FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 21)463 

AUG t 3 2015 

MEMORANDUM 

TO; Patricia C. Orrock 

Chief Compliance Officer 

Thomas E. Hintermister 

Assistant Staff Director 

Audit Division 

FROM: Lisa J. Stevenson 

Deputy General Counsel - Law 

Lorenzo Holloway 

Assistant General Counsel 

Compliance Advice 

Joshua Blume 

Attorney 

SUBJECT: Interim Audit Report on the Ted Cruz for Senate Committee (LRA 976) 

I. INTRODUCTION 

The Office of the General Counsel has reviewed the Interim Audit Report ("lAR") on the 

Ted Cruz for Senate committee ("the Committee"). The lAR contains two findings: Receipt of 

Contributions in Excess of Net Debt (Finding 1); and Reporting of Candidate Loan as a 

Contribution (Finding 2). Our comments address Finding 1 only, as we concur with Finding 2. If 

you have any questions, pleaise contact Joshua Blume, the attorney assigned to this audit. 
Comments on the Interim Audit Report 

Ted Cruz for Senate (LRA 976) 

Page 2 

II. RECEIPT OF CONTRIBUTIONS IN EXCESS OF NET DEBT (Finding 1) 

Finding 1 concerns eight contributions totaling $19,000 made by various political 

committees' to the Committee, all of which were made after the date of the general election. The 

lAR concludes that all eight of the contributions were designated for the general election. The 

Audit Division relied on disclosure reports filed by the contributing political committees to 

determine that these contributions were designated for the general election. The Audit EMvision, 

however, found that the Committee had no net debts outstanding associated with the general 

election when it received these contributions.^ The IAR, therefore, concludes that the Committee 

was not eligible to receive general election contributions. See 11 C.F.R. §§ 110.1(b)(3)(i), 

110.2(b)(3)(i) (contributions designated in writing for a particular election but made after that 

election may be accepted only to the extent necessary to retire net debts outstanding from that 

election). 

We conclude that some, but not all, of the eight contributions were designated for the 

general election. We set forth our specific conclusions for each of the three categories of 

contribution discussed in the lAR below. 

The first category includes four contributions totaling $^,000 containing such aimotations 

as "general election," "general debt retirement," or "debt retirement." We conclude that the 

contributors designated these contributions for the general election. This conclusion, however, is 

based on the annotations that appear on the contributions and not on the contributing committees* 

disclosure reports.^ The annotations "general election'* and "general debt retirement" clearly 

indicate the particular election for which the respective contributions were made. 11 C.F.R. §§ 

110. l(b)(4)(i), 110.2(b)(4)(i). The contributions bearing the annotation "debt retirement" do not 

' We understand that all but one of the political committee contributors discussed in the lAR are, or were, 

multicandidate committees, as that term is defined in the Federal Election Campaign Act of 1971, as amended, and in 

Commission regulations. See 52 U.S.C. § 30116(aX4); 11 C.F.R. § I00.S(e)(3). Since all but one of the contributors 

discussed in Finding 1 are or were multicandidate committees, we recommend that the Audit Division revise the Legal 

Standard section of the Finding to incorporate references to section 110.2, and determine whether the application of 

section 110.2 to any of the contributions made by a multicandidate committee would change the resulting analysis. 

^ The lAR does not present the calculation that the Audit staff performed to determine that the Committee had 

no net debts outstanding associated with the general election at the time it received these contributions. To provide 

more support for the finding and to allow the Committee to respond to it, we would recommend that the Audit 

Division revise the lAR to provide details of the calculation. 

^ The Audit Division used the disclosure reports to determine the designations not only to resolve apparent 

ambiguities in the status of certain of the contributions discussed in the Finding, but also so as to be consistent with its 

decision to exclude one apparent excessive contribution of S2,S00 from the Finding. We recommend that the Audit 

Division revise the lAR to remove any analysis that relies on the disclosure reports to determine the contributors' 

designation of the contributions. The Commission previously considered and rejected a proposal to allow contributing 

political committees to designate their contributions by indicating those designations in their disclosure reports. See 

Explanation and Justification for Final Rule on Contribution and Expenditure Limitations and Prohibitions [and] 

Contributions by Persons and Multicandidate Political Committees, 52 Fed. Reg. 760,762-63 (Jan. 9,1987) ("1987 

E&J"). Therefore, we do not believe that the contributors' disclosure reports can serve as a source of contribution 

designation information. 
Comments on the Interim Audit Report 

Ted Cruz for Senate (LRA 976) 

Pages 

on their face indicate which election debt they are intended to help reduce, but given the timing of 

the contributions, we believe they should also be considered general election contributions. This 

conclusion is consistent with the result in Re: AOR 1976-101 (Moynihan).^ In that matter, the 

Commission concluded that persons making contributions after the general election to retire a 

committee's debts should designate in writing the specific election debt to which their 

contributions relate, and that, if the contributors make no designation as to which election debt the 

ftmds should be applied, then the contributions should be deemed made with respect to the general 

election. Re: AOR 1976-101 (Moynihan).^ 

Although these contributions should be considered designated for the general election, the 

Committee could not accept these contributions for that election. To accept a contribution that is 

designated for the general election, but received after that election, a committee must have net 

debts outstanding. 11 C.F.R. §§ 110.1(b)(3)(i), I10.2(b)(3)(i) The four contributions designated 

for the general election could not have been properly received for that election because according 

to the Audit Division there were no net debts outstanding associated with the general election.® 

Second, we believe that the three contribution checks totaling $4,500 should be considered 

as undesignated because they apparently bore no annotations, nor were they accompanied by a 

signed writing designating the contributions for specific elections. 11 C.F.R. §§ 

110.1(b)(4)(i)-(ii), 110.2(b)(4)(i)-(ii). Given these facts, we believe that the contributions should 

be deemed to have been made with respect to the 2018 primary election for the U.S. Senate - the 

next election for the same Federal office occurring after the contributions were made. 11 C.F.R. 

§§ 110.1(b)(2)(ii), 110.2(b)(2)(ii). These three contributions totaling $4,500 therefore also would 

require evidence of redesignation if the Conunittee sought to use them to retire 2012 election debt. 

Finally, we believe that the single contribution of $2,500 containing the annotation 

"run-off election" should be considered to have been made with respect to the primary run-off 

election since the annotation clearly indicates the particular election for which the contribution 

was made. 11 C.F.R. §§ 110.1(b)(4)(i), 110.2(b)(4)(i). Given this conclusion, the single $2,500 

contribution designated for the run-off election would not require evidence of redesignation to the 

extent that: (1) there was net debt outstanding from the run-o^ election under the rules; and (2) the 

Committee used the contribution to help reduce this run-off election debt. 11 C.F.R. §§ 

110.1(b)(3)(i),110.2(b)(3)(i). 

* The Commission issued this document in response to an advisory opinion request, but noted that it should be 

regarded as informational only and not as an advisory opinion, because it was based in part on proposed Commission 

regulations. Re:AOR 1976-101 (Moynihan for Senate). 

' The Moynihan committee had accumulated both primary election debt and general election debt. Re: AOR 

1976-101 (Moynihan for Senate). 

' Commission regulations provide that the net debt outstanding rules do not otherwise preclude candidates who 

participate in the general election from using general election contributions to pay primary election debt. 11 C.F.R. § 

110.1(b)(3)(iv); see also Advisory Opinion 1990-30 (Helms) (concluding that committee could treat total SI million 

indebtedness as general election indebtedness pursuant to section 110.1(b)(3Xiv)). In its explanation of this rule, the 

Commission clarified that it allows the use of fiinds "properly received" for the general election for this purpose. 1987 

E&J, at 762. Funds received for the general election that exceed net debts outstanding for that election would not be 

properly received.