FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

July 22, 2014 

MEMORANDUM 

TO: 

FROM: 

Patricia C. Orrock 

Chief Compliance Ofificer 

Thomas E. Hintermister 

Assistant Staff Director 

Audit Division 

Lisa J. Stevenson 

Deputy General Counsel - Law 

Lorenzx) Holloway 

Assistant General Counsel 

Compliance Advice 

S3? 

Margaret J. Forman "Tvi ^ 

Attorney 

SUBJECT: Proposed Preliminary Audit Report on New American City, Inc. (LRA 964) 

I. INTRODUCTION 

The Office of the General Counsel has reviewed the proposed Preliminary Audit Report 

("proposed Report") on New American City, Inc ("NAC"). The proposed Report contains four 

findings: Misstatement of Financial Activity (Finding I); Disclosure of Receipts (Finding 2); 

Disclosure of Disbursements (Finding 3); and Reporting of Debt and Obligations (Finding 4).' 

We concur with the findings, and comment briefly on Finding 2 (Disclosure of Receipts) and 

Finding 3 (Disclosure of Disbursements). If you have any questions, please contact Margaret J. 

Forman, the attorney assigned to this audit. 

' We recommend that the Commission consider this document in Executive Session because the Commission 

may eventually decide to pursue an investigation of matters contained in the proposed Report. 11 C.F.R. §§ 2.4(a) and 

(b)(6). 
LRA 964 New American City, Inc. 

PAR Comments 

Page 2 of 3 

n. FACTUAL INFORMATION SURROUNDING SOME INCOMPLETE MAILING 

ADDRESSES 

In both Finding 2 (Disclosure of Receipts) and Finding 3 (Disclosure of Disbursements) in 

the proposed Report, the Audit Division identifies transactions requiring itemization that lacked 

the required disclosure information, including incomplete mailing addresses. However, the law 

does not specify the requirements of a mailing address and the incomplete mailing address 

information, in some of these instances, can be determined fairly easily with an electronic search 

on the Internet. Therefore, we question whether this incomplete information should be included as 

a part of Finding 2 and Finding 3. 

Finding 2 identifies 16 receipts totaling $2,704,569, requiring itemization that lacked 

required disclosure information. For 6 of these receipts, totaling $39,950, NAC disclosed the street 

address or post office box, and zip code, but not the city and state. The proposed Report 

recommends that NAC amend its reports to disclose these transactions correctly on Schedule A, 

Itemized Receipts. 

Similarly, Finding 3 identifies 653 disbursements totaling $4,188,384, requiring 

itemization that lacked required disclosure information, including 9 transactions totaling 

$ 194,888.13 in which the Audit Division marked the disbursements as errors due to an incomplete 

street address and the lack of a state listed on NAC's disclosure report. On Schedule B of FEC 

Form 4 (Itemized Disbursements), NAC identified the disbursements as follows; "Research 

Triangle Park, NC" on the mailing address line, "P.O. Box" on the city line, nothing on the state 

line, and what apparently is a post office box number on the zip code line.^ See New American 

City, Inc., 2012 Post Convention Report, Image # 12972715697-12972715700 (Oct. 17,2012) 

available at httD://docQuerv.fec.gov/Ddty831 /12972714831/12972714831 .odf: New American 

City, 2012 Year End Report, Image # 13960623441 (Jan. 31,2013) available at 

http://docQuerv.fec.i!Ov/Ddf/421/13960623421 /13960623421 .odf. The proposed Report 

recommends that NAC amend its reports to disclose these transactions correctly on Schedule B, 

Itemized Disbursements. 

NAC is required to disclose these transactions under the Federal Election Campaign Act 

("Act") and the Commission's regulations. The Act and pertinent regulations require the 

disclosure of the individual's name, mailing address, occupation, and the name of the individual's 

employer, and for any other person, the full name and address. 2 U.S.C. § 434'(b)(3)(A), 

^ The zip code listed was 12696. According to the Audit Division, the zip code for Research Triangle Park, 

Durham, NC is 27709. The 2011-2012 Title 26 Audit Program does not require zip codes for mailing addresses. 

NAC may have complied with the address requirements for the 9 disbursements in Finding 3. The Act and 

pertinent regulations require the full name and mailing address of this disbursement. 2 U.S.C. § 434(b)(S)(A), 

11 C.F.R. § 104.3(b)(3)(i); see 2 U.S.C. § 431(13); 11 C.F.R. § 100.12. NAC listed the required information, but on 

the wrong lines on the form. The Audit Division should also discuss these facts in their cover memorandum to the 

Commission. 
LRA 964 New American City, Inc. 

PAR Comments 

Page 3 of3 

(b)(5)(A), 11 C.F.R. § 104.3(a)(4)(i). (b)(3)(i);wg 2 U.S.C. §431(13), 11 C.F.R. § 100.12. The 

Act and regulations, however, do not describe what must be included in a mailing address. 

Since the Act and regulations do not describe the requirements of a mailing address, we 

looked to the United States Postal Service for guidance. The United States Postal Service requires 

that a delivery address include at least the recipient's name or other identification, street and 

number, city and state, and zip code where required.^ See Mailing Standards of the United States 

Postal Service Publication 28 - Postal Addressing Standards, January 2013, PSN 

7610-03-000-3688 available at http://ne.usDS.com/texi/pub28/welcome.htm (last visited Jul. 15, 

2014); Mailing Standards of the United States Postal Service Domestic Mail Manual, 600 Basic 

Standards for All Mailing Services, available at http.7/pe.usps.com/text/dmm300/602.htm (last 

visited Jul. 15,2014). However, with a street address and zip code, the city and state can be 

determined fairly easily with an electronic search on the Internet. USPS.com, "Look Up a Zip 

Code," https://tools.usps.com/eo/ZipLookupActionlinput.action (last visited Jul. 17,2014). 

Given that the Act and the Commission's regulations do not describe the requirements for 

reporting the mailing address, and the missing city and state information can easily be obtained 

with a street address and a zip code, we question whether the transactions missing only the city and 

state should be included in the audit finding. We, therefore, recommend that the auditors discuss 

this matter in their cover memorandum to the Commission, and include the applicable monetary 

amount of these receipts and disbursements. 

III. ULTIMATE PAYEE DISCLOSURE ERRORS 

We also recommend that the Audit Division revise Finding 3 to include additional 

information. Finding 3 references $149,058 in disbursements that were "missing memo entries to 

the ultimate payee." Proposed Report at 7, note 3. The Audit Division should include more 

explanation as to what information was missing regarding these disbursements. For example, if 

these errors were for missing memo entries detailing reimbursement to an individual who 

advanced personal funds to pay committee expenses aggregating more than $200 to a single 

vendor (or $500 for travel or subsistence expenses), the proposed Report should explain these 

facts. 

^ The United States Postal Service specifies that failure to include this information could result in a delayed or 

misrouted mailpiece. See USPS Business Mail 101 - Addressing Delivery Address available at 

htlD://De.usDs.com/busines5inaillOI/addressine/deiivervaddress.htin (last visited Jul. IS, 2014). 

* It is our understanding that in examining the disbursements, the Audit Division complied with the audit 

program, which is consistent with the Commission's interpretive rule on ultimate payees. Notice of Interpretive Rule 

on Reporting Ultimate Payees of Political CommiUee Disbursements. 78 Fed. Reg. 40625 (Jul. 8,2013). Although 

this audit pre-dates the date of the notice of interpretive rule, the notice states that "the Commission makes clear that 

this interpretation is based on long-standing Commission practice and is not making any fundamental changes to its 

rules or processes." Id. at 40626.