FEDERAL ELECTION COMMISSION 

WASHINGTON, O.C. 20463 

MEMORANDUM 

TO: 

FROM: 

Patricia C. Orrock 

Chief Compliance Officer 

Thomas E. Hintennister 

Assistant Staff Director 

Audit Division 

Lisa J. Stevenson 

Deputy General Counsel - Law 

IEC222in 

Lorenzo Holloway 

Assistant General CounseP^ 

Compliance Advice 

Margaret J. Forman OTn ^ 

Attorney 

SUBJECT: Proposed Interim Audit Report on the Majority Committee PAC (LRA 992) 

I. INTRODUCTION 

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

("proposed lAR") on the Majority Committee PAC ("McPAC"). The proposed lAR contains one 

finding: Excessive Contributions to Candidates.' We concur with the finding and comment on it 

below. 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 lAR. 11 C.F.R. §§ 2.4(a) and 

(b)(6). 
LRA 992 Majority Committee PAG 

lAR Legal Comments 

Page 2 of3 

II. McPAC's PAYMENT OF TRAVEL EXPENSES OF LEADERSHIP PAC'S 

SPONSOR TO ATTEND OR SPEAK AT FUNDRAISERS ARE IN-KIND 

CONTRIBUTIONS TO THE EXTENT THAT THE FEDERAL CANDIDATES 

DIRECTLY BENEFITED 

McPAC is a non-connected, multicandidate leadership PAC whose sponsor is 

Congressman Kevin McCarthy.^ The Audit Division determined that McPAC made excessive 

in-kind contributions to nine federal candidate committees, totaling $20,110. The in-kind 

contributions consisted of airfare paid by McPAC for Mr. McCarthy to speak or make appearances 

at flindraising events that directly benefitted these federal candidate committees. 

We conclude that McPAC's payment of Mr. McCarthy's travel expenses are in-kind 

contributions to those candidates and the relevant committees to the extent that his travel was for 

the purpose of attending or speaking at those fundraisers. A contribution includes "anything of 

value made by any person for the purpose of influencing any election for Federal office." 52 

U.S.C. § 30101(8)(A)(i). When the Commission established the concept of a Leadership PAC in 

its regulations, it recognized that activities paid for by Leadership PACs on behalf of Federal 

candidates would be considered contributions. 

"[A] leadership PAC's provision of funds, goods, or services to any authorized committee 

will be treated as a contribution as defined in 2 U.S.C. 431(8) [now 52 U.S.C. § 30101(8)], 

and thus limited to the amount at either 2 U.S.C. 441a(a)(l)(A) or 441a(a)(2)(A) [now 52 

U.S.C. § 30116(a)(1)(A) or 30116(a)(2)(A)] per election, depending on whether the 

leadership PAC has attained multicandidate committee status, unless the activity falls 

within an exception to the definition of "contribution'.' or "expenditure," or is a &ir 

market value exchange of goods or services for the usual and normal charge. See also 2 

U.S.C. 431(8) [now 52 U.S.C. § 30101(8)]." Explanation and Justification for Leadership 

PACs. 68 Fed. Reg. 67013,67016 (Dec. 1,2003) (emphasis in original). 

Consequently, "Leadership PACs ... whose purpose is to support more than one Federal candidate 

... once they qualify as multicandidate committees, may contribute up to $5,000 per candidate per 

election. See 2 U.S.C. 432(e)(3) [now 52 U.S.C. § 30102(e)(3)], 441a(a)(l)(C) [now 52 

U.S.C. § 30116(a)(1)(C)] and 441a(a)(2)(A) [now 52 U.S.C. § 30116(a)(2)(A)]; 11 CFR 110.1(d) 

and 110.2(b)." Id or 67017. 

The payment of an individual's travel costs to attend or speak at a fundraiser for a Federal 

candidate is an in-kind contribution. The Commission has specifically recognized that travel costs 

. paid for by a multicandidate committee and associated with an individual's appearances on behalf 

of a Federal candidate are a contribution to the Federal candidate. See Advisory Opinion 1986-6 

(America's Future), and Advisory Opinion 1985-40 (Republican Majority Fund); cf. Advisory 

^ As a leadership PAC, McPAC is a political committee that is directly or indirectly established, financed, 

maintained, or controlled by a candidate for Federal office or an individual holding Federal office (Congressman 

McCarthy) but which is not an authorized committee, nor affiliated with an authorized committee of the candidate or 

individual, except that leadership PAC does not include a political committee of a political party. 

11 C.F.R. § 100.5(e)(6). 
LRA 992 Majority Committee PAC 

lAR Legal Comments 

Page 3 of3 

Opinion 1996-20 (Lucas); Advisory Opinion 2000-12 (Bradley and McCain). Thus, McPAC's 

payment of Mr. McCarthy's travel expenses to attend or speak at fundraisers for Federal 

candidates are in-kind contributions to those candidates and the relevant committees.^ 

^ We understand that Mr. McCarthy may have traveled to appear on behalf of one or more Federal 

candidates, either at a single fundraiser, or at several separate fundraisers at the same destination. As a general matter, 

"expenditures may be allocable as in-kind contributions to the candidates and political committees for whom 

appearances are made. See 11 C.F.R. § l00.7(a)(lXiii) [now 11 C.F.R. § I00.S2(d)], 106.1(b), and 110.2(a); 

Advisory Opinion 1985-40." Advisory Opinion 1986-6 (Fund for American's Future, Inc.). To the extent that travel 

expenses benefit more than one Federal candidate, the Commission has applied 11 C.F.R. § 106.1. "[Ejxpenditures 

on behalf of more than one candidate shall be attributed to each candidate in proportion to, and shall be reported to 

reflect, the benefit reasonably expected to be derived." Advisory Opinion 1986-6 (Fund for American's Future, Inc.) 

citing 11 C.F.R. § 106.1(a); see Advisory Opinion 1982-56 (Jacobs) (superceded in part on other grounds) and 

Advisory Opinion 1985-40 Republican Majority Fund); We conclude, therefbre, that 11 C.F.R. § 106.1 governs the 

allocation of these in-kind contributions among several candidates. 

If, however. Congressman McCarthy also attended events in his capacity as an'officeholder, or for purposes 

other than the purpose of influencing any election for Federal office, the travel expenses incurred would require a 

separate analysis of the specific underlying facts. See Advisory Opinion 1985-40 (Republican Majority Fund); <f., 

Advisory Opinion 1996-20 (Lucas).