Perkins 

Cole 

700 Thirteenth street, N.W., Suite 600 

Washington, O.C. 20005-3960 

brianG.Svoboda PHONE: 202.6546200 

PHONE:(202)434.1654 «X= 202.654.62,, 

P*x: (202)654-9150 www.perl<inscoie.«,m 

EMAIL: BSvoboda@perkinscoie.coin 

February 24,2014 

Mr. Thomas Hintermister 

Assistant Staff Director 

Audit Division 

Federal Election Commission 

999 E Street, NW 

Washington, DC 20463 

Dear Mr. Hintermister: 

On behalf of the Democratic Party of Illinois and its treasurer (collectively, "DPIL"), I write to 

respond to the draft final audit and the Office of General Counsel's memorandum regarding the 

DPIL's 2010 activities. The DPIL seeks a hearing on Finding 3 of the draft final audit report, 

pursuant to the Commission's Procedural Rules for Audit Hearings, 74 Fed. Reg. 33,140 (2009). 

INTRODUCTION 

The DPIL has cooperated fiilly with the Audit Division ever since it received notice of this audit 

in December 2011. The draft final audit report correctly notes the DPIL's compliance with each 

of the interim audit report's recommendations. And the DPIL complied as part of an overall 

effort to review and improve its compliance procedures, which it remains committed to do. 

The sole remaining issue in dispute—^Finding 3—involves $75,800 among the DPIL's 

$4,284,010 in federal receipts. The Audit Division contends that these funds were ineligible for 

deposit in the federal account, because they were the proceeds of joint fundraising under 11 

C.F.R. § 102.17 (2012), because they were raised through events for which the costs were not 

allocated under 11 C.F.R. § 106.7(d), and because the donors did not receive the notices required 

under 11 C.F.R, § 102.5(a)(2). 

Solely to avoid further dispute, the DPIL transferred these funds to its nonfederal account. The 

amount was insubstantial compared with the DPIL's total federal activity, and the DPIL wanted 

generally to comply the auditors' recommendations. But because Finding 3 still asserts potential 

violations by the DPIL, we must submit this response and seek a hearing. 

1 

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Perkins Cole UP 
BACKGROUND 

The draft final audit report does not say specifically how Finding 3 arose. As the DPIL 

explained in its response to the interim audit report, the auditors reviewed deposit batches during 

fieldwork. In some cases, the batch deposit slip bore a notation with the name of a fundraising 

event. In other cases, the batch included checks that were accompanied by materials referring to 

a particular event, like an invitation or a donor card. 

The auditors appear to have assumed that all the checks in each batch were raised through the 

event identified in that batch. At the exit conference, the auditors asked about ten nonfederal 

fundraising events. They contended that these events raised $89,918 in federal funds and were 

not disclosed on Schedule H2 for allocation. In response, the DPIL noted that: (1) each of the 

identified events was a nonfederal flmdraising event; (2) the nonfederal campaign of the DPIL's 

Chairman sponsored four of the events for its own benefit, and these events elicited a de minimis 

number of unsolicited checks for the DPIL; and (3) the DPIL sometimes batched checks received 

from events together with other checks received around the same time. 

The interim audit report reduced the disputed amount to $75,800. As to the four events for the 

nonfederal campaign of the DPIL's Chairman, "it appears that these events may have been solely 

for the benefit of the non-federal campaign account" and there was no documentation "to 

demonstrate that DPIL solicited funds from or participated in these events." Still, it "concluded 

that none of the funds that DPIL received as a result of these four events was permitted to be 

deposited into DPIL's federal account." (Interim Audit Report at 10.) As to the six other events, 

the interim audit report acknowledged that there was not "sufficient information to be able to 

determine into which category these events fall." (Interim Audit Report at 11.) Nonetheless, the 

interim audit report asserted that the DPIL failed to follow the joint fundraising rules, failed to 

include required solicitation language for federal contributions, and failed to allocate the 

fundraising costs, and was required to transfer the disputed amount to the nonfederal account.. 

Upon receiving the interim audit report, the DPIL requested and received a list of the checks the 

auditors identified as disputed. (See Exhibit B.) A review of the checks confirmed that the 

interim audit report had at least overstated the amount in dispute. For example, the auditors 

identified $23,050 in federal contributions associated v^dth a September 28,2010 "Jannsen 

event." At least $19,500 of these contributions showed no indicia of association with the event, 

were solicited by an individual not associated with the event, and were made well before the 

event occurred. Nonetheless, the draft final audit report presents Finding 3 in the same amountand substantially the same language. 

LEGAL DISCUSSION 

There is no basis to contend that the DPIL violated the joint fundraising rules, allocation rules or 

notice requirements. Section 102.17 does not define "joint fundraising." When written in 1983, 

the regulation codified a series of advisory opinions that prescribed the conditions by which 

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multiple committees could actively seek contributions together for their respective activities. See 

Transfer of Funds; Collecting Agents; Joint Fundraising, 48 Fed. Reg. 26,296,26,298 (1983). 

Each opinion involved an initiative by which multiple committees would solicit funds together, 

split the proceeds, and divide the costs. See Advisory Opinion 1977-08 (Sasser); Advisory 

Opinion 1977-14 (Bayh, Harris and Shriver); Advisory Opinion 1977-23 (Steers); Advisory 

Opinion 1977-61 (Colorado Democratic Party); Advisory Opinion 1979-06 (Shasteen); Advisory 

Opinion 1979-12 (Burlison); Advisory Opinion 1979-35 (DSCC); Advisory Opinion 1979-75 

(Associated Builders and Contractors PAC). 

Section 102.17 does not create a refund requirement that is triggered every time a donor brings a 

lawful check to one committee's event that is payable to another committee. Rather, it requires a 

series of complex procedures when multiple committees coordinate the allocation of receipts and 

disbursements between them through a specific event or initiative, as the committees in the 

original advisory opinions sought to do. See, e.g., Factual and Legal Analysis, MUR 5780, at 5 

(Republican Federal Committee of Pennsylvania) (involving events held at the same place and 

the same time, with the same guest speaker, yet ostensibly branded separately). Even in clear 

cases, the Commission has shown restraint in enforcing these procedures. See, e.g.. Factual and 

Legal Analysis, MUR 6654 (exercising discretion and taking no action against two Connecticut 

congressional campaigns, when they each raised approximately $11,000 through a joint event); 

First General Counsel's Report, MUR 6039 (exercising discretion in the case of an invitation to 

an event benefiting three Florida committees). 

There is no basis to find that the joint fundraising rules were triggered by any of the events at 

issue here. For the four events involving the DPIL Chairman's nonfederal campaign, the draft 

final audit report acknowledges that "it appears that these events may have been solely for the 

benefit of the non-federal campaign account..." It presents no coordination between the 

committees regarding the splitting of proceeds. Instead, the draft report posits a requirement 

contained nowhere in Commission regulations: that a party leader, whenever he receives a check 

for the party while raising money for his own campaign, must send the check back if the party 

and his campaign have not designated a joint fundraising representative, agreed on an allocation 

formula, signed a joint fundraising agreement, and included special notices on all of their 

fundraising materials. Adopting Finding 3 in its current form would take the joint fundraising 

rules where they have never gone before. 

Nor is there any basis to find that the DPIL violated the allocation rules or notice requirements. 

The draft final audit report acknowledges that there is insufficient information to categorize the 

events identified in fieldwork. A close review of the records shows that at least some of the 

checks have nothing to do with the identified events, other than that they were batched and 

deposited with event checks. The draft final audit report shows no amoimt owed by the 

nonfederal account to the federal account, which means that the DPIL on the whole paid 

appropriately for its federal and nonfederal activities. And there is no evidence that any donor 

was misled about the treatment of his or her contribution, as 11 C.F.R, § 102.5(a)(2) was meant to 

guard against. See Prohibited and Excessive Contributions: Non-Federal Funds or Soft Money, 

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67 Fed. Reg. 49,064,49,073 (2002). See also Conciliation Agreement, MUR 4961 (DNC 

Services Corporation) (involving splitting of nonfederal contributions when donors were 

unaware). 

We appreciate the Commission's attention to this request, and respectfully request that Finding 3 

be rejected. 

Very truly yours, 

Brian G. Svoboda 

Counsel to the Democratic Party of Illinois 

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