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111)f RAL ELECTION COl\-1MISSION

.\ '''ltl ..... l,!()..... \)( .!04f1\

November 13, 1980

HEt-10 RAN Dr :·1

TIl ROU/~H :

FRu:·! :

SUBJECT:

F RE iJ 1: I L l\ N[)

PRESS OFFICE

BOB COSTA

I \' , ,

F: Ie:: Ii ,,\ LT E R \.~. ':, \

PUBL:C ISSUANCE OF FINAL AUDIT

REPC?T-CRANE FOR PRESIDENT COHMITTEE

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Attached pleas.:: find a copy of the final audit report

of the Crane F01- Pre~iJcnt Committee which was approved by

t II c' C() r:1 mi ~; ~_; i c""l non ::.:" .: .~ mbe r (), 1 98 0 •

I n forIn ali 0 n a 1 -:: 01.; i (' S 0 f the r P po r t h a v e bee n r e c (' i ve d

b'l all partie sinv \-) 1 '/ n dand t his rep0 r t may b ere 1 casr: c1 t 0

the public.

t\ t t u C f1m en t ass tat -:. d

C L: : F::eLi bra 1- ':'

RAD

i,-.; Ht'CI,')i"d
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'toFED~RAl Elf:CTIO~ COMMISSION

REPORT OF THE AUDIT DIVISION

ON

CRANE FOR PRES I DEtJT COMMITTEE

A. Overview

This report is b~sed on an audit of the Crane For

President Committee ("thc~ Committee") to determine whether

there h~s been compliance with the provisions of the Federal

Election Campaign Act of 1971, as amended ("the Act"). The audit

was conducted pursuant to Section 9038(a) of Title 26 of the

United St~tes Code which states that "after each matching payment period, the Commission shall conduct a thorough examination

and audit of the qualified ca~~~ign expenses of every candidate

and his authorized committees \-.'ho received payments under Section

9037".

In addition, Sectio~ 9039(b) of Title 26 of the United

St~tes Code and Section 9038.l(b) of Title 11 of the Code of

FederCll ReGulations state, in p.:1rt, that the Commission may con-

(Iuct other examinations and a~dits from time to ti~c as it deems

The Committee reqistcrc(1 with the Federal Flection

Commission on l\ugust 2, 1978 .:18 th0 principal c~mpnign commi tt(\('\

o~ th('" Honorable Philip ~o'. C:'-.:l:"'.0, ccJndidate for the Republican

nomin~ti()n for President of t:1C T'ni ted Stntcs. The Committc(\

m()int~inL)IJ its headquarters i:~ 13ai 10YS Cross Roads, Virginia •.!/

The audit covered the period from July 27, 1978, the

inception d~tc of the ('oMnittee, through April 3, 1980, the diltf'

determined by the Commission to be the date of ineligibility fOt·

purposC'[; of incurring qualified camIJaign expenses. During this

period, the Conunittee reported an opening cash balance of $-0-,

tot~l r0c()ipt~ of $4,966,41G.~8, total expenditures of $4,885,341.79,

.-111c1 a cl()~;inCJ cash bllancc 0: S~1,()74.39. ?/

1/ On ~, ..,o.: 22, 1980, the C('~~~~itt(>0 amended it's statement of

Oloq,ln i zClti,-"n to di~clos~"I t~1t"" ~lldrcss of its nc\·: hcadquartt.... rs

i n ~~ t. Lou is, Mis S C'tn- i .

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., , ... / finures include t~0 Co~~ittee·s activity between

1 an.:1 Ap r i 1 3, 1 (): ' .
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This report is based on documents and working papers ~upporting each of the factual statements contained herein.

'rhcy form part of the record upon which the Commission based

its decisions on the matters addressed in the report and were

ilV.l i lable to the Commissioners and appropriate staff for review.

B. Key Personnel

The principal officers of the Committee during the period

audited were:

c. ~cope

The audit included such tests as verification of total

rel)Ortcd receipts, expenditures and individual transactions: review

of required supporting documentation: analysis of debts and oblig~tions: review of contribution and expenditure limitationR; ~nd such other audit procedures as deemed necessary under the

circumstances.

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Chairman

Mrs. Judy Chaney Petty

Treasurer

Mr. Roy Burlew, Jr.

M:;. Martha Da\oJson

Mr. Curt Coonrod

Mr. Jerry D. Harkins

Ms. Victoria Tigwell

Period

7/27/78 - Present

Period

7/27/78 - 10/10/78

10/10/78 - 5/16/79

5/16/79 - 6/26/79

6/26/79 - 1/8/80

1/8/80 - Present

II. Audit Findinqs ana Recommendations

A. Disclosure of Itemizable Contributions

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Section l04.17(b) (2) of Title 11 of the Code of

Foderal Regulations stntcs that each report shall disclose the

identification, occupntion, and principal place of business, if ~llY, of each person who has m~do a contribution to or for the

committce or candidute dur.inC1 the reporting period in an amount

or v~lluc in excess of $100, or in an amount of less than $100 if t.hc~ person's contribution~ within a calend.:lr year total more th~n

S100, toycther with the ~mount ~nd date of such contributions.

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A sample of contributions w~s randomly selected and

t ('steel f(q- proper itcmiz3tion. The s~mple indicated that at a

90'~, con t i dc~nce level between 35.62% and 44.64 % of the contribution~; t"t'quiring itemization were not itemized. In addition,

the Slln\i' t I' indicated thl3t at a 90% confidence level between

lO,5(;H dlld 13,232 of the contributions received by the Committee

wert' rpqllir<'d to be itemized. The large percentage of contributio11r; \\'hich were not itemized \vas due to inconsistencies related

to the Kl'yl ine code (a series of characters taken from a

contributot·'s nume and address). The Committee's computerized

system tot- aggregating contributions from the same individlh\l was

b~\sed on the assignment of a kcyline code for each contribution

b,lsec1 on the contributor informi1tion enterf'd into the data hase.

If there' was a change in anyone of the charl3cters making up the

keyline code, the computer would produce n new contribution record

which would not aggro~atc with any other contributions from the

same individu~l. For example, if Mr. X's street address was

initially entered as Box 37, Route 3, and a second contribution

from Mr. X was entered (1S RatIte 3, Box 37, two different contribution

t"('cords \vould exist in the d"tll b:lsc~ and the computer would view

Mr. X as two different contributors. The Committee stated that

lhey werc correcting their entire data b3s0 and would file the

appropri.:lte 3mendments to properly reflect lheir itemiz3ble

contributions.

On September 24, 1980, the Committ0c filed amended

schedule A-Pis for calcnd3r YC3rs 1978 and 1979, which substanti~11y

rc [lc'c t~:d the i r i tc:mi Z:lb 1c con tri bu t ions.

Hecommonc1~lt jon

rl'h·,"" :'.\ldi t st., ff r(~c(~:r.mcnd~ l1n rut-thor action ill this matter.

B. Disclosure of Tn-kind Contributions

Sec t ion 1 0 --1 • ] 3 (a) (1) and (2 ) 0 f Tit1 L"' 11 0 f the Cod C 0 f

Ft'tit'\}-:ll Ht'qulations slat",,,,s, in p:lrt, th.:lt th0 amount of an in-kind

contribution shall be E'ClU':ll to tho usual and n()rm~l value on the

d'::llt~ recl""i\·l'd. Each in':kind contribution sh..111 be reported as a

con t ribu t- i () n inac c ()r d Ll nee with 11 c. F . R. 10 ..\ . 3 (,1 ) () nd a san

c ;.:p () n(1 i t- u t- \-:' inaceor c1 Zl nc ("\ \\~ i t h 11 c. F • R. 10 4 . 3 (b) •

Du r i nq tho r("': i l.",\' 0 r tht' Comm i t t0e I s )"t'cords und repor t ~~ ,

tlh' i\udi l. ~;t~lff noted 20 in-l~ilh1 l'ont-ributions, tntdlinq

$ , :~ 0 9 . () -;, t h t we r e n n t rep0 r l L""db,:, t 11(."' Comm itt. l'P •

011 S\."'ptembcr 17, 1980 :tl'h1 SQptembcr 24, 19BO, tht'

Cnmmi tt·:,t,,' ~-i led ,1mc!1(:t~d S"":H'(1tl1t.-"'~l :\.-P, und dmr)ndl'\.l schcdull"'s R-P,

\·;hjch (11~~~';\.)scd th~-'" in-ki:~l1 cont"t-ibuti0ns .
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-tlC. Debts and Obli_C@_~}~-.-!lS

Section 434(b) (8) of Title 2 of the United States Code

~;t tltcS, in part, that each report shall disclose the amount and

""Lure of outstanding debts and obligations owed by such political

«., Jlumi t tee.

Section l04.llCa) of Title 11 of the Code of Federal

1~"qu1()tions states, in part, that these debts and obligations shall

},(', rCf)orteu on separate schedules together with a statement

t'xpla ining the circumstances and condi tions under which each debt

dlle1 obligation was incurred or extinguished.

During the r0vicw of the committee's expenditure records,

the ]\ur} it staff nolc'cl the:! follo\ving:

1. Und i f-;C 1(,: ~f·d Debt --- -- - ~- - - - -------

Thl"\ COIllIll i t tee had an outstanding debt to a vendor

for $18,375.00 as of Dt'(·,·mber 31, 1979 that was not disclosed on

FEe Schedule C-P. The dt·bt was subsequently extinguished as part

of an 3d":.1ancc payment m~ldQ to the vendor on January 22, 1980. Th(\

~Hlvancc !'Ja::mcnt WZlS properly reported on the Committee's January

1980 schedules B-P.

2 • U~c1isclosed Payment on Debt Schedule

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The COr:1mi. tt(~e' s March 1980 report (FEe Schedule

C-P) disclosed un outst~nding debt owed to a vendor of $11,R20.58.

l1(n-:cvcr, this fillurc did not reflect () $10,000.00 payment mild£'

t}(Jainst the dcl.... t .:lS rC'portcd on FEe Sche'dule B-P for the same' rcpc'"Irt.

On S(·I;'t·mbt l· 17, 1980 thC' Committee filed an

dmendmc:1::' disclosinq tht,:;\ debts ~nd obligations.

The Audit st.lff rpcommcncls no further action in this matter.

Sec tic n 4·1 1" ( h) (1.) (:\) and 4 4 1 ((") 0 ( 1'i t 1e 2 0 f t h l."'"

Uni to:~ St3tCS Code r~r()·· i des th~ t no calH.l iCl-:ltc for the Off icc of

Preside:-.:: 0:- tl:o rr:ii j·d St.:ttcs \oJho h.:ls received mlltchinq funds m~1':

m~ll:c c:-::'t.:\::~1 i llll-L.... S j n .ln~· on\~' st.:lte llqqrcq.:lting in excess of the -

qrc~ltc~· 0::' 16 Cl."":~ts m~ll ti plied by the st.:lte voting age population

or S :: :} l~ , J (; 0 . 0 0 , ~l d -~ \1:: t l -.(! b";· t h C' Con s ume r Pricc I noex •
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Section 106.2(a) of Title 11 of the Code of Federal

Regulations states that expenditures made by a Presidential

candidate's authorized committee which seek to influence the

nomination of the candidate in a particular state shall be

attributed to that state. This allocation of expenditures shall

be' reported on FEC form 3Pc.

Section l06.2(b) of Title 11 of the Code of Federal

Hequlations states, in part, that expenditures for staff, media,

printing, and other goods and services used in a campaign in a

specific state shall be attributed to that state. Further,

Section lOG.2(c) (1) and (2) states, in part, that expenditures

for publication and distribution of newspaper, magazine, television, and other tyP(~S of advertisements distributed in more than

one state shall be attributed to each state in proportion to the

estimated viewing audience or readership of voting age which can

rC<.1sonably be c;":pectl.~d to be influ0nced by these advertisements.

Expenditures for tr~vel within a state shall be attributed to

that state. Expenditures for travel between states need not be

attributeu to any individual state.

Our review of expenditures for the audit period included

testing to determine the Conunittee's compliance with the recordkecpinq, reporting and allocation requirements of the Act. Based

upon our revic\·;, which consisted of an examination of selected

disbursements on a lOO'~ basis plus an unrestricted random sample

dra\-Jn from a separate population of approximately 3,900 disburscmen ts, \ole uctermined the follo\-Jing:

1. Expenl1 i tures Rcviewed on Ll 100 c~ Basis

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Sixteen (16) expenditures were not allocated to

the propcr states in consonance with the provisions outlined

abo\~, totaling $602,828.29. These expenditures represent

;lPIJro:~imatcly 8'J of the tot31 number and 23.l5'~ of the total

dol13r amount of expenditures within this review category. The

expenaitures were for media space, postaqe, a survey and travel.

2. E;·:pcnditures Heviewed on a Sample Basis

l\ppro:·~imately l7.3G'~ of th<.; total number and 10.2"7~.

of the total dollar amount of cxpL~nditures reviewed in the sample

'vJc'rc not allocat(~d to thc~ appropri~ltc Sl.ltc (s). These expenditures

wer<.~ for :1 variety of activitie~j ~;uch as travel, phone, consulti::~r,

s 1;\r i 0 ~3, etc.

Generdlly, tIll' rL~a~on fOt" Lh0 allocc:ltion discrep,"1ncies noted in boLh of the' abO\"L' cLlt~qor ies resul ted from the COl::i:1ittL")t.~ not havilhj ~1 predt.~tL·rmined system for allocc:lting

c:·:::·t..~n\.iitul-C~; to ;;t:1tA'S prior to Dt..'C<.;InUC1- 1979. Ho\\'evcr, the

Cv::·.:::iL~L)e did not e:,~cL'cd tht.' sL3tl..' spcndiny limitations in any

onL" St,"1tl-~ fOl- l.hp p(~rio~l CO\",,'l-t't.! by tht..~ ~udit •
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On ,1une 20, 1980, the Com:nittee filed amended FEC

schf!dules 3Pc wh il.=h substantially reflect the allocation of

ex~~enditurcs to :,latcs.

Recc:-:'cn ~ation ----------

The Aud it.. :;t I} ff recommends no further action in this matter.

E. De!f'r:lIl11ation of Net Outstanding Campaign Obliaations

Sef·tllill 9034.5(b) of Title 11 of the Code of Federal

l-"";~ll.:ltions rf·q'll n~5 th.:lt the candidate submit a statement of

~;l·t. Outst.:lnlllflll ("lmpaign Obligations (:~OCO) which contains, among

ot~'.·2r itL'I:1S, lIl" t.otal of all outsLlnding obligations for qualified

c.l.:::pLl1qn eXIJ'-'Il';"'; and an esti~atc of necessary winding down costs

..... i~::::1 15 d.:.l·:'~; of the candid.:ltc's dL1te of ineligibility.

'l'h,~ Committee filed a NC,('l) st.:ltement on April 17, 1980

.:lr.~i subscqu(!ntly filed amended :-Joco st.:lt(·ments on June 12, 1980,

SL.. ;lt'....:::-.l:cr 22, 1980, October 6, 19HO ,1nd October 20, 1980. Shown

be:.-··,,; is the Corr.xnittee's financial position (NOCO) as of 4/3/80

b.:. ,L',l 0n t;.·_~ l\udi t sta f f' s rev iew () f Conrni l tee records, reports

ani 0~:"f'r inforI:1<1tion during the conduct of the audit.

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Cr.:lne For PrcslJcnt Cc~~ittee

St.1~C'r.:t:nl of ~;et Out~;t,\n\jin,: Cam;".Jl::n Obligations

April \, 1980

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('.\ ,;. - : =: - :~ ,1 :~ ~: ( .; / J / 8 0 ) ~/

::: •.:...; :\,. C"': 1 ':,l~ 18

':-c~.11 :\:J~~L·ts

( :., : :. • 1 ._: ::s - - -------

$ 81,310.00

24,176.51

~~l~'~-J-~Td~:IT $105,486.51

':·c~.II \ :)~ i.;.lt~ons

:;.. ':_~~.:.'i!-_l:.,ii:l'; C..l;:.!-Ja~\_;n C)l..l~ l~tic~:;.~

•:: :.' :' :. -.: :} ,1 0 f .; / 3/.3 0

(~t;~t,,607.00i

Ts ',', :n-'-:;If,--:J-6T ($ 6 36 , 607 • 00 )

($531,120.49)

T:~'·r·f'~ur'.'l, .:IS 0: ·1/3,'~~r), t..::..... cc~::tt,·t· W..lS ,..:-nt.it1ed to a

:".~;.::'::-:'~::: 0::' ::.'~n,l::O.';':J in ::i':-lt..::.. i:-..: :~::~~:~, r~,-!~~cL.... j b~l t~c amount of

i:':: :. .:..1 e c S :1 +_ :- 11.- U t. i.ens r t-; <.: t~ 1 .... ,_" ... : ,1. :- .~ , r .; /' 3I • 8 0 •

~~~ ~~. i~:.:~' J'~'~:1~r~ 1~~c:: ':~.l rf~~~i~,~~ ~~~ :;~~::~~I t ~~~~ ':~~~ ~~~ t ~~~~;~o~~ ; t:-:::~, ~';:i 10/23,'31), t:1t.· ::-.C ~~ :·.... ,··-.::t i"',lyr::L"'nt of ~.:l.:'=~i:1g funJs:

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~: •.•_ ')'l~:;·_,l::.~ln', C"'::·T.l~,:a :'L!: :_lti,-'::_~

\:'•. :' • 1 ,1~; 0 f -1,".3. J 0

__ :.: ~'_'2 C':::~:·1:'l~t.:2:-:;; (";,'.~, ~~ - ~lI13". ':"\j'

~·~.l· ,~:~ ~:_ : l..l:,: rf,C~ll ;'~:3 (4.' J 1 ~J)

:~":"--i~:11::t; l!:1~~t:~t.·::t.::.... ...1S f"): ..l,1 ~; :::)

:':.- :.; 1. -_ \~ -.:' _':: ~:.~ :} ~l t. ~":::.~ (;j 'I - L I : ~, .~ ''; ;

~.'... ~._ ::: : ::: :- .~:.: :' .I: _.1 1 :-; (t.: : -' <0 J I

($531,120.4'))

$ 92,951.05

..!..~"l,:s 35 .}!. ( 4. <.) -,. , u 3·} • J J }

$ 7,852.A2

$ 1,254.00

1lJ,5:i6.1l

(Z 2 sa, );-f:-·;.) )

$ 2,413.0(,

. :-.'- : l··· l)~ .:,:"':,:

:: ...; :.

~::~.:;::~: ~.:_.::,.: : . 1. '., .... : ....
$ 390.00

$ 6,447.95

6,760.72

($196,767.65)

12,926.77

32,950.25

($210,286.32)

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Private contributions (8/1/80 - 8/31/80)

Joint fundraising receipts as of 8/1/80

1980 United Republican Committee 4/

1980 Republican Presidential Unity

Conunittee 5/

Hemaining entitlement as of 8/31/80

Private contributions (9/1/80 - 9/30/80)

Malching fund receipts (10/20/80)

M~tching fund receipts (10/23/80)

Remaining entitlement as of 10/23/80 ~/

$ 310.00

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Therefore, the Committee's remaining entitlement pursuant

to 11 C.F.R. 9034.1(b) as of 10/23/80 is $196,767.65.* However,

it should be noted that since estimates were used in computing

the above amount, the Audit staff will review the Committee's

reports and records to compare the actual figures with the estimates

noted above, and prepare adjustments, if necessary.

Recommendation

The Audit staff recommends that the Committee prepare its

next NOCO statement utilizing the above figures and adjusting for

changes not reflected on this NOCO statement.

The joint-fundraising dinner was held on June 16, 1980. Th0

net proceeds were disbursed on August 1, 1980 and received

by the Comr.littee on August 4, 1980. It is our opinion that

monies became available to payoff debts on or before 6/30/dO

since the joint-fundraising committee is an authorized

committee of the Candidate.

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*

The joint-fundraising dinners sponsored by this committee

were held on June 13, 20 and 27, 1980. For purposes of

calculating remaining entitlement, it is our opinion that

monies became available to payoff debts on or before 8/1/80,

since the joint-fundraising committee is an authorized

committee of th(~ Candidate. The Candid~tc's pro rata portion

of the reported net proceeds realized by the joint-fundraising

committee as of 9/30/80 was calculated by applying this pro

rata share (4.5~) to the reported net proceeds of $732,227.69.

No amount is available for private contributions received

during the month of October, 1980, since the report coverin..::

that period is not required to be filed until November 20,

1980. Fur~her, remaining entitlement as of 10/23/80 is

subject to change due to a probable increase in estimated

winding do"n costs. The Committee's original estimate of

winding do\·;n costs \.;as based on a termination date of 10/31/80.

St:t~ foo~note 6/
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Excessive Payment of Matching Funds

Section 9038(b) (1) of Title 26, United States Code,

states that if the Commission determines that any portion of

the p~ymcnts made to a candidate from the matching payment

account was in excess of the aggregate amount of payments to

which such ~anJidate was entitled under Section 9034, it shall

notify the ~.J.nclidate, and the candidate shall pay to the Secretary

of the Treasury an amount equal to the amount of excess payments.

D~ring the period from January 8, 1980, through October

1980, the Co~mittcc presented matching fund requests totaling

$2,040,112.85, representing submissions numbered one through

eleven. As of October 31, 1980, the Commission certified

$1,649,847.05 for payment from the Matching Payment Account for

these elcve~ submissions.

0:1 September 2, 1980, the Com::1i ttee presented its first

resubmissic~ which covered submissions one through eight. In ef~ect,

this resub~ission sup(~rseded the original submissions with respect

to listed cO:ltributors and amounts requested. The Conunittee

attempted to correct errors contained in its first eight

submission~ in an effort to realize additional matching funds.

'fhe fo11o·.·;i::S chart shows the amount of adc1itional matching funds

the Corm:1i t :'-2e stood to gai n by its cOI11binccl rcsubmission:

• Amount rcq~~stcd Resubmission #1

(covers o~i~inal Submissions #1 thru ~8)

Amount pre"::ously certified for original

(subnd 5S ic::s :r.1 thru #8)

r-1u:·:imum a~·_~·-.ln.t to be realized on

Rl~submissic':: 1

$1,719,543.00

(1,617,871.18)

$ 101,671.82

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In accord~nce with COffi!":1ission approved certification

procf..:<.lures, the staff evaluated Resubmission #1 and calculated

thc matc~.:l;'::·~ amount as $1,574,06-1.75. Givt"\n that the ne\ol

matchable .:l::~OU:lt is less than the amount of $1,617,871.18 which

\oJas prc\"iC'·_::.:;l:" certifit."\d, an OVQrpuyn1t\nt \'Jc:l~ made in the amount o~

$43,806.~': ·.·;it~l respect to the RcsulJmission #1. It should be

noted th.J:' .'.:j:: l\\..:·submis~;ion #1 thc"' Comr.littec did omit $280,758.63

in contr i~·,": ·.:i (lns which or iqinally aPlJ(~.:.1rcd on Submissions 1 throayh

8 • As p~-c':':',_~~:d b~' the C()Im~lission's combinc'd resubmission procedl1rc;s,

the~;c d01c::-..:,:: contrilJution~ mdY be ~ulJ::~ittcd as new contributions on

a 1 ate r s "--:;.. :-. -:. ~; i. 0 n .
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On October 30, 1980, the review and evaluation of till'

Committee's latest submission (S-11) was completed. The results

of th.lt review found that the Committee is entitled to an additional

$834.0(, ($2,563.13 or 27.49% of the amount requested was heldback

whi]p the review found only $1,729.07 or 18.54% was non-matchable)

which then reduces the amount of the current overpayment to

$42,972.37 as of October 31, 1980.

Recommendation

The Audit staff recommends the Commi~)sion prelimin~rily determine th~t, absent a showing to the contr;lry such as submission of

sufficient matchable contributions to "offset" the excessive amou~t

certiried, an amount equal to the excessive payment of $42,972.37

is rcp~lyable in full to the U. S. Treasury wi thin 90 d~ys of the

Committee's receipt of this report.

G. Matters Referred to tho Office of General Counsel

•

Other m~tters noted durinq the audit were referred

to the' Office of ~eneral Counsel on July 17, 1980 .