosure of debts and obligations on 

Schedule D-P (Debts and Obligations). (For more detail, see p. 13.) 

Finding 5. Stale-Dated Checks 

The Audit staff identified 12 stale-dated checks totaling $15,197 issued by OMFP. 

In response to the Preliminary Audit Report, OMFP made a payment of $15,197 to the 

U.S. Treasury. (For more detail, see p. 14.) 

Summary of Amounts Owed to 

States Treasury 

nited 

Finding 2. (p. 9) Payments of Non-Qualifie^''''^ 

Expenses /c \ 

Checks *ji\ 

$0 

Finding 5. (p. 13) Stale-Dated 5,197 

Total $ 15,197 
Part IV 

Findings and Recommendations 

I Finding 1. Net Outstanding Campaign Obligations 

Summary 

The Audit staffs review of OMFP's financial activity through December 31,2017, and 

estimated winding down costs indicated that the Candidate did not receive matching fund 

payments in excess of his entitlement. 

In response to the Preliminary Audit Report recommendatior 

related to this matter. // 

IFPl no comments 

Legal Standard 

A. Net Outstanding Campaign Obligations (N] 

candidate's date of ineligibility (see definition 

statemenit of "net outstanding campaign obli^tiOiu:^. J 

among other things: 

• The total of all committee as^ including ca^ 

committee and capital assets.li^bii^nheir fair 

• The total of all outstanding oblij^d^fb^ualified 

• An estimate of necessary windin^o^s;!Mts>sJ 1 C 

ithin IS diyA^rthe 

didate musis^imt a 

lent must^^fain, 

id, amounts owed to the 

gn expenses; and 

19034.5(a). 

B. Dateof Ineiigibi 

occurs first: 

• The day or 

• The 30th day foT 

rend of 

nomini 

case ofai 

ion, the lastdi 

the I • year. 

I of ineli^Kriity is wh^hever of the following dates 

ijhe ct^didate ceases^^te active in more than one state; 

le'secQad con^c^tive primary in which the candidate 

lular vote; 

shihg^bayment period, which is generally the day when the 

the general election; or 

late >^dse party does not make its selection at a national 

y of the last national convention held by a major party in 

CFR §§9032.6 and 9033.5. 

C. Qualified Car expense. Each of the 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 11 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. 

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

activity. 11 CFR §9034.4(a)(3). 

D. 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 for 

matchable contributions received and deposited on or before De^fnter 31^ of the 

Presidential election year, provided that he or she still has ne^^§tai^ng campaign debts 

on the day when the matching payments are made. 11 CFR^03i^.l(b). 

E. Value of Capital Assets. The fair market value of qap^l ass^t^i^O% of the total 

original cost of the assets when acquired, except tha^sets that are reqeiyed after the date 

of ineligibility must be valued at their fair maite^mlue on the date receiwdw A 

candidate may claim a lower fair market valup^4qrycapital^sset by listin^thie^set on 

the NOCO statement separately and demonstratii^th^ugb-^umentationi^tne lower 

fair market value. 11 CFR §9034.5(c)(I). 

F. Winding Down Costs. A primary<«lectioi 

election may receive and use matching 

of the candidate's withdrawal from the 

party's nominating cony^tioru if the candu 

A primary election crat^te^^o runs in t1 

after the general eledtion before u^ng any mi 

regardless of whetne^thVqandig4le receives mi 

11 CFR §9034.11(d). 

it^andidate' 

.^iv.q^ifying i 

not run in the general 

le^mmission in writing 

iigb^3^^niin^'Km or after the date of the 

as nobwhhdrawn before the convention, 

eral elenion must wait until 31 days 

ing funds for winding down costs, 

ng funds for the general election. 

Facts^ 

A. Facis^ N. \ \ ^ 

The Candid^^ date of ineligibility (DOI) was February 1,2016. The Audit staff 

reviewed OM^P^ftnancial ^tivity through December 31,2016; analyzed actual and 

projected winding^own co^;^ and prepared the Statement of Net Outstanding 

Campaign Obligatibns appears on the next page. 

' The actual winding down costs were reviewed through April 30,2018. The projected winding down 

costs were estimated through December 31,2018. 
O'MallQT for President 

Statement of Net Outstanding Campaign Obligations 

As of February 1,2016 

Prepared May 25,2018 

Assets 

Cash in Bank 

Accounts Receivable 

Security Deposits 

Physical Assets @ 60% depreciation 

Total Assets 

Liabilities 

Accounts Payable for Qualified Campaign Expenses as oi2J\ 

Winding Down Costs: 

Actual Winding Down Costs Paid (2/2/16 - 4/30/18) 

Estimated Winding Down Costs (5/1/18 - 12/31/] 

Total Liabilities 

Amounts Payable to the US Treasury 

Stale Dated Checks (See Finding S) 

Net Outstanding Campaign Obligati 

$ 181,638 [a] 

27,074 

2.642 

$211,354 

[a] Amount include^'htributii 

[b] Estimated winding 

adjusted accordingly? 

163) 

^ m-M 

$(494,626) 

(15,197) 

Footnotes to NOCO Statement: 

^ated prior to yPI and deposited after DOI. 

rill be compared'jio actual winding down costs and will be 
Shown below are adjustments for funds received after the Candidate's DOl on February 

1,2016 through April 7,2016, the date OMFP received its last matching fund payment. 

Net Outstanding Campaign Obligations (Deficit) as of 2/1/16 $ (298,469) 

Less: Contributions Received (2/2/16 - 4/7/16) 104,475 

Less: Matching Funds Received (2/2/16 - 4/7/16) 142,565 

Remaining Net Outstanding Campaign Obligations 

(Deficit) as of 4/7/16 / \ 

$(51,429) 

As presented above, OMFP has not received matching 

entitlement. 

B. Preliminary Audit Report & Audit Division 

The Audit staff presented a preliminary NOCC^ratement 

OMFP representatives at the exit conference.^Sup^uentI 

supporting calculations for the NOCO figures. O 

comments related to this matter. 

endatioi 

related 

e Audit I 

itives did i 

The Preliminary Audit Report recomr 

believed were required in connection' 

provide any other additional comments. 

C. Committee ResTOi 

In its response to the P' 

comments related 

ents in excess of its 

to the 

ided the 

provide 

at OMFP ( 

f the an 

ite any adjustments it 

OCO statement or 

endation, OMFP had no 

__^Npn-Qualified Expenses y 

During audiK^l^ork, the Audit staffs review of OMFP's disbursements indicated that 

OMFP spent on tej/alf of the O' Say Can You See Political Action Committee 

(OPAC).^ Sinceth^ejmds were not spent in connection with the Candidate's 

nomination for electimi^ey are considered non-qualified campaign expenses. The 

calculated repaymei^o the United States Treasury at a ratio of 23.37% is $9,309. OMFP 

representatives explained that OMFP was aware during the campaign that these were not 

qualified campaign expenses and expected OPAC's reimbursement for these expenses. 

The Audit staff analyzed all documentation pertaining to these disbursements and 

subsequent reimbursements and confirmed that OPAC reimbursed OMFP in full. Since 

the public funds were restored as a result of the reimbursement, the Audit staff will 

recommend that the Commission make a determination that no repayment is owed to the 

U.S. Treasury. 

' OPAC is a qualified multi-candidate political action committee ibrmed 'on July 18,2012. Initially 

OPAC supported and opposed more than one Federal candidate; however, OPAC amended its Form I 

with the Qimmission on June 12,201S to identify the Candidate as the sponsor of the Leadership PAC. 

OPAC has no affiliated committees. 
10 

In response to the Preliminary Audit Report recommendation, OMFP had no comments 

related to this matter. 

Legal Standard 

A. Qualified Campaign Expense. The legal standard in Finding 1 above pertaining to 

the qualified campaign expenses is incorporated herein. 

B. Definition of Non-Qnalified Campaign Expense. A noh-qualified campaign 

expense is any expense that is not included in the definition of a qualified campaign 

expense (see above). 11 CFR §9034.4(b). 

C. Matching Funds Used for Non-Qnalified Campaign Ex[ 

determines that a campaign used matching funds for non-qi 

the candidate must repay the Secretary of the United St 

the amount of matching funds used for the non-qualified^ampai^ 

§9038(b)(2)(A). 

Jf the Commission 

1 campaign expenses, 

' an amount equal to 

26 U.S.C. 

D. How to Determine Repayment Amonnti^^n-Qit^ified Campai; 

The amount of any repayment sought under tm?^qaiqn sh^h^ar the same^Wo to the 

total amount determined to have been used for non^u^ned campaign expenses as the 

amount of matching funds certified to^he candidate beia(^ the candidate's total 

deposits, as of 90 days after the candiq^'s.^te of ineli^jjitv. 11 CFR 

§9038.2(b)(2)(iii). 

E. Notification of Repayment Obligatic 

any repayment determin^iq^^s soon as j 

close of the matching'na^eitt^mod. The < 

the candidate (undN>lT^R §^^8.1(d)) wilP 

section. 11CFR§903{ 

Facts 

Ssfdn will notify a candidate of 

)le, but r^dater than three years after the 

imission's issuance of the audit report to 

titute notification for purposes of this 

A. 

The Aud^itv^kff reviewed (^h^FP's^isbursement records and identified the following 

three paym^t;^ade by O on behalf of OPAC: the first payment of $15,000 was 

made on May r8,2(H5; the^econd payment of $15,728 was made on June 1,2015; and 

the third paymen^f $9«ijOo was made on June 5,2015. OMFP made these 

disbursements totaling/^9,834 to purchase social media advertising and to finance 

payroll on behalf of OPAC and confirmed that none of these expenses related to the 

presidential campaign. 

Since these expenses were not made in connection with the Candidate's campaign for the 

Democratic Party nomination for President, they would be considered non-qualified 

campaign expenses. It is apparent that OMFP used these public funds to defray nonqualified campaign expenses. When calculating a repayment determination, the Audit 

staff routinely examines all expenses regardless of when they were made. In this 

instance, in accordance with 11 CFR §9038.2(b)(2)(iii), the Audit staff calculated the 
11 

ratio of repayment at 23.37%.Applying this ratio to the total non-qualified expenses of 

$39,834, the amount of repayment to the United States Treasury would equal $9,309. 

However, based on the documentation presented by OMFP, the Audit staff confirmed 

that OPAC reimbursed OMFP in full on August 20,201S. While it may have taken 

OPAC more than two months to reimburse OMFP, it repaid the total balance of public 

funds spent on non-qualified campaign expenses of $39,834. By repaying all the 

borrowed funds from OMFP, OPAC restored the public funds tmtrh^ been used for the 

non-qualified campaign expenses." This reimbursement ensii^ that OMFP was able to 

use the public funds to pay other qualified campaign exTOlfses^aAo^pay the U.S. 

Treasury if OMFP had been in the position of carrying aj^lusorjbhad received public 

funds in excess of its entitlement. Since the publicj^nd^!;^nt on uie^n-qualified 

expenses have been restored via reimbursement^^m OPAC, no repaym^H^ recoup 

public funds is warranted.'^ 

B. Preliminary Audit Report & Audit Division Reobifnfmendation 

The Audit staff presented this matterdoOMFP represratatiyes at the exit conference 

along with schedules detailing the finmn|sQMFP repre^nwiyes reiterated that they 

were aware all along of the fact that the^x^dif^s did wt re^sent qualified 

campaign expenses. For that reason, 0M|^ reqijestgd>imd reined OPAC's 

reimbursement for these expenses in full. 

The Preliminary Ai 

relevant to this mdl..^ 

that no repayment is o\ 

. Qiftecbmmended^ 

lie Au9iy staff will 

sur 

; OMFP submit any comments it deemed 

—nend that the Commission determine 

[minary Audit Report 

eport recommendation, OMFP had no 

to Itemize Offsets to Eixpenditures | 

Summcury 

The Audit staff reviewed vendor refunds OMFP disclosed on Schedule A-P, Line 20 

(Offsets to Expenditures (Refunds, Rebates, etc.)) and determined that OMFP did not 

itemize 14 such refunds totaling $8,582. Subsequent to the audit notification, OMFP 

filed amended reports and materially disclosed these receipts. Since OMFP's corrective 

action occurred after audit notification, the matter is included in this audit report. 

10 Matching flinds certified as of 90 days post-DOI divided by deposits ibr the Primary election as of 90 

days post-DOI (S1,088,929/$4,6S9,221=.2337). 

" OMFP's payment of $39,834 deemed as non-qualified campaign expenses less OP AG's fiill repayment 

of $39,834 equals zero. Since these activities occurred prior to the DOl, they are not reflected on the 

NOCO statement. 

A repayment determination is meant for the government to recoup money that was spent in violation of 

the conditions of receiving matching funds, not to be a penalty. Since OMFP's funds were restored via 

OP AG's reimbursement, any repayment determination would be a penalty. Kennecfyfor Presieknl 

Committee v. Federal Election Commission, 734 F.2d ISS8,1562 (D.G. Gir. 1984). 
12 

In response to the Preliminary Audit Report recommendation, OMFP had no comments 

related to this matter. 

Legal Standard 

A. When to Itemize. Authorized candidate committees must itemize: 

Any person who provides a rebate, relund, or other offset to operating expenditures to the 

reporting committee in an aggregate amount or value in excess of $200 within the 

election cycle, together with the date and amount of such receipt. 52 U.S.C. 

§30104(b)(3)(F). 

B. Election Cycle. The election cycle begins on the first day fol] 

previous general election and ends on the date of the next ger 

§100.3(b). 

C. Definition of Itemization. Itemization of contril 

recipient committee discloses, on a separate schedn 

• The amount of the contribution; 

• The date of receipt (the date the commiraeLrecei 

• The full name and address of the contribi 

• In the case of contributions from individual 

occupation and the name of l»s.or her emplo; 

• The election cycle-to-date total S^tillj:ontributioi 

11 CFR §§100.12 and 104.3(a; 

Facts and Analysis^ 

A. Facts 

During audit field 

by OMFP, and identifie 

Schedule ArPrEm©^ of i 

OM^fi|ed amended^ 

matmidlv^Borrected thes© it 

after audibnOTification, the 

lyi^ing the date of the 

11 CFR 

leans that the 

ation: 

tutors, the contributor's 

same contributor. 

Istaff revii vendor refunds and rebates received 

1,582 that were not itemized on 

irts, as required. 

^subsequent to the audit notification and 

Terrors. Since OMFP's corrective action occurred 

is included in this audit report. 

B. FreliminaiyvAiidit ]^brt & Audit Division. Recommendation 

The Audit staff present^fhis matter to OMFP representatives at the exit conference 

along with schedule^etailing the finding. OMFP representatives stated that OMFP 

amended its disclosure reports after the audit notification and disclosed the majority of 

these refunds. 

The Preliminary Audit Report recommended that OMFP provide any comments that it 

deemed necessary with respect to this matter. 

C. Committee Response to Preliminary Audit Report 

In response to the Preliminary Audit Report recommendation, OMFP had no comments 

related to this matter. 
13 

I Finding 4. Reporting of Debts and Obligations 

Summary 

During audit fieldwork, the Audit staff noted that OMFP failed to disclose debts and 

obligations to one vendor totaling $156,019. 

In response to the Preliminary Audit Report recommendation, OMFP amended its 

disclosure reports to materially correct the disclosure of debts apdjo^gations on 

Schedule D-P (Debts and Obligations). 

Legal Standard 

A. Continuous Reporting Required. A political ^mmit^e must*(^ 

and nature of outstanding debts and obligations undHho^ debts are e: 

U.S.C. §30104(b) and 11 CFR §§104.3(d) and^^l 1(a). 

B. Separate Schedules. A political committee mi 

owed by the committee and debts owed to the comm 

explaining the circumstances, and coi^tietis under whici 

incurred or extinguished. 11 CFR§104.44ia 

ose the amount 

ished. 52 

scheduleffor debts 

sgether with a statement 

1 debt and obligation was 

C. Itemizing Debts and Obligations. 

A debt of $500 priesS^ust be repbli^^nce it I^s'been outstanding 60 days from 

the date incu [(the^t\of the transaction); the committee reports it on the next 

regularly: 

A debt exceediT 

which4he^ebt ^ 

I disclos^in the report that covers the date on 

104.11(b). 

A. Fac 

During au^it.^bldwork, the i^udit staff used available disbursement records to reconcile'^ 

the account of^e of thcyOMFP's largest vendors, American Express. The vendor 

provided the Cremtxkn^js^ices that OMFP used on a daily basis to purchase various goods 

and services inclu^r^advertising, ballot access consulting, compliance consulting, 

database managemeri^igital consulting, direct mail, food and beverage, office equipment, 

etc. The unreported debt balances totaling $156,019 should initially have been disclosed 

on Schedule D-P for the 2015 October Quarterly Report and the 2016 February Monthly 

Report.'^ 

The reconciliation consisted of calculating invoiced and paid amounts for individual reporting periods in 

the 201S-2016 campaign cycle. The Audit staff then determined whether any outstanding debts were 

correctly disclosed on Schedule D-P. Each debt amount was counted once, even if it required disclosure 

over multiple reporting periods. 

These reports covered periods July 1,2015 - September 30,2015 and January 1,2016 - January 31, 

2016, respectively. OMFP paid off the balances in the subsequent reporting periods; the 2015 Year-End 

Report and the 2016 March Monthly Report. 
14 

B. Preliminary Audit Report & Audit Division Recommendation 

The Audit staff presented this matter to OMFP representatives at the exit conference and 

provided schedules detailing the unreported debts for each audited reporting period. 

OMFP did not provide comments related to this matter. 

The Preliminary Audit Report recommended that OMFP provide documentation 

demonstrating that these expenditures did not require reporting on Schedule D-P. Absent 

such documentation, the Preliminary Audit Report recommended that OMFP amend its 

reports to disclose the unreported debts of $156,019. 

C. Committee Response to Preliminary Audit Report 

In response to the Preliminary Audit Report recommendaUe^i>^ 

disclosure reports to materially correct the disclosure of^ms an 

Schedule D-P. 

I Finding 5. Stale-Dated Chec! 

Summary 

The Audit staff identified 12 stal 

In response to the Preliminary Audit 

U.S. Treasury. 

V 

checks total i, 197 issued by OMFP. 

P made aliayhf^nt of $15,197 to the 

Legal Standard 

Handling Stale-Da^d^(Un< 

payees (creditors dnxMradbutoi 

Commission of its effoi 

outstanding^hecks>jrhe 

Treasi 

amended its 

igations on 

a committee has issued checks that the 

le committee must notify the 

encourage them to cash the 

Submit a check payable to the U. S. 

ling checks. 11 CFR §9038.6. 

A. Facts 

The Audit staff\i^ncili&tIon of OMFP's bank accounts through December 31,2016, 

identified 12 stal&^d^b^fiecks totaling $15,197 issued by OMFP. The checks were 

dated between June \^15 and December 14,2016 and had not cleared the bank as of 

December 31,2017.'' 

B. Preliminaiy Audit Report & Audit Division Recommendation 

The Audit staff provided OMFP a schedule of stale-dated checks at the exit conference. 

OMFP did not provide comments on this finding. 

" The Audit staff conducted a limited review of financial activity through December 31,2017 in order to 

determine whether the stale-dated checks had been cashed by the recipients and cleared the bank prior to 

the issuance of this report. 
15 

The PFeliminary Audit Report recommended that OMFP demonstrate that: 

• The checks were not outstanding by providing copies of the front and back of the 

negotiated checks along with bank statements; or 

• The outstanding checks have been voided by providing either: 

o Copies of the voided check with evidence that no obligation exists, or 

o Copies of the front and back of negotiated replacement checks along with 

bank statements. 

• Absent such evidence, the Preliminary Audit Report recommended that $ 1S, 197 

be paid to the U.S. Treasury; or 

• If funds were not available to make the necessary refunds, OMFP should have