Final Audit Report of the 

Commission on the Republican 

Party of Orange County (Federal) 

(January 1, 2009 - December 31, 2010) 

Why the Audit 

Was Done 

Federal law permits the 

Commission to conduct 

audits and field 

investigations of any 

political committee that 

is required to file reports 

under the Federal 

Election Campaign Act' 

(the Act). The 

Commission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold 

requirements for 

substantial compliance 

with the Act.^ The audit 

determines whether the 

committee complied with 

the limitations, 

prohibitions and 

disclosure requirements 

of the Act. 

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 Committee (p. 2) 

The Republican Party of Orange County (Federal) is a local party 

committee headquartered in Tustin, California. For more 

information, see the chart on the Committee organization, p. 2. 

Financial Activity (p. 2) 

• Receipts 

o Individual Contributions $ 299,234 

o Political Conunittee Contributions 81,000 

o Transfers from Affiliates 76,923 

o Transfers from Non-federal Accounts 230,078 

o Transfers from Levin Account 73,466 

o Loans Received 6,205 

o Offsets to Operating Expenditures 3,661 

Total Receipts $ 770,567 

• Disbursements 

o Operating Expenditures $613,029 

o Federal Election Activity 149,571 

o Contribution Refunds g,gso 

o Loans Repaid 6,205 

Total Disbursements $ 777,655 

• Levin Receipts S 74,132 

• Levin Disbursements S 73,465 

Commission Findings (p. 3) 

• Misstatement of Financial Activity (Finding 1) 

• Reporting of Debts and Obligations (Finding 2) 

• Recordkeeping for Employees (Finding 3) 

• Use of Levin Fund Transfers (Finding 4) 

' On September 1,2014, the Federal Election Campaign Act of 1971, as amended ("the Act"), was transferred 

from Title 2 of the United States Code to new Title S2 of the United States Code. . 

^ 52 U.S.C. §30111(b). 
Final Audit Report of the 

Commission on the 

Republican Party of Orange 

County (Federal) 

(January 1, 2009 - December 31, 2010) 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Commission Guidance 1 

Audit Hearing 2 

Part II. Overview of Committee 

Committee Organization 3 

Overview of Financial Activity 4 

Part III. Summaries 

Commission Findings S 

Part IV. Commission Findings 

Finding 1. Misstatement of Financial Activity 7 

Finding 2. Reporting ofDebts and Obligations 9 

Findings. Recordkeeping for Employees 11 

Finding 4. Use ofLevin Fund Transfers 13 
Parti 

Background 

Authority for Audit 

This report is based on an audit of the Republican Party of Orange County (Federal) 

(RPOC), undertaken by the Audit Division of the Federal Election Commission (the 

Commission) in accordance >vith the Federal Election Campaign Act of 1971, as 

amended (the Act). The Audit Division conducted the audit pursuant to 52 U.S.C. 

§30111(b), which permits the Commission to conduct audits and field investigations of 

any political committee that is required to file a report under 52 U.S.C. §30104. 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. 52 U.S.C. §30111(b). 

Scope of Audit 

Following Commission-approved procedures, the Audit staff evaluated various risk 

factors and as a result, this audit examined: 

1. the disclosure of individual contributors' occupation and name of employer; 

2. the disclosure of disbursements, debts and obligations; 

3. the disclosure of expenses allocated between federal and non-federal accounts; 

4. the consistency between reported figures and bank records; 

5. the completeness of records; 

6. the disclosure of independent expenditures; and 

7. other committee operations necessary to the review. 

Commission Guidance 

Request for Early Commission Consideration of a Legal Question 

Pursuant to the Commission's "Policy Statement Establishing a Program for Requesting 

Consideration of Legal Questions by the Commission," several state party committees 

unaffiliated with RPOC requested early consideration of a legal question raised during an 

audit. Specifically, the Commission addressed whether monthly time logs under 11 CFR 

§ 106.7(d)(1) were required for employees paid with 100 percent federal funds. 

The Commission concluded, by a vote of 5-1, that 11 CFR § 106.7(d)(1), does require 

committees to keep a monthly log for employees paid exclusively with federal funds. 

Exercising its prosecutorial discretion, however, the Commission decided it will not 

pursue recordkeeping violations for the failure to keep time logs or to provide affidavits 

to account for employee salaries paid with 100 percent federal funds and reported as 

such. Finding 3, Recordkeeping for Employees, of this audit report does not include 

RPOC employees paid with 100 percent federal funds and reported as such. 
Audit Hearing 

RPOC requested a hearing before the Commission. The request was granted and the 

hearing was held on November 20,2014. At the hearing, RPOC addressed one issue 

related to whether RPOC could spend Levin funds received from the California 

Republican Party (CRP) on federal election activity. (For more detail, see Finding 4, p. 

13.) 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration July 6,1982 

• Audit Coverage January 1,2009 - December 31,2010 

Headquarters Tustin, California 

Bank Information 

• Bank Depositories Two 

• Bank Accounts Four Federal, Two Levin and Eight 

Non-federal 

Treasurer 

• Treasurer When Audit Was Conducted Mark W. Bucher 

• Treasurer During Period Covered by Audit Mark W. Bucher 

Management Information 

• Attended Commission Campaign Finance 

Seminar 

No 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid Company 
Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand @ January 1,2009 $ 6,092 

Receipts 

o Individual Contributions 299,234 

o Political Committee Contributions 81,000 

o Transfers from Affiliates 76,923 

o Transfers from Non-federal Accounts 230,078 

o Transfers from Levin Account 73,466 

o Loans Received 6,205 

o Offsets to Operating Expenditures 3,661 

Total Receipts $ 770,567 

Disbursements 

o Operating Expenditures 613,029 

o Federal Election Activity 149,571 

o Contribution Refunds 8,850 

o Loans Repaid 6,205 

Total Disbursements $ 777,655 

Cash-on-hand ® December 31,2010 (S 996)' 

Levin Cash-on-hand ® January 1,2009 SIO 

Total Levin Receipts $ 74,132 

Total Levin Disbursements $ 73,465 

Levin Cash-on-hand @ December 31,2010 $677 

^ RPOC overdrew its bank accounts in the amount of S996. On January 12,2011, RPOC's balance was no 

longer overdrawn. 
Part III 

Summaries 

Commission Findings 

Finding 1. Misstatement of Financial Activity 

During audit fieldwork, a comparison of RPOC's reported financial activity with its bank 

records revealed a misstatement of receipts and disbursements for calendar year 2Q09. 

RPOC understated its receipts by $17,420 and disbursements by $17,420. The 

misstatements were due mainly to unreported transfers to and f^m non-federal accounts 

and unreported in-kind contributions. In response to the Interim Audit Report 

recommendation, RPOC amended its reports to materially correct the misstatements 

noted above. 

The Commission approved a finding that RPOC misstated its financial activity for 

calendar year 2009. (For more detail, see p. 7.) 

Finding 2. Reporting of Debts and Obligations 

Audit fieldwork indicated that RPOC failed to report debts and obligations for 12 vendors 

totaling $60,296 on Schedule D (Debts and Obligations). In response to the Interim 

Audit Report recommendation, RPOC amended its reports to materially include these 

debts and obligations. 

The Commission approved a finding that RPOC failed to disclose debts and obligations 

of $60,296 in its reports. (For more detail, see p. 9.) 

Finding 3. Recordkeeping for Employees 

During audit fieldwork, the Audit staff determined that RPOC did not maintain monthly 

payroll logs, as required, to document the percentage of time each employee spent on 

federal election activity. For 2009 and 2010, the amount of payroll for which logs were 

required was $187,281. RPOC reported these payroll disbursements as allocated between 

federal and non-federal funds. 

After audit fieldwork, RPOC provided an affidavit that listed the time spent on federal 

election activities for each of its employees. In response to the Interim Audit Report 

recommendation, RPOC stated that, for all future payrolls, it will maintain monthly 

payroll logs and document the percentage of time each employee spends on federal and 

non-federal election activity. 

The Commission approved a finding that RPOC did not maintain monthly payroll logs 

totaling $187,281, as required, to document the percentage of time each employee spent 

on federal election activity. (For more detail, see p. 11.) 
Finding 4. Use of Levin Fund Transfers 

During audit fieldwork, a review of Levin fund activity determined that RPOC received 

$74,132 from the CRP's Levin account for reimbursement of voter registration expenses. 

RPOC then transferred $73,465 from its Levin account to its federal accounts, as 

reimbursement for voter registration expenses. In accordance with 11 CFR §300.31(a), 

Levin funds expended must be raised solely by the committee that expends them. In 

response to the Interim Audit Report recommendation, RPOC disclosed $73,465 on 

Schedule D of its 2013 November monthly report as a debt to its Levin account. RPOC 

requested a hearing before the Commission to discuss this matter. (For more detail, see 

Audit Hearing, p. 16.) 

The Commission approved a finding that RPOC improperly spent $73,465 on voter 

registration activities using Levin funds transferred from the CRP. (For more detail, see 

p. 13.) 
Part IV 

Commission Findings 

Finding 1. Misstatement of Financial Activity 

Summary 

During audit fieldwork, a comparison of RPOC's reported financial activity with its bank 

records revealed a misstatement of receipts and disbursements for calendar year 2009. 

RPOC understated its receipts by $17,420 and disbursements by $17,420. The 

misstatements were due mainly to unreported transfers to and from non-federal accounts 

and unreported in-kind contributions. In response to the Interim Audit Report 

recommendation, RPOC amended its reports to materially correct the misstatements 

noted above. 

The Commission approved a finding that RPOC misstated its financial activity for 

calendar year 2009. 

Legal Standard 

A. 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 calendar year; 

• the total amount of disbursements for the reporting period and for the calendar 

year; and 

• certain transactions that require itemization on Schedule A (Itemized Receipts) or 

Schedule B (Itemized Disbursements). 52 U.S.C. §30104(b)(l), (2), (3), (4) and 

(5). 

B. Definition of Contribution. Gift, subscription, loan, advance or deposit of money. 

• a gift, subscription, loan, 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 anything of value includes all in-kind contributions. 

• the provision of any goods or services without charge or at a charge that is less 

than the usual and normal charge for such goods or services is a contribution. 11 

CFR §100.52(a) & (d)(1). 

Facts and Analysis 

A. Facts 

During audit fieldwork, a comparison of RPOC's reported financial activity with its bank 

records revealed a misstatement of receipts and disbursements for calendar year 2009. 

The following chart details the discrepancies between RPOC's disclosure reports and its 

bank records. Succeeding paragraphs explain why the discrepancies occurred. 
2009 Activity 

Reported Bank Records Discrepancy 

Beginning Cash-on-Hand 

@ January 1,2009 $6,092 $6,092 $0 

Receipts $311,572 $328,992 ($17,420) 

Understated 

Disbursements $303,419 $320,839 ($17,420) 

Understated 

Ending Cash-on-Hand 

® December 31,2009 $14,245 $14,245 $0 

The understatement of receipts resulted from the following. 

• Under reporting of receipts $ 10,631 

• In-kind contribution, not reported as a receipt 10,000'* 

• In-kind rent for December, not reported as a receipt 3,904 

• Duplicate reported receipt (in-kind contribution) (5,000)^ 

• Unexplained difference (2.1151 

Net Understatement of Receipts $ 17.420 

The understatement of disbursements resulted from the following. 

• In-kind contribution, not reported as a disbursement 

• Disbursements not reported 

• In-kind rent for December, not reported as a disbursement 

• Disbursements over-reported 

• Duplicate reported disbursement (in-kind contribution) 

Net Understatement of Disbursements I 

10,000 

9,382 

3,904 

(866) 

(5,000) 

17.420 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff provided RPOC's treasurer with workpapers 

detailing the misstatements. The treasurer asked general questions regarding the 

reporting requirements. 

The Interim Audit Report recommended that RFOC amend its disclosure reports to 

correct the misstatement of its receipts and disbursements for 2009. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, RPOC filed amended reports 

that materially correct the misstatements of financial activity. 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that RPOC filed amended reports that 

materially corrected the misstatement of financial activity. 

* This was a partial payment for a fiindraising event. 

^ RPOC originally reported this as a loan and repayment. It was later reported as an in-kind contribution. 
E. Committee Response to the Draft Final Audit Report 

RPOC's response to the Draft Final Audit Report provided no additional comments 

relating to this matter. 

F. Audit Hearing 

RPOC did not address this finding during the Audit hearing. 

Commission Conclusion 

On March 10,2015, the Commission considered the Audit Division Recoiiunendation 

Memorandum in which the Audit staff recommended the Commission find that RPOC 

misstated its financial activity for calendar year 2009. 

The Commission approved the Audit staffs recommendation. 

Finding 2. Reporting of Debts and Obligations 

Summary 

Audit fieldwork indicated that RPOC failed to report debts and obligations for 12 vendors 

totaling $60,296 on Schedule D (Debts and Obligations). In response to the Interim 

Audit Report recommendation, RPOC amended its reports to materially include these 

debts and obligations. 

The Commission approved a finding that RPOC failed to disclose debts and obligations 

of $60,296 in its reports. 

Legal Standard 

A. Continuous Reporting Required. A political committee must disclose the amount 

and nature of outstanding debts and obligations until those debts are extinguished. 

52 U.S.C. §30104(b)(8) and 11 CFR §§104.3(d) and 104.11(a). 

B. Separate Schedules. A political committee must file separate schedules for debts 

owed by and to the committee with a statement explaining the circumstances and 

conditions under which each debt and obligation was incurred or extinguished. 

11 CFR §104.11 (a). 

C. Itemizing Debts and Obligations. 

• Once it has been outstanding 60 days from the date incurred, a debt of $500 or less 

must be reported on the next regularly scheduled report. 

• A debt exceeding $500 must be disclosed in the report that covers the date on which 

the debt was incurred. 11 CFR §104.11(b). 
10 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reviewed disbursement records and disclosure 

reports for proper reporting of debts and obligations. This review identified debts owed 

to 12 vendors totaling $60,296 that RPOC failed to report on Schedule D. Of these debts, 

$48,636 was incurred during the audit period and $11,660 was incurred prior to the audit 

period and remained outstanding as of the beginning of the audit period. It should be 

noted that RPOC did disclose debts owed to some of these vendors during the audit 

period. However, the debt amounts identified by the Audit staff above were not included 

in the debt amounts reported. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff discussed the reporting of debts and obligations 

with RPOC's treasurer and provided schedules detailing the transactions requiring 

disclosure. The treasurer had no comments on this matter. 

The Interim Audit Report recommended that RPOC amend its disclosure reports to 

correctly include debts and obligations of $60,296 on Schedule D. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, RPOC amended its reports to 

materially include these debts and obligations. In addition, RPOC stated that it has 

tightened procedures for reporting accounts payable. RPOC also added that staff and 

board members have been informed that all its obligations need to be reported to the 

treasurer at the time they are incurred. 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that RPOC filed amended reports that 

materially disclosed its debts and obligations. 

E. Committee Response to the Draft Final Audit Report 

RPOC's response to the Draft Final Audit Report provided no additional comments 

relating to this matter. 

F. Audit Hearing 

RPOC did not address this finding during the Audit hearing. 

Commission Conclusion 

On March 10,20IS, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended the Commission find that RPOC 

failed to disclose debts and obligations of $60,296 in its reports. 

The Commission approved the Audit staffs recommendation. 
11 

Finding 3. Recordkeeping for Employees 

I 

Summary 

During audit fieldwbrk, the Audit staff determined that RPOC did not maintain monthly 

payroll logs, as required, to document the percentage of time each employee spent on 

federal election activity. For 2009 and 2010, the amount of payroll for which logs were 

required was $187,281. RPOC reported these payroll disbursements as allocated between 

federal and non-federal funds. 

After audit fieldwork, RPOC provided an affidavit that listed the time spent on federal 

election activities for each of its employees. In response to the Interim Audit Report 

recommendation, RPOC stated that, for all future payrolls, it will maintain monthly 

payroll logs and document the percentage of time each employee spends on federal and 

non-federal election activity. 

The Commission approved a finding that RPOC did not maintain monthly payroll logs 

totaling $ 187,281, as required, to document the percentage of time each employee spent 

on federal election activity. 

Legal Standard 

Maintenance of Monthly Logs. Party committees must keep a monthly log of the 

percentage of time each employee spends in connection vdth a federal election. 

Allocations of salaries, wages, and ^nge benefits are to be undertaken as follows: 

• Employees who spend 25 percent or less of their compensated time in a given 

month on federal election activities must be paid either from the federal account 

or be allocated as administrative costs; 

• Employees who spend more than 25 percent of their compensated time in a given 

month on federal election activities must be paid only from a federal account; and, 

• Employees who spend none of their compensated time in a given month on 

federal election activities may be paid entirely with funds that comply with State 

law. 11 CFR§ 106.7(d)(1). 

Facts and Analysis 

A. Facts 

During fieldwork, the Audit staff reviewed payroll disbursements totaling $187,281.® 

RPOC did not maintain any monthly payroll logs or equivalent records to document the 

percentage of time each employee spent in connection with federal election activity. 

These logs are required to document the proper allocation of federal and non-federal 

funds used to pay employee salaries and wages. This entire amount ($187,281) 

represents payroll disbursements allocated between federal and non-federal funds during 

the audit period. RPOC had no employees paid exclusively from a non-federal account. 

RPOC's staffing consisted of eight individuals all of whom were hired via an 

employment company. In its reports, RPOC disclosed the purpose of the payroll 

' This total does not include payroll for employees paid with 100 percent federal funds (see Part I, 

Background, Commission Guidance, Request for Early Commission Consideration of a Legal Question, 

page 1). 
12 

expenditures as "Leased Employees." In addition, RPOC included a statement in its 

reports noting that the time spent on federal election activity and federal campaigns was 

tracked on a monthly basis and no employee spent 25 percent or more of their 

compensated time on federal election activity. RPOC did not maintain a monthly time 

log to support its statement above and as required by 11 CFR § 106.7(d)(1). 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference and during audit fieldwork, the Audit staff discussed the payroll 

recordkeeping matter with RPOC's treasurer. At the exit conference, the treasurer 

provided an affidavit from RPOC's chairman that listed the time spent on federal election 

activities for its employees. This document, however, did not resolve the recordkeeping 

finding because RPOC provided the affidavit only after being notified of the 

recordkeeping requirement during the audit. 

The Interim Audit Report recommended that, for all future payrolls, RPOC implement a 

plan to maintain monftly payroll logs to track the percentage of time each employee 

spends on federal election activity. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, RPOC stated that, for all future 

payrolls, it will maintain monthly payroll logs and document the percentage of time each 

employee spends on federal and non-federal election activity. RPOC stated that it will 

document the amount of hours spent on federal and non-federal election activity on a 

semi-monthly basis in a spreadsheet log. 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that RPOC stated that for future payrolls, it 

will maintain monthly payroll logs and document the percentage of time each employee 

spends on federal and non-federal activity. 

E. Committee Response to the Draft Final Audit Report 

RPOC's response to the Draft Final Audit Report provided no additional comments 

relating to this matter. 

F. Audit Hearing 

RPOC did not address this finding during the Audit hearing. 

Commission Conclusion 

On March 10,2015, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended the Commission find that RPOC 

did not maintain monthly payroll logs totaling $187,281, as required, to document the 

percentage of time each employee spent on federal election activity. 

The Commission approved the Audit staffs recommendation. 
13 

Finding 4. Use of Levin Fund Transfers 

Summary 

During audit fieldwork, a review of Levin fund activity determined that RPOC received 

$74,132 from the CRP's Levin account for reimbursement of voter registration expenses. 

RPOC then transferred $73,465 from its Levin account to its federal accounts, as 

reimbursement for voter registration expenses. In accordance with 11 CFR §300.31(a), 

Levin funds expended must be raised solely by the committee that expends them. In 

response to the Interim Audit Report recommendation, RPOC disclosed $73,465 on 

Schedule D of its 2013 November monthly report as a debt to its Levin account. RPOC 

requested a hearing before the Commission to discuss this matter. 

The Commission approved a finding that RPOC improperly spent $73,465 on voter 

registration activities using Levin funds transferred from the CRP. 

Legal Standard 

A. Expending of Levin Funds. Levin funds expended or disbursed by any State, 

district or local committee must be raised solely by the committee that expends or 

disburses them. Consequently, funds from national party committees, other State, district 

and local committees and Federal candidates or officeholders, may not be accepted as 

Levin funds. 11 CFR §§300.31(a) and 300.34(b). This includes any entity directly or 

indirectly established, financed, maintained or controlled by any national. State, district 

or local committee of a political party. 52 U.S.C. §30125(b)(2)(B)(iv). 

B. Levin Fund Transfers. A State, district, or local committee of a political party must 

not use any Federal funds transferred to it from or otherwise accepted by it from any 

other State, district, or local committee as the Federal component of an expenditure or 

disbursement for Federal election activity under 11 CFR §300.32. A State, district, or 

local committee of a political party must itself raise the Federal component of an 

expenditure or disbursement allocated between federal funds and Levin funds under 11 

CFR §§300.32 and 300.33. 11 CFR §300.34(a). 

Levin funds must be raised solely by the State, district, or local committee of a political 

party that expends or disburses the funds. A State, district, or local committee of a 

political party must not use as Levin funds any funds transferred or otherwise provided to 

the committee by any State, district, or local committee of a political party of Ae national 

committee of any political party. 11 CFR §300.34(b). 

Facts and Analysis 

A. Facts 

During the audit period, RPOC made 23 transfers, totaling $73,465, from its Levin 

account to its federal accounts and reported these transfers on Schedule H5 (Transfers of 

Levin Funds Received for Allocated Federal Election Activity). All of the Levin funds 

expended by RPOC' ($73,465) were received from the CRP's Levin account, which 

transferred $74,132 to RPOC's Levin account. 

RPOC had a beginning cash balance of $10 in its Levin account that was not transierred from CRP. 
14 

While there is no prohibition on the CRP transferring Levin funds to local party 

committees under 11 CFR §102.6, there is a prohibition on local committees using funds 

transferred by a state party committee for either the federal or Levin shares of 

disbursements allocated between federal and Levin funds.' As such, RPOC did not meet 

the requirement that the Levin funds must be raised solely by the committee that expends 

or disburses the funds. 

B. Interim Audit Report & Audit Division Recommendation 

At the entrance and exit conferences, the Audit staff discussed this matter with RPOC's 

treasurer. The treasurer had no comments regarding this matter. 

The Interim Audit Report recommended that RPOC demonstrate that it solely raised the 

expended Levin funds. Absent such demonstration, it was recommended that RPOC 

refund its Levin account $73,465 from its federal account and provide evidence of this 

refund. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, RPOC added the Levin fund 

transfers ($73,465) to its Schedule D on the 2013 November monthly report, as a debt 

owed to its Levin account.^ 

However, RPOC contended that the Conunission should not accept this finding. RPOC 

stated that it is a vendor to the CRP and its agent in conducting voter registration 

activities in Orange County. RPOC noted that it has operated under the CRP's 

"Operation Bounty" agreement by which RPOC is compensated by the CRP on the basis 

of valid Republican voter registrations it obtains and which the CRP verifies as valid 

voter registrations throughout each election cycle. RPOC stated that, for the 2010-2011" 

election cycle, this included registrations obtained outside the Federal Election Activity 

(FEA), Type II" period, as well as, registrations obtained during the FEA, Type II 

period. RPOC stated that it received consideration in the form of payment per valid 

registration to defray its cost in obtaining, processing, verifying and submitting the voter 

registrations to the CRP through the Operation Bounty program. RPOC contended that 

without the Operation Bounty reimbursement, it would be less likely and able to conduct 

effective voter registrations using the volunteer resources of Republican volunteer 

organizations, groups and activists. Further, RPOC stated that the Operation Bounty 

program is a bona Ede party building program, which engages Republican volunteer 

groups and individual Republican activists in voter outreach, voter communication and 

spreading the Republican identification and brand in the community. It further added that 

if the CRP was not able to utilize the RPOC as its agent and vendor, the CRP would have 

' This matter was addressed in a Request for Commission Directive 69 Guidance involving the Democratic 

State Central Committee of California (LRA #819) dated April 22,2011. 

' As of February 28,2015, this amount remains outstanding on Schedule D and the reported cash-on-hand 

balance is S7,634. 

The audit period was 2009-2010. 

'' The Audit staff believes RPOC is actually referring to FEA, Type 1. These are voter registration 

activities conducted by a state or local political party committee within a period starting 120 days before 

the date of a scheduled federal election and ending on the date of the election. The FEA, Type I periods 

were 2/08/10 - 6/08/10 for the 2010 CA Primary election and 7/OS/IO ^ 11/02/10 for the 2010 General 

election. 
15 

to seek alternatives, such as commercial vendors, which do not offer the collateral party 

building benefits that the RPOC-CRP relationship promotes. 

RPOC contested whether this finding should be approved by the Commission on both 

statutory and constitutional grounds. RPOC stated that it is not prohibited from using 

non-federal funds transferred by a State, local or district committee of a political party to 

reimburse its federal account for a portion of expenses for voter registration conducted 

outside the FEA, Type II period as set forth in Commission regulation 11 CFR 

§300.32(b)(l)(i). Also, a State, local or district committee of a political party is not 

prohibited from paying vendors other than another State, local or district committee of a 

political party using Levin funds for voter registration activity during the FEA, Type II 

period under 11 CFR §300.32(b)(l)(i). 

In conclusion, RPOC stated that the Commission should allow it to accept and use Levin 

funds obtained in reimbursement through Operation Bounty as a matter of contract and 

agency law. Alternatively, RPOC also noted that the Commission should not enforce 2 

U.S.C. §441i(b)(2)(iv)(I) because it feels such enforcement would violate the equal 

protection clause of the Fourteenth Amendment to the United States Constitution. 

RPOC believed this would discriminate against a political party and its members for 

engaging in voter registration political activity using Levin funds received in coimection 

with its contract with the CRP. RPOC further added that such a decision would not apply 

to other vendors that contract to engage in voter registration activity payable with Levin 

funds. 

RPOC stated that guidance provided by the Commission's Reports Analysis Division and 

the CRP Final Audit Report of the Commission both confirm payments to local 

committees for voter registration activities were within the statute and the regulations. 

The Audit staff does not dispute this fact. CRP transferred Levin fimds to RPOC, which 

is not prohibited by the Act. However, RPOC used the transferred funds for Type I FEA 

- voter registration activities, which is not permitted under 11 CFR §300.31(a). This is 

the distinction between the activities performed by these two committees. 

Based on the above, the Audit staff considered that RPOC improperly spent $73,465 on 

Type I FEA - voter registration activities using Levin funds transferred from the CRP. 

D. Draft Final Audit Report 

The Draft Final Audit Report noted that RPOC improperly spent $73,465 on voter 

registration activities using Levin funds transferred from the CRP. 

E. Committee Response to the Draft Final Audit Report 

RPOC responded to the Draft Final Audit Report by requesting a hearing on this matter. 

RPOC stated that: 

1. There was no evidence of circumvention by any donor to RPOC of the $ 10,000 

Levin Fund limits. 

2. RPOC provided Republican voter registration to the CRP for "fair consideration" 

pursuant to the Operation Bounty voter registration agreement and found it 

"anomalous" that a state party committee would be permitted to transfer Levin 

funds to a subordinate party committee with the subordinate party committee 

precluded fi-om using the Levin funds for "Levin" purposes. 
16 

3. RPOC understood that the CRF had obtained informal authorization to make the 

payments in question to RPOC. RPOC believed the transfers were permissible, 

and, in response to requests for additional information from the Commission, 

RPOC responded with FEC Form 99 submissions and does not recall further 

response from the Commission. 

F. Audit Hearing 

During the Audit hearing, RPOC reiterated its position that it acted as an agent to the 

CRP by engaging in local voter registration activities through the Operation Bounty 

Program. RPOC stated that it did not perform the voter registration services as a 

mechanism to raise money for its other political activities or as an effort to circumvent an 

applicable contribution limit. Further, ^OC contended that the CRP was given FEC 

approval to make the transfers to local parties for voter registration services. With regard 

to its claim of a violation of the equal protection clause, RPOC stated that the 

Commission had responded appropriately in this context. In closing, RPOC stated that 

the final audit report should not contain Finding 4. 

The Audit staff maintains that the Act and Commission's regulations prohibit the use of 

Levin funds received from another state or local party for federal election activity. As a 

local party committee, RPOC is subject to those regulations with respect to the $73,465 

transferred from the CRP and used for voter registration activities. 

Commission Conclusion 

On March 10,2015, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended the Commission find that RPOC 

improperly spent $73,465 on voter registration activities using Levin funds transferred 

from the CRP. 

The Commission approved the Audit staffs recommendation.