11

E. Definition of an earmarked contribution. A contribution that the contributor
directs (either orally or in writing) to a clearly identified candidate or authorized
committee through an intermediary or conduit. 11 CFR §110.6(b)(1).

F. Required Information for Contributions from Individuals Received From a
Conduit. For each itemized contribution from an individual forwarded by a conduit, the
recipient committee must report the following information:
e The contributor’s full name and address (including zip code);
e The contributor’s occupation and the name of his or her employer;
e The date of receipt (the date the conduit received the contribution);
The amount of the contribution;
The election cycle-to-date total of all contributions from the same individual;
e The full name and address of the conduit; and
e The date and total amount of earmarked contributions received from the conduit
11 CFR §§100.12, 104.3(a)(4), 110.6(c) and 2 U.S.C. §434(b)(3)(A).

Facts and Analysis

Results from a sample review of contributions received from individuals indicated that
RMCC did not accurately disclose the election cycle to date total for 14% of the
contributions reviewed. These errors may have occurred because RMCC did not enter
every contribution into its campaign finance software (FECfile). Instead, contributions of
small denominations were often grouped together and itemized on Schedules A (Itemized
Receipts) as “Small Internet Donations” or “Some Small Anonymous.” During the audit
period, receipts itemized in this manner totaled $173,177. Also, according to the
Candidate, RMCC did not maintain a central database of all contributions. Instead,
RMCC maintained a database of credit card contributions and separate database for
contributions made by check. For these reasons, RMCC did not accurately calculate or
disclose the election cycle to date total for many contributors.

The Audit staff also determined that earmarked contributions from individuals totaling
$28,406 received via a political committee (ACTBLUE) were not properly disclosed on
Schedules A. During the audit period, RMCC received $29,652 in transfers from
ACTBLUE for earmarked contributions from individuals.* Although RMCC included
these earmarked contributions in reported figures for Line 1 laii (Unitemized
Contributions from Individuals), RMCC did not disclose the name of the conduit, or the
date and amount of the conduit’s transfers as memo entries.

At the exit conference, RMCC was informed of the inaccurate election cycle to date
totals and incorrect disclosure of earmarked contributions. The Candidate stated that
amended reports would be filed to correct Schedules A.

5 This amount does not include $6,025 in checks issued by ACTBLUE to replace checks originally lost by
RMCC. It was later determined that both the original and replacement checks were deposited by RMCC.
Since these transfers represent earmarked contributions from individuals, the Audit staff determined that
contribution limits were not exceeded by ACTBLUE; however, because the amount has not been repaid
by RMCC it should be disclosed as an outstanding debt on Schedules D.


Part II
Overview of Campaign

Campaign Organization

Important Dates RMCC

e Date of Registration November 24, 2003

e Audit Coverage September 30, 2003 — December 31, 2004
Headquarters Kemah, Texas

Bank Information

e Bank Depository 1

e Bank Account 1 Checking Account
Treasurer

e Treasurer When Audit Was Conducted Michael Gidley

e Treasurer During Period Covered by Audit | Michael Gidley

Management Information

e Attended FEC Campaign Finance Seminar_| No

¢ Used Commonly Available Campaign Yes
Management Software Package

«¢ Who Handled Accounting and Volunteer campaign staff
Recordkeeping Tasks

Overview of Financial Activity

(Audited Amounts)
Cash on hand @ September 30, 2003 $0
o Contributions from Individuals 690,524
o Contributions from other Political Committees 37,433
o Candidate Loans 30,000
o Offsets to Operating Expenditures 3,785
o Other Receipts 9,266
Total Receipts $771,008
o Operating Expenditures 740,056
o Repayment of Candidate Loans 30,000
Total Disbursements $ 770,056
Cash on hand @ December 31, 2004 $ 952



(a) Assets. Amounts derived from any asset that, under applicable State law, at the
time the individual became a candidate, the candidate had legal right of access to or
control over, and with respect to which the candidate had legal and rightful title or an
equitable interest;

(b) Income. Income received during the current election cycle, as defined in 11 CFR
§400.2, of the candidate, including:

(1) A salary and other earned income that the candidate earns from bona fide
employment;

(2) Income from the candidate’s stocks or other investments;

(3) Bequests to the candidate;

(4) Income from trusts established before the beginning of the election cycle as
defined in 11 CFR §400.2;

(5) Income from trusts established by bequest after the beginning of the election
cycle of which the candidate is the beneficiary;

(6) Gifts of a personal nature that had been customarily received by the candidate
prior to the beginning of the election cycle, as defined in 11 CFR §400.2; and

(7) Proceeds from lotteries and similar legal games of chance. 11 CFR §100.33

E. Contents of Reports. Each report must disclose for the reporting period and for the

election cycle, the total amount of loans made by or guaranteed by the candidate and the

identification of each person who makes, endorses or guarantees a loan to the committee.
2 U.S.C. §434(b)(2)(G) and (3)(E).

Facts and Analysis

The Candidate made two loans to RMCC totaling $30,000 with funds provided by his
parents. As a result, the Candidate’s parents made excessive contributions to RMCC
totaling $28,000.*

On October 8, 2004, $100,000 was wired from an investment account of the Candidate’s
parents to an account in the name of the Candidate’s father and aunt. On October 13,
2004, these funds were wired from this account to a business account of the Candidate.
On October 29, 2004 and November 1, 2004, withdrawals of $15,000 were made from
the Candidate’s business account and deposited in the RMCC account. On November 16,
2004, RMCC repaid the Candidate $30,000 and on November 18, 2004 the Candidate
repaid his father $100,000. For these transactions, RMCC reported only a loan from the
Candidate of $15,000 and did not report the repayments to the Candidate (see Finding 1).
It was also determined that a portion of the $30,000 loaned by the Candidate was used to
correct a shortfall in the RMCC account during a brief period prior to the general
election.

5 The excessive contribution amount equals the amount of the contribution ($30,000) less the total
available limit for each parent towards the general election ($2,000). At the time the loan was made to
RMCC, the Candidate’s mother had contributed $2,000 for the general election and the Candidate’s
father had not made a contribution for the general election.


Part IV
Findings and Recommendations

| Finding 1. Misstatement of Financial Activity

Summary

A comparison of RMCC’s reported financial activity to bank records revealed a
misstatement of cash on hand, receipts, and disbursements in 2004. In response to a
recommendation in the Interim Audit Report, RMCC filed amended reports that corrected
the misstatements.

Legal Standard

Contents of Reports. Each report must disclose:

The amount of cash on hand at the beginning and end of the reporting period;

The total amount of receipts for the reporting period and for the election cycle; and
The total amount of disbursements for the reporting period and for the election cycle
Certain transactions that require itemization on Schedule A or Schedule B. 2 U.S.C.
§434(b)(1), (2), (3), (4), and (5).

Facts and Analysis

The Audit staff reconciled the reported activity to the bank records and determined there
was a misstatement of ending cash on hand, receipts, and disbursements in 2004. The
following charts detail the discrepancies between the totals on RMCC’s disclosure
reports and bank records for 2004.

2004 Activity
Reported* Bank Records | Discrepancy

Opening Cash Balance $9,130 $9,130 $0

Receipts $614,480 $744,819 $130,339
Understated

Disbursements $666,739 $752,997 $86,258
Understated

Ending Cash Balance $-44,2897 $952 $-45,241
Understated

3 Based on reported activity as of audit notification on April 25, 2005.
+ This figure does not foot due to a discrepancy of $1,160 between the ending cash balance on the Post
General Election Report and the beginning cash balance on the Year End Report.


Part III
Summaries

Findings and Recommendations

Finding 1. Misstatement of Financial Activity

A comparison of RMCC’s reported financial activity to bank records revealed a
misstatement of cash on hand, receipts, and disbursements in 2004. In response to a
recommendation in the Interim Audit Report, RMCC filed amended reports that corrected
the misstatements. (For more detail, see p. 4)

Finding 2. Receipt of Loans that Exceed Limits

The Candidate made two loans to RMCC totaling $30,000 with funds provided by his
parents. As a result, the Candidate’s parents made excessive contributions to RMCC
totaling $28,000. The Audit staff recommended that RMCC provide documentation
demonstrating that the loans were not made with funds from the Candidate’s parents.
Absent such evidence, it was recommended RMCC amend its reports to correctly
disclose the source of these loans. In response, RMCC maintained the funds loaned to
RMCC were the Candidate’s personal funds. (For more detail, see p. 6)

Finding 3. Disclosure of Disbursements

Results of a sample review of operating expenditures itemized on Schedules B indicated
that RMCC did not provide adequate disclosure information, such as purpose, for 61% of
the items reviewed. Similarly, a review of reimbursements made to the Candidate and
campaign manager resulted in the identification of disbursements totaling $331,265
reported with incorrect disclosure information or an unacceptable purpose. In addition,
the Audit staff’s review of reimbursements to individuals identified expenses totaling
$50,832 that should have been itemized on Schedules B as memo entries disclosing the
names of the original vendors. In response to a recommendation in the Interim Audit
Report, RMCC filed amended reports correctly disclosing the required information.
(For more detail, see p. 9)

Finding 4. Disclosure of Contributions

Results of a sample review of contributions received from individuals indicated that
RMCC did not accurately disclose the election cycle to date total for 14% of the
contributions reviewed. In addition, RMCC did not properly disclose the receipt of
earmarked contributions totaling $28,406. In response to a recommendation in the
Interim Audit Report, RMCC filed amended reports correctly disclosing the required
information. (For more detail, see p. 10)

Finding 5. Failure to File 48-Hour Notices

The Audit staff identified 13 contributions totaling $31,750 for which RMCC did not file
48-hour notices. In response to the Interim Audit Report, RMCC acknowledged that it
may have failed to completely report all the 48-hour notices. (For more detail, see p. 12)


During audit fieldwork, the Audit staff informed the Candidate of the misstated activity
noted above. In response, the Candidate stated problems with its campaign software may
have caused some of the reporting errors. At the exit conference, the Audit staff provided
the Candidate with a schedule of the reporting discrepancies. The Candidate indicated
that amended reports would be filed to correct the misstatements.

Interim Audit Report Recommendation and Committee Response
The Audit staff recommended that RMCC amend its reports to correct the misstatements
noted above. It was also recommended that RMCC amend its most recently filed report
to correct the cash on hand balance and include a notation that the change is due to audit
adjustments in 2004. In response, RMCC filed amended reports that corrected the
misstatements.

| Finding 2. Receipt of Loans that Exceed Limits

Summary

The Candidate made two loans to RMCC totaling $30,000 with funds provided by his
parents. As a result, the Candidate’s parents made excessive contributions to RMCC
totaling $28,000. The Audit staff recommended that RMCC provide documentation
demonstrating that the loans were not made with funds from the Candidate’s parents.
Absent such evidence, it was recommended RMCC amend its reports to correctly
disclose the source of these loans. In response, RMCC maintained the funds loaned to
RMCC were the Candidate’s personal funds.

Legal Standard

A. Authorized Committee Limits. An authorized committee may not receive more
than a total of $2,000 per election from any one person or $5,000 per election from a
multicandidate political committee. 2 U.S.C. §441a(a)(1)(A), (2)(A) and (f); 11 CFR
§§110.1(a) and (b) and 110.9(a).

B. Contribution Defined. A gift, subscription, loan (except when made in accordance
with 11 CFR §§100.72 and 100.73), advance, or deposit of money or anything of value
made by any person for the purpose of influencing any election for Federal office is a
contribution. The term Joan includes a guarantee, endorsement, and any other form of
security. A loan is a contribution at the time it is made and is a contribution to the extent
that it remains unpaid. The aggregate amount loaned to a candidate or committee by a
contributor, when added to other contributions from that individual to that candidate or
committee, shall not exceed the contribution limitations set forth at 11 CFR part 110. A
loan, to the extent it is repaid, is no longer a contribution. 11 CFR §100.52(a).

C. Expenditures by Candidates. Candidates for Federal office may make unlimited
expenditures from personal funds. 11 CFR §110.10(a)

D. Definition of Personal Funds. Personal funds of the candidate means the sum of all
of the following:


FEDERAL ELECTION COMMISSION
Washington, DC 20463

March 22, 2007

MEMORANDUM

To: Robert W. Biersack
Press Officer

Through: Margarita Maisonet
Chief Compliance Officer

From: Joseph F. Stoltz r
Assistant Staff D ‘or

Audit Division ;

Subject: Public Issuance of the Audit Report on Richard Morrison Congressional
Committee

Attached please find a copy of the audit report and related documents on Richard
Morrison Congressional Committee, which was approved by the Commission on March 7,
2007.

The report may be released to the public on March 22, 2007.

Attachment as stated

cc: Office of General Counsel
Office of Public Disclosure
Reports Analysis Division
‘C Library
DSDD Website


| Finding 3. Disclosure of Disbursements

Summary

Results of a sample review of operating expenditures itemized on Schedules B indicated
that RMCC did not provide adequate disclosure information, such as purpose, for 61% of
the items reviewed. Similarly, a review of reimbursements made to the Candidate and
campaign manager resulted in the identification of disbursements totaling $331,265
reported with incorrect disclosure information or an unacceptable purpose. In addition,
the Audit staff’s review of reimbursements to individuals identified expenses totaling
$50,832 that should have been itemized on Schedules B as memo entries disclosing the
names of the original vendors. In response to a recommendation in the Interim Audit
Report, RMCC filed amended reports correctly disclosing the required information.

Legal Standard
A. Reporting Operating Expenditures. When operating expenditures to the same
person exceed $200 in an election cycle, the committee must report the:

e Amount;

e Date when the expenditures were made;
e Name and address of the payee’; and
.

Purpose (a brief description of why the disbursement was made—see below). 11
CFR §104.3(b)(4)(i).

B. Examples of Purpose.

e Adequate Descriptions. Examples of adequate descriptions of “purpose” include
the following: dinner expenses, media, salary, polling, travel, party fees, phone
banks, travel expenses, travel expense reimbursement, catering costs, loan
repayment, or contribution refund. 11 CFR §104.3(b)(4)(i)(A).

e Inadequate Descriptions. The following descriptions do not meet the requirement
for reporting “purpose”: advance, Election Day expenses, other expenses,
expense reimbursement, miscellaneous, outside services, get-out-the-vote, and
voter registration. 11 CFR §104.3(b)(4)(i)(A).

Facts and Analysis

A sample review of operating expenditures resulted in a 61% error rate for disclosure
information. The errors consisted mostly of reporting no purposes or an unacceptable
purpose (such as consultant or campaign consultant) on Schedules B. Similarly, a review
of media expenditures and reimbursements to the candidate and campaign manager
resulted in the identification of disbursements totaling $331,265 with inadequate
disclosure information. In most cases, the reporting of these disbursements also lacked a
purpose or an acceptable purpose. In each review, it was determined that a person not
associated with RMCC would not easily discern why the disbursement was made when
reading the name of the recipient and the purpose on Schedules B.

7 Payee means the person who provides the goods or services to the committee.
11 CFR §102.9(b)(2)(i)(A)


The Candidate maintains that the funds loaned to RMCC were his personal funds.°
However, it appears the funds in the Candidate’s business account were necessary to pay
other obligations of the business and, therefore, were not available to be loaned to
RMCC. In fact, without the funds from the Candidate’s parents, the Candidate’s business
account would have been overdrawn when the second $15,000 loan was made to RMCC.
Furthermore, the Candidate’s business account was overdrawn shortly after the
Candidate’s father was repaid which indicates the funds in this account were committed
for other expenses.

At the exit conference, the Audit staff provided the Candidate with its calculation of
excessive contribution amounts resulting from the loans and explained the reporting
discrepancies.

Interim Audit Report Recommendation and Committee Response
The Interim Audit Report concluded that based on an analysis of the bank account
records provided by RMCC, the Candidate appears not to have had sufficient unobligated
funds to make the $30,000 loan to RMCC and, therefore, the funds received from his
parents appear to be the source of the loan. It was recommended that should RMCC wish
to challenge this conclusion, it should submit documentation to show that the Candidate
did have sufficient unobligated funds. Such evidence was to include:

e Records to establish that the Candidate had sufficient personal funds, excluding
the funds received from his parents, to make the loan to RMCC while still
satisfying his non-campaign obligations. Such information could include records
from the Candidate’s business which could establish what, if any, types of
business expenses were paid from other accounts and other available personal or
business funds; and,

¢ Records that demonstrate the Candidate’s legal right of access to or control over
funds in the business account(s).

Absent such evidence, it was recommended that RMCC amend its reports (Schedules C)
to correctly disclose the source of funds for these loans.

In response, RMCC maintained that the funds loaned to RMCC were the Candidate’s
personal funds and was composed of the $19,602 from the Candidate’s business account
and $10,398 from a business loan to the Candidate from his father. RMCC stated that the
Candidate’s father had previously made loans to his son and that this loan was an interest
bearing short term loan for the purpose of paying business expenses pending the receipt
of outstanding accounts receivable. No documentation in support of any of these
statements was submitted, nor was any information provided about other available
personal funds or the Candidate’s legal right of access to funds in the business account.

© Prior to the deposit of funds from the parents, the Candidate’s business account had a balance of $19,602.


Receipts — 2004

The understatement of receipts was the net result of the following:

e Receipts Not Reported

monogp

Contributions from individuals

Loan from Candidate (see Finding 2)
Contributions from political committees
Earmarked contributions (net)

Offsets to operating expenditures
In-kind contributions

e Unexplained difference

Net Understatement

Disbursements — 2004

The understatement of disbursements was the net result of the following:

e Disbursements Not Reported

rome me ao ge

Repayment of Candidate loan (see Finding 2)
Operating expenditures

Consulting services

Phone bank expenses

Media expenses

Bank charges

Reimbursements

Fundraising expenses

Purchase of campaign materials
In-kind contributions

Contributions to political committees

e Disbursements Over Reported

a.
b.
c.

Disbursements reported twice

Disbursements reported with wrong amounts (net)
Disbursements reported and later voided with no
adjustment

e Unexplained difference

Net Understatement

Ending Cash Balance - 2004
The reporting discrepancies identified above also resulted in the misstatement of the
reported cash balance throughout 2004. On December 31, 2004, the cash balance was

understated by $45,241.

+

t+eetst

+

ttt teteeees

+

$

$ 89,790
15,000
8,760
4,194
3,785
1,094

7,716

$ 130,339

$ 30,000
13,305
13,100
10,300

7,262
6,916
4,332
2,653
2,618
1,094
1,050

4,750
1,228
500

105

$ 86,258


Part I
Background

Authority for Audit

This report is based on an audit of the Richard Morrison Congressional Committee
(RMCC), undertaken by the Audit Division of the Federal Election Commission (the
Commission) in accordance with the Federal Election Campaign Act of 1971, as
amended (the Act). The Audit Division conducted the audit pursuant to 2 U.S.C.
§438(b), which permits the Commission to conduct audits and field investigations of any
political committee that is required to file a report under 2 U.S.C. §434. Prior to
conducting any audit under this subsection, the Commission must perform an internal
review of reports filed by selected committees to determine if the reports filed by a
particular committee meet the threshold requirements for substantial compliance with the
Act. 2 U.S.C. §438(b).

Scope of Audit

This audit examined:

The receipt of excessive contributions and loans.

The receipt of contributions from prohibited sources.

The disclosure of contributions received.

The disclosure of disbursements, debts and obligations.
The consistency between reported figures and bank records.
The completeness of records.

Other committee operations necessary to the review.

NAN YN

Limitations

Although RMCC complied with the recordkeeping requirements for disbursements,
invoices or receipts from the original vendor were not available for 55% of all
disbursements.” Without third party documentation for these disbursements, the Audit
staff was unable to verify the following:

¢ prohibited contributions resulting from the application of 11 CFR §116.3 —
extensions of credit by commercial vendors;

© excessive contributions resulting from the application of 11 CFR §116.5 —
advances by committee staff and other individuals;

e personal use of funds in a campaign account — 11 CFR §113.1(g);

© reporting of debts and obligations — 2 U.S.C. §434(b); and

e disclosure of memo entries required for reimbursements to individuals— 2 U.S.C.
§434(b).

? Records for disbursements in excess of $200 must include a receipt or invoice from the payee, or a
cancelled check or share draft to the payee. 11 CFR §102.9(b)(2).


Interim Audit Report Recommendation and Committee Response
In response to a recommendation in the Interim Audit Report, RMCC filed amended
reports correctly disclosing the required information.

| Finding 5. Failure to File 48-Hour Notices

12

Summary

The Audit staff identified 13 contributions totaling $31,750 for which RMCC did not file
48-hour notices. In response to the Interim Audit Report, RMCC acknowledged that it

may have failed to completely report all the 48-hour notices. .

Legal Standard

Last-Minute Contributions (48-Hour Notice). Campaign committees must file special
notices regarding contributions of $1,000 or more received less than 20 days but not more
than 48 hours before any election in which the candidate is running. This rule applies to
all types of contributions to any authorized committee of the candidate, including:

e Contributions from the candidate;

e Loans from the candidate and other non-bank sources; and
¢ Endorsements or guarantees of loans from the banks. 11 CFR §104.5(f).

Facts and Analysis

The Audit staff reviewed those contributions of $1,000 or more that were received during
the 48-hour notice filing period for the primary and general elections. RMCC failed to
file 48-hours notices for 13 contributions totaling $31,750. These contributions are

summarized below.

Contribution Type Primary General Total
Loan from the Candidate” $15,000 $15,000
Contributions from Individuals $5,750 $10,000 $15,750
Contributions from Political Committees $ 1,000 $ 1,000

Total 48-Hour Notices not filed $5,750 $26,000 $31,750

At the exit conference, the Audit staff informed the Candidate of the failure to file 48-
hour notices. The Candidate provided no explanation for not filing these notices.

Interim Audit Report Recommendation and Committee Response
The Audit staff recommended that RMCC provide evidence that 48-hour notices were
filed timely for those contributions mentioned above or provide any comments it has
regarding this matter. In response, RMCC acknowledged that it may have failed to
completely report all the 48-hour notices and noted that approximately half of the amount
without 48-hour notices was attributable to a loan from the candidate. RMCC stated the
Commission’s regulations requiring the filing of 48-hour notices for such loans are

unclear.

° This loan from the Candidate is also included in Finding 1 and Finding 2.



Table of Contents

Part I. Background
Authority for Audit
Scope of Audit
Limitations

Part II. Overview of Campaign
Campaign Organization
Overview of Financial Activity

Part III. Summaries
Findings and Recommendations

Part IV. Findings and Recommendations
Finding 1. Misstatement of Financial Activity
Finding 2. Receipt of Loans that Exceed Limits
Finding 3. Disclosure of Disbursements
Finding 4. Disclosure of Contributions
Finding 5. Failure to File 48-Hour Notices

Page

ee
NOOO


Report of the
Audit Division on the
Richard Morrison Congressional

Committee
September 30, 2003 - December 31, 2004

Why the Audit About the Campaign (p. 2)

Was Done Richard Morrison Congressional Committee (RMCC) is the
Federal law permits the principal campaign committee for Richard Roberts Morrison IV,
Commission to conduct Democratic candidate for the U.S. House of Representatives from
audits and field the state of Texas, 22" district. RMCC maintains its
investigations of any headquarters in Kemah, Texas. For more information, see the

political committee that is chart on the Campaign Organization, p.2.
required to file reports

under the Federal Financial Activity (p. 2)
Election Campaign Act « Receipts
(the Act). The o Contributions from Individuals $ 690,524
Commission generally o Contributions from Other Political
conducts such audits Committees 37,433
when a committee o Candidate Loans 30,000
appears not to have met o Offsets to Operating Expenditures 3,785
the threshold o Other Receipts 9,266
requirements for o Total Receipts $ 771,008
substantial compliance « Disbursements
with the Act.’ The audit o Operating Expenditures $ 740,056
determines whether the o Repayment of Candidate Loans 30,000
committee complied with o Total Disbursements $ 770,056
the limitations,
prohibitions and Findings and Recommendations (p. 3)
disclosure requirements ¢ Misstatement of Financial Activity (Finding 1)
of the Act. « Receipt of Loans that Exceed Limits (Finding 2)

« Disclosure of Disbursements (Finding 3)
Future Action ¢ Disclosure of Contributions (Finding 4)
The Commission may Failure to File 48-Hour Notices (Finding 5)

initiate an enforcement
action, at a later time,
with respect to any of the
matters discussed in this
report.

* 2 U.S.C. §438(b).


10

As part of the review of reimbursements to individuals, the Audit staff also identified
expenses totaling $50,832 that should have been itemized on Schedules B as memo
entries disclosing the names of the original vendors. As stated earlier, the scope of this
review was limited due to the lack of available receipts or invoices from the original
vendors to document the reimbursement. (See Limitations on page 1.)

The Audit staff discussed the matter with the Candidate at the exit conference and he
stated that amended Schedules B would be filed to adequately disclose the purpose of the
disbursements and to include the required memo entries for reimbursements.

Interim Audit Report Recommendation and Committee Response

In response to a recommendation in the Interim Audit Report, RMCC filed amended
reports correctly disclosing the required information.

| Finding 4. Disclosure of Contributions

Summary

Results of a sample review of contributions received from individuals indicated that
RMCC did not accurately disclose the election cycle to date total for 14% of the
contributions reviewed. In addition, RMCC did not properly disclose the receipt of
earmarked contributions totaling $28,406. In response to a recommendation in the
Interim Audit Report, RMCC filed amended reports correctly disclosing the required
information.

Legal Standard

A. Itemization Required for Contributions from Individuals. An authorized
candidate committee must itemize any contribution from an individual if it exceeds $200
per election cycle, either by itself or when combined with other contributions from the
same contributor. 2 U.S.C. §434(b)(3)(A).

B. Election Cycle. The election cycle begins on the first day following the date of the
previous general election and ends on the date of the next general election. 11 CFR
§100.3(b).

C. Required Information for Contributions from Individuals. For each itemized

contribution from an individual, the committee must provide the following information:
e The contributor’s full name and address (including zip code);

The contributor’s occupation and the name of his or her employer;

The date of receipt (the date the committee received the contribution);

The amount of the contribution; and

The election cycle-to-date total of all contributions from the same individual. 11

CFR §§100.12 and 104.3(a)(4) and 2 U.S.C. §434(b)(3)(A).

D. Definition of a Conduit. Any person who receives and forwards an earmarked
contribution to a candidate or candidate’s authorized committee. 11 CFR §110.6(b)(2).