FEDERAL ELECTION COMMISSION 

WMSMNGTON, DC 2040 

July 27,2015 

MEMORANDUM 

To; The Conunurion 

Hirough: Alee Palmer 

Staff Dizector 

From; Patzicia C. Onock 

Chief Compliance OfiGcer 

Thomas E. Hintemiisler"^ 

Aasiataiit Staff Director 

Audit Division 

Dougias Kodidi 

Audit Msnagar^l^ 

By: JeffSpUizewsId ^ 

LesdAuditor ' 

Sidject: Audit DiviskmRBOommendalionMminnDdum on the Committee fiv 

Chariotte/Charlotte DNC Host Coznmittee (CFC) 

Puzsuant to Commission Directive No. 70 (PEG Dizective on Processing Audit ReportsX 

the Audit staff presents its zecoounendatiaas below and discusses die findinga in die 

attached Draft Final Audit Ri^oit (DEAR). The Office ofGenenl Counsel has reviewed 

this memorandum and concurs with the •wftfrnimMirfatinw 

Flndiugl. RecordkeepliigforlB-KlndConhilnitioiis 

During audit fidthworl^ the Audit staff identified 23 in-ldnd contzibutions provided 

by cozpozatiaas, commncial vendors, and individual contributors, totaling 

^,878,882, which lacked the required siqipoztingdocumentatian. Ihzeaponseto 

the Preliminary Audit Rqxnt, CTC proviM some internally developed siqipozting 

documentation fbr a portion of its in-ldnd contributions, but these documents did 

not allow for verification of the reported amounts and finding was not 

resolved. In its response to the Dnft Final Audit Rqxnt, CFC counsel stated he 

was still trying to get more infimnation fiom fbnner CFC staff. 
Thg Aivtit mtmffrmmmtmAm ihmt ihrt Cnnnmi—inn fiiiH tftot PPT ftilaJ to wwinlaifi 

iqy|vopriatB documcBtatlQn to support iqxnted in-ldnd conbibutk^ 

$2,878,882. 

Fliidliig2. DtodMnreofDtabmscmcBli 

During audit fiddwoik, the Audit staff identified 43 disbunemenls totaling 

$12,580,995 that were dtfaer mining or did not adequately provide the leqiiiied 

diadoaure infbnnation. In teqxnse to the Preliminaiy Audit Rq)ort,CFC filed 

amended disclosure reports that materially corrected the dishunementdiacloaure 

oion. In its ze^xmae to the Draft Final Audit Report, CFC had no further 

commcnta. 

The Audit ataffiecofnmends that the Commiaainn find fliatCFC did not 

fdytuately d'tdnae the wMpiitwH fhr tnit«Hng 

$12,580,995. 

Hie Cammitiee did not zequeat an audit hearing 

If this memorandum ia qqxoved, a ftopoaed Final Audh Rqiort will be prqaned widiin 

30 daya of the Commisaion's vote. 

In case of an olyection. Directive No. 70 atatea that the Audit Division Reoommendation 

Memorandum will be placed on fiw next legnlariy scheduled open aeaaion agenda. 

Documents related to this audit report can be viewed in the Voting Ballot Matten fidder. 

Should you have any queationa, pleaae contact Jeff Spilizewdd or Dou^ Kodidi at 694-

1200. 

Attachment: 

Draft Final Audit Report of the Audh Division on the Committee fix 

Chailotte/CharloCte DNC Host Committee 

cc: Office of General Counsel 
Draft Final Audit Report of the 

Audit Division on the Committee 

for Charlotte/Charlotte DNC 

Host Committee 

(April 1, 2011 - December 31, 2012) 

Why the Audit 

Waa Done 

The Commission audits 

each host committee (R 

municipal flmd that 

lepresenti a dty vtec a 

publicly financed 

nominating convention 

was held. The audit 

seeks to detennine 

whether the committee 

has materially congdied 

with the prohibitions and 

disclosure requixements 

of the election law.' 

Future Aetii^'lv^ 

TbeCommiasionmf^ 

initiate an' 

action. 

Aboat tlw CommlttM 

The Committee for Chariotte/C^motte^DNC Host Committee (CFC), 

headquartered in ChailotiB, NonkCnolina, is a committee responsi^ 

for hosting the 2012 Deim^alicwSfim^ Fornune 

infimnuian. »e the Ite 

Finaneiftl Activity^ 2) 

• Receipti / 

o Conlrihulii-'-i 10Convention 

ises 

o iReceived 

o 

O ^ :s: 

Total pH 

^s DIsbnneirilnts 

JBaqwnditures 

AfBHaind 

Made 

Other 

^ llqtel Diibuscmenta 

$24^28337 

13,000,000 

31 

a709) 

$37«425,6S9 

$32,532,958 

8,783 

4,000,000 

93,592 

S36pd38333 

Ffadfasa and Reeommeadatloas (p. 3) 

• Recordkeeptaig fin Ih-KindConbihiitiona (Ending 1} 

• Disclosure ofDisbunements (Finding 2) 

* 11CFR 19008.54. 

' Thli iiiiiiiml urn a iiiiiill flisii IIIH iiii liiwrtniiiili 
Draft Final Audit Report of the 

Audit Division on the 

Committee for Charlotte/ 

Charlotte DNC Host Committee 

(April 1, 2011 - Deceip^r 31, 2012) 

•rf'% 

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V. 

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s_ 
Table of Contents 

•5f 

" P" 

Part m. Summaiiea 

Findingg and BccommwiriafimM "" 

' • •• •• •• -V •• % '."JS w 

•'k.. ^ 

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• ' •x.* •f 

"^."SP. s^v 

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•••.••AS. 

P.'^ '''^•. V".: , ''•••=.. >'.••. . p.." 'AWJX* 

4-sV. 'S-.-- ^ ^•.•^ \ •. •.^ . 

PftCe 

Fiartl. Backgnrand 

Aulfaorityfiir Audit 1 

Scope of Audit 1 

InveatoiyofCcniimitteeReooids 1 

Partn. Overview of Committae 

Cominitlee QrgBiiizBtion 

Overview of Financial Activity ^ 

Conunitlee Organization *•• 2 

Part IV. FtatdlafB and Reeonimeiail^tUtiia 

Finding 1. RecordkeqnngfiwliHKiDdCantribufi^^ 4 

Finding 2. Diadoiure of Diabunements *> >. 6 
Parti 

Background 

Anthorlty for Audit 

Tliu repent U based on an audh of tfao Conmuttoo fo Quriotle/Charlotte DNC Host 

Committee (CFC), undertakflD by the Audit Divisian of die Fedend Election Comniisnon 

(tfin ConrniiMimi) •• mmiated Qiw« sd ofUde 11 of tlie Code of Fodenl 

Regulations. That section states the Commission dudl conduct an examinatioa and audit 

of each boat committee legisteied under 11CFR $9008.51. 

Scope of Audit 

This Audit examined: ^ 

1. the teceipt of contributions fiompiohiUtedsouf^ ' 

2. die disclosure ofcontributions aid other receipd; 

3. the disdosuw and nature of disbufsemcntsij;^ 

4. the discIoBure of debts and oUigations; 

5. the conqdeteneas ofrecoids; 

6. theoondsteocybetaeeniq)octed^gunsandbankTl^Qid8;aiid 

7. odiercoinmittee(9eration8neceBB8tg^^theieview. '' ;L-^ 

Inventory of Committee Reeorife^y 

lie Audit staffroudnely conducts an faivci^l^ of ebniii^i^ records befine it begins the 

audit fiddwoik. CFCzeisQM'-fmmateria^'co 'conqdcte Slid die fiekhwoik begsA 

imflMdialBly. \ 

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•V. 

.s = 

sS 
Part n 

Overview of Committee 

Committee Organisation 

laportant Datee 

• Date of Regirtnttion PdwMiy 16.2011 

• Audit CovenMC ^gil l,2011^TOcsmber31,2012 

Headqnarten Chariottey^lmA C=x-z= 

Bank iBforraatloii 

• Bank Dcpositorici 

• BankAecounts Atfcounts 

Treunrar 

• lYBanirer When Audh Was Conducted 

• TVeaiuier Purina Period Covered by Audit •!« i 

M«—jamaat Informatioo 

• Attended Commianon Campaign Finiiftie. No 

• Who Handled Acoountnig and llriiin'kt-epiiiK Pr'si-ill 

0^^rvie#of FiflAjmial Activity 

- ^inidtted Aiibiuts) 

-l:. V. 

Caah-on-Jiiad A Aorfl S 0 

Recdiitt •==••••.. V 

o Contribut^^Avto Defray Coftyention Exoeoaea 24.428J37 

o Loans Recei^'. 13.000.000 

0 Refunds. RebateKRetuina'nD^^ 31 

o Other Income (2.700) 

Total RaceiptB $37.425i699 

DtabnneBMBtB 

o Convention Expenditures 32.532.958 

f, 1W—AMmmg 

0 Loan Repayments Made 

gifge 

4J)UU.U00 

0 Other Dubunements 93.592 

Total Dbbnnemenla S36d635333 

Caah-on-hand @ December 31| 2012 S 790326 
Part m 

Summaries 

Findings and Recommendations 

Finding 1. Recordkeeping for In-Kind Contrflmtlons 

The Audit staff identified 23 in-kind conuibiitioaa provided by conoiationa, commepcial 

vendors, and individual contributoia totaling $2,878,882 that iao^t(ie lequiied 

supporting documenlation. h response to flwPieliminaiyAstBlRepoHieconmiendalioii, 

Crc provided some internally developed sigipoctiiig I ^ 

in-ld^ Gomributions, but the reported amounts still remap 

unresolved. (For more detail, see p. 4.) ^ ^ 

Findings. DlaelMonofDUbipj^ment 

The Audit Staff identified 43 disburaemeiits tdtalli 

or did not adequately provide retpdred diacloaure: 

ibr a portion of ita 

and the finding 

Preliminary Audit Report reeornineiidtfion, CFC fi! 

ineterially cotrected the dirfiurBemenfdlar^oaure 

5 fiiat wac ri ite miasmg 

Ihreqponaeiofiie 

disclosure lepofta that 

ercora. (F^i^inore detail, see p. 6.) 

•'••••hi -. " 

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Part IV 

Findings and Recommendations 

I rinding 1. aecordkeeptog for In-Kind ContribntloM 

Simntty 

TTift Audit ataff identified 23 in-toidconlribatioM provided lycuipoiatioM, commercial 

veiuiots, and individDal oonbibutOEB totaling $2^78,882 that iacU tbe lequiied 

supporting documentttion. toicqKmsetotiiePidiminaiyAu^i^qrtieoQianiGndatioii, 

Crc provided some intenially developed supporting doGum^mon fin a portion of hs 

iiHldi^ Gontiibutiona, but the rqxnted amounts still and the finding 

unresolved. 

Lcfal Standard 

A. Recelpta and dtobwsementa of muBld^ftaBda. Municipal fiiiiqjmw 

goods or sendees ftom commercial vendt^'ibr con^ption uses undv^ saine 

terms and conditions (including rqxntingie^tepentO set &fth at fl CFR 

9008.9 fiv convention Gommhtees. Bu8ine8ad^^udi]iigbaiiksXl>bor 

ccganizations^ ottier (ngantasjons and indiv^nls may funds or make 

In-Und '^'^'vitiftns to a imimc!] inllCFR 

9008.S2(b). 11 CFR {9008.53. 

promotional 

'»S 

nominating 

convniLun • 

fhnn cUiiorGial vendors far 

al vendors nuy sell, lease, rent or provide 

whli leqieGt to a presidential 

lateStOratrmGhnge. The 

dwwing: 

•^iegoac*---rr- -JS;-. - JSJ. 

tfaedatCs or vb-...; ijc A lOn- -services were provided; 

the terras and^^^tiorSl^flie amngement; and 

• ^ABtpromoti^^consiaeration was provided. 11 CFR {9008.9(bX4). 

C. ValnatiSn-prin-KltidContribatlonB. The arnouritafan in-kind contribution 

shall be eq^ to die usual and normal value on the date received. IICFR 

§104.13(aXl): 

D. Formal Reqnlnmenls Regarding Reports and Statements. Eachpolitical 

committee diall maintain records with leqiect to the matters requiied to be 

rqxnted which shall provide in sufficient detail the necessary infbrmation and 

data fiom i^ch die filed reports may be verified, explained, clarified, and 

checked fixr accuracy and conqdeleness. 11 CFR{104.14(bXl)-

E. RscofdkeaplngReqnIramantoflirRecelpti. The treasurer of a political 

conunittee shall keep an account of; 
• AUcontributioiu received by or on behalf of Ibeconnnhle^ 

• TheiiameaiidaddrenofanypcnonwdiDindceiacoDtEibudoninexGenof 

$50, together with the date and amount of die contribution; and 

• The occupatiaa and name ofenqdoyerofany individual wAoae contributions 

aggregate more than S200 during a calendar year, together with the date and 

amount ofanynich contributions. 11 CFR§102.9(a). 

F. Preserving Documcnti. Committees must preserve these records for 3 years 

after a rqiort is filed. 11 CFR§102.9(c). 

Fnetn and Aanlynin 

<• s 

that ladced the 

A. Fbcts 

The Audit staff identified 23 in-ldnd contributions totaling $2,87i 

required si^y(Hting documentation. Theiii-kindcaai&utkm8coiiaibied.M 

services provided by commercial vendors, cotppnmons, and individualj<. Anproxunately 

half of the in-kind contributions totaling $1,55$&3 oiigiiiated fiom one dnoration. 

reported were receipt and 

stated die amount of die 

ncordliig, uS in ''-'M .ase, a contract 

nr irnestation fiom 

liihiiiii iflhe amounts iqxnted. 

Ill KiiM kradonwerenotqiedfically 

Documentadon siteportiiig die —of in-kiiid 

disbursement databaecs and a ftwuitypal tracking 

contribution, the Une item to be 

reference.' However, no internal 

contributors was provided that would al! 

Also, m-Und contributioute|ving some 

ideo^ed or valued. Pjtt^raMwoik, the 

additional in-kind dcfjm CFG 

but r» additional TOcu&ailatioSvaa sent 

was available and would be provided. 

At the q^ confeidiiBi^^Aiid^ljrifdiscuiBBd and provided a list of in-kind 

contrib^^onsfbrwUimwChBa^^rovidedsiqipoitiiigdocnnienlatiDn. CFC 

lepresebiMfm aclmowidQU the mSumg siqiport fbr in-kind Gonlributta 

they wouldefccitie and protro the lequired documeneadoiL 

ThePrel: recommended diat CFC obtain and provide doeumentBthm 

to support thai 

C. Conuaittec Rwpoiise to PrsUnliiaiy Audit Report 

In reaponae to the Preliminary Audit Rsp^ reconmifsidation, CFC provided in-kind 

contribution documentatioiL The In-ldnd documentation consisted ^finirintenially 

generated "tracking flbrms,"* totaling $1,264,477, and an internal draft schedule that 

' The contiBctMJtnfeniiitkm did not provide the type inlbfinitionnseded to verity flie«nouBta reported. 

* This tnddng Ibrm provided moitiy intbrmUian ttet wti limilir to tbe hilbiiBnUuu teund in CFC'i 

titsibitf fadbmstlaB coaalated oftbe Iblkmbig: donor hfemttoMdamrliiclmcfihelaBi or 

1' 1 n 'i i jmrigrt• pi**! ««•••»»"»— I'giify 

AU tirelung tbnni wan uoBlped. 
totaled $2,121,206. In addition, a GFCiqmaentative stated that he was trying to woik 

with fimner staff to provide additional in-ldnd documenlatioa, but ultimately he said 

additional documentation could not be located. 

The schedules and forma CFC provided did not include any documentation fiom the 

contributon. worksheet calculidons. or any other details that would allow fbr verification 

oflfae in-kind contributions reported. In addition, $757^6, still remains without 

siqipoiting documentation. Because die documentation CFC provided did not allow for 

the verification of die inrkind contributions rqxnted, along with the absence of 

documentation fbr the remaining m-Und contributions reported, dds finding remains 

uniesotved. 

I Finding 2. Piichwiire of 0tebniiem»^ 

s.-

Snmiiiuy .ff 

The Audit staff identified 43 disbursements toCalihg^ 12,5^995 that were d^6r missing 

or did not adeqpiately provide required disclosure mmmM^w lnte^Kmae to the 

PrelimiruDy Audit Report cpc filed^wnded diadosure reports that 

A. Reporting Eipendttares. When ^fpendfiust^^^ti^ same person exceed $200 in 

a calendar year, ^.^p^nuttee must rep&t die: 

• Dateu^id^eexperatuieawi 

• Narrw arid ^Aepayei 

• PTMp*(abi^@*!p8te6£ai|iyTMdiaburaementwase^^ 

^ a^l CFR §104.3(bX3)a). 

P. -3R^r1hig<>eiit^idlTMiiBellona, A committee must hamize a pqment to 

^'it ci^ conqii^ if diO>ynw>d exceeds the ^00 aggregate thrnhold finI. The odt^mitlee must also hendzB^ as a memo entry, any specific 

_j^charged^ a credit card if die p^ment to the actual vendor exceeds 

the $200 The memo entry must include dm name and address of the 

vendor, die imteofdmdiibuisement, and dm amount of dm disbursement 11 

CFR 8102.9(^) and 104.9. 

C. Repoilfaig ReimbniicnMnIs to Indlvidneia. When an individual udio is not 

acting as a vendor advances his or ber penooBl fluids (or uses a penonal credit 

card) to pay fbr goods or services on behalf of a poIitU committee, the 

reimbuiaement must be reported as follows: 

• Nontravd Advances. Rqxut the individual u payee, and report the payments 

aggregating over $200 to any one vendor as memo entriea on Schedule B; and 

• Travel and Subsistenee Advanoea. Ifdm total amount reuDburaed is $500 or 

leas, the conunittee should report dm individual as payee. If the total amount 
exceeds SSdO and p^menta to Boy one vendor used fiir the expenses total 

over S200 forlfae calendar year, icport fbe individual as payees and iqxnt the 

payments aggregating over S200 to any one vendor as nuoBO entries on 

Schedule B. Eadi memo enliy must include toe name and address of the 

vendor, as wdl as the date, amount and purpose of die payment IICFR 

§104.3(bX3Xi) and 104.9. 

Famtn and Annlynin 

A. Facts 

The Audit staff identified 43 disbinsemcnla totaling S12,580,995 d^were missing or did 

not adequately provide required disclosuie mfonnation. The^orityofdiscloiuze 

enoiB, totaling $12,319,532, involved tiwfagiitte puipoa^'dlabra|^ for payments to a 

siligle vendor. Additio^ mfonnation is provided in die fa 

i ' 

• 

Dcscrlptiott 

V" s 

Number of 

Tkuuaactions Value 

P^mientB to corporations or odwr eiitldes with insde4t|8te 

or with no stated DuroosediecloBed. -

3« 

s 

n2A90;987 

Pevment with an incomplete address diecloied. V. 1 $48365 

Credit card payaMnt with no memo entri^dj|nlneing 

naymenlini^ to the uttmute vendor. 

•'/.A. 

S2M87 

Staff leimbuieBiueiite with faiadequiteiiuip^M^g^^ 

meow emries diacloeing ptenieati meto to flte ulteile 

vendor. .. 

A 

• -^3 $13,156 

yf- sC 

. 1^ x:.' Totel SUiSSO^SS 

B. Prdimlnaiy Audit 

At the exit 

items 

die ndssuig or inadequate disclosuie 

a schedule detailing diese items. CFC 

their xepoits in lesponse to die Pzeliminaiy 

The Preliniu^ Audit Rep^ leconmiended that CFC amend its rqxnts to coiiectly 

disclose these d^fiursemente on Schedule B (Itemized Disbursements). 

"K. 

C. Committee Res^pnse to PreUmfaiaiy Audit Report 

In response to dw Prelimiiuvy Audit Rqxnt recommendation, CFC filed amended 

diacltMMre reports that materially conected the disbursement disclosure errois.