FEDERAL ELECTION COMMISSION 

WASHINr.TCJN. D.C.. 2()4h» 

MEMORANDUM 

TO: The Commission 

THROUGH: D. Alec Palmer 

Staff Director /f 

• ;::.;;R^.L ELECT:-:.. 

CCMMiSSiCII 

SECRETARi.M • 

2QiU?.Nl'4 AM 9: 20 

January 10, 2014 

MMtme 

FROM: Compliance Office -Q. 

Patricia C. Orrock 

Chief Compliance Officer 

Tom Hintermister 

Assistant Staff Director 

Audit Division 

Alex Boniewiczi/j^^ 

Audit Manager ^ 

Audit Division 

Douglas Kodish 

Audit Manager 

Audit Division 

Paula Nurthen 9! 

Auditor 

Audit Division 

General Counsel's Office 

Lisa J. Stevenson 

Deputy General Counsel -

Lorenzo Holloway 

Assistant General Counsel 

Compliance Advice 

Joshua Blume'^Jl^ 

Attorney 

SUBJECT: Request for Commission Directive 69 Guidance involving the Oakland County 

Democratic Party (LRA # 946) 

I. . Statement of Issue and Brief Answer 

Pursuant to Commission Directive 69, the Office of Compliance ("OC") and the Office of 

General Counsel ("OGC") seek the Commission's guidance on an issue addressing what 

recordkeeping requirements under 2 U.S.C. § 432(c) and 11 C.F.R. § 102.9(a) apply to 

contributions that the Oakland County Democratic Party ("OCDP" or "Committee") received 

during twice-weekly "bingo nights" that the Committee held for the purpose of raising funds to 

influence Federal elections. The Committee kept records of the total amount of contributions it 

received from each bingo night but did not maintain itemized records for each individual 
Memorandum to Commission 

Oakland County Democratic Party - LRA 946 

Page 2 of 6 

contributor. The Committee relies upon prior Commission advisory opinions, discussed more 

fully below, as a basis for not individually itemizing its contributions. These advisory opinions 

considered what constituted a "reasonable accounting procedure" for purposes of satisfying the 

recordkeeping requirements for contributions under SSO for events where the requesting 

committees anticipated receiving a large number of small contributions (i.e. less than SSO). In 

such situations, the Commission concluded that committees may elect to keep a record only of 

the name of an event, the date(s) the contributions were received for that event, and the total 

amount of contributions received on each day for that event. 

The Committee asserts that because each "bingo night" consisted of three separate 

gaming activities that are independently regulated by the State of Michigan, each bingo night 

actually constituted three separate fundraising "events," rather than a single event, for the 

purpose of applying the Commission's advisory opinions. The Committee's characterization of 

its bingo nights as consisting of three separate hindraising events affects the amount of 

information the Committee was required to preserve in its records. If the Committee's 

characterization were to be upheld, then the names and addresses of contributors whose 

contributions for each of the three events is below $50, but whose total contributions for the 

evening are above $50, would not be maintained in the Committee's records. 

We are raising this issue for the Commission's consideration under the procedures set 

forth in Directive 69 which encourage OGC and OC to bring before the Commission novel or 

unsettled questions of law. See Commission Directive No. 69, paragraph 3d. The issue of 

whether the OCDP's characterization of its bingo nights as three separate fundraising events, 

rather than a single event, for purposes of the recordkeeping requirements under 11 C.F.R. 

§ 102.9(a) satisfies the Directive's criteria. 

We recommend that the Commission reject the Committee's characterization of its bingo 

nights as consisting of three separate fundraising events for the purpose of applying the 

recordkeeping requirements to fundraising events where committees receive a large number of 

contributions under the $50 threshold. Rather, we recommend that the Commission conclude 

that treatment of each bingo night as a single fundraising event is appropriate for purposes of 

analyzing the recordkeeping requirements as discussed in the Commission's prior advisory 

opinions. This conclusion means that the Committee was required to keep itemized records of 

all contributions in excess of $50 that it received from gaming participants during the course of a 

single bingo night. Thus, even if a gaming participant spent less than $50 on each of three 

possible gaming activities that typically took place during a bingo night, the Committee was 

required to keep an itemized record if the aggregate amount the participant spent on all activities 

in which he or she participated during the course of a bingo night exceeded $50. 

II. The Commission's Advisory Opinions Interpreting the Term "Reasonable 

Accounting Method" Do Not Apply to the Committee's Approach 

The Federal Election Campaign Act of 1971 (the "Act") and Commission regulations 

implementing the Act require the treasurer of a political committee to keep an account of all 

contributions received by or on behalf of such committee. 2 U.S.C. § 432(c)(1); 11 C.F.R. 

§ 102.9(a). For each contribution in excess of $50, a record of the name and address of the 
Memorandum to Commission 

Oakland County Democratic Party - LR.A 946 

Page 3 of 6 

contributor, as well as the date and amount of the contribution must be retained. 2 U.S.C. 

§ 432(c)(l)-(2); 11 C.F.R. § 102.9(a)(1). For contributions below $50, the treasurer must only 

keep an account "by any reasonable accounting procedure." 11 C.F.R. § 102.9(a). The 

Commission has interpreted the term "reasonable accounting procedure" in section 102.9(a) to 

allow committees to dispense with individual itemization of their records of contributions in 

cases where a single fundraising event involves the receipt of a large number of small (below 

$50) contributions. See Advisory Opinions 1980-99 (Republican Roundup Committee) and 

1981-48 (Muskegon County Republican Party). In such cases, committees may simply keep a 

record of "the name of the event, the date(s) contributions were received for that event, and the 

total amount of contributions received on each day for that event." Advisory Opinion 1980-99 

(Republican Roundup Committee). See also Advisory Opinion 1981-48 (Muskegon County 

Republican Party) (noting, in summarizing Advisory Opinion 1980-99, that "[t]he Commission 

did not require the political committee to record the names and addresses of individuals 

contributing less than $50 at a single event...").' Neither advisory opinion defines what 

constitutes a single fundraising "event," however, nor do the Act or Commission regulations 

include such a definition.^ 

The Committee argues that each bingo night is comprised of three separate fundraising 

events under the Act because patrons of the bingo nights have the option of participating in up to 

three separate gaming activities that are independentlv regulated under Michigan law:^ regular 

bingo, charity gaming, and progressive linked bingo. According to the Committee, contributors 

must purchase bingo cards in order to play bingo, and they have the option of purchasing charity 

game tickets while on the premises, as well as the option of participating in progressive linked 

bingo, which is linked with other bingos in the hall in which the activities occur. 

According to the Audit Division, contributions to the Committee derived from bingo 

nights totaled approximately $1.8 million for the 2012 election cycle, which represents 

93% of the Committee's total reported contributions for that election cycle of $ 1,951,184. The 

average cost per attendee at a bingo night, as disclosed by Committee records, was 

' If a Committee chooses this approach, it is still required to comply with 2 U.S.C. § 432(c)(IH2) and 11 

C.F.R. § 102.9(a)(1) with respect to contributions in excess of SSO. See Advisory Opinion 1980-99 (Republican 

Roundup Comminee) at 2. 

- Michigan law pertaining to regulated gaming activities includes a definition of "event". An "event" for 

purposes of that law is defined as "each occasion of a bingo, millionaire party, raffle, charity game, or numeral game 

licensed under this act." Michigan Compiled Laws ("MCL") § 432.103a(2). An "occasion" is defined as "the hours 

of the day for which a license is issued." MCL § 432.103a(l I). 

The Committee also notes that the Michigan Bureau of State Lottery treats all three gaming activities 

separately, and that Federal tax law treats the income from bingo and charity gaming difTerently. Although 

Michigan law may regulate the types of gaming activity conducted by the OCDP separately, the policies underlying 

Michigan gaming law are distinct from those underlying the recordkeeping requirements of the Act. 

Bingo, subdivided into "large" bingo, "small" bingo, and "progressive jackpot" bingo, and "charity game" 

are defined separately under Michigan law, and bingo and charity games are separately licensed under that law. 

See MCL §§ 432.102(c), (e); 432.103a(3), (7), (IS); 432.105; 432.107b. Progressive jackpot bingo is regulated 

separately. MCL § 432.105c. 
Memorandum to Commission 

Oakland County Democratic Party - LRA 946 

Page 4 of 6 

approximately $87 for the 2012 election cycle. According to the Audit Division, the Committee 

solicited attendance at its twice-weekly bingo nights primarily by advertising in a publication 

known as the Bingo Bugle. Regardless of which of the three activities contributors chose, the 

Committee deposited all of its proceeds from each bingo night into a single Federal bank 

account. The Committee transferred the net proceeds to a second Federal bank account. 

We recommend that the Commission reject the Committee's characterization of its bingo 

nights as consisting of three events. Instead, the Commission should conclude that the 

Committee's bingo nights constitute a single fundraising event as to which the Committee was 

required to collect individual contributor information for all contributions that in aggregate 

exceeded the SSO itemization threshold. 

The advisory opinions upon which the Committee relies contemplated factual situations 

that differed from the situation presented in this audit in one important respect - there were 

strong assurances in the advisory opinions that a substantial number of the contributors would 

not reach or exceed the $50 itemization threshold. In Advisory Opinion 1980-99 (Republican 

Roundup Committee), the requesting committee represented that it intended to host several 

fundraising events. The cost range to attend each event was well below the $50 itemization 

threshold, and, further, while hundreds of people were expected to attend each event, few people 

were expected to attend more than one. Advisory Opinion 1980-99 (Republican Roundup 

Committee). Similarly, in Advisory Opinion 1981-48 (Muskegon County Republican Party), the 

requesting committee held weekly bingo games. Contributors purchased bingo cards on entering 

and paid a minimum $1 admission charge. The average bingo card holder was expected to spend 

about $12 in an evening, and one particular person would occasionally spend more than $20 for 

bingo cards. Advisory Opinion 1981-48 (Muskegon County Republican Party). 

Thus, the factual context for the Commission's conclusion that keeping a record of the 

aggregate amount of contributions was acceptable for the requesting political committees was; 

I) all or the majority of contributions those committees would receive would not reach or exceed 

the $50 itemization threshold and 2) in the case of Advisory Opinion 1980-99, contributors were 

not likely to attend more than one event. ^ The Commission had reasonable assurance that the 

$50 itemization threshold would not be exceeded. Here, the facts present no assurance that 

people attending the OCDP's twice-weekly bingo nights will spend less than $50 during the 

course of an evening. To the contrary, as disclosed by the Committee's records, the average cost 

per attendee at a bingo night exceeded $50, and averaged approximately $87 for the 2012 

election cycle.' 

' Indeed, this advisory opinion suggests that whether a Tundraising occasion consists of single or multiple 

events may in fact be less significant than the opportunities contributors may have to exceed the SSO itemization 

threshold. Thus, even if three activities conducted during a single bingo night would constitute three separate 

fundraising events. Advisory Opinion 1980-99 would arguably still not permit use of the alternative recordkeeping 

method in this case because contributors appearing during bingo nights are likely to attend more than one event. 

' Using the average contribution per anendee of S87 is potentially overinclusive because not all attendees 

likely bought SSO or more of bingo cards per night. 
Memorandum to Commission 

Oakland County Democratic Party - LRA 946 

Page 5 of 6 

In Advisory Opinion 1991-20 (Call Interactive), the Commission decided not to permit 

use of the recordkeeping methodology set forth in Advisory Opinions 1980-99 (Republican 

Roundup Committee) and 1981-48 (Muskegon County Republican Party) for a 900-line 

fundraising program. The Commission based its conclusion primarily on the fact that the 900-

line technology allowed for obtaining the names and addresses of most of the contributors. By 

contrast, the Committees in the previous advisory opinions did not have automatically have 

access to identifying information for bingo participants, particularly those paying by cash. 

Advisory Opinion 1991-20 (Call Interactive). The Commission also noted, however, that its 

interest in requiring that the names and addresses of small contributors be recorded was 

heightened because of the callers were able to make repetitive calls and calls from prohibited 

sources. Id. Here, while contributors participating in bingo nights are not easily identifiable, 

unlike the contributors in Advisory Opinion 1991-20 (Call Interactive), potential contributors do 

have a similar ability to make repetitive contributions at each of the activities sponsored by the 

Committee during a bingo night. 

We understand the Committee's concern for committing resources to maintain more 

detailed records of small contributions, but interpreting the above advisory opinions in the 

manner suggested by the Committee would effectively vest committees with unilateral discretion 

to determine the extent of their recordkeeping obligations through the manner in which they 

characterize activities closely related in time and subject matter as single or separate fundraising 

events. We do not believe that the Commission intended this consequence when it issued the 

advisory opinions. Rather, the Commission provided an alternate means of recordkeeping to 

committees receiving a large number of contributions under $50 in factual situations where there 

was little likelihood that the majority of such contributors would exceed the $50 itemization 

threshold. Advisory Opinions 1980-99 (Republican Roundup Committee) and Advisory Opinion 

1981-48 (Muskegon County Republican Party), 

Because this factual situation involves a significant likelihood of the Committee's 

receiving aggregate contributions from single contributors in excess of $50 as a result of 

participating in activities closely related in time (during a single evening), subject matter 

(gaming activity) and method of processing (the Committee deposits all of its bingo night 

proceeds into a single account and uses them for the same purpose regardless of the nature of the 

originating gaming activity), we believe that the Committee was required under the 

recordkeeping regulations to account for all aggregate contributions exceeding $50 received 

during each bingo night. 

For these reasons, we recommend that the Commission conclude that the Committee was 

required to itemize all contributions exceeding $50 in aggregate from contributors during the 

single bingo night under 2 U.S.C. § 432(c)(l)-(2); 11 C.F.R. § 102.9(a) and Advisory Opinions 

1980-99 (Republican Roundup Committee) and 1981-48 (Muskegon County Republican Party). 

Although the Committee was legally required to maintain such records, the Commission may 

wish to consider as a matter of policy whether it should pursue a recordkeeping finding against 

this Committee where it may not have been clear to the Committee that it was required to treat 

the three gaming activities as a single fundraising event under the prior advisory opinions or the 

Campaign Guide for Party Committees. 
Memorandum to Commission 

Oakland County Democratic Party - LRA 946 

Page 6 of 6 

III. Recommendation 

Conclude that OCDP's bingo nights did not constitute three separate fundraising 

events, and, instead, OCDP was required to itemize all contributions exceeding $50 

received from contributors during each bingo night under the provisions addressing the 

recordkeeping requirements at 2 U.S.C. § 432(c)(l)-(2); 11 C.F.R. § 102.9(a).