Draft Final Audit Report of the 

Audit Division on the 

Democratic Party of Illinois 

(January 1, 2009 - December 31, 2010) 

About the Committee (p. 2) 

The Democratic Party of Illinois (DPI 

with headquarters in Springfield, Ij^ 

the chart on the Committee r 

Financial Activity^^il)^ 

• Receipts 

o Individual Cpnti^tions 

o Political Commii 

o Transfers from Affil 

o Transfers from Non-; 

Ai 

Total 

IS a state party committee 

For more information, see 

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, .yiihetlrei-'the;., 

commi^ complied 

withjdie^iinitations, 

prohibitib^^a^d 

disclosure 

requirements d^^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. 

' 2 U.S.C. §438(b). 

' DPIL did not maintain a Levin bank account, but during the period covered by the audit DPIL raised $254,774 of 

Levin receipts that it deposited into its non-iMeral bank account. DPIL transferred $100,000 of Levin funds to its 

federai account for federal election activity during this same period. See Finding 4 for Levin reporting issues. 

• Disbursemc 

Operating1|Mi^ditures. 

|iFederal Elec^on Activity" 

o^f^oordinated ^penditures 

o ; :^ransfers to Affiliated Committees 

, p ; •btlip.r.Pjs.burseinents 

/Total Diilibiiiif^^ments 

,542 

,337,075 

844,950 

1,504,443 

$4,284,010 

$ 1,922,328 

705,871 

1,257,848 

292,178 

62,545 

$ 4,240,770 

ndiipit and Recommendations (p. 

Misstatement of Financial Activity (Finding 1) 

Recordkeeping for Employees (Finding 2) 

Fundraising Receipts (Finding 3) 

Unreported Levin Fund Activity (Finding 4) 

3) 
Draft Final Audit Report of the Audit 

Division on the 

Democratic Party of Illinois 

(January 1, 2009 - Deceiver 31, 2010) 

•i • 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 

Scope of Audit 

Commission Guidance 

Part II. Overview of Committee 

Committee Organization 

Overview of Financial Activity 

Part III. Summaries 

Findings and Recommendations 

Part IV. Findings and Recomm 

Finding 1. Misstatementof Financial Activity 

Finding 2. Recordkeeping for Employees 

Findings. FundraisingReceipts %• 

Finding 4. Unreported Levin Fund Al 

ti'y. 

H:;-. •« 

'i' 
Parti 

Background 

Authority for Audit 

This report is based on an audit of the Democratic Party of Illinois (DPIL), undertaken by 

the Audit Division of the Federal Election Commission (the Commission) in accordance 

with the Federal Election Campaign Act of 1971, as amended (the Act). The Audit 

Division conducted the audit pursuant to 2 U.S.C. §438(b), which ^^its the 

Commission to conduct audits and field investigations of any pff|nical rammittee that is 

required to file a report under 2 U.S.C. §434. Prior to conductiiA^any audit under this 

subsection, the Commission must perform an internal review of re|^^ filed by selected 

committees to determine whether the reports filed by a^anjpular cbf^toee meet the 

threshold requirements for substantial compliance '^]#^e,A^ct. 2 U.Ki^f438(b). 

Scope of Audit 

Following Commission-approved procedures, the 

factors and as a result, this audit examined: 

1. the disclosure of individual Contibutors' occupation 

the disclosure of disbursements, ^^nd obligations;' 

the disclosure of expenses allocat^ij»j^^|nfederal and n 

the consistency between reported fibres ahd^^^t^ iecords; >-

the completeness of records; and \ 

2. 

3. 

4. 

5. 

6. 

luated Vi 

pame of employer; 

al accounts; 

4-' 

Other committee ope^tons necessary td;.^ review. Vi 

• 'v.;"*!. 

CommissiQU^uidan^ 

Request fo;;,]|arIy Coih ^ 

Pursuan^t&^iii^|]|plii.cy Sta 

of Lg^a Question 

;ipn raised duriri^^audit. 

requi^l^nder 11 CFR^^,6.7(d 

funds. (S^ifjnding 2.) 

£onsiap|j^j(i0ii of a Legal Question 

EsteSf^h'h'g a Program for Requesting Consideration 

~iion," DPIL requested early consideration of a legal 

questioned whether the monthly time logs 

Tapplied to employees paid with 100 percent federal 

The CommisS^^i^ncli^^, by a vote of 5-1, that 11 CFR §106.7(d)(l) does require 

committees to kfet^^nfShthly log for employees paid exclusively with federal funds. 

Exercising its prosi^^orial discretion, the Commission will not, however, 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. 

The Audit staff informed DPIL counsel of the Commission's decision on DPIL's request. 

This audit report does not include any finding or recommendation with respect to DPIL's 

employees paid with 100 percent federal funds and reported as such. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

Date of Registration May 4,1983 

Audit Coverage 

Headquarters 

January 1,2| 

Springfiel^fl linoi: 

Bank Information 

Bank Depositories 

Bank Accounts 3;Federal, 4 JSon-federal Ai 

% Treasurer 

Treasurer When Audit Was Conducted Mid 

Treasurer During Period Covered by Audit 

Management Information 

• Attended Commission Campaign Finandie 

Seminar 

Who Handled Accoum 

Recordkeeping T 

Michaell^jrer, January 1,2009 • 

December'I^feZOlO 

cial Activity 

ounts) 

• V.5¥.- . 

Casb-on'rhiand @ Janu8r^'!U;2009 ' S 298,984 

Receipts 

o Individual Contributions r . 597.542 

o Political Corrirtiktee Contributions 1,337.075 

o Transfers from'AjETiliates 844.950 

o Transfers from Nd^'fdderal Accounts 1.504,443 

Total Receipts S 4,284,010 

Disbursements 

o Operating Expenditures 1,922.328 

o Federal Election Activity 705,871 

o Coordinated Expenditures 1,257,848 

o Transfers to Affiliated Committees 292,178 

o Other Disbursements 62,545 

Total Disbursements S 4,240,770 

Cash-on-hand @ December 31,2010 $ 342,224 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activi^ 

During audit fieidwork, a comparison of DPIL's reported financia^;i^%ity with its bank 

records revealed a misstatement of receipts and disbursementsjif^lendar year 2010. 

DPIL understated receipts by $203,666 and disbursements ^$^^^77. The 

misstatements were mainly the result of unreported transfer' froni'ihj&m 

accounts and affiliated committees, as well as unreport bfi^rating l^nditures and 

transfers to affiliated committees. In response to thj^iBimT-im Audit 

recommendation, DPIL amended its reports to ma^rially cprrect the missta pnts noted 

above. (For more detail, see p. S.) 

Finding 2. Recordkeeping for Bm; 

During audit fieidwork, the Audit sti#Tound that DPIL' 

required, to document the percentage^^me each empl 

activity. DPIL maintained payroll logs^r^tltQOnth of 

contained in these logs, however, did noHl^cl 

spent on federal election activity. For 200d anbil^lOf Ibg^rSyere required for DPIL 

payroll totaling $729,1response to t^e^hterim AuSil Report recommendation, 

DPIL acknowledged.that it heeided to improve..its system for maintaining monthly payroll 

logs, and it provid^ a sample pi^roll log that I'Vintends to use as part of its general 

maintain monthly logs, as 

It on federal election 

:0I0; the information 

itag^^f time each employee 

compliance procedures, (For mpre detail, see p^:?:) 

i audit fiek 

JL's federal i 

Although': 

share iii^^jjiysf the costs i 

benefit a i 

the remaining! 

the events were 

AlS§j|^fF identified 10 fundraising events that raised funds 

fedelfl^^unts. The federal account received $75,800 from 

federapiccount was the recipient of these funds, DPIL did not 

in raising these funds. Four of the events were held to 

and therefore appear to be prohibited contributions. For 

Audit staff lacks sufficient information to conclude whether 

sing events with other political committees or DPIL 

fundraising events plely benefiting DPIL's federal and non-federal accounts. 

In response to the Interim Audit Report recommendation, DPIL transferred $75,800 to its 

non-federal account. DPIL's response also stated that the Interim Audit Report presented 

neither evidence of any failure on DPIL's part to allocate the event costs, nor any 

indication that the events in question were somehow joint fundraisers under 11 CFR 

' This total does not include payroll for employees paid with 100 percent federal funds and reported as 

such. (See Part 1, Background, Commission Guidance, Request for Early Consideration of a Legal 

Question on Page 1.) 
§ 102.17. The response further stated that all of the events were non-federal fundraising 

events, and that the amounts identified by the auditors were insubstantial, when compared 

with the total amounts raised through these events. (For more detail, see p. 9.) 

Finding 4. Unreported Levin Fund Activity 

During audit fieldwork, ah analysis of DPIL's Levin fund activity indicated that DPIL 

raised Levin funds during the period covered by the audit that totaled $254,774. Of this 

amount, DPIL did not report Levin funds totaling $115,274 on its Levin Schedules L 

(Aggregation Page: Levin Funds) or on its Schedules L-A (Itemize^^ceipts of Levin 

Funds). In addition, DPIL incorrectly disclosed a shared feder^^^idh activity 

expenditure in the amount of $144,375 as a shared operating ep^nditure. In response to 

the Interim Audit Report recommendation, DPIL filed amg^O^^^£te that materially 

corrected the reporting of Levin activity. (For more de 
Part IV 

Findings and Reconunendations 

Finding 1. Misstatement of Financial Activity 

Summary 

During audit fieidwork, a comparison of DPIL's reported financial activity with its bank 

records revealed a misstatement of receipts and disbursements iri^e^ar year 2010. 

DPIL understated receipts by S203,666 and disbursements by £2^ 5,677. llie 

misstatements were mainly the result of unreported transfer^^rrftg^e non-federal 

accounts and affiliated committees; as well as unreported^peratini^penditures and 

transfers to affiliated committees. In response to the Ij^jrii^ Audit - -r. 

recommendation, DPIL amended its reports to matgrmly^rrect the mi^^ments noted 

above. . 

Legal Standard 

Contents of Reports. Each report must disclose: 

• the amount of cash on hand ati^e beginning 

• the total amount of receipts fo^|E^porting period 

• the total amount of disburseme% ^'l^^^porting 

year; and 

• certain transactions that require ite^za^pn onf 

Schedule B (Itgi^^^jsbursemen^f2 U.S.C. 

f the reporting period; 

ir ^e calendar year; 

for the calendar 

le A (Itemized Receipts) or 

4(b)(1). (2). (3). (4) and (5). 

Facts and 

J . . w 

if 

A. Facts,,. 

As partpf'Suidit^iiathyork, tfii^udit staff reconciled DPIL's reported activity with its 

bankf f^rds and id@nj^.ed mi^tements of receipts and disbursements for calendar year 

2P'W^.!rhe chart belo^^tails th^^fepancies and succeeding paragraphs explain the 

reasdnii^fQr the misstatei^ts. 

1 

2010 A 

i-sr-i- jc-

''il- ^ V JSr 

.jr.:;-

Beginning Caift^alance 

@ January 1,2^10 

Reported Bank Records Discrepancy 

$324,676 $324,676 $0 

Receipts $3,727,446 $3,931,112 $203,666 

Understated 

Disbursements $3,697,887 $3,913,564 $215,677 

Understated 

Ending Cash Balance 

@ December 31,2010 

$354,235 $342,224 $12,011 

Overstated 
The understatement of receipts was the result of the following: 

• Contributions from individuals not reported 

• Transfers from non-federal accounts not reported 

• Transfers from an affiliated committee not reported 

• Contributions received via ACTBLUE reported net of 

processing fees 

• Reported receipts not supported by deposit or credit 

Net Understatement of Receipts 

The understatement of disbursements was the result of the 

• Operating expenditures not reported 

• Transfer to an affiliated committee not 

• Disbursements not supported by check or del 

• Unreported in-kind contributions 

• Disbursements incorrectly reported j; 

• ACTBLUE processing fees not report^ 

Net Understatement of Disbursements 

The $12,011 overstatement of the 

discrepancies noted above. 

balance resii"^"" 

$1,525 

79,316 

138,089 

296 

(15,560) 

$21S.677 

Tom the reporting 

B. Interim Audit Report & Audit Divisipn Reco^^^fidation 

At the exit conference, dji|^K^it staff pro^^ed^^DPIL refpsentatives with work papers 

detailing the misst^^^en^^^pancial actiV% and discussed the reporting errors that 

representatree stated that DPIL made the unreported 

I in error, anc^iSe the unreported transfers received 

srrect the original transfer. DPIL was 

) correctlMMisstatement. 

1 that DPIL: 

It correcptfie misstatements for 2010 as noted above; 

iit repim to correct the cash-on-hand balance with an 

^change resulted fix>m a prior period audit adjustment; and 

ilance of its most recent report to identify any subsequent 

caused the mis: 

transfer to the affili 

from the same affiliai 

•4r. 

iterim Audit 

its 

id its most 

lotion that 

recorigil^the 

discrepan^j^t may affect the adjustment recommended by the Audit staff. 

C. Committee R&ponse to Interim Audit Report Recommendation 

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

that materially corrected the misstatement of financial activity. The response also noted 

that DPIL is reviewing and revising its procedures for reconciling and verifying its 

reports to ensure that such misstatement errors do not recur in future reporting periods. 

h.-
I Finding 2. Recordkeeping for Employees 

Summary 

During audit fieldwork, the Audit staff found that DPIL did not maintain monthly togs, as 

required, to document the percentage of time each employee spent on federal election 

activity. DPIL maintained payroll logs for the month of September 2010; the information 

contained in these logs, however, did not include the percentage of time each employee 

spent on federal election activity. For 2009 and 2010, logs were rqahmd for DPIL 

payroll totaling $729,125.* In response to the Interim Audit Re^ recbmmendation, 

DPIL acknowledged that it needed to improve its system forrt^teining monthly payroll 

logs, and it provided a sample payroll log that it intends tQ»^ as(^|^.of its general 

compliance procedures. 

Legal Standard 

Maintenance of Monthly Logs. Party commit^| must keep a monthly lo^S 

percentage of time each employee spends in cbnne|ti9n with|^ federal electiof(|:|^'' 

Allocations of salaries, wages, and fringe benefits a'^^^ bj^^aertaken as folldisvs: 

• employees who spend 25 percent or less of thefcifi^inpensated time in a given 

month on federal election 

or have their pay allocated as 

employees who spend more thi 

month on federal election activitii 

employees who sMnjd none of the! 

election activJl^^^j^^ paid enti 

CFR§106ji)(l). 

must be paid i 

itive costs; 

. must~l^ii!KiELQnl\ 

from the federal account 

isated time in a given 

a federal account; and 

in a given month on federal 

comply with state law. 11 

Facts and Anal: 

A. Facta"'• 

During audit fieldworkvthe Aiidirs^ff jeviewed all payroll disbursements made fix>m 

DPfL^sfederal, non-fe^^|ml and dopMlnated campaign accounts. The only payroll log 

DPIL ms^tained was fof^be montiS of September 2010. This log listed the number of 

hours w6'fkbd,by each emi|byee and the activities performed each day. The information 

provided dM^t,, howeve^^lnclude the percentage of time that the employees spent in 

connection wi^sSi^eral^.^bction activity. During audit fieldwork, DPIL representatives 

explained that D^i^jid not realize that logs were required until September 1,2010, and 

that some staff lef^^Mfore the end of September without turning in their logs. Such logs 

were required to document the proper allocation of federal and non-federal funds used to 

pay employee salaries and wages. 

In addition to the aforementioned logs for the month of September 2010, DPIL provided 

agreement-for-services contracts, campaign employment applications, and IRS W-4 

* This total does not include payroll for employees paid with 100 percent federal funds and reported as 

such. (See Part I, Background, Commission Guidance, Request for Early Consideration of a Legal 

Question on Page 1.) 
8 

forms (Employee's Withholding Allowance Certificate) for most of its employees. For 

employees paid from the non-federal account, the campaign employment applications 

noted the non-federal candidates to which the employees were assigned, and for 

employees paid from the federal account, the applications noted that the employee was 

assigned to DPIL's headquarters. Further, DPIL provided copies of in-kind letters that 

were addressed to non-federal candidates. These letters listed salaries and expenses paid 

to employees from its non-federal accounts as in-kind contributions made on behalf of 

non-federal candidates. The documentation provided by DPIL supports its position that 

the employees it considered non-federal could be paid from its non^Jideral accounts. 

DPIL did not, however, maintain sufficient payroll logs to docu^eniP9iie..percentage of 

time each employee spent in connection with federal election a^yity. 

|9 paid with an 

federal 

For 2009 and 2010, logs were required for $729,125 in 

allocation of shared federal/non-federal funds and 

funds).® 

B. Interim Audit Report & Audit Divisioi 

At the exit conference and during audit fieldwork,1£^^^d^^ff discussed i 

recordkeeping issue with DPIL representatives, llie r^^entatives provided notarized 

and sworn affidavits by DPIL's execbtjj/e director and c^^jpated campaign director that 

identified DPIL's employees and discuf$|^^.e amount of ^^^ns^d time spent by 

each employee on activities in connection vwtiii'f^eral electioB'^|;DPIL did not provide 

documentation of the actual percentage of .time ^^iht^n federal^ctiviti While the 

affidavits were useful for allocation purp6isbs,.^by af6Ae|^i^ not sufficient to fulfill the 

recordkeeping requirement^because they weii|>hot created:lind maintained prior to the 

issuance of the audjt notificait^in; letter. 

For DPIL employees 

those emplg]^!^ paid 

recomi][^endM^k^ 

log%,tb^'track the 

C. Gb^mittee 

In respo^ehtP the Interi 

needed to T 

sample payro 

the future. The 

1 and non-federal funds, and for 

ids, the Interim Audit Report 

a plan to maintain such monthly payroll 

each employee spends on federal election activity. 

Audit Report Recommendation 

recommendation, DPIL acknowledged that it 

for maintaining monthly payroll logs. It also provided a 

itends to use as part of its general compliance procedures in 

11 log contained columns for each employee to track nonfederal hours worl^^',"federal election activity hours worked and the type of federal 

election activity that the employee performed. If DPIL uses this log properly, it should 

result in compliance with the 11 CFR 106.7(d)(1) recordkeeping requirements. 

' DPIL paid S9 employees from its non-federal account. Forty-six of these employees were paid 

exclusively with non-federal funds totaling S221,64l. The other 13 employees were paid $94,675 from the 

non-federal account, but also received payments from the federal account. 

). 

K. 

* Payroll Is stated net of taxes and benefits. 
Finding 3. Fundraising Receipts 

Summary 

During audit fieldwork, the Audit staff identified 10 fundraising events that raised funds 

for DPIL's federal and non-federal accounts. The federal account received $75,800 from 

these events. Although the federal account was the recipient of these funds, DPIL did not 

share in any of the costs incurred in raising these funds. Four of the events were held to 

benefit a non-federal campaign and therefore appear to be prohibited contributions. For 

the remaining six events, the Audit staff lacks sufficient informatmi^^^nclude whether 

the events were joint fundraising events with other political compttees or DPIL 

fundraising events solely benefiting DPIL's federal and non-;^g^ accounts. 

In response to the Interim Audit Report recommendation, l^IL trafi^^d $75,800 to its 

non-federal account. DPIL's response also stated th^tlHie Interim Audifl^port presented 

neither evidence of any failure on DPIL's part to allocate the event costs, nb^^ny 

indication that the events in question were somellbw joint fimdraisers under 

§ 102.17. The response further stated that all of tho^yonts non-federal fuddraising 

events, and that the amounts identified by the auditof " 

with the total amounts raised through these events. 

Legal Standard 

A. Written Agreement. Participants 

written agreement. The written agreemi 

and state a formula for thg^location of 

B. Fundraising S^ce. Ajoi 

solicitation for 

• the names of a 

if< 

ions. 

must enter into a 

ing representative 

11 CFR§ 102.17(c)(1). 

fundraising 

notice shal 

mnt 

Ice shall be included with every 

lude the following: 

in the joint fundraising activity; 

be ^SSSi^^Tstributing joint fundraising proceeds; 

ibutors that they may designate their contributions for 

a particular p^bipant o^^j^ipants; and 

' • ^ipipants'^n lawfully accept contributions that are prohibited 

luri'der the Act, a ^mifemenrmforming contributors that contributions from 

prohibited sourcesri^ill be distributed only to those participants that can accept 

them: CFR § 1 17(c)(2). 

C. Required InfoVjnhtion on Solicitations. AH written solicitations for contributions 

will include a clear request for the contributor's full name, mailing address, occupation 

and name of employer, and must include an accurate statement of federal law regarding 

the collection and reporting of individual contributor identifications. 11 CFR 

§104.7(b)(l). 

D. Fundraising for Federal and Non-Federal Accounts. If federal and non-federal 

funds are collected by a state party committee through a joint fundraising activity, that 

committee must allocate its direct fundraising costs using the funds received method. If 

the non-federal account has paid more than its allocable share, the committee shall 
10 

transfer funds from its federal to its non-federal account. The committee shall make note 

of any such adjustments and transfers in its report for any period in which a transfer was 

made, and shall also report the date of the fundraising program or event that serves as the 

basis for the transfer. 11 CFR §106.7(d)(4). 

E. Depositing Contributions into Federal Accounts: Only contributions meeting any 

of the following conditions may be deposited in a federal account: 

^)ion; or 

ributions are subject 

(2)(iHiii). 

• contributions designated for the federal account; 

• contributions that result from a solicitation that expressl; 

contributions will be used in connection with a 

• contributions from contributors who are informed 

to the prohibitions and limitations of the Act. 1.1 

Facts and Analsrsis 

A. Facts 

During audit fieldwork, the Audit staff identified 1 

for DPIL's federal and non-federal accounts. DPIL di 

Schedules H-2 (Allocation Ratios). I^djdition, DPIL di 

these fundraising events from its fede^^^^federal acco1 

documentation, the Audit staff determiif^dmffli^^olicitations 

requested that checks be made out to the^iends^^^cj^l L Madigan committee,^ (2) 

organizations other than,EJj|?IL paid the coli| fgfwme 8^|^"Cvents, and (3) most of the 

disclaimers on the evfhfSb'K|imtions did noV'jnclude an accurate statement of federal law 

regarding the collecfipn and i^^.rting of individual contributor information. DPIL 

provided In-kind Coiitribution IJ^iotiflcation foifjbs,te document some of the costs of three 

of the fundraising evented .Thej^oirms noted tlM the in-kind contributions for the costs 

were made.pnbehalf of 

documenliiition'th'kt^^ 

fundyrtiising events"^'^''"^^ 

'events that raised funds 

^disclose the events on 

ly any expenses related to 

j^m the available 

some of the events 

1 account 

from the^eyents. .It is 

events. AltfT^ugh the fedi 

shared in any c " ' 

10 events sho 

in the amount of $ 

of mi^l^^JHvIi^adigan, not DPIL. From the 

lable, it'^ppeared that the solicitations for these 

to raise money for the federal account. 

$75,1^00 and the non-federal account received SI,103,925 

lear whether any other committees received funds from these 

1 account was the recipient of funds, it did not appear to have 

incurred in raising these funds. Documentation for three of die 

hkind contributions were made to Friends of Michael J. Madigan 

7 for some of the costs of these events. There were no written 

agreements available that identified the fundraising representatives and stated the 

allocation formulas, the allocation percentages for distribution of Joint fundraising 

proceeds and expenses among the participants. The Audit staff has grouped the 10 

fundraising events into two categories. 

' Friends of Michael J. Madi^ is a non-federal eomminee. Michael J. Madigan is the Speaker of the 

Illinois House of Representatives and Chairman of DPIL. 
11 

1. Fundraisine Events Held to Benefit the Non-federal Campaign Committee of 

DPIL's Chairman. Michael J. Madigan 

DPIL received and deposited into its federal account contributions totaling $S,6S0 

from four of the 10 events. DPIL contends that the events were not DPIL events 

and that it did not solicit the contributions. The four fundraisers were: 

• 2009 Lake Event held in April, 2009; 

• 2010 Lake Event held on April 26,2010; 

• Luciana Event held on September 21,2010; and 

• Union League Event held on September 23, ^ 

Based on the content of the solicitations for these ?^r evetifi^feapDears that these 

events may have been solely for the benefit ^^'tSFj^on-federal^^i^aign account 

of Michael J. Madigan. All solicitations f|dm these events 

contributor's checks be made payable t(^"iriends oLMichael J. Mu^.e^.,^-

documentation was available to demohstrat||hat DPj^^^licited funds^m or 

participated in these events. ' 

As cited above, 11 CFR §10l^§(a)(2)(i)-(iii) proviti^jguidance on when funds 

may be deposited into a commi^|«^deral accounf;-^^^on the 

documentation provided, the Ai%t sMfj^^cluded thafyhe of the funds that 

DPIL received as a result of thesc'four ey^^^^i^j>erqifil^ to be deposited into 

TMiiT DPIL's •- federal —1 —^—* Ti—550 were impermissible 

and should 

2. 

in-federal i 

\ 

ising Events^ 

nt. 

iitBaitHB@K°t(Eiaeral account contributions totaling 

ining fu^roising events. These events may be either 

joint fundrai§f||ipvenf^ith other political committees or fundraising events that 

lely benefiWK^IL's and non-federal accounts. The six events are as 

•0:: DC 2009 ^bnt, held on November 4,2009; 

• WjesPAC/I^BEW Event held on February 24,2010; 

• Re2a>-'Dinner held on August 12,2010; 

• JansSen Event held on September 28,2010; 

• Hospitality Event held on October 6,2010; and 

• 2010 DC Event held on October 14,2010. 

The Audit staff lacks sufficient information to be able to determine into which 

category these events fall. Despite event solicitations directing contributors to 

make their checks payable to the "Democratic Party of Illinois," the Audit staff 

does not have information suggesting that DPIL pt^cipated with any other 

committees, shared any of the costs, or received any of the shared proceeds for 
12 

these events. Although some of the solicitations requested contributors to mail 

their checks to the event sponsor and/or include "paid for by" language to identity 

the political committee that paid for the solicitation, this alone does not establish 

that the events were joint fundraisers with other political committees in 

connection with a federal election. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff presented this issue to thie DPIL representatives 

and requested that they document the costs associated with these ey^ts, as well as who 

paid for such expenses. DPIL representatives acknowledged tha|^l^uf'&f the events in 

which DPIL received federal funds were not DPIL events, bu^a^ued that the amount of 

federal funds received from the events was de minimis. 

sSf. 

The Audit staff recommended that DPIL: , ^ 

Jr" •• 

*ji f'i' "r 

• demonstrate that it could permissibly dff^it funds totaling $5,650 lii^^h^four 

Hindraising events identified above; ana 'pi"' 

• demonstrate that it could permissibly deposi^^ds^^Tihg $70,150 fr6m the 

remaining six events. Further, for these events^^^nterim Audit Report 

recommended that DPIL ideri^^ which, if any, x^e^joint fundraising events with 

other political committees, or any, were bH^yents benefiting solely 

its federal and non-federal accoifetCTlfegnection wi^^M events that 

benefited solely DPIL's federal a^ non^p^^^un^the Interim Audit 

Report recommenced that DPIL d^oi^rote t^^H^ properly allocated costs 

between its fediS^I^Im^snon-federal i 

Absent such demonstration, the.^75,800 deposi^Jn its federal account would be 

considered impermissibl<e and tfie-lnterim Audi^Report would recommend that DPIL 

transfer these funds to its npn-fedeiiErj^pMn^^^^^ 

C. Committee R&ppiise to iiii!^.m Audit Report Recommendation 

In'^i^nse to the transferred $75,800, to 

its noii|feC.eral account Oj^geptemMr 18,2013 and provided a copy of the check (front 

only). D^,submitted tli^the Interim Audit Report presented no evidence of any failure 

on DPIL's |i^to allocat^e event costs, nor any indication that the events in question 

were someho^j^i^t fui^raisers under 11 CFR §102.17. 

The response furth'^stated that all of the events were non-federal fundraising events, and 

that the amounts identified by the auditors were insubstantial, when compared with the 

total amounts raised through these events. The response also stated that neither the 

allocation rules nor the joint fundraising rules were triggered vdien a bona fide nonfederal fundraising event elicits a de minimis number of federal contributions, and the 

Interim Audit Report presented no evidence that DPIL or the Friends of Michael J. 

Madigan Committee sought federal contributions through any of these events. However, 

because of the limited documentation available, and to eliminate any question of 

noncompliance, DPIL nonetheless made the recommended transfer. 
. • s i.B 

13 

Although DPIL has complied with the Audit staffs recommendation to transfer the 

$75,800 to its non-federal account, we do not agree with its assertions. DPIL did not 

show that any of the funds it deposited in its federal account met the criteria in 11 CFR 

§102.S(a)(2)(i)-(iii). There is no exception to the Commission's rules that would permit a 

de minimis amount of funds, the origins of which are either related to a non-federal event 

or an event for which the political purpose (federal/non-federal) cannot be determined, to 

be deposited in a committee's federal account. 

I Finding 4. Unreported Levin Fund Activity^a^^ 

Summary 

During audit fieldwork, an analysis of DPIL's Levin 

raised Levin funds during the period covered by the 

amount, DPIL did not report Levin funds totaling 

(Aggregation Page: Levin Funds) or on its 

Funds). In addition, DPIL incorrectly discio 

expenditure in the amount of $144,375 as a 

the Interim Audit Report recommendation, DPIL 

corrected the reporting of Levin activity. 

itytij^atea that DPIL 

it Wat totalra^^4,774. Of this 

H on its Leviffi^^edules L 

L-A (Itemized Recel^pf Levin 

I election acti^ 

itin^iXpenditure. In ri^onseto 

ided reports that materially 

Legal Standard . 'i'V 

A. Reporting. If a state, district or loc^^arty-bbi^mittee's combined annual receipts 

and disbursements for federal election activity pEAp£^Ij|5^60 or more during the 

calendar year, the com^j^=must disclose^ilpts and'^lbursements of federal funds 

and Levin funds usec^tor F^fj 1 CFR §36|i36 (b)(2). 

B. Receipt of Levi: 

must be raised solely I 

must be, 

fundasdfrcitedl 

tds. ^vin funds expe or disbursed by any state committee 

or disburses them. Each donation 

- the^ili^^f thl^'^IS^p&hich the committee is organized and the 

more than $10,000 in a calendar year. Consequently, 

comifi{|i|g&^«ther state, district and local committees, and from 

Iders^ay not be accepted as Levin funds. 11 CFR 

irts. Each report must disclose: 

l-hand for Levin funds at the beginning and end of the reporting 

funds from national 

edemi^didates or o: 

§300.3ia. 

C. Contents-bf^JLevin 

• the amount 

period; ' ^ 

• the total amount of Levin fund receipts for the reporting period and the calendar year; 

• the total amount of Levin fund disbursements for the reporting period and the 

calendar year; and 

• certain transactions that require itemization on Schedule L-A (Itemized Receipts of 

Levin Funds) or Schedule L-B (Itemized Disbursements of Levin Funds). 11 CFR 

§300.36 (b)(2). 
14 

Facts and Anal3rsis 

A. Facts 

As part of audit fieldwork, the Audit staff found that DPIL raised Levin iiinds totaling 

$254,774 that it deposited into its non-federal account. It reported Levin funds totaling 

$139,500 on its Schedules L-A. DPIL did not report Levin funds totaling $115,274. In 

addition, DPIL incorrectly disclosed a shared federal election activity expenditure of 

$144,375, of which the Levin share was $114,056, as a shared operating expenditure. 

DPIL did not have a Leviti fund bank account for its Levin fund^^^^pts. DPIL 

representatives explained that DPIL kept all Levin funds raisedj^Aits non-federal account 

in accordance with 11 CFR §300.30(C)(2) and (3). DPIL pj#«f|he Audit staff with a 

reasonable accounting of its Levin fund receipts. A dail/B|sh andy'|i[s^pf DPIL's nonfederal accounts demonstrated that DPIL had sufficiegjtLevin funds a^tiie^time DPIL 

transferred the funds to the federal account. " f-y.. 

During the period covered by the audit, DPlL'^fejS^i^d shar 

expenditures totaling $180,000. The Levin share o' 

DPIL transferred only $100,000 to its federal accounf 

expenditures. Levin funds totaling $^.^|,774 remain in 

federal election'^tfvity 

e'ffditures was $159,500. 

I Levin share of the allocable 

^s non-federal account. 

mmendat _ 

ives with workpapers 

lunt. DPIL 

disbursement in the 

ederal/Non-Federal Activity) instead of 

that it could have used Levin funds 

iture. They argued that DPIL had 

federal share, and stated that the reports 

B. Interim Audit Report & Audit Di 

At the exit conference, the Audit staff 

that detailed a possible oyerfunding by D! 

representatives respon^l^^^^pPIL had ii 

amount of $144,3^^ Sch^^ H-4 (S! 

Schedule H-6 (Slni||Federalpection Activ: 

to pay the $114,056 si^^of tll^idirect mail 

sufficient Le,yip.funds 

would .^;aMen4^^to corrdisf^^^^ matter. '^e Audit staff concurred that Levin funds 

could have been tfkj^^rred tb^&/ederal account in regard to this expenditure, and that 

QPIL. did have sufficieji^-^Levin available to be transferred. Further, by classifying 

this tn^s^tion as such;'l|§re no loitger would be an overfunding by the non-federal 

account;-: 

The Interim Ab)4H^R-epo^^commended that DPIL amend its reports to disclose the 

additional Levin in the amount of $ 115,274 on Schedules L-A and disclose the 

expenditure in the'^ount of $144,375 as a shared federal election activity expenditure 

on Schedule H-6. 

C. Committee Response to Interim Audit Report Recommendation 

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

that materially corrected the reporting of Levin activity.