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REPORT 0 ..THE AUDIT DIVISION

ON

DR. JOlIN HAGELIN FOR

PIUESIDE~,1996

Appnwed May 11, 1998

JEDERALElM£TION COMMISSION

'"E STIIEET, N.W.

WASIIINGTON, D.C.
FEDERAL ELECTION COMMISSION

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May 20, 1998

MEMORANDUM

TO: RON M. HARRIS

PRESS OFFICER

PRESS OFFICE

SUBJECT: PUBLIC ISSUANCE OF THE AUDIT REPORT ON

DR. JOHN HAGELIN FOR PRESIDENT, 1996

Attached please find a copy ofthe audit report and related docmnents on Dr. John

Hagelin for President, 1996, which was approved by the Commission on May 11, 1998.

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FROM: ROBERT J. COSTA (11., h~ ,z.::s Co. :S-.. 1.. >:; - t)C{'

ASSISTANT STAFF DIRECTOR

AUDIT DIVISION

Infonnational copies ofthe report have been received by all parti~ involved and

the report may be released to the public.

Attachment as stated

cc: Office ofGeneral Counsel

Office ofPublic Disclosure

Reports Analysis Division

FEC Library
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REPORT OF THE AUDIT DIVISION

ON

DR. JOHN HAGELIN FOR

PRESIDENT, 1996

Approved May 11, 1998

FEDERAL ELECI10N COMMISSION

999 E STREET, N.W.

WASBINGTON, D.C.
TABLE OF CONTENTS

DR. JOHN HAGELIN FORPRESIDENT, 1996

Page

C1• Executive Summary

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07 Audit Report

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(}2 Transmittal to Committee

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5• Transmittal to Candidate 11 20 Chronology 13 33
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REPORT OF THE AUDIT DIVISION

ON

DR. JOHN HAGELIN FOR PRESIDENT, 1996

EXECUTIVE SUMMARY

Dr. John Hagelin for President, 1996 (the Committee) registered with the Federal

Election Commission on August 7, 1995 as the principal campaign committee ofthe

Natural Law Party candidate for the office ofPresident ofthe United States.

The audit was conducted P1D'SU8Dt to 26 U.S.C. §9038(a), which requires the

Commission to audit committees that receive matching funds. The Committee received

5504,831 in matching funds.

At an exit conference held on April 14, 1998, the Committee was infonned that

no material non-compliance with the Federal Election Campaign Act of 1971 as amended

or Chapter 96 ofTitle 26 ofthe United States Code was detected dming the audit. In

addition, an Exit Conference Memorandum (ECM) acknowledging this infonnation was

mailed to them on that date. The ECM also addressed the Committee's Statement ofNet

Outstanding Campaign Obligations which was prepared based on a review financial

activity through December 31, 1996. It was determined that the Committee did not

receive matching funds in excess ofthe amount to which it was entitled.

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REPORTOF THE AUDITDIVISION

ON

DR. JOHNHAGEUNFOR PRESIDENT, 1996

I. BACKGROUND

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A. AWJT AUTHORITY

This report is based on an audit ofthe Dr. John Hagelin for President,

1996 (the Committee). The audit is mandated by Section 9038(a) ofTitle 26 ofthe

United States Code. That section states that "After each matching payment period, the

Commission shall conduct a thorough examination and audit ofthe qualified campaign

expenses ofevery candidate and his authorized committees who received payments under

section 9037". Also, Section 9039(b) ofthe United States Code and Section 9038.1(a)(2)

ofthe Commission's Regulations state that the Commission may conduct other

examinations and audits from time to time as it deems necessary.

In addition to examining the receipt and use ofFederal funds, the audit

seeks to determine ifthe campaign has materially complied with the limitations,

prohibitions, and disclosure requirements ofthe Federal Election Campaign Act of 1971

(FECA), as amended. .

B. AUDIT COVERAGE

The audit ofthe Committee covered the period from its inception, July 24,

1995 through December 31, 1996. The Committee reported an opening cash balance of

$-0-; total receipts ofSl,363,180; total disbursements ofSl,3S9,518; and a closing cash

balance of53,662.1

c. CAMPAIGN QRGAN'ZATION

The Committee maintains its headquarters in Fairfield, Iowa. The

Treasurer is Mr. Michael Spivak.

The Committee registered with the Federal Election Commission on

August 7, 1995 as the principal campaign committee ofthe Natural Law Party candidate

for the office ofPresident ofthe United States. During the period audited, the Committee

The reponed figures are rounded to the nemat dollar amount.

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maintained depositoriesin Iowa and California. To handle its financial activity, the

Committee utilized four baDk 8CCOUDtS. From these accounts the Committee made

approximately 1,225 disbursements. In addition, the Committee received approximately

6,749 contributioDS, totaliDg approximately 5726,364.

Dr. Hagelin (the CaDdidate) was cIetermiDed eligible to receive matching

funds on December 22, 1995. The Committee made eleven requests for matching funds

and received $504,831 from the United States Treasury. This amount represents 3% of

the S15,45S,OOO maximmn entitlement that any candidate could receive. For matching

fund pmpoleS, the Commission determined that Dr. Hagelin's candidacy ended on

August 22, 1996, the date when the candidate was nominsted by the Natural LawParty.

On October 1, 1996, the Committee received its fiDal matching fund payment to deftay

qualified campaign expenses aDd to help defiay the cost ofwinding down the campaign.

D. AUDIT SCorE AND PaOClDURI.S

In addition to a review ofexpenditures made by Dr.. Jobo Hagelin for

President, 1996 to determine ifthey were qualified or non-qualitied campaign expenses,

the audit ofthe aforementioned committee covaed the foUowiDg general categories:

1.. The receipt ofcontributionsfrom prohibited sources, such as

those from corporations orlabor orpni7Jltions;

2. the receipt ofcontributioDS orloansin excess ofthe statutory

limitations;

3. proper disclosure ofcontributions from individuals, political

committees and other entities, to include the itemization of

contributions when required, as well as, the completeness and

ICC1D1ICY ofthe information disclosed;

4. proper disclosure ofdisbursements including the itemization of

disbursements when required, as wen as, the completeness and

accuracy ofthe information disclosed;

s. proper disclosure ofcampaign debts and obligations;

6. the ICC1D1ICY oftotal reported receipts, disbursements and C8Sb

beJmres u c:om.pIIed to camptiII'..records.

8. ICC1D1ICY oftbe Statement ofNet Ontstmdina Camprip

Obliptioas filed by the Committee to disclose its fiDancial

condition amd to establish continuiDg matching fund eDtitIement;

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the Committee's compliance with spending limitations; and,

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10. other audit procedures that were deemed necessary in the situation.

As part ofthe Commission's standard audit process, an inventory of

campaign records is conducted prior to the audit fieldwork. This inventory is conducted

to determine ifthe auditee's records are materially complete and in an auditable state.

Based on our review ofrecords presented, it was concluded that the records were

materially complete and fieldwork began immediately.

Based upon our examination ofthe reports and statements filed and the

records presented by the Committee, no material problems in complying with the Federal

Election Campaign Act of 1971 as amended or Chapter 96 ofTitle 26 ofthe United

States Code were discovered during the course ofthe audit.2

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D. DETERMINATION OF NET 0IITSTANDING CAMPAIGN

OBLIGATIONS

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Section 9034.5(a) ofTitle 11 ofthe Code ofFederal Regulations requires

that within 15 calendar days after the candidate's date ofineligibility, the candidate shall

submit a statement ofnet outstanding campaign obligations which reflects the total ofall

outstanding obligations for qualified campaign expenses, plus estimated necessary

winding down costs.

In addition, Section 9034.1(b) ofTitle 11 ofthe Code ofFederal

Regulations states, in part, that ifon the date ofineligibility a candidate has net

outstanding campaign obligations as defined under 11 CFR §9034.5, that candidate may

continue to receive matching payments provided that on the date ofpayment there are

remaining net outstanding campaign obligations.

Dr. Hagelin's date ofineligibility was August 22, 1996. The Audit staff

reviewed the Committee's financial activity through December 31, 1996, analyzed

winding down costs, and prepared the Statement ofNet Outstanding Campaign

Obligations which appears below.

2 The Committee wu given the opportunity to respond but in view ofthe absence of(mdings,

elected to waive the response period.

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DR.JOHN HAGELIN FOR PRESIDENT, 1996

STATEMENT·OF NET OUTSTANDING CAMPAIGN OBLIGATIONS

.. of AIIpIt 22, 1996

.. dete.....ed Deceaaber 31, 1996

ASSETS

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Cash in Bank

Matching Funds Receivable

Total Assets

OBLIGATIONS

Accounts Payable for Qualified Campaign Expenses

Loans Payable

Loan Interest Payable

Actual Winding Down Costs

August 23, 1996 - December 31, 1996

Total Obligations

Net OutItaIIdiDl Campaip Obliptio. as.I A....

n, 1996 (DefIeit)

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$28,397

$66,632

5163,679

$50,000

5384

$4,331

595,029

5218,394

($123,365)
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Shown below are adjustments for fimds received after August 22, 1996:

Net Outstanding Campaign ObUgatiODS as ofAugust 22, 1996 (Deficit) ($123,365)

Matching Funds Received October 1, 1996 79,313

Deposits August 23, 1996 to October 1, 1996 37.S7S

Remaining (Deficit) ($ 6,477)

As presented above, the Committee ha.s not received matching fund payments in

--excess ofits entidement

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May 13, 1998

Mr. Michael Spivak, Treasurer

Dr. John Hagelin for President, 1996

1946 Mansion Drive

Fairfield, IA. 52556

Dear Mr. Spivak:

Attached please find the Final Audit Report on Dr. Jolm Hagelin for President,

1996. The Commission approved the report on May 11, 1998.

The Conlmission approved Final Audit Report will be placed on the public record

on May 20, 1998. Should you have any questions regarding the public release ofthe

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

Deanne McClintock or Wanda Thomas ofthe Audit Division at (202) 694-1200 or toll free

at (800) 424-9530.

Sincerely,

~.Robert J. sta

Assistant Staff Director

Audit Division

Attaclunent as Slated

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May 13, 1998

Dr. John Hagelin

Dr. John Hagelin for President, 1996

1946 Mansion Drive

Fairfield, fA 52556

Dear Dr. Hagelin:

Attached please find the Final Audit Report on Dr. John Hagelin for President,

1996. The Commission approved the report on May 11, 1998.

The Commission approved Final Audit Report will be placed on the public record

on May 20, 1998. Should you have any questions regarding the public release ofthe

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

Deanne McClintock or Wanda Thomas ofthe Audit Division at (202) 694-1200 or toll free

at (800) 424-9530.

Attachment as stated

Page 11
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Ii
CHRONOLOGY

DR. JOHN HAGELIN FOR PRESIDENT, 1996

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Audit Fieldwork

Exit Conference Memonmdum

to the Committee

Audit Report Approved

Page 13

02117198 - 03/05198

4/13198

5/11198
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