FEDERAL ELECTION COMMISSION
WASHINGTON DC Zon’

May 1, 2003

Mr. Ira Spodek, Treasurer
Friends of Weiner

P.O. Box 290-346
Brooklyn, NY 11229

Dear Mr. Spodek:

Attached please find the Report of the Audit Division on Friends of Weiner (Final
Audit Report). The Commission approved the report on Apnil 22, 2003.

The Commission approved Final Audit Report will be placed on the public record
on May 9, 2003. Should you have any questions regarding the public release of the report,
please contact the Commission's Press Office at (202) 694-1220.

Any questions you have related to matters covered during the audit or in the report
should be directed to Jim Miller or Ray Lisi of the Audit Division at (202) 694-1200 or toll
free at (800) 424-9530.

Sincerely, -

/
bed of (ee
77 Joseph F. Stoltz
“© Assistant Staff Director
Audit Division

cc: Cassandra F. Lentchner, Counsel

Attachment as stated

Page 17 of 20


contributed $1,000 to FOW primary, it appears that the Candidate’s parents made
excessive contributions in the form of a loan to FOW totaling $28,000. No information
was available about whether the funds were returned to the Candidate’s parents.

In the interim audit report, it was recommended that FOW provide
documentation to show that the funds provided to the Candidate by his parents should not
be considered excessive contributions to FOW. If amounts received from the Candidate's
parents are “gifts of a personal nature which had been customarily received prior to
candidacy”, evidence of previous gifts of a similar nature should be provided. Further the
candidate should provide the source of funds for the $5,000 deposit into his credit union
account on September 2, 1998. Finally the Candidate should provide an explanation of
and documentation for the final disposition of the $28,000 repaid to him from FOW. The
documentation should include but not be limited to copies of deposit tickets and cancelled
checks (front & back) showing the final disposition of the $28,000.

In response to the interim audit report, counsel for FOW stated that
“Based on information received from our client, we understand that the Candidate
returned the amount in question to his parents.” The response did not include any
evidence that the funds provided by the Candidate's parents should not be treated as
excessive contributions. In addition, the Candidate did not provide any information
regarding the source of funds for the $5,000 deposit into his credit union account on
September 2, 1998, or documentation for the final disposition of the $28,000 repaid to
him from FOW.

Cc. MISSTATEMENT OF FINANCIAL ACTIVITY

Sections 434(b)(1), (2), and (4) of Title 2 of the United States Code state,
in part, that each report shall disclose the amount of cash on hand at the beginning of the
Teporting period and the total amount of all receipts and disbursements for the reporting
period and calendar year.

The reconciliation of FOW’s reported financial activity to its bank records.
revealed that beginning cash on hand, receipts, disbursements and ending cash on hand
had been misstated for calendar years 1999 and 2000. FOW did not maintain records to
show the derivation of its reported amounts. Absent such records, the Audit staff could
not identify all differences between bank activity and the disclosure reports.

1. 1999 Misstatement

FOW reported a beginning cash balance of $27,516 on January 1,
1999. The correct cash balance was determined to be $23.743. The reported amount was
overstated by $3,773, a difference that carmed over from the year-end 1998 disclosure
report and.could.not be explained absent FOW work papers showing the denvation of the
Teported amount.

Page 11 of 20



CONTRIBUTIONS SUBJECT TO 48 HOUR NOTIFICATION — 11 CFR §104.5(f). A review of
contributions indicated FOW did not file required 48-hour notices for 46 contributions
totaling $66,000. In response to the interim audit report, Counsel for FOW questioned the
receipt date used in determining whether contributions were received within the 48-hour
reporting period. Based on the response, the amount of contributions that lack a 48-hour
notice was reduced to $50,000.

DISCLOSURE OF RECEIPTS — 2 U.S.C. §§434(b)(3)(A)(B) and 431(13); 11 CFR
§104.7(a)(4)(ii). Sample reviews of contributions from individuals and from political
committees noted deficiencies in the disclosure of contributor information. In response the
interim audit report, FOW filed amended reports, which significantly corrected these
deficiencies.

DISCLOSURE OF DISBURSEMENTS — 2 U.S.C. §434(b)(5)(A). A review of all
disbursements requiring itemization revealed that FOW failed to properly disclose
addresses and/or inadequately disclosed the purpose for approximately 23% of its
disbursements, totaling $121,906. In its response, FOW filed amended reports that
significantly corrected the noted disclosure deficiencies.

Page 2 of 2


Page 18 of 20


Page 20 of 20


Section 104.3(a) (4) (ii) of Title 11 of the Code of Federal Regulations
states, in relevant part, that the identification of each conwibutor and the aggregate year-
to-date total for such contributor shall be reported for all political committees which
make contributions to the reporting committee during the reporting period, together with
the date of receipt and amount of any such contribution.

1. Adequacy of Disclosure of Individual Receipts

The Audit staff's sample review of contributions from individuals
itemized on Schedule A identified a deficiency in the disclosure of contributor
information. The majority of the errors were the result of FOW reporting two
individual’s (i.e. husband and wife) names on one line, when in fact the contribution was
made by only one of the individuals. The other errors were the result of missing
addresses.

2. Adequacy of Disclosure for Political Committees Receipts

The Audit staff's sample review of contributions from political
committees itemized on Schedules A revealed a problem with the adequacy of disclosure
information. The majority of the errors were incorrect aggregate year-to-date totals.
Also, some errors related to incorrect names and addresses of contributors. and
contribution dates.

At the exit conference, FOW officials were informed of the disclosure
information problem noted above. FOW officials stated they would research the matter.

In the interim audit report, it was recommended that FOW file with its
comprehensive amended reports Schedules A (Itemized Receipts), to correctly disclose
the contributions noted above. In response FOW filed amended reports, which
significantly corrected the noted deficiencies.

F. DISCLOSURE OF DISBURSEMENTS

Section 434(b)(5)(A) of Title 2 of the United States Code states that each
report under this section shall disclose the name and address of each person to whom an
expenditure in an aggregate amount or value in excess of $200 within the calendar year is
made by the reporting committee to meet a candidate or committee operating expense,
together with the date, amount, and purpose of such operating expenditure.

A review of all disbursements requiring itemization on FOW''s disclosure

reports revealed that FOW failed to disclose addresses andor disclosed an inadequate
purpose for approximately 23% of its disbursements, totaling $121,906.

Page 15 of 20



FOW’s contribution records consisted of a database containing contributor
information and bank deposit slips that included copies of contribution checks. A sample
review of contributions from individuals disclosed that FOW’s had received excessive
contributions. The review of all contributions from individuals who made contributions

in excess of $1,000 revealed the following:

1. Primary Election Contributions

FOW received contributions from 175 individuals, totaling
$202,801, in excess of the contribution limitation for the primary election. These
contributions were dated prior to the primary election and were either designated to the
general election or reattributed to another individual by FOW, without proper wnitten
authorization from the contributors. FOW did receive redesignation letters from 19 of
these contributors, but none of the redesignations were timely. The Audit staff noted that
most of the redesignation letters were signed and dated more than a year after the
contributions were made well beyond the period provided in the regulations and therefore
the contributions must be refunded. FOW made contribution refunds, totaling $2,501, to
four contributors, but made them untimely. Taking into consideration these untimely
refunds, the Audit staff determined that FOW has unresolved excessive contributions
totaling $200,300.

2. General Election Contributions

FOW received contributions from 8 individuals that exceed the
contribution limitation for the general election by $10,000. In some cases FOW
attributed portions of these contributions to another individual without written
authorization. FOW made contribution refunds, totaling $3,000, to two individuals,
however, these refunds were not timely. Taking into consideration these untimely
refunds, FOW has unresolved excessive contributions of $7,000.

FOW did not maintain a separate account to deposit questionable
contributions but did consistently maintain sufficient balances to cover the amounts
deposited in excess of the limitations.” The Audit staff also performed an analysis of the
contributions and disbursements to determine whether any of the contributions designated
for the general election had been spent on primary election expenses. The analysis was
performed using election designations for contributions as entered by FOW on its
database. The analysis shows that contributions designated by FOW for the general
election were not spent on primary related activity.

At the exit conference, FOW officials were provided schedules detailing
the Primary and General excessive contributions discussed above. FOW officials stated
they would look into this matter.

z On its latest disclosure report covering the penod through November 25, 2002, FOW reported
ending cash on hand totaling $1,203,696.

Page 7 of 20


The Treasurer for FOW during the audit period was Christopher L. Bellitti.
Mr. Ira Spodek replaced Mr. Bellitti on January 12, 2001, as the Treasurer, and is
currently serving in that capacity. FOW maintains its headquarters in Brooklyn, New
York.

To manage its financial activity, FOW maintained three bank accounts,
one of which was closed on November 30, 1999. From these accounts, 480
disbursements were made totaling $557,594.' FOW receipts were comprised of
approximately 1,400 contributions from individuals totaling $764,122; 273 contributions
from other political committees and organizations totaling $372,047; offsets to operating
expenditures totaling $5,350; and other receipts (interest) totaling $10,219. Accounting,
record keeping and reporting functions were performed by volunteer campaign staff,
utilizing commonly available computer software. Neither the current treasurer, nor the
previous treasurer, had any previous campaign finance or accounting experience and have
not attended any Commission seminars. FOW did not file its disclosure reports
electronically during the period covered by the audit.

D. AUDIT SCOPE AND PROCEDURES

In maintaining its disbursement records, FOW satisfied the minimum
record keeping requirements of 11 CFR §102.9; however, the Audit staff's testing of
disbursements was limited by the lack of external documentation, such as invoices, for
approximately 18% of its disbursements. This lack of third party records limited the
testing for record keeping and the proper reporting of debts and obligations; as well as the
adequacy of disclosure of information, such as, payee, address and purpose for
disbursements. Following Commission approved procedures, the Audit staff evaluated
various risk factors and as a result, the scope of the audit included the following general
categories:

1. The receipt of contributions or loans in excess of the statutory
limitations (see Findings II. A. & B.);

2. The receipt of contributions from prohibited sources, such as those
from corporations or labor organizations;

3. Proper disclosure of receipts from individuals, political committees
and. other entities, to include the itemization of contnbutions or
other receipts when required, as well as, the completeness and
accuracy of the information disclosed (see Finding Il. E.);

4, Proper disclosure of disbursements, including the itemization of
disbursements when required, as well as, the completeness and
accuracy of the information disclosed (see Finding Il. F.);

This amount does not agree with total reported disbursements due to FOW reporung errors (see
Finding II. C.).

Page 4 of 20


A01-08
FEDERAL ELECTION COMMISSION

WASHINGTON. DC 20463

REPORT OF THE AUDIT DIVISION

ON

FRIENDS OF WEINER

I. BACKGROUND
A. AUDIT AUTHORITY

This report is based on an audit of Friends of Weiner (FOW), undertaken
by the Audit Division of the Federal Election Commission (the 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) of Title 2 of the
United States Code that states, in part, that the Commission may conduct audits and field
investigations of any political committee required to file a report under Section 434 of
this title. Prior to conducting any audit under this subsection, the Commission shall
perform an internal review of reports filed by selected committees to determine if the
reports filed by a particular committee meet the threshold requirements for substantial
compliance with the Act.

B. AUDIT COVERAGE

The audit covered the period from January 1, 1999, through December 31,
2000. FOW reported a beginning cash balance of $27,516; total receipts for the audit
period of $1,147,672; total disbursements for the audit period of $528,369; and an ending
cash balance of $646,819.

Cc CAMPAIGN ORGANIZATION

FOW registered with the Commission on May 28, 1997, as the principal
campaign committee for Anthony David Weiner (the Candidate), Democratic candidate
for the U.S. House of Representatives from the state of New York, g Congressional
District.

Page 3 of 20


At the exit conference, FOW officials were informed of the disclosure
information problem and were provided schedules detailing the errors. FOW officials
stated they would respond to this issue.

In the interim audit report, it was recommended that FOW file with its
comprehensive amended reports Schedules B (Itemized Disbursements), to properly
disclose the disbursements noted above. In response, FOW filed amended reports that
significantly corrected the noted disclosure deficiencies.

Page 16 of 20


political committee until the contribution has been determined 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.

Section 110.1(k) of Title 11 of the Code of Federal Regulations states that
any contribution made by more than one person, except for a contribution made by a
partnership, shall include the signature of each contributor on the check, money order, or
other negotiable instrument or in a separate writing and if a contribution made by more
than one person does not indicate the amount to be attributed to each contributor, the
contribution shall be attributed equally to each contributor. If a contribution to a
candidate or political committee, either on its face or when aggregated with other
contributions from the same contributor, exceeds the limitations on contributions set forth
in 11 CFR 110.1(b), (c) or (d), as appropriate, the treasurer of the recipient political
committee may ask the contributor whether the contribution was intended to be a joint
contribution by more than one person. A contribution shal! be considered to be
reattributed to another contributor if the treasurer of the recipient political committee asks
the contributor whether the contribution is intended to be a joint contribution by more
than one person, and informs the contributor that he or she may request the retum of the
excessive portion of the contribution if it is not intended to be a joint contribution, and
within sixty days from the date of the treasurer's receipt of the contribution, the
contributors provide the treasurer with a written reattribution of the contribution, which is
signed by each contributor, and which indicates the amount to be attributed to each
contributor if equal attribution is not intended.

Section 110.1(b)(5) of Title 11 of the Code of Federal Regulations states,
in relevant part, that the treasurer of an authorized political committee may request a
written redesignation of a contribution by the contributor for a different election if the
contribution exceeds the limitation on contributions set forth in 11 CFR 110.1(b)(1). A
contribution shall be considered to be redesignated for another election if the treasurer of
the recipient authorized political committee requests that the contributor provide a written
redesignation of the contribution and informs the contributor that the contributor may
request the refund of the contribution as an alternative to providing a written
redesignation and within sixty days from the date of the treasurer's receipt of the
contribution, the contributor provides the treasurer with a written redesignation of the
contribution for another election, which is signed by the contributor.

Section 110.1(1)(5) of Title 11 of the Code of Federal Regulations states,
in part, that if a political committee does not retain the written records conceming
redesignation or reattribution, the redesignation or reattribution shall not be effective, and
the original designation or attribution shall control.

Page 6 of 20


FEDERAL ELECTION COMMISSION
WASHINGTON, D.C. 20463

May 9, 2003

MEMORANDUM
TO: RON M. HARRIS

PRESS OFFICER

PRESS OFFICE
FROM: JOSEPH F. STOLTZ AE ESS

ASSISTANT STAFF DIRECTOR

AUDIT DIVISION

SUBJECT: | PUBLIC ISSUANCE OF THE FINAL AUDIT REPORT ON
FRIENDS OF WEINER

Attached please find a copy of the final audit report and related documents on the
Friends of Weiner that was approved by the Commission on April 22, 2003.

All parties involved have received informational copies of the report and the
report may be released to the public on May 9, 2003.

Attachment as stated

ce: Office of General Counsel
Office of Public Disclosure
Reports Analysis Division
FEC Library


Section 441a(a)(1)(A) of Title 2 of the United States Code states that no
person shall make contributions to any candidate and his authorized political committees
with respect to any election for Federal office which, in the aggregate, exceed $1,000.

Section 100.7(a)(1)(i) of Title 11 of the Code of Federal Regulations
states, in part, that the term contribution includes the following payments, services or
other things of value: a gift, subscription, loan (except for a loan made in accordance
with 11 CFR 100.7(b)(11)), advance or deposit of money or anything of value made by
any person for the purpose of influencing any election for Federal office is a contribution.
The term Joan includes a guarantee, endorsement, and any other form of security. A loan
is a contribution at the time it is made and is a contribution to the extent that it remains
unpaid. The aggregate amount loaned to a candidate or committee by a contributor, when
added to other contributions from that individual to that candidate or committee, shall not
exceed the contribution limitations set forth at 11 CFR part 110. A loan, to the extent itis
repaid, is no longer a contribution.

In September 1998 the Candidate made two loans to FOW totaling
$28,000. FOW paid $10,000 on the loans in 1998 and repaid the remainder of the loans
in 1999 during the period covered by this audit. The Audit staff requested that FOW
produce loan documents, copies of the loan proceed checks, and copies of the Candidate's
bank statements for the period August through October 1998 in order to determine
whether the loans were made from the personal funds of the Candidate.

Initially, Counsel for FOW responded that no loan documents exist and
also refused to produce the bank statements on the grounds that the 1998 loan falls
outside of the scope of the 2000 election cycle audit and the request for the documents
violates the Candidate’s First Amendment rights and privacy interests.

On May 17, 2002, the Commission issued a subpoena to FOW requesting
production of the documents and a subpoena and order to the Candidate to produce
records and to identify the source of the funds used to make the loan. On May 13, 2002,
prior to. issuance.of the subpoenas, counsel for FOW produced monthly statements for the
Candidate’s credit union account for September and October 1998 and a tissue copy of
one of the loan proceed.checks for $20,000 payable to FOW. Ina letter accompanying
the production, the counsel for FOW stated that the Candidate has no other bank
accounts; does-not_have.a.copy of the other loan proceeds check and no other documents.
Counsel for FOW explained that the Candidate did not have a copy of the monthly
statement-for August 1998 and that, due to a computer problem the credit union was
unable to retrieve it from its records. A letter from a credit union officer confirming this
was included.

A review of the Candidate's credit union statement for September 1998,
shows thaton. September 2, 1998, just prior to making the loans to FOW, the Candidate
deposited:$5,000 into the credit union account bringing the balance to $32,222. By
September 10, 1998, the Candidate had transferred $28,000 of this amount to FOW. For

Page 9 of 20


Subsequent to the exit conference, FOW provided copies of refund checks
(front only) issued in November 2001 to seven individuals, totaling $9,250. To date,
copies of negotiated refund checks have not been provided. Absent evidence that the
refund checks were cashed, the Audit staff determined that $207,300 ($200,300 + $7,000)
was the amount of unresolved excessive contributions received for the Primary and
General elections.

However, the Commission has recently adopted new regulations that allow
committees greater latitude to either reattribute contributions to joint account holders or
redesignate contributions to other elections, and the Commission has applied these new
provisions to current matters. Accordingly, the Audit staff reevaluated this issue under
the revised regulations. The reevaluation resulted in a reduction of the number of
unresolved excessive contributions to $27,250 for the Primary election and $6,000 for the
General election’.

In the interim audit repon, it was recommended that FOW provide
evidence demonstrating that the contributions in question are not excessive and that the
refunds it made were timely. Absent such a demonstration, it was recommended that
FOW refund $33,250‘ and provide evidence of such refunds (photocopies of the front and
back of the negotiated refund checks) for our review.

In response to the interim audit report, FOW provided photocopies of
refund checks for the $33,250 in excessive contribution (front only). The refund checks
were issued on February 26, 2003, and March 27, 2003.

B. RECEIPT OF LOAN IN EXCESS OF THE LIMITATIONS

Section 110.10 of Title 11 of the Code of Federal Regulations states, in
part, that candidates for Federal office may make unlimited expenditures from personal
funds. For the purposes of this section personal funds means - any assets which, under
applicable state law, at the time he or she becomes a candidate, the candidate had legal
right of access to or control over, and with respect to which the candidate had either legal
and rightful title, or an equitable interest. Further personal funds means - salary and other
earned income from bona fide employment; dividends and proceeds from the sale of the
candidate’s stocks or other investments; bequests to the candidate; income from trusts
established before candidacy; income from trusts established by bequest after candidacy
of which the candidate is the beneficiary; gifts of a personal nature which had been
customarily received prior to candidacy, proceeds from jotteries and similar legal games
of chance.

3 FOW did not report any Primary debt. therefore no excessive General election contribution could
be redesignated for the Primary election.

‘ This total is net of refunds that cleared FOW bank accounts.

Page 8 of 20



5. Proper disclosure of debts and obligations;

6. The accuracy of total reported receipts, disbursements and cash
balances as compared to bank records (see Finding n.C.)

7. Adequate record keeping for transactions; and

8. Other audit procedures that were deemed necessary in the situation
(see Finding 1. D.).

Unless specifically discussed below, no material non-compliance was
detected. It should be noted that the Commission may pursue any of the matters
discussed in this report in an enforcement action.

Il. AUDIT FINDINGS AND RECOMMENDATIONS

A. RECEIPT OF CONTRIBUTIONS FROM INDIVIDUALS IN EXCESS OF THE
LIMITATIONS

Section 441a(a)(1)(A) of Title 2 of the United States Code states that no
person shall make contributions to any candidate and his authorized political committees
with respect to any election for Federal office, which in the aggregate, exceed $1,000.
Subsection (b) (2) and (6) of 11 CFR §110.1 explains that with respect to any’ election
means that if the contribution is not designated in writing by the contributor for a
particular election then the contribution applies to the next election for that Federal office
after the contribution is made. A contribution is considered made when the contributor
relinquishes control over the contribution by delivering the contribution to the Candidate,
the political committee, or an agent of the committee. A contribution that is mailed is
considered to be made on the date of the postmark.

Section 103.3(b)(3) of Title 11 of the Code of Federal Regulations states,
in part, that the treasurer shall be responsible for examining all contributions received for
evidence of illegality and for ascertaining whether contributions received, when
aggregated with other contributions from the same contributor, exceed the contribution
limitations of 11 CFR 110.1. If any such contribution is deposited, the treasurer may
request redesignation or reattribution of the contribution by the contributor in accordance
with 11 CFR 110.1(b) or 110.1(k), as appropriate. If a redesignation or reattribution is
not obtained, the treasurer shall, within sixty days of the treasurer's receipt of the
contribution, refund the contribution to the contributor.

Section 103.3(b)(4) of Title 11 of the Code of Federal Regulations states
that any contribution which appears to be illegal under 11 CFR §103.3(b)(3), and which
is deposited into a campaign depository shall not be used for any disbursements by the

Page 5 of 20


CHRONOLOGY

FRIENDS OF WEINER
Audit Fieldwork December 11, 2001 -
April 2, 2002

Interim Audit Report to

the Committee January 14, 2003
Response Received to the

Interim Audit Report March 5, 2003
Final Audit Report Approved April 22, 2003

Page 19 of 20


A01-08

FEDERAL ELECTION COMMISSION
Washington, DC 20463

FRIENDS OF WEINER
EXECUTIVE SUMMARY

Friends of Weiner (FOW) registered with the Federal Election Commission on May
28, 1997, as the principal campaign committee for Anthony David Weiner (the Candidate),
Democratic candidate for the U.S. House of Representatives from the state of New York,
9 Congressional District.

The audit was conducted pursuant to 2 U.S.C. §438(b), which states that the
Commission may conduct audits of any political committee whose reports fail to meet the
threshold level of compliance set by the Commission.

The audit findings summarized below were presented to the FOW at the completion
of fieldwork on April 17, 2002, and later in the interim audit report. FOW’s response to
these findings is contained in the audit report.

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

RECEIPT OF CONTRIBUTIONS FROM INDIVIDUALS IN EXCESS OF THE LIMITATIONS —

2 U.S.C. §441a(a)(1)(A). A review of FOW's receipt records identified contributions
from 183 individuals that exceeded the contribution limitations by $207,300. However, as
a result of the application of new regulations adopted by the Commission that allow greater
latitude to either reattribute or redesignate contributions to other elections, the number of
unresolved excessive contributions was reduced to $33.250. In response to the intenm
audit report, FOW provided photocopies of contribution refund checks (front only) ithad
issued for the $33,250 in excessive contributions.

RECEIPT OF LOAN IN EXCESS OF THE LIMITATIONS — 2 U.S.C. §441a(a)(1)(A); 11 CFR
§§ 100.7(a)(1)(i) and 110.10. FOW disclosed the receipt of two loans from the Candidate
totaling $28,000, which appeared to have been funded by the Candidate's parents. resulting
in excessive contributions by the parents totaling $28.000. The response did not include
any evidence that the funds provided by the Candidate’s parents should not be treated as
excessive contributions.

MISSTATEMENT OF FINANCIAL ACTIVITY — 2 U.S.C. §434(b)(1)(2)(4). A reconciliation
of FOW’s reports to the bank activity revealed misstatements on reports covering calendar
years 1999 and 2000. FOW filed amended reports, which significantly corrected the
misstatements.

Page 1 of 2



FOW reported total receipts of $482,951. The correct total was
$469,350, an overstatement of $13,601. The overstatement resulted primarily from:
FOW’s failure to report contributions from political committees ($1,500); reporting
contributions from individuals twice (-§15,250); a math error on the 1999 Year-End
report, Schedule A’s, ($200); and, an unexplained difference (-$51).

Total reported disbursements were $122,602. FOW should have
reported total disbursements of $126,068, an understatement of $3,466. The
understatement is the net result of: disbursements not reported ($5,241); math errors on
reported disbursements (-$775); and a disbursement reported with no check or bank debit
memo issued (-$1,000).

Reported ending cash-on-hand was $387,865. The correct cash
balance was determined to be $367,024. The amount was overstated by $20,841 as a
result of the discrepancies noted above. Beginning cash on hand for 2000 was similarly
misstated.

2. 2000 Misstatement

FOW reported total receipts of $664,721. The correct total was
$682,388, a net understatement of $17,667. The understatement is the net result of
FOW’s: failure to report contributions from political committees totaling $10,000;
individual contributions not reported totaling $5,000; unreported earned interest totaling
$2,574; in-kind contributions not reported in the amount of $847; and, an unexplained
difference of -$754.

Reported disbursements were $405,767. FOW should have reported
total disbursements of $431,526, a net understatement of $25,759. The understatement is
the net result of FOW’s: disbursements not reported ($26,392); math errors on reported
disbursements ($2,971); reported disbursements not supported by checks or bank debit
memos (-$6,776); unreported in-kind contributions ($3,197); and, an unexplained
difference (-$25).

Reported ending cash-on-hand was $646,819. The correct cash
balance was determined to be-$617,886. The reported amount was overstated by $28,933
as a net result of the discrepancies noted above.

At the exit conference, FOW officials were informed of the
misstatements of financial activity and were provided schedules detailing the errors.
FOW officials stated they would research the matter.

In the interim audit report, it was recommended that FOW file
comprehensive amended reports for calendar years 1999 and 2000, including corrected
Summary and Detailed Summary Pages for each year to accurately disclose the FOW
financial activity, and amended Schedules A and B, to support the corrected Summary

Page 12 of 20



arbitrary use of the three-day period from the day each contribution was dated ignores the
Commission’s regulations at 1] CFR §102.8(a) permitting a person who receives a
contribution for an authorized committee 10 days to forward the contribution to the
Treasurer. Counsel for FOW also stated that on September 11, 2000, FOW held a gala
fundraising event, which was after the close of the 48-hour reporting period and that most
of the contributors listed on the schedules provided by the Audit staff attended and/or
contributed to this event. In addition, counsel for FOW stated the Audit staff had not
permitted a reasonable time frame for agents of the campaign who served as hosts for the
event, to collect, receive and forward contributions for the event to FOW.

The Audit staff agrees that the regulations provide 10 days for persons
who receive a contribution for a committee to forward that contribution to the Treasurer.
However, FOW’s response provides no evidence that an agent initially received the
contributions in question. Eleven of the contributions, totaling $16,000, are associated
with solicitation response devices that reference an unidentified reception and include a
Washington, D.C. address. The Audit staff was able to determine that the address is that
of a fundraising concern. Therefore, although it is not possible to determine if the event
is the September 11, 2000, event referred to by the counsel for FOW, or the precise date
of FOW’s receipt of the contributions, it is reasonable to assume that the fundraiser
initially received these contributions and to allow the additional 10 days for transmittal to
FOW. With one exception, documentation for the remaining contributions does not
associate them with any event or any person who may have received them on behalf of
FOW. The exception is a contribution that was accompanied by a letter that references
the September 11, 2000, event, but the letter is addressed to FOW’s New York post office
box rather than some other person. Therefore, the remaining contributions that lack a 48-
hour notice total $50,000.

E. DISCLOSURE OF RECEIPTS

Section 434(b)(3)(A) of Title 2 of the United States Code requires, in part,
a political committee to report the identification of each person (other than a political
committee) who makes a contribution to the committee in an aggregate amount or value
in excess of $200 per calendar year together with the date and amount of any such
contribution.

Section 434(b)(3)(B) of Title 2 of the United States Code states that each
report under this section shall disclose the identification of each political committee
which makes a contribution to the reporting committee during the reporting period,
together with the date and amount of any such contribution.

Section 431(13) of Title 2 of the United States Code defines the term
“identification” to be, in the case of any individual, the name, the mailing address, and the
occupation of such individual, as well as the name of his or her employer; and, in the case
of any other person, the full name and address of such person.

Page 14 of 20


TABLE OF CONTENTS

FRIENDS OF WEINER
PAGE
Executive Summary 1
Final Audit Report 3
Background 3
Findings 5
Transmittal to Committee 17

Chronology 19


REPORT OF THE AUDIT DIVISION
ON THE

FRIENDS OF WEINER

Approved April 22, 2003

FEDERAL ELECTION COMMISSION
999 E STREET, N.W.
WASHINGTON, D.C.



the months of September and October the only other significant deposits to the
Candidate’s account appear to be direct deposits of salary. The activity in the
Candidate’s account raised questions as to the source of the $28,000 in loans.

On June 25, 2002, Counsel for FOW stated that FOW had produced all
documents in its possession responsive to its subpoena. Counsel for FOW further stated
that the Candidate had not received his subpoena and that Counsel did not have the
authority to receive the subpoena on his behalf. Another copy of the subpoena was sent
to the Candidate on July 2, 2002.

On August 5, 2002, in response to the subpoena, the Candidate stated:
“The funds I used to make loans to Friends of Weiner, totaling $28,000, in September
1998 were funds in my personal bank account at the Municipal Credit Union... (the
“MCU Account”). Pursuant to the FEC’s requests, I previously produced my bank
statements for the MCU Account for September and October 1998.” The Candidate also
stated: “ to the best of my current ability to recall, I believe that in August of 1998, I made
the following deposits into the MCU Account:

a. Two deposits of $1,734.75 from the City of New York,
b. A deposit of $10,000.00 from Mort Weiner, my father,
c. A deposit of $2,500.00 from Fran Weiner, my mother.”

The Candidate further stated that he is unable to locate a statement for the
credit union account for August 1998 and the credit union is unable to provide a copy.

On August 6, 2002, the Commission issued an additional subpoena to the
Candidate’s credit union requesting documents sufficient to identify all items in excess of
$2,000 deposited into the Candidate’s account for the period July through August 1998.
In addition, the credit union was asked to provide documentation to identify the source of
the $5,000 deposit into the Candidate's account on September 2, 1998.

On September 16, 2002, in response to the subpoena, the credit union
provided four check copies (front & back), totaling $30,000, that were deposited into the
Candidate’s account.> One check dated August 3, 1998, in the amount of $15,000 was
made payable to the Candidate and was drawn on an account of the Candidate's father.
The memo line of the check indicated that the $15,000 was a loan. Two of the checks
made payable to the Candidate ($5,000 & $2,862) each dated August 5, 1998, were drawn
on accounts of the Candidate’s mother. The memo lines on these checks were blank.

The last check dated August 3, 1998, in the amount of $7,138 was drawn on an
investment account and was made payable to the Candidate’s mother.

Based on the facts presented above, it appears that the Candidate's parents
provided the funding for the $28,000 in loans to FOW. Since both parents previously

s The credit union did not provide documents to identify the source of the $5,000 deposit on

September 2, 1998.

Page 10 of 20


and Detailed Summary Pages. In response, FOW filed amended reports, which
significantly corrected the misstatements.

D. CONTRIBUTIONS SUBJECT TO 48 HOUR NOTIFICATION

Section 104.5(f) of Title 11 of the Code of Federal Regulations states, that
if any contribution of $1,000 or more is received by any authorized committee of a
candidate after the 20" day, but more than 48 hours, before 12:0la.m. of the day of the
election, the principal campaign committee of that candidate shall notify the Commission,
the Secretary of the Senate and the Secretary of State, as appropriate, within 48 hours of
receipt of the contribution. The notification shall be in writing and shall include the name
of the candidate and office sought by the candidate, the identification of the contributor,
and the date of receipt and amount of the contribution. The notification shall be in
addition to the reporting of these contributions on the post-election report.

FOW was required to report within 48 hours of receipt, any contributions
of $1,000 or more received August 24, 2000, through September 9, 2000, for the primary
election and October 19, 2000, through November 4, 2000, for the general election. It
was determined that most of the checks dated during these periods were included in
deposits made after the periods®. FOW used the check date as the reported date on its
Schedules A for these contributions. No record was kept of the date the contributions
were received. Therefore, three days were allowed for delivery of the contribution after
the date of the check when determining the date of receipt. Using this criteria, the review
identified 42 contributions totaling $63,500 that appeared to have been received within
two and twenty days of the primary election, held on September 12, 2000, and 6
contributions totaling $9,500 that appeared to have been received within two and twenty
days of the general election, held on November 7, 2000.

Forty-eight hour notices were not filed for 43 of the contributions noted
above totaling $66,000. Forty of the contributions totaling $61,500 related to the pnmary
election, while three contributions totaling $4,500 related to the general election.

At the exit conference, FOW officials were informed of these
discrepancies and were provided schedules detailing the contributions noted above. FOW
officials stated they would look into the matter.

In the interim audit report, it was recommended that FOW submit
evidence that all required 48 hour notices were filed as required or submit evidence that
the noted contributions were not received within two and twenty days of the pnmary or
general election.

In response to the interim audit report, Counsel for FOW questioned the
receipt date the Audit staff used in determining whether contributions were received
within the 48-hour reporting period. Counsel for FOW contends that the Audit staff's

‘ FOW made deposits infrequently making the deposit date an unreliable indication of receipt date

Page 13 of 20