FEDERAL ELECTION COMMISSION

WASHINGTON. 0 C 204&3

October 21, 1997

MEMORANDUM

SUBJECT: PUBLIC ISSUANCE OF THE AUDIT REPORT ON MAPP FOR

CONGRESS COMMIITEE

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FROM:

RON M. HARRIS

PRESS OFFICER

PRESS OFFICE

ROBERT J. COSTA .~J~ ASSISTANT STAFF DIRECTOR

AUDIT DIVISION

Attached please find a copy ofthe audit report and related documents on Mapp for

Congress Committee, which was approved by the Commission on October 5, 1998.

Infonnational copies ofthe report have been received by all parties. involved and

the report may be released to the public.

Attachment as stated

cc: Office ofGeneral Counsel

Office of Public Disclosure

Reports Analysis Division

FEe Library
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REPORT OF THE AUDIT DIVISION

ON

MAPP FOR CONGRESS COMMITTEE

Approved Oetober S, 1998

FEDERAL ELECfION COMMISSION

999 E STREET, N.W.

WASHINCTON, D.C.
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TABLE OF CONTENTS

MAPP FOR CONGRESS COMMITIEE

Page

EXHutive SumlDary 1

FiBal Audit Report 3

Background 3

Findings 5

Tnnsmittal to Committee 11

Cbroilolol)' 12
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FEDERAL ELECTIO'" CO,\1f\1ISSIO'"

FINAL AUDIT REPORT

ON

MAPP FOR CONGRESS COMMITTEE

EXECUTIVE SUMMARY

The Mapp for Congress Committee (the Committee) registered with the United

States House ofRepresentatives on May 21, 1996 as the principal campaign committee

for Kenneth Mapp (the Candidate), Republican candidate for the Delegate ofthe House

ofRepresentatives from the territory ofthe U.S. Virgin Islands.

The audit was conducted pursuant to 2 U.S.C. Section 438(b), which states that

the Commission may conduct audits ofany political committee whose reports fail to meet

the threshold level ofcompliance set by the Commission.

The findings ofthe audit were presented to the Committee at an exit conference

held subsequent to the completion offieldwork on December II, 1997 and later in an

interim audit report. The Committee's response to those findings is included in this final

audit report.

The following is an overview ofthe findings contained in the final audit report.

APPARENT PROHIBITED CONTRIBUTIONS-2 U.S.C. §441 b. The audit identified

four contributions, totaling 52..200, that were drawn on accounts maintained by

incorporated entities.

In response to the interim audit report, the Committee agreed to refund 52,200 to

the corporate entities. However, the Committee is currently insolvent. Therefore, a

Schedule D was filed, as part of a comprehensive amended report, disclosing the refunds

as debts.

RECEIPT OF CONTBIBVTlONS CASH -2 U.S.C. § 44lg and II CFR § 110.4(c)(3)

&: 102.9(8). A review ofthe Committee's bank records revealed deposits containing

547,390 in cash.

1. Individual Cash Contributions in ExCess of Limitation

A review ofthe cash deposits disclosed that 58,150 ofthe total was received

from 10 individuals.
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In response to the interim audit repon.. the Committee agreed to refund

$7,150 in contributions to the ten individuals. However.. since the Committee is

currently insolvent, the refunds will be disclosed as debts and obligations on Schedule

D.

2. Undocumented Cash Contributions

The Audit staffidentified $39..240 in cash that \\'as acquired from fundraising

activities. It \\'as initially determined that the cash \\'as obtained from anonymous

sources. In its response the Committee states that it is attempting to reconstruct a

participant list for the events. The response contained a Schedule D disclosing the

537,980 in cash as a debt. However. in the final analysis, the Audit staff accepted, as

adequately documented. all cash contributions which met the minimum standards as set

forth in the Campaign Guide for Congressional Candidates and Commillees; ie.. keeping

a record ofthe name ofthe event and the date and total amount received at the event.

Using this standard, the amount ofundocumented cash contributions was reduced to

$21,606.

DISBURSEl\tE~7 DOCUMENTATION-II CFR §102.9(b). The audit revealed that

documentatior was not available for 23 disbursements totaling $23,026.

In response to the interim audit report, the Committee stated that a copious search

is being conducted to locate the missing invoices however to date, the documents have

not been located.

IN-KINDCONTRIBlfTIONS-II CFR §§I04.13(a)(I) & (2) and IOO.7(a)(1)(iii).

During a review ofthe Committee's disbursements. the Audit staffidentified five paid

invoices and or copies of canceled checks which had notations which indicated that either

a discount had been provided to the Committee or that someone other than the Committee

had paid for the services or goods.

In response to the interim audit repon, an amended Schedule A was filed

disclosing the in-kind contributions. An amended Schedule B was also filed amending

line 17t showing the in-kinds as operating expenses.

DEBTS AND OBLIGATIONS-2 U. S. C. §434(b)(8). A review ofthe Committee's

disbursements revealed 26 invoices. totaling 512..216. for which no evidence of payment

was found.

The Committee filed amended reports disclosing the outstanding invoices as debts

and obligations on Schedule D.
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FEDERAL ELECTION COMMISSION

W~StIlNC 1()~ () ( ,?U.ah \

REPORT OF THE AUDITDIVISION

ON

MAPP FOR CONGRESS COMMITTEE

This report is based on an audit ofthe Mapp for Congress Committee (the

Committee), undertaken by the Audit Division ofthe Federal Election Commission in

accordance with the provisions of the Federal Election Campaign Act of 1971, as

amended (the Act). The audit was conducted pursuant to Section 438(b) ofTitle 2 ofthe

United States Code which states" in part~ that the Commission may conduct audits and

field investigations of any political colJtmittee required to file a report under Section 434

ofthis title. Prior to conducting any audit under this subsection" the Commission shall

perfonn an internal review ofreports filed by selected committees to detemline ifthe

reports filed by a particular committee meet the threshold requirernents for substantial

compliance with the Act.

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I. BACKGROUND

A. AUDIT AUTIIORIT\'

B. AUDIT COVERAGE

The audit covered the period from the Committee's initial deposit on May

29. 1996" through December 31, )996. The Committee reported a beginning cash

balance of$O; total receipts for the audit period of$157,751; total disbursclnents for the

audit period ofSJ53,,62 J; and an ending cash balance of$4.130 on December 31" 1996. I

c. CAI\IPAIGN ORGANIZATION

The Committee registcrcd with the Clerk ofthe U.S. House of

Representatives on May 21. 1996 as the principal campaign committee (or Kenneth Mapp

(the candidate), Republican candidate for Delegate to the U.S. House ofRepresentatives

from the territory ofthe U.S. Virgin Islands.

The figures cited in this repon are rounded to the nearest doHar.

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The treasurer ofthe Committee during the period covered by the audit

was Adriane Dudley. The Committee maintains its headquaners in St. Croix" U.S. Virgin

Islands.

To manage its financial activity" the CommiUcc naainlained one bmtk

account. From this account" the Committee made approximately 145 disbursements. The

Committee reported receiving approximately 160J contributions totaling S137,,752 (87%

oftotal receipts) from individuals and two contributions totaling 52.500 (1.6% oftotal

receipts) from political committees. The Committee also reported five loans from the

Candidate totaling $17,SOO.

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D• AUDIT SCOPE AND PROCEDURES

The audit included testing ofthe following general categories:

1. The receipt ofcontributions or loans in excess ofthe statutory

limitations (see Finding II.B.);

2. the receipt ofcontributions from prohibited sources. such as those

from corporations or labor organizations(see Finding ItA.);

3. proper disclosure of contributions from individuals. political

committees and other entities. to include tnt:.itemization of

contributions or other receipts when required. as well as, the

completeness and accuracy ofthe information dis«;losed

(see Finding 11.0.);

4. proper disclosure ofdisbursements including the itemization of

disbursements when required. as well as" the completeness and

accuracy ofthe information disclosed;

S. proper disclosure ofCommittee debts and obligations, to include

loans (see Finding II.E.);

6. the accuracy oftotal reported receipts. disbursements and cash

balances as compared to campaign bank records;

7. adequate recordkccping lor campaign tnulSUCtiUIlS

(see Finding II.C.); and

8. other audit procedures that were deemed necessary in the situation.

1bc exact number ofcontributions received is ...known due 10 dae rcceipl uf anunyl1lOUS ca.'th

contributions as discussed in Finding II B.2.

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Unless specifically discussed belo\\', no material non-compliance \\'as

detected. The Committee received approximately $39..240 in anonymous cash

contributions for which inadequate records were kept therefore.. the Audit staff\\'as

unable to test these contributions for itemization, disclosure.. arad contribution linlitations

(see Finding II.B.2.). It should be noted that the Commission nlay pursue any ofthe

matters discussed in this report in an enforcement action.

II. AUDIT [INDINGS AND RECOl\1MENDATIONS

A. ApPARENT PROIIiBITED CONTRIBUTIONS

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Section 441 b ofTitle 2 ofthe United States Code states. in part. that it is

unla\\'ful for any corporation to make a contribution or expenditure in connection \\'ith

any election at which a Delegate to Congress is to be voted for, or in connection with an)'

primary election or political convention or caucus held to select candidates" or for any

candidate, political committee, or other person knowingly to accept or receive any

contribution prohibited by this section, or any officer or any director ofany corporation to

consent to any contribution or expenditure by the corporation prohibited by this section.

Section I03.3(b)(4) and (5) ofTitle 11 ofthe Code of Federal Regulations

state that any contribution which appears to be illegal under 11 CFR 103.3(b)(I) or (3),

and which is deposited into a campaign depository shall not be used for any

disbursements by the poHtical committee until the contribution has been detennined to be

legal. The political committee must either establish a separate account in a campaign

depository for such contributions or maintain sufficient funds to make all such refunds.

If a contribution which appears to be illegal under 11 eFR 103.3(b)( 1) or

(3) is deposited in a campaign depository.. the treasurer shall make and retain a written

record noting the basis for the appearance: of illegality. A statement noting that the

illegality ofthe contribution is in question shall be included in the report noting the

receipt ofthe contribution. Ifthe contribution is refunded to the contributor because it

cannot be determined to be legal. the treasurer shall note the refund on the report covering

the reporting period in which the refund is made.

The Committee maintained copies ofthe majority of contributor checks

deposited. A review ofthese checks revealed that four contributions, totaling $2..200.

were drawn on accounts which appeared to be maintained by incorporated entities. ·rhc

Corporate Registration Division in the Virgin Islands verified that the entities making the

contributions were registered corporations at the time the contributions were made. A

listing ofthe apparent corporate contributions was provided to the Committee"s

accountant prior to the exit conference.

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In the interim audit report. the Audit staffrecommended that the

Committee provide evidence demonstrating that the contributions in question \vere not

from corporations. It was further recommended that. absent such evidence. the

Committee refund these contributions to the corporations and provide evidence ofsuch

(to include the front and back of negotiated refund checks). Iffunds \\'etc not currently

available to make the necessary refunds. the Audit staffrecommended that those

contributions requiring refunds be disclosed as debts on Schedule 0 (Debts and

Obligations) until such time that funds become available to make the refunds.

In response to the interim audit report, the Committee conceded that it

inadvertently accepted prohibited contributions and realizes that it needs to refund those

contributions. However. according to the Committee. "the Campaign Committee is

currently insolvent and has no financial capacity to refund these funds...." As a result. the

Committee filed an amended Schedule 0 disclosing the refunds as debts and obligations.

In addition to the contributions noted above, the review ofin-kind

contributions (Finding II D) revealed that the Committee also received an in-kind

contribution from a corporation. The Committee has not been able to place a value on

the contribution which was in the fonn of beverages apparently provided for a fundraiser.

They state that it is their beliefthat the corporation customarily provides beverages to

various political campaigns on the island. however no evidence was provided to support

this contention.

B. RECEIPT OF CASU CONTRIBUTIONS

Section 441 g ofTille 2 ofthe United States Code states that no person

shall make contributions of currency ofthe lJnited States or currency ofany foreign

country to or for the benefit ofany candidate which. in the aggregate. exceed 5100. \vith

respect to any campaign ofsuch candidate for nomination for election. or for election. to

Federal office.

Section 110.4(c)(2) and (3) ofthe Code of Federal Regulations states that

a candidate or committee receiving a cash contribution in excess of51 00 shall promptly

return the amount over $100 to the contributor. A candidate or committee receiving an

anonymous cash contribution in excess of$50 shall promptly dispose ofthe amount over

SSO. The amount over S50 may be used for any lawful purpose unrelated to any Federal

election. campaign. or candidate.

Section 102.9(a) ofthe Code of Federal Regulations states that an account

shall be kept by any reasonable accounting procedure ofall contributions received by or

on behalfofthe political committee. The Campaign Guide for Congressional Candidates

and Committees published by the Commission lists two possible accounting nlethods for

contributions ofSSO or less. Thc methods providc for keeping the same informntion

required for identifying contributions that exceed SSO (amount, datc ofreceipt. and

donor's name and address)~ or in the case ofsmall contributions collected at a fundraiser

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(such as gate receipts. cash contributions) keep records ofthe name ofthe event. the date

and total amount of contributions received on each day ofthe event. See ADs 1980-99

and 1981-48.

1. Individual Cash Contributions

A revic\v ofthe Committee's bank records revealed deposits

containing $47.390 in cash. Ofthis amount. $8.150 was received from 10 individuals.

As a result. the Committee received $7 150 in cash which exceeded the individual cash

contribution limitation. A listing ofthe contributions was provided to the Comlllittcc's

accountant prior to the exit conference.

Documentation maintained on the remaining $39.,240 indicated

that the cash was received from the sale offood and drinks at campaign events. rame

tickets. and the sale of polo shirts. Based on the available documentation, the Audit staff

\\'as unable to detennine the individual amounts received from contributors. 'The Audit

staff accepted the first SSO of each cash deposit as an acceptable anonymous cash

contribution, which resulted in the remaining 537.890 being considered undocumented

cash contributions. The Committee's accountant stated that it is comnlon practice in the

Virgin Islands to conduct business with cash and that many residents do not have

checking accounts.

2. Undocumented Cash Contributions

The Committee'5 accountant was provided with a schedul~ ofthe cash

contributions prior to the exit conference.

In the inter~m audit report. the Audit staffrecommended that the

Committee provide evidence that the individual cash contributions noted above \verc not

excessive cash contributions. It was further recommended that. absent such evidence. the

Committee refund the excessive portion to the contributors. Ifsufficient funds were not

currently available to make the necessary refunds. the Audit staffrecommended that those

contributions requiring refunds be disclosed as debts on Schedule D until such time that

funds become available.

In response to the interim audit report finding regarding excessive cash

contributions from individuals. the Committee filed a Schedule D disclosing the amounts

as debts until such time that funds become available to make refunds.

Regarding the remaining cash contributions. the Committee noted that.

"these funds were obtained through various fundraising events.·' According to the

Committee, "these fundraising events...involved certain types ofevents such as railles, ·rshirt sales and quadrille dances."· The Committee concedes that proper documentation

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was not maintained to identify the individuals who purchased T-shirts or tickets for the

rames and dances and acknowledged that it was unable to determine all who participated

in these fundraising events. In its response the Committee states that it is attempting to

reconstruct a participant list for the events. The response contained a Schedule D

disclosing the 537.,980 in cash as a debt which will be disposed offor any lawful purpose

not related to any Federal election campaign or candidate when funds beconle available.

The Audit staff has accepted, as adequately documented. all cash contributions

which meet the minimum standards as set forth in the Campaign Guide for Congressional

Candidates and Committees; i.e., keeping a record ofthe name ofthe event and the date

and total amount received at the event. Using this standard, the amount of undocumented

cash contributions is reduced to 521.606.

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c. DISBURSEI\IENT DOCUI\'IENTATION

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Section I02.9(b) ofTitle 11 ofthe Code ofFederal Regulations states. in

part, that an account shall be kept of all disbursements made by or on behalf ofthe

political committee. Such account shall consist ofthe name and address of every person

to whom any disbursement is made and the date. amount, and purpose ofthe

disbursement. In addition, a receipt or invoice from the payee or a canceled check to the

payee shall be obtained and kept for each disbursement in excess of5200 by or on behalf

ofthe committee.

A review ofthe Committee's disbursements revealed that receipts or

invoices were not available for 23 disbursements totaling 523,,026. Eight ofthe

disbursements appear to be reimbursements to individuals or the candidate. The schedule

of undocumented disbursements was provided to the Committee's accoumant prior to the

exit conference and he indicated that an attempt would be made to obtain the invoices

and/or receipts.

In the interim audit report, the Audit staffrecommended that the

Committee provide copies ofthe invoices and/or receipted bills for the undocumented

disbursements.

In response to the interim audit report, the Committee states that a copious

search is being conducted to locate the missing invoices. However. to date the documents

have not heen located.

D. IN-KIND CONTRIBUTIONS

Section 104.13(a)(l) ofTitle II ofthe Code ofRegulations stales~ in part,

each in-kind contribution shall be reported as a contribution in accordance with 11 CFR

104.3(a). In addition" Section 104.13(a)(2) states" in part. each in-kind contribution shall

also be reported as an expenditure at the same usual and normal value and reported on the

appropriate expenditure schedule.

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Section IOO.7(a)(I)(iii) ofTitle 11 ofthe Code of Federal Regulations

states. in part, the tenn anything of value includes all in kind contributions. Unless

specifically exempted under II CFR IOO.7(b), the provision of any goods or services

without charge or at a charge which is less than the usual and nvnnal charge for such

goods or services is a contribution. If goods or services are provided at less than the

usual and normal charge. the amount ofthe in kind contribution is the difference bCl\veen

the usual and normal charge for the goods and services at the time ofthe contribution and

the amount charged the political committee.

During a revic\v ofthe Committee·s disbursements. the Audit staff

identified five paid invoices and or canceled checks with notations that indicated either a

discount had been provided to the Committee or that someone other than the Committee

had paid for the services or goods. Four ofthese items totaled $1.269. while the fifth

indicated goods provided at no charge; however. the documentation did not include the

costs ofthe goods provided. The Committee did not report the receipt of any in-kind

contributions.

A schedule ofthe items was presented to the Committee"s accountant prior

to the exit conference. The accountant stated that he would research the items.

In the interim audit report. the Audit staffrecommended that the

Committee provide evidence that the items noted above were nut in-kind contributions.

It "'as further recommended that. absent such evidence. the Committee file an amended

report disclosing the items as in-kind contributions. Should it be detennined that any of

the contributions noted above are prohibited. i.e.• from corporations or excessive. the

Audit staffrecommended that the amounts ofthe contributions be refunded to the

contributors.

In response to the interim audit report. the Committee amended its reports

to disclose four ofthe in-kind contributions on Schedules A & B as required. Regarding

the fifth contribution. the Committee states that it represented beverages provided by a

corporation. However. the value is unknown. This contribution has been incorporated

into Finding II A - Apparent Prohibited Contributions.

E. DEBTS AND OBLIGATIONS

Section 434(b)(8) ofTitle 2 ofthe United Stales Code states lhat each

report filed under this section shall disclose the nature and amount of outstanding debts

and obligations owed by or to such political commattee; and where such debts and

obligations are settled for less than their reported amount or value. a statement as to the

circumstances and conditions under which such debts or obligations were extinguished

nnd the con~idcrntion thereof.

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A review ofthe Committee's disbursements revealed 26 invoices. totaling

S12.216, for which no evidence ofpayment was found. In some cases. partial payments

were noted on the invoices; however. there was no evidence ofa final payment.

A schedule ofthe unpaid invoices was provided to the Committee·5

accountant prior to the exit conference. He stated that he would research the matter tll

determine whether the invoices had been paid.

In the interim audit report. the Audit staffrecommended that the

Committee provide evidence that the invoices were paid. It further recommended that

absent such evidence, the Committee file an amended disclosure report listing the unpaid

invoices as debts owed by the Committee.

In response to the interim audit report. the Committee filed an amended

Schedule D disclosing the unpaid invoices as debts.

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FEDERAL ELECTION COMMISSION

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October 8. 1998

Ms. Ana Davila, Treasurer

Mapp for Congress Committee

clo Tha\\', Gopman & Associates. Inc.

20451 Northwest 2nd Ave.

Miami, FL 33169

Dear Ms. Davila:

Attached please find the Final Audit Report on the Mapp for Congress

Committee. The Commission approved the report on October 5, 1998.

The Commission approved Final Audit Report will be placed on the public record

on October 13, 1998. Should you have any questions regarding the public release ofthe

report, please contact the Commission's Press Office at (202) 694-1220 or toll free at

(800) 424·9530. Any questions you have related to matters covered during the audit or in

the report should be directed to Brenda Wheeler, or Ray Lisi ofthe Audit Division at

(202) 694·1200 or at the above toll free number.

Sincerely, .-;(':.-; ,. /:-'~ /'

/' J .

Robert J. Costa

Assistant Staff Director

Audit Division

Attachment as stated
CHRONOLOGY

MAPP FOR CONGRESS COMMITTEE ..

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Audit Fieldwork

Interim Audit Report

to Committee

Response Received to

Interim Audit Report

Final Audit Report

Approved

6/24/97 - 7/18/97

2/11/98

4/30/98

10/5/98

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