FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

SCCRETARlAii 

2012 APR 25 P OT 

April 25.2012 

MEMORANDUM 

To: 

Through: 

From: 

The Commission 

Alec Palmer 

Staff Director 

By: 

Subject: 

Patricia Catmona 

Chief Compliance Officer 

Tom Hintermistef^W 

Assistant Staff Director 

Audit Division 

Kendrick Smiths";^ 

Audit Manager 

Robert Morcomb/'Oi^^^ 

Lead Auditor 

Audit Division Recommendation Memorandum on the Democratic 

Executive Conunittee of Florida (DECF) (A08-03) 

Pursuant to Commission Directive No. 70 (FEC Directive on Processing Audit Reports), 

the Audit staffs recommendations are presented below and tiie findings are discussed in the 

attached Draft Final Audit Report (DFAR). The Office of General Counsel has reviewed 

tiiis memorandum and concurs with the recommendations. 

Finding 1. Excessive Coordinated Party Expenditures 

In response to the DFAR, DECF contends that the Final Audit Report should note that the 

combined coordinated expenditure limit of $82,400 was not exceeded for Annette Taddeo. 

DECF furtiier added that "although tiiere may have been a paperwork error with respect to 

tiie transfer of tiiis unused autiiority, the autiiority held by the DCCC was in fact, unused. 

Therefore, as a practical matter, the combined 441a(d), in total, had not been exceeded 

and thus, no unfair advantage had been conferred upon the DECF or the Taddeo 

campaign." 

The Audit staff offers the following conceming DECF's response to tiie DFAR. DECF 

could not demonstrate, in writing, that it was granted additional spending authority 

beyond $60,000. As a result, DECF exceeded its coordinated party expenditure limitation 

by $22,400 ($82,400 - $60,000). 
The Audit staff recommends tiiat tiie Commission fmd tiiat DECF exceeded its 

coordinated party expenditure limitation by $22,400. 

Finding 2. Failure to Itemize Coordinated Party Expenditures 

DECF did not mention tiiis matter in its response to tiie DFAR. The Audit staff 

recommends that the Commission find that DECF did not itemize coordinated party 

expenditures of $194,957 on Schedule F (Itemized Coordinated Party Expenditures). 

Finding 3. Allocation of Expenditures 

In response to tiie DFAR, DECF objected to two portions of tiiis finding: 

A. Rent Paid Directly by the Non-Federal Account 

DECF objected to the characterization of rent paid on behalf of its legislative caucus 

activities as 100% non-federal. DECF contends tiiat tiie space was used by an 

autonomous arm of tiie DECF tiiat worked exclusively in connection with state 

legislative elections. DECF stated "Parties do indeed have discreet projects that are 

exclusively related to non-federal elections and the Commission, in previous audits 

and in previous practice, has acknowledged this fact. There is no logical reason to 

prohibit a party committee from paying the office rent paid of a discreet, autonomous 

non-federal project of the party with 100% non-federal funds." 

B. Get-Out-the-Vote 

DECF objected to the characterization of translators as get-out-the-vote activities. 

They believe the expenditure for language translation as defined by the Office of 

General Counsel is completely contradictory of what was intended by Congress and 

the Commission. DECF stated "national and state party committees engage in all 

types of protect the vote activities at polling places, which include information 

regarding voter identification and other information regarding voters rights, and to our 

knowledge, none of these activities are generally classified as get-out-the-vote by 

those committees." DECF further added "the get-out-the-vote regulation that was in 

effect in 2008 was designed to cover those activities that turned out voters by either 1) 

providing information, through targeted communications on when and where to vote 

or 2) by transporting those voters to the polls or by engaging in absentee ballot or vote 

by mail activities. The translators did neither. They merely provided translation 

services to any voter that was already at the polling place that desired to speak with an 

election official or otherwise required translation services." 

DECF's response to the DFAR also contends the Audit staff did not take a position with 

respect to the merits of their objections to Finding 3 provided in their response to the 

Interim Audit Report. It is noted that the DFAR briefly states the Audit staffs position on 

these issues on page 14 of the report. After review of the DECF's response to the DFAR, 

tiie Audit staff maintains the rent payments (Finding 3 Part A) for the DECF headquarters 

are part of admuiistrative costs that require allocation per 11 CFR § 106.7(c). The 

expenditure for translators (Finding 3 Part B) was for GOTV activity and should have 

been paid with 100% Federal funds. The Audit staff recommends that the Commission 

find tiiat DECF's non-federal account overfunded its share of allocable activity by 

$84,364. 
Finding 4. Misstatement of Financial Activity - Levin Fund 

DECF did not mention this matter in its response to the DFAR. The Audit staff 

recommends that the Commission find that DECF misstated its Levin financial activity for 

2009 and 2010. 

Findings. Disclosure of Disbursements 

DECF did not mention this matter in its response to the DFAR. The Audit staff 

recommends that the Commission find that DECF did not properly disclose disbursements 

totaling $9,554,713. 

The Committee did not request an audit hearing. 

If this memorandum is approved, a Proposed Final Audit Report will be prepared within 

30 days of the Commission's vote. 

Should an objection be received. Directive No. 70 states tiiat the Audit Division 

Recommendation Memorandum will be placed on the next regularly scheduled open 

session agenda. 

Documents related to this audit report can be viewed in the Voting Ballot Matters folder. 

Should you have any questions, please contact Robert Morcomb or Kendrick Smitii at 

694-1200. 

Attachments: 

- Draft Final Audit Report of tiie Audit Division on the Democratic Executive 

Committee of Florida 

- Office of General Counsel Analysis of ADRM received on April 24,2012 

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

Audit Division on the 

Democratic Executive 

Committee of Florida 

January 1, 2007 - December 31. 2008 

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 

(tiie Act). The 

Commission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold 

requirements for 

substantial compliance 

witii tiie Act.' The audit 

determines whether the 

committee complied with 

the limitations, 

prohibitions and 

disclosure requirements 

of 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. 

About the Committee (p. 2) 

The Democratic Executive Cloinmittee of Florida is a state party 

committee headquartered in Tallahassee, Florida. For more 

information, see the chiart on the Committee Organization, p. 2. 

Financial Activity (p. 2) 

• Receipts 

o Contributions from Individuals 

o From Other Political Committees 

o From Affiliated/Otiier Party 

Committees 

o Transfers from Non-federal Account 

o All Otiier Receipts 

Total Receipts 

• Disbursements 

o Operating Expenditures 

o Federal Election Activity 

o Otiier Disbursements 

Total Disbursements 

$ 1.381,039 

379.860 

20.465,884 

2,037,583 

516.180 

$24,780^46 

$ 12.999.529 

11.409.932 

288.438 

$24,697^99 

Findings and Recommendations (p. 3) 

• Excessive Coordinated Party Expenditures (Finding 1) 

• Failure to Itemize Coordinated Party Expenditures (Finding 2) 

• Allocation of Expenditures (Finding 3) 

• Misstatement of Financial Activity - Levin Fund (Finding 4) 

• Disclosure of Disbursements (Finding 5) 

2U.S.C. §438(b). 
Draft Final Audit Report of the 

Audit Division on the 

Democratic Executive 

Committee of Florida 

January 1, 2007 - December 31, 2008 
Table of Contents 

Page 

Parti. Background 

Authority for Audit 1 

Scope of Audit 1 

Partll. Overview of Committee 

Committee Organization 2 

Overview of Financial Activity 2 

Part in. Summaries 

Findings and Recommendations 3 

Part IV. Findings and Recomniendations 

Finding 1. Excessive Coordinated Party Expenditures 5 

Finding 2. Failure to Itemize Coordinated Party Expenditures 8 

Finding 3. Allocation of Expenditures 9 

Finding 4. Misstatement of Financial Activity - Levm Fund 14 

Findings. Disclosure of Disbursements 15 
Part I 

Background 

Authority for Audit 

This report is based on an audit of the Democratic Executive Conunittee of Florida 

(DECF), undertaken by the Audit Division of the Federal Election Commission (the 

Commission) in accordance with the Federal Election Campaign Act of 1971. as 

amended (tiie Act). The Audit Division conducted the audit pursuant to 2 U.S.C. 

§438(b), which permits the Commission to conduct audits and field investigations of any 

political committee that is required to file a report under 2 U.S.C. §434. Prior to 

conducting any audit under this subsection, the Commission must perform an intemal 

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. 2 U.S.C. §438(b). 

Scope of Audit 

Following Commission-approved procedures, the Audit staff evaluated various risk 

factors and as a result, this audit examined: 

1. tiie receipt of excessive contributions and loans; 

2. the receipt of contributions from prohibited sources; 

3. the disclosure of individual contributors' occupation and name of employer; 

4. tiie disclosure of disbursements, debts and obligations; 

5. the disclosure of expenses allocated between federal and non-federal accounts; 

6. tiie consistency between reported figures and bank records; 

7. tiie completeness of records; and 

8. other committee operations necessary to the review. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration April 19.1972 

• Audit Coverage January 1,2007 - December 31.2008 

Headquarters Tallahassee, Florida 

Bank Information 

• Bank Depositories Two 

• Bank Accounts Six Federal and Two Non-federal 

Treasurer 

• Treasurer When Audit Was Conducted Alma Gonzalez 

• Treasurer During Period Covered by Audit Rudy Parker 

Management Information 

• Attended FEC Campaign Finance Seminar Yes 

• Who Handled Accounting and 

Recordkeeping Tasks 

I>aid Staff 

Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand @ January 1,2007 $ 203,156 

o Contributions from Individuals 1.381.039 

o From Otiier Political Conunittees 379.860 

o From Affiliated/Otiier Party Committees 20,465.884 

o Transfers from Non-federal Account 2.037.583 

c All Other Receipts 516.180 

Total Receipts $24,780,546 

c Operating Expenditures 12.999.529 

o Federal Election Activity 11,409.932 

0 Other Disbursements 288.438 

Total Disbursements $ 24,697,899 

Cash-on-hand @ December 31,2008 $ 285,803 
Part III 

Sunrniaries 

Findings and Recommendations 

Finding 1. Excessive Coordinated Party Expenditures 

During fieldwork, tiie Audit staff calculated tiiat DECF appears to have exceeded tiie 

2008 coordinated party expenditures limit on behalf of a House candidate ($60,000) by 

$35,108. Our review identified two media ads ($82,400) and two duect mail pieces 

($12,708) tiiat appear to represent coordinated party expenditures. 

In response to the Interim Audit Report recommendation. DECF provided statements and 

documents to demonstrate why the expenditures should not be considered excessive 

coordinated party expenditures. DECF submitted documentation for the direct mail 

pieces to support its claim that sufHcient volunteer activity occurred and the expenses 

qualified for the volunteer materials exemption and were not coordinated party 

expenditures. In light of the lack of clarity in recent audits regarding the amount of 

volunteer involvement needed to qualify for tiie volunteer materials exemption, the 

expenses were not counted towards the coordinated party expenditure limit. Regarding 

the two media ads ($82,400), DECF did not demonstrate that they were granted 

additional spending authority beyond $60,000. As a result, DECF exceeded its 

coordinated party expenditures limitation by $22,400 ($82,400 - $60,000). (For more 

detail, see p. 5) 

Finding 2. Failure to Itemize Coordinated Party 

Expenditures 

During fieldwork, the Audit staff identified 64 expenditures, totaling $207,665, that were 

not itemized on Schedules F (Itemized Coordinated Party Expenditures). The 

expenditures were made on behalf of six congressional candidates. Subsequent to tiie 

start of audit fieldwork, DECF filed amended reports that substantially disclosed the 

expenditures in question as coordinated party expenditures on Schedules F. 

In response to the Interim Audit Report recommendation, DECF made no additional 

comments on this matter. DECF has corrected the public record witii respect to these 

transactions. (For more detail, see p. 8) 

Finding 3. Allocation of E^enditures 

During fieldwork. the Audit staffs review of disbursements made from tiie federal and 

non-federal accounts identified an apparent non-federal overfunding of allocable activity 

in tiie amount of $107,536. 

DECF materially complied with the Interim Audit Report recommendation. DECF eitiier 

accepted the Audit staffs position or provided documentation demonstrating that lesser 
allocation was required for all non-federal expenditures in question, except for rent 

payments. DECF's response reduced tiie potential non-federal overfunding of allocable 

activity to $84,364. (For more detail, see p. 9) 

Finding 4. Misstatement of Financial Activity - Levin 

Fund 

Throughout the audit period, DECF disclosed $6,438 as cash-on-hand for tiie Levin Fund 

account. However, DECF's Levin Fund account closed in November 2006. In response 

to the Interim Audit Report reconunendation, DECF filed an amended report that 

corrected the overstatement of cash-on-hand. (For more detail, see p. 14) 

Finding 5. Disclosure of Disbursements 

During audit fieldwork, tiie Audit staff calculated tiiat disbursement entries, totaling 

$9,554,713. contained inadequate or incorrect disclosure information. In response to the 

Interim Audit Report recommendation. DECF filed amended reports tiiat materially 

corrected the disclosure errors. (For more detail, see p. IS) 
Part IV 

Findings and Reconmiendations 

Finding 1. Excessive Coordinated Party Expenditures I 

Summary 

During fieldwork. the Audit staff calculated that DECF appears to have exceeded the 

2008 coordinated party expenditures limit on behalf of a House candidate ($60,000) by 

$35,108. A review identified two media ads ($82,400) and two direct mail pieces 

($12,708) that appear to represent coordinated party expenditures. 

In response to the Interim Audit Report recommendation, DECF provided statements and 

documents to demonstrate why the expenditures should not be considered excessive 

coordinated party expenditures. DECF submitted documentation for the direct mail 

pieces to support its claim that sufficient volunteer activity occurred and the expenses 

qualified for the volunteer materials exemption and were not coordinated party 

expenditures. In light of the lack of clarity in recent audits regarding the amount of 

volunteer involvement needed to qualify for tiie volunteer materials exemption, the 

expenses were not counted towards tiie coordinated party expenditure limit. Regarding 

tiie two media ads ($82,400), DECF did not denionstrate that tiiey were granted 

additional spending authority beyond $60,000. As a result. DECF exceeded its 

coordinated party expenditures limitation by $22,400 ($82,400 - $60,000). 

Legal Standard 

A. Coordinated Party Expenditures. National party committees and state party 

committees are permitted to purchase goods and services on behalf of candidates in the 

general election—over and above the contributions tiiat are subject to contribution limits. 

Such purchases are termed "coordinated party expenditures." They are subject to the 

following rules: 

• The amount spent on "coordinated party expenditures** is limited by statutory 

formulas that are based on tiie Cost of Living Adjustment (COLA) and tiie voting 

age population. 

• Party committees are permitted to coordinate the spending witii the candidate 

committees. 

• The parties may make these expenditures only in connection with tiie general 

election. 

• The party conunittees—^not the candidates—are responsible for reporting these 

expenditures. 

• If the party committee exceeds the limits on coordinated party expenditures, the 

excess amount is considered an in-kind contribution, subject to the contribution 

limits. 2 U.S.C. §441a(d) and 11 CFR §§109.30 and 109.32. 

B. Assignment of Coordinated Party Expenditure Limit A political party may 

assign its authority to make coordinated party expenditures to another political party 
committee. Such an assignment must be made in writing, state the amount of the 

authority assigned, and be received by tiie assignee before any coordinated party 

expenditure is made pursuant to tiie assignment. The political party committee that is 

assigned authority to make coordinated party expenditures must maintain the written 

assignment for at least tiiree years. 11 CFR §§104.14 and 109.33(a) and (c). 

C. Volunteer Activity. The payment by a state conunittee of a political party of the costs 

of campaign materials (such as pins, bumper stickers, handbills, brochures, posters, party 

tabloids or newsletters, and yard signs) used by such committee in connection with 

volunteer activities on behalf of any nominee(s) of such party is not a contribution, 

provided that the following conditions are met: 

1. Such payment is not for cost incurred in connection with any broadcasting, 

newspaper, magazine, bill board, direct mail, or similar type of general public 

communication or political advertising. The term direct mail means any mailing(s) by a 

conunercial vendor or any mailing(s) made from commercial lists. 

2. The portion of the cost of such materials allocable to Federal candidates must be paid 

from contributions subject to the limitations and prohibitions of the Act. 

3. Such payment is not made from contributions designated by tiie donor to be spent on 

behalf of a particular candidate for Federal office. 

4. Such materials are distributed by volunteers and not by commercial or for-profit 

operations. 

5. If made by a political committee such payments shall be reported by tiie political 

committee as a disbursement in accordance with 1 CFR 104.3 but need not be allocated 

to specific candidates in committee reports. 

6. The exemption is not applicable to campaign materials purchased by the national party 

committees. 11 CFR §100.87 (a), (b). (c). (d), (e) and (g) and 11 CFR §100.147 (a), (b). 

(c),(d).(e)and(g). 

Facts and Analysis 

A. Facts 

The coordinated expenditure limit for the 2008 election cycle for a U.S. House of 

Representatives candidate in the state of Florida was $42,100. DECF provided 

documentation from tiie DCCC showing tiiat it autiiorized DECF to spend $17,900 of its 

limit on behalf of Annette Taddeo, a candidate for tiie U.S. House of Representatives. 

Therefore, DECF's coordinated spending limit for tiiis candidate was $60,000. 

The Audit staff identified four disbursements, totaling $95,108, on behalf of Annette 

Taddeo. Two disbursements ($82,400) were for media ads. The remaining two 

disbursements ($12,708) were for direct mail pieces. DECF disclosed tiie cost of one 

media ad and botii mail pieces as federal election activity on line 30b of its disclosure 

reports. The cost of the remaining media ad was disclosed as an operating expenditure on 

line 21b. 
One of the two media ads discussed the candidate's position on health care. The other ad 

discussed tiie opponent's voting record on healtii care and taxes. The disclaimer for each 

ad stated, "Paid for by tiie Florida Democratic Party and Taddeo for Congress, Approved 

by Annette Taddeo." 

Regarding tiie direct mail pieces, a vendor located in Virginia processed and mailed the 

two direct mail pieces (one in English, tiie otiier in Spanish). The file for tiiis vendor 

included an email communication from a vendor representative to a representative of 

DECF requesting approval of tiie direct mail piece. The email also copied the Taddeo 

campaign. 

B. Interim Audit Report & Audit Division Recommendation 

At tiie exit conference, the Audit staff provided DECF representatives with a schedule of 

the apparent excessive coordinated expenditures. In response. DECF stated they believed 

tiiey were authorized to spend an additional $22,400 because the DCCC had reported 

spending only $1,754 in coordinated campaign expenditures on behalf of candidate 

Taddeo. DECF also stated that the combined total spent on Taddeo was less tiian the 

$84,200 available^. They believe tiiat tiie DCCC and DECF coordinated to achieve tiiis 

and that the remaining authority would have been transferred to DECF. DECF also 

stated tiiat the Taddeo mail pieces represented exempt activity. 

The Interim Audit Report recommended that DECF demonstrate that it did not exceed its 

coordinated spenduig limit by providing evidence that: 

• It received additional spending autiiority from the DCCC prior to spending in 

excess of its $60,000 limitation; and 

• There was volunteer involvement with respect to the direct mail pieces. 

Absent such evidence, the Interim Audit Report recommended DECF obtain a refund of 

$35,108 ($95,108 - $60,000) from Taddeo for Congress and provide evidence of tiie 

refund received. 

C. Committee Response to Interim Audit Report 

In response to tiie Interim Audit Report. DECF stated that the audit report correctly states 

that DECF reported coordinated expenditures of $95,108 on behalf of Annette Taddeo.^ 

DECF acknowledged tiiat DECF paid for two media ads. totaling $82,400, on behalf of 

tiie candidate and that prior to making these expenditures; tiie DCCC assigned $17,900 of 

its coordinated expenditure limit to DECF. DECF also submitted a letter; dated 

September 22,2011, from tiie DCCC to explain the coordinated expenditure authority. 

The letter states. "[t]he DCCC's current records show a transfer (oO $17,900 in 

coordinated expenditure authority in connection with this election to the Florida 

Democratic Party on October 29.2008. While we can locate no furtiier records of otiier 

transfers of autiiority to your conunittee in connection witii this election, we did support 

^ DECF had a coordinated expenditure spending limit of $42,100 and the National Party Committee also 

had a coordinated expenditure spending limit of $42,100. 

^ Disclosure reports subject to this audit did not disclose any coordinated expenditures for Annette Taddeo. 

(See Finding 2) 
Ms. Taddeo*s candidacy - both before and after tiie date of the above transfer - and we 

know of no reason why any requested or needed transfer of authority would have been 

withheld at the time." 

Regarding the two mail pieces, DECF stated that the mail pieces were actually prepared 

with substantial volunteer participation and, tiierefore, meet the volunteer materials 

exemption and should not be considered coordinated party expenditures. DECF also 

provided a copy of a photo which it believes demonstrates volunteer participation. In 

light of the lack of clarity in recent audits regarding the amount of volunteer involvement 

needed to qualify for tiie volunteer materials exemption, the expenses were not counted 

towards the coordinated party expenditure limit. 

In response to tiie Interim Audit Report, neither DECF nor tiie DCCC could locate a 

record authorizing additional spending authority. As noted in the legal standards above. 

11 CFR § 109.33(a) requires that an assignment must be made in writing, state the amount 

of the authority assigned, and be received by the assignee before any coordinated party 

expenditure is made pursuant to the assignment. In similar cases, the Commission has 

rejected assignments of spenduig authority after the fact.^ Absent evidence of additional 

spending autiiority from the DCCC, DECF's coordinated spending limit was $60,000 

and DECF exceeded its coordinated expenditure limitation by $22,400 ($82,400 [media 

ad expenditures] - $60,000 [DECF's coordinated spending limit]). 

Finding 2. Failure to Itemize Coordinated Party 

Expenditures 

Summary 

During fieldwork, tiie Audit staff identified 64 expenditures, totaling $207,665. that were 

not itemized on Schedules F (Itemized Coordinated Party Expenditures). The 

expenditures were made on behalf of six congressional candidates. Subsequent to the 

start of audit fieldwork, DECF filed amended reports that substantially disclosed tiie 

expenditures in question as coordinated party expenditures on Schedules F. 

In response to tiie Interim Audit Report recommendation, DECF made no additional 

comments on this matter. DECF has corrected the public record with respect to diese 

transactions. 

Legal Standard 

Reporting Coordinated Party Expenditures. Each political committee shall report the 

full name of each person who receives any expenditure from the reporting committee 

during the reporting period in connection witii an expenditure under 11 CFR Part 109. 

Subpart D (2 USC 441 a(d)), togetiier witii tiie date, amount and purpose of any such 

expenditure as well as the name of, and office sought by the candidate on whose behalf 

the expenditure is made. 11 CFR §104.3 (b)(l)(viii). 

^ Final Audit Report on Missouri Democratic State Committee, MUR 5274. Final Audit Report on the 

California Republican State Committee, MUR S246. 
Facts and Analysis 

A. Facts 

The Audit staff identified 64 expenditures, totaling $207,665, tiiat were not itemized on 

Schedules F as coordinated party expenditures. The expenditures were made on behalf of 

six congressional candidates and included payments for staff salaries, direct mail, cell 

phones and media ads. Subsequent to tiie start of audit fieldwork, DECF filed amended 

reports that substantially disclosed the expenditures in question as coordinated party 

expenditures on Schedule F. 

B. Interim Audit Report & Audit Division Recominendation 

This matter was presented at tiie exit conference. In response, DECF stated that it believes 

two of the disbursements, totalmg $12,708. were volunteer mailings (Taddeo mail pieces 

discussed in Finding 1) and thus would not need; to be reported on Schedules F. The 

Interim Audit Report recommended DECF prbvide any additional information or 

comments that it considers relevant to this matter. 

C. Committee Response to Interim Audit Report 

In response. DECF did not have any additional comments on this matter. As explained in 

Finding 1, tiiere is a lack of clarity regarding the amount of volunteer involvement 

needed to qualify for the volunteer materials exemption. As a result, expenses for two 

direct mail pieces totaling $12,708 were not classified as coordinated party expenditures. 

Therefore, the amount of expenditures not previously itemized on Schedules F is 

$194,957 ($207,665 - $12,708). DECF has corrected tiie public record witii respect to 

these transactions. 

Finding 3. Allocation of Expenditures 

Summary 

During fieldwork, the Audit staffs reyiew of disbursements made from the federal and 

non-federal accounts identified an apparent non-federal overfunding of allocable activity 

in tiie amount of $107,536. 

DECF materially complied with the Interim Audit Report recommendation. DECF either 

accepted tiie Audit staffs position or provided documentation demonstrating that lesser 

allocation was required for all non-federal expenditures in question, except for rent 

payments. DECF's response reduced the potential non-federal overfunding of allocable 

activity to $84,364. 

Legal Standard 

A. Paying for Allocable Expenses. The Commission regulations offer party 

committees two ways to pay for allocable, shared federal/non-federal expenses. 

• They may pay the entire amount of tiie shared expense from tiie federal account 

and transfer funds from the non-federal account to the federal account to cover the 

non-federal share of that expense; or 
10 

• They may establish a separate, federal allocation account uito which the 

committee deposits fimds from botii its federal and non-federal accounts solely 

for the purpose of paying tiie allocable expenses. 11 CFR § 106.7(b). 

B. Transfers. Generally, a political committee may not transfer funds from its nonfederal account to its federal account, except when the committee follows specific rules 

for paying for shared federal/non-federal election activity. 11 CFR §§102.S(a)(l)(i) and 

106.7(f). 

C. Reporting Allocable Expenses. A state, district or local committee that allocates 

federal/non-federal expenses must report each disbursement it makes from its federal 

account (or separate allocation account) to pay for a shared federal/non-federal expense. 

Committees report these kinds of disbursements on Schedule H4 (Disbursements for 

Allocated Federal/Non-federal Activity). 11 CFR §104.17(b)(3). 

D. Allocation Required for Generic Voter Drives. State and local party committees 

must allocate all of their costs for generic voter drives. A generic voter drive is an 

activity that urges the general public: 

• to register to vote; 

• to vote; or 

• to support candidates of a particular party or candidates who are associated witii a 

particular issue, without mentioning a specific candidate. 11 CFR § 106.7(c)(5). 

E. Allocation Ratio for Administrative & Generic Voter Drive Costs. State and local 

party committees must allocate their administrative expenses and generic voter drive 

costs dependent upon which federal offices appear on the ballot for the election year. 

The minimum percentage of federal funds would be at least: 

• 36 percent if botii a Presidential candidate and a Senate candidate appear on tiie 

ballot; 

• 28 percent if a Presidential candidate but not a Senate candidate appears on the 

ballot; 

• 21 percent if a Senate candidate, but no Presidential candidate appears on tiie 

ballot; and. 

• 15 percent if neither a Presidential nor a Senate candidate appears on the ballot. 

llCFR§106.7(d)(2)and(3). 

F. Allocation of Costs of Federal Election Activity. Expenditures for public 

communications as defined in 11 CFR 100.26 by state party committees tiiat refer to a 

clearly identified candidate for Federal office and that promote, support, attack, or oppose 

any such candidate for Federal office must not be allocated. Only federal funds may be 

used. 11 CFR§300.33(c). 

G. Allocation Ratio for Shared Fundraising Expenses. If a conunittee raises bodi 

federal and non-federal funds tiurough tiie same fundraising program or event, it must 

allocate the direct cost of the fundraising event based upon the ratio of funds received by 

the federal account to the total amount raised for tiie event. 11 CFR § 106.7(c)(4). 
11 

H. Salaries and Wages. Committees must keep a monthly log of tiie percentage of time 

each employee spends in connection witii a Federal election. Employees who spend 25 

percent or less of their compensated time in a given montii on Federal election activity or 

on activities in connection witii a Federal election must eitiier be paid only from tiie 

Federal account or have their salaries allocated as an administrative cost. 11 CFR 

§106.7(d)(l). 

Facta and Analysis 

A. Facts 

The Audit staff calculated the non-federal share of expenditures required to be disclosed 

on Schedules H4 and compared that to the amount transferred from the non-federal 

account. It calculated tiiat tiie non-federal portion of shared activity was $2,222,695. 

However, the non-federal account transferred $2,242,955. resulting in an overfunding of 

$20,260. 

In addition to the above, the following expenditures were paid directly from tiie nonfederal account but appear to represent 100 percGut federal activity or allocable activity. 

• An absentee chase ballot ($3,745) that included a picture of President Bush and 

Vice President Cheney with a red line through the pictures and a caption stating, 

"We Can't Afford More Of The Same." The back side of tiie mailer stated, "Send 

the Republicans a Message - You can Make the Difference Vote Democratic" 

followed by a sample ballot listing the Democratic nominee for President and 

Vice President, Congressional Districts 2 and 4, State Senator District 3, State 

Representative Districts 8 and 9, County Commissioner, City Commissioner and 

District Supervisor. Further, an email between tiie Leon County Chair and DECF 

makes clear that the DECF expenditure was in connection with a federal election. 

Based on the above, the sample ballot should have been paid with federal funds. 

As a result, the non-federal account overpaid $3,745. 

• An invoice for $17,240, witii tiie description, "Consulting Fee for Creole 

Translators/Haitian Antierican G.O.T.V.** Support for this disbursement was not 

available for review. However, if the activity represents a public communication 

tiiat named a clearly identified federal candidate, the cost would have to be paid 

with 100 percent federal funds. If the cost represented get-out-the-vote activity, it 

could have been paid with a combination of federal and Levin funds. However. 

DECF did not maintain a Levin fund; therefore, only federal funds could be used. 

The only way that tiie cost could have been permissibly paid witii 100 percent 

non-federal fimds was if the activity named only non-federal candidates and did 

not represent a get-out-the-vote effort. 

The Audit staff could not determine if this payment was wholly non-federal, 

allocable or wholly federal. Until more information is provided, it is assumed that 

the cost potentially should have been paid entirely by the federal accoimt. As a 
12 

result, the non-federal account may have overpaid its share by as much as 

$17,240. 

• The total amount of rent paid for DECF*s headquarters during tiie audit period 

was $212,313. According to DECF, tiie building is occupied by DECF, tiie State 

House Caucus and the State Senate Caucus (Caucus). With tiie exception of one 

month (January 2007). DECF paid half of the montiily rent directly from the nonfederal account and half from the federal account. Rent payments from tiie 

federal account were disclosed on Schedules H4 and allocated 28 percent federal 

and 72 percent non-federal. Thus, the non-federal account paid 86 percent of the 

rent for DECF headquarters. As a result, the nonrfederal account overpaid its 

share of rent by $28,482 ($181,347 - $152,865). 

• DECF was not able to produce montiily time logs for six employees documenting 

tiieir time spent on federal and non-federal activities. In addition, the records 

supplied by three individuals did not attest to working 25 percent or less of their 

time on federal activity for all tiie pay periods in which tiieir salaries were 

allocated between federal and non-federal activity. Absent records to demonstrate 

the activity engaged in by the employees in question. $23,172 was considered to 

potentially be a non-allocable expense that should have been paid entirely by the 

federal account. 

• Ten fundraising programs and events were reviewed for the proper allocation of 

expenses between federal and non-federal accounts. The cost of each fiindraising 

program or event in which DECF collected both federal and non-federal funds 

was allocated based on the funds received method. One event, the 2008 Jefferson 

Jackson Dinner, accounted for the amount of overfunding identified. The 

proportion of federal funds received to non-federal funds received as calculated 

by DECF was 8 percent federal to 92 percent non-federal. Per tiie Audit staffs 

calculation, the amount of funds received was 16 percent federal and 84 percent 

non-federal. The review indicated that tiie non-federal account overpaid its share 

of the fundraising cost by $14,637. 

In summary, tiie Audit staff calculated tiiat tiie non-federal account potentially 

overfunded its share of expenditures by $107,536 ($20,260 + $3,745 + $17,240 + 

$28,482 + $23,172 + $14,637). 

B. Interim Audit Report & Audit Division Recommendation 

This matter was discussed at tiie exit conference. In response, DECF stated tiiat tiie cost 

of tiie absentee chase ballot ($3,745) and the consulting fee for Creole 

Translators/Haitian American G.O.T.V. ($17,240) represent non-federal activity. DECF 

did not provide any documentation supporting its position. 

Witii respect to tiie rent allocation and tiie Caucus. DECF stated tiiat tiie Caucus is 

"considered an autonomous project of the state party... they do not have a separate legal 

entity. Therefore, tiiey did not sign tiie lease.** DECF furtiier stated that tiie Caucus 
13 

employees are on the payroll of tiie state party, so tiiey would technically qualify as 

employees of the party. 

The exit conference response did not address the lack of time records and allocation of 

fundraising expenses. 

The Audit staff has reviewed DECF*s response and offers tiie following: 

Absentee Chase Ballot - DECF did not provide any documentation supporting its 

position tiiat tiie mailer represented 100 percent non-federal activity. The mailer clearly 

identified a candidate for federal office. The email between the Leon County Chair and 

DECF makes clear that the DECF expenditure was in connection witii a federal election. 

Therefore, tiie cost of the absentee chase ballot should have been paid witii federal funds. 

Consulting Fee for Creole Translators/Haitian American G.Cr.V. - DECF did not 

provide any documentation supporting its position tiiat the activity was 100 percent nonfederal. As previously stated, until more information is provided, it is presumed that the 

cost should have been paid entirely by the federal account. 

Rent Payments - A state party committee may either pay administrative costs, including 

rent, from its federal account, or allocate such expenses between its federal and nonfederal accounts. (11 CFR § 106.7(c)(2)). In tiie Explanation and Justification for section 

106.7(c). the Commission recognizes that state party committees engage in multiple nonfederal activities, but the Commission determined that the administrative costs underlying 

a state party conunittee's activities should be allocated. Therefore, tiie rent payments in 

question should have been allocated on a 28 percent federal and 72 percent non-federal 

basis. 

The hiterim Audit Report recommended tiiat DECF provide documentation tiiat clarified 

and supported the non-federal nature of the noted expenditures or reimburse the nonfederal account $107,536. 

C. Committee Response tp Interim Audit Report 

In response to tiie Interim Audit Report, DECF conceded tiiat DECF's non-federal 

account overfimded its shared activity in the amount of $43,469 ($20,260 [Initial 

Overfunding] + $3,745 [Absentee Chase Ballot] + $4,827 [Consulting Fee for Creole 

Translators/Haitian American G.O.T.V. - 28%] + $14,637 [Fundraising]). DECF states 

that the federal account reimbursed the non-federal account accordingly . 

DECF*s position demonstrates tiiat the documentation provided verified tiiat tiie 

consulting fee paid for tiie Creole Translators/Haitian American G.O.T.V. represented a 

shared activity that should have been allocated based on tiie administrative ratio of 28% 

federal and 72% non-federal. 

' DECF's September 2011 bank statement verified the transfer of $43,469 from the federal account to the 

non-federal account. 
14 

DECF also provided documentation demonstrating tiiat tiie salary payments in question 

were for employees that did not spend in excess of 25 percent of their time on Federal 

election activity or on activities in connection with a Federal election in a given month. 

DECF disagrees that a portion of the headquarters rent requires allocation. DECF states 

that the Florida State Caucus and Senate Committees serve as tiie campaign arm of the 

Democratic legislators for both tiie Florida State House and Senate. DECF contends that 

due to state law. the state party was required to serve as fiscal agent for both the House 

and Senate Democratic Caucus Committees. Each Caucus Committee is responsible for 

raising its own funds and administering its own budget, established in consultation with 

DECF. which can only be utilized for state eleaions to the Florida House and Florida 

Senate. Although each staff member for each Caucus Committee is an employee of 

DECF, they are employed in consultation with leaders of each respective Caucus. 

DECF further states that, as a matter of law, the FECA and Commission regulations do 

not consider a caucus committee as a party committee. Furthermore, Congress, during its 

2002 amendments, amended the FECA to specifically cover caucus committees 

separately in certain circumstances. In addition, DECF states that none of the provisions 

added to tiie FECA or the Commission* s regulations cover the ordinary administrative 

expenses of a caucus committee. 

After reviewing DECF's response to the Interim Audit Report, the expenditure for the 

Creole Translators/Haitian American G.O.T.V was considered a GOTV expense under 

the defmition of GOTV applicable at tiie time of tiie expense. The Creole Translators 

activity qualifies as "contacting" registered voters and "assisting** tiiem in the act of 

voting. Therefore, tiie expenditure was for GOTV activity and should have been paid 

with 100% Federal funds. It is also maintained that the rent payments for the DECF 

headquarters are part of administrative costs that require allocation per 11 CFR § 106.7(c). 

Based on DECF's response, tiie Audit staff recalculated tiie apparent non-federal 

overfimding of allocable activity as $84,364. DECF's response materially complies with 

the Interim Audit Report recommendation. 

Finding 4. Bftisstatement of Financial Activity - Levin 

Fund 

Summary 

Throughout tiie audit period, DECF disclosed $6,438 as cash-on-hand for tiie Levin Fund 

account. However, DECF's Levin Fund account closed in November 2006. In response 

to tiie Interim Audit Report recommendation, DECF filed an amended report that 

corrected the overstatement of cash-on-hand. 
15 

Legal Standard 

Contents of Levin Reports. Each report must disclose: 

• The amount of cash-on-hand for Levin funds at tiie beginning and end of tiie 

reporting period; 

• The total amount of Levin fund receipts and disbursements (including allocation 

transfers) for tiie reporting period and for tiie 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)(B). 

Facta and Aoaljraia 

A. Facts 

Disclosure reports filed by DECF indicated a cash balance in the Levin fund account of 

$6,438. DECF disclosed tiiis cash balance throughout tiie audit period. However. Levin 

fimd bank records indicate that the account was closed on November 16,2006. Other 

dian the cash-on-hand balance, DECF did not disclose any Levin fund receipts or 

disbursements. 

B. Interim Audit Report & Audit Division Recommendation 

This matter was discussed with DECF representatives at the exit conference. DECF 

representatives made no comment on this matter. In tiie Interim Audit Report, the Audit 

staff recommended tiiat DECF amend its most recent report to correct the overstatement 

of Levin fund cash-on-hand. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Rieport, DECF filed an amended report that corrected the 

overstatement of cash-on-hand. 

I Finding 5. Disclosure of Disbursements 

Summary 

During audit fieldwork, tiie Audit staff calculated that disbursement entries, totaling 

$9,554,713. contained inadequate or incorrect disclosure information. In response to tiie 

Interim Audit Report recommendation. DECF filed amended reports that materially 

corrected the disclosure errors. 

Legal Standard 

A. Reporting Operating Expenditures. When operating expenditures to tiie same 

person exceed $200 in a calendar year, tiie committee must report tiie: 

• amount; 

• date when the expenditures were made; 

• name and address of tiie payee; and 
16 

• purpose (a brief description of why the disbursement was made—see below). 

2 U.S.C. §434(b)(5)(A) and 11 CFR §104.3(b)(3)(i). 

B. Examples of Purpose. Adequate Descriptions. Examples of adequate descriptions 

of "purpose" include the following: dinner expenses, media, salary, polling, travel, party 

fees, phone banks, travel expenses, travel expense reimbursement, catering costs, loan 

repayment, or contribution refund. 11 CFR §104.3(b)(3)(i)(B). 

Inadequate Descriptions. The following descriptions do not meet the requirement for 

reporting "purpose": advance, election-day expenses, other expenses, expense 

reimbursement, miscellaneous, outside services, get-out-the-vote. and voter registration. 

11 CFR §104.3(b)(3)(i)(B) and Commission Policy Statement at 

www.fec.gov/law/policy/purposeofdisbursement/inadequate.purpose_list_3507. 

Facts and Aaalyaia 

A. Facts 

The reported purpose of the disbursement, when considered with the identity of the 

disbursement recipient, must clearly specify why the disbursement was made. The Audit 

staff reviewed disbursements itemized by DECF for proper disclosure on both a sample 

and 100 percent basis. These reviews resiilted in errors totaling $9,554,713. This amount 

is comprised of projected errors totaling $1,708,395 from the sample review and 

$7,846,318 in errors from the separate review conducted on a 100 percent basis.^ The 

disclosure errors identified in each review were similar. 

From the 100 percent review, more than $7,300,000 of the disclosure errors was for 

campaign materials tiiat, for tiie most part. (1) described Senator Obama's position on 

issues, (2) compared Senator Obama and Senator McCain's position on issues or (3) were 

for get-out-the-vote telephone calls autiiorized by Obama for America. The majority of 

errors in the review were for inadequate or incorrect purposes disclosed. 

Examples of incorrect purposes included: 

• Three mail pieces tiiat described Senator McCain* s position on an issue were 

disclosed as eitiier "Abisentee/Early Vote Mail" or "Direct Mail/Early Vote." The 

mail pieces did not discuss obtaining an absentee ballot or voting early. 

• A mail piece that stated vote Obama and provided polling locations, voting and 

ride information was disclosed as "Generic Literature." 

Examples of inadequate purposes included: 

• Payments for automated phone banks by Senator Obama or on behalf of Senator 

Obama that asked for your vote or provided information on polling locations were 

disclosed as 'Telephone Calls" or "Generic Telephone Calls." 

6 The error amount was projected using a Monetary Unit Sample with a 95 percent confidence level plus 

the results of a 100 percent review of items not in the sample population. The sample estimate could be 

as low as $1,350,377 or as high as $2,066,413. 
17 

• Payments for mail pieces that described Senator Obama's position on issues. 

Senator McCain's position on issues or the positions of botii candidates were 

disclosed as Literature. Generic Mail, or Direct Mail. 

B. Interim Audit Report & Audit Division Recommendation 

This matter was discussed at tiie exit conference. In response, DECF representatives 

stated tiiey would review tiiis issue. The Interim Audit Report recommended that DECF 

amend its reports to correct the disclosure errors. 

C. Committee Response to Interim Audit Report 

In response, DECF filed amended reports that materially corrected the inadequate and/or 

incorrect disclosure information. 
FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

Apri l 24, 2012 

MEMORANDUM 

TO: 

FROM: 

SUBJECT: 

Patricia Carmona 

Chief Compliance Officer 

Tom Hintermister 

Assistant Staff Director 

Audit Division 

Christopher Hughey yU 

Deputy General Counsel | 

Lawrence L. Calvert, Jr. 

Associate General Couns 

General Law and Advice 

Lorenzo Holloway _ 

Assistant General Counsel 

Public Finance and Audit Advice 

Danita C.Lee 

Attorney 

Audit Division Recommendation Memorandum on the Democratic 

Executive Committee of Florida (LRA 805) 

I. INTRODUCTION 

The Audit Division submitted for review the Audit Division Recommendation 

Memorandum ("ADRM") on the Democratic Executive Committee of Florida 

("Committee"). We also reviewed the Committee's response to the Draft Final Audit 

Report ("DFAR Response"). We concur with the ADRM. In this memorandum, we 

address the Committee's objection to our legal analysis of apparent get-out-the-vote 

("GOTV") expenditures (Finding 3: Allocation of Expenditures). If you have any 

questions, please contact Danita C. Lee, the attorney assigned to this audit. 
Memorandum to Patricia Carmona and Tom Hintermister 

ADRM on Democratic Executive Committee of Florida (LRA 805) 

Page 2 of2 

II. COMMITTEE'S ARGUMENT ABOUT GOTV IS UNAVAILING 

The Committee objects to our conclusion that its expenditures for translation 

services constituted GOTV activity that should have been paid with 100% federal funds. 

The Committee said that it provided translation services "on a non-partisan basis to any 

voter, already at their polling place, who requested language translation assistance." The 

Committee asserts that the GOTV regulations "were designed to urge, transport or 

facilitate voters to get to the polls" and, in essence, that they were not intended to reach 

activities that provided assistance to voters who were already at the polls. It appears that 

the Committee is relying on the "ge/ ouf* portion of the phrase "get-out-the-vote" to 

support its interpretation that GOTV is limited solely to activities involving getting voters 

to the polls. We acknowledge that there is surface appeal to this position. Nevertheless, 

as we pointed out in our comments on the DFAR, nothing in the regulatory history 

suggests the Conunission intended to limit the regulations in effect in 2008 to the act of 

getting voters to the polls. Rather, the three elements of GOTV at the time were: (1) 

contact, that was (2) individualized, and (3) for the purpose of assisting individuals in the 

act of voting. 11 C.F.R. § 100.24(a)(3)(2008). The translators obviously assisted 

individuals in the act of voting. Moreover, as we noted in the DFAR, the translators 

presumably would have had to engage in some type of individualized contact with voters 

in order to let them know that translation services were available in the first place, and 

the Committee's response does not dispute that point.