• FEDERAL ELECTION COMMISSION

WASHINGTON, 0 C 20463

June 11, 1981

MEMORANDU~I

TO:

FROM:

SUBJECT:

FRED EILAND

PRESS OFFIC~

BOB COSTA "'1~

PUBLIC ISSUANCE OF FI~AL AUDIT REPORT - CITIZENS COMMITTEE FOR THE DEMOCRATIC NATIO~AL CONVENTIO~, INC.

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Attached please find a copy of the final audit report

of the Citizens Committee for the Democratic National

Convention, Inc., which was-approved by the Commission on

Nay 27, 1981.

Informational copies of the report have been received

by all parties involved and this report may be released to

the public.

Attachment as stated

cc: FEe Library

RAD ~lic Record
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• FEDERAL ELECTION COMMISSION

WASHI'GTON. 0 C 20463

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REPORT OF THE AUDIT DIVISION

ON THE

CITIZENS COMMITTEE FOR THE DEMOCRATIC

NATIONAL CONVENTION, INC.

I. Background

A. Overvie\'1

This report is based on an audit of-the Citizens

Committee for the Democratic National Convention, Inc. (lithe

Committee") to determine whether there has been compliance with

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

amended ("the Act"). Theaaudit was conducted pursuant to Section

9008.9 of Title 11 of the Code of Federal Regulations which states,

in part, that the Commission shall conduct an examinatio~ and

audit 0: each host co~~ittee.

The Co~~ittee regis~ered with the Federal Election

Commission on October 13, 1979 as the New York City host committee

for the 1980 Democratic National Convention. The Co~~ittee

maintains its headquarters in New York, New York. The audit

covered the period October 13, 1979 through December 31, 1980.

During this period, the Committee reported a beginning cash

balance of $3,438.76 1/, total receipts of $549,142.80, total

expenditures of $500,675.01, and an ending cash balance C~

December 31, 1980 of $51,906.55.

This re~ort is based on documents and working papers

which support eac; of its factual statements. They for~ part of

the record upon \·,·hich the Cor.-.:nission based its decisions on the

matters in this report and were available to Cornrnissionc~s and

approp~iate sta:: for review .

.!,.I T:~e beg i~:1i::g cash balo.r:.:e consists of funds rernuin i:1g

a~ter the host co~~ittcc for the 1976 Democratic N~tional

Cc~vention ceased operations.
• B. Key Personnel

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The principal officers for the period audited were:

Mr. Preston R. Tisch, Chairman and Mr. Charles Gillett,

Treasurer.

C. Scope

The audit included such tests as verification of

total reported receipts and expenditures and individual

transactions; review of required supporting documentation

and analysis of Committee debts and obligations; review of

contribution and expenditure limitations; and such other

audit procedures ~s deemed necessary under the circumstances.

II. Findings and Recommendations

A. Possible Prohibited Contribution

Section 9008.7(d) (2) of Title 11 of the Code of

Federal Regulations states, in relevant part, that a local

business may donate funds to a host committee for the purpose

of promoting the conventidn city and its commerce.

Section 9008.7(d) (2) (iv), in relevant part, states

that any business entity within the Standard Metropolitan

Statistical Area ("S)15;''') shall be considered local and any

business entity located outside the S~SA is not local, absent

a showing that the volume of business in an area lying outside

the S~SA would be directly affected by the presence of the

convention.

During the course of the audit, the Audit staff noted

one (1) contribution of Sl,OOO.OO fro~ a business apparently

located outside of the SMSA.

In response to the interim audit report the COI":"'J:1ittee retur~ed the contribution to the business, and on April 6, 1981

su~~i~tcd a copy of th~ f~ont of the c~eck as evidence of the

re~und. A copy of the reverse side of the refund check will be

provided once the check clears the bank.

Rec oI':"'.:':".end ation

Provided that the Committee subnits a copy of the negotiated

refu:::l chec~:, it. is the rccomr.lendation of the Audit sta~f that

no further actioD be taken on this matter .
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B. Disclosure of In-kind Contributions

Section 434(b) (3) (A) of Title 2 of the United States·

Code states, in relcvunt part, that each report shall disclose

the identification of each person who makes a contribution to

the committee during the reporting period which has an aggregate

amount or value in excess of S200.00 within the calendar year,

together with the date and amount thereof.

Further, Section l04.l3(a) (1) and (2) of ~itle 11 of

the Code of Federal Reaulations states that the amount of the

in-kind shall be equal to the usual and normal charge on the

date received and shall be reoorted as a contribution and an

expenditure in accordance with 11 C.F.~. l04.3(a} and (b).

During the course of the audit, it was determined that

volunteers assianed b·" the Commi ttee to be "host couoles" to

each of the state delegations at the 1980 Democratic-National

Convention were encouraged by the Committee to hold at least one

event for their res~ective delegation. The type of event was left

entirely to the discretion of the "host couple" as \'lell as the

financial responsibility for the event. ~he Committee did not

consider the costs in=urred bv these individuals to be in-kind

contributions to the Co~ittee since they exercised no control

over the type or cost of-~ach event and, furthermore, maintained

no records frc~ whic~ the auditors could determine the dollar

value involved. T:1e CO~T;1ittee stated that "host couples" held

events for the delega~ions in 1976, the costs of which were not

repo~ted as in-kind c~~tributions. T~e Cc~~ittee further stated

t hat sinc e t his acti ": :. :.~: was not me:-: t ione c1 by the FEC a ud i tor s

durinc the audi t 0: t~e 197 (; host COD.":li ttee, the'.? did not considerJit necessary to maintai~ reco~ds or report~this activity

as in-~ind contributio~s..

In respo~se to the interi~ audit report the Committee

cO:1::acted each of the "host cou?les" to request statements of

the costs inc~rrod b~· t~c~. 0~ the 59 letters sent, responses

to 31 '.·:ere recc i ")'(;':.1 by t he CO~lmit tee.. ()n A~r i 1 6, 1981, the

Co~mit::ee submi::t~d a~c~d~ents to its disclosure reports pro?erly

d i -: : 0 5 ::10 i n - ~: i ~. c1 C (; :-. ::ributi c':: s tot:11 inc; 2 5 , 8 5 3 .. 3 i' .. In

ac:c::" :::'::;:;, t~c CC::·.~1':'::::'~''': 1:2 S S ·~:::-::-.i:: ::...::'~ :l cc~y 0 f t:;e letter se~ t

to t::·2 "::cs cc:..:;-: 1(:5" .:i :~a alis t 0:- t:-:ei:r na!'nes and addresses

to de:::'J s t ratc t:! I:: i~· e := () ;.- t s toob t a i nth(:. r c C1 ucstedinforma t i 0:1 ..

Addi~io~~l aDC!~~~0~~S ~s the ~isclosur0 rc~orts will be filed if

furt~e~ rGSpo~SCS aro r0~ci~0rl ..
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Recommendation

It is the op~n~on of the Audit staff that the committee

has demonstrated its best efforts to obtain the requested

information from the "host couples", therefore, we recommend

that no further action be taken on this matter.

c. Disclosure of the Purpose of Expenditures

. 2 U.S.C. 434(b) (5) (A), in relevant part, requires that

each report filed under 2 U.S.C. 434 shall disclose the name and

address of each person to whom an expenditure in an aggregate

amount of value in excess of $200.00 within the calendar year is

made, together with the date, amount and purpose of such expenditure.

11 C.F.R. 104.3(b) (3) (i) (A) defines purpose as a brief

statement or description of why the disbursement was made.

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During the review of expenditures, the Audit staff noted

that, in its disclosure reports, the Committee listed the purpose

of 128 expenditures totaling $285,307.18 as either delegate

services, public relations or convention expense. This figure

represents 37.76% of the nu~ber and 62.76% of the dollar figure

of expenditures requiring itemization.

In response to the interim audit report the Co~~ittee

filed amendments to its disclosure reports on April 6, 1981 to

include more detailed descriptions of those expenditures originally

disclosed as delegate services, public relations or convention

expense.

Recommendation

It is the reco~~endation of the Audit staff that no further

action be taken on this matter .
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FEDERAL ELECTION COMMISSION

,us SIRH T '" \\'.

\\,.-\SHI"-CTO"-.DC 2046.3

AlDITI~ lNFURMe\TION REOOIDlNG '!HIS ORGANIZATION

MAY BE LOCATED mA CXM'IE1ED CXI1PLIANCE ACI'ICIl

FILE RELEASED BY '!HE aMnSSIOO AND MADE PUBLIC IN

11£ PUBLIC REroRDS OFFICE. FUR THIS PARrIaJLAR

ORGANIZATION t S CXM'LE'lED CXM'LIANCE ACTION FILE

SIMPLY ASK FOR 'mE PRESS St»fARY OF MIJR II 1175.

'!HE PRESS St.M1ARY WILL PROVIDE A BRIEF HISroRY OF

'mE CASE AND A smt1ARY OF !BE AC1'IONS TA.l<m, IF JlN{.

Audit ~! Z9J'
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