Interim Audit Report of the 

Audit Division on John Kennedy 

for U.S. Senate, Inc. 

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 

(the Act). The 

Commission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold 

requirements for 

substantial compliance 

with the 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 the matter 

discussed in this report. 

About the Campaign (p. 2) 

John Kennedy for U.S. Senate, Inc. (JKFS) is the principal campaign 

committee for John Neely Kennedy, Republican candidate for the 

United States Senate from Louisiana. JKFS is headquartered in 

Baton Rouge, Louisiana. For more information, see chart on the 

Campaign Organization, p. 2. 

Financial Activity (p. 2) 

• Receipts 

o From Individuals $3,550,103 

o From Poiiticai Party Committees 35,750 

o From Other Political Committees 474,177 

o From Other Authorized Committees 691,263 

o Offsets to Operating Expenditures 18,488 

o Other Receipts 23,677 

Total Receipts $ 4,793,458 

• Disbursements 

o Operating Expenditures $4,587,927 

o Loan Repayments 37,500 

o Contribution Refunds 138,925 

o Other Disbursements 440 

Total Disbursements $ 4,764,792 

Finding and Recommendation (p. 3) 

• Receipt of Contributions that Exceed Limits 

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

Audit Division on 

John Kennedy for U.S. Senate, Inc. 

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

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Part II. Overview of Campaign 

Campaign Organization 2 

Overview of Financial Activity 2 

Part III. Summary 

Finding and Recommendation 3 

Part IV. Finding and Recommendation 

Receipt of Contributions that Exceed Limits 4 
Part I 

Background 

Authority for Audit 

This report is based on an audit of John Kennedy for U.S. Senate, Inc. (JKFS), 

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

in accordance with the Federal Election Campaign Act of 1971, as amended (the Act). 

The Audit Division conducted the audh 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 factors 

and as a result, the scope of this audit was limited to the following: 

1. the receipt of excessive contributions; 

2. the receipt of contributions from prohibited sources; 

3. the disclosure of contributions received; 

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

5. the consistency between reported figures and bank records; 

6. the completeness of records; and 

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

Overview of Campaign 

Campaign Organization 

Important Dates 

• Date of Registration February 9, 2004 

• Audit Coverage January 1,2007 - December 31,2008 

Headquarters Baton Rouge, Louisiana 

Bank Information 

• Banlc Depositories Two 

• Banic Accounts Two savings and two checicing accounts 

Treasurer 

• Treasurer When Audit Was Conducted Keith Davis 

• Treasurer During Period Covered by Audit William Potter (January 1,2007 to May 5, 

2008) 

Keith Davis (May 6, 2008 to Present) 

Management Information 

• Attended FEC Campaign Finance Seminar No 

• Who Handled Accounting and Recordlceeping 

Taslcs 

Paid Staff 

Overview of Financial Activity 

Cash on hand @ January 1,2007 $ 5,820 

Receipts: 

o From Individuals 3,550,103 

o From Political Party Committees 35,750 

o From Other Political Committees 474,177 

o From Authorized Committees 691,263 

o Offsets to Operating Expenditures 18,488 

o Other Receipts 23,677 

Total Receipts $ 4,793,458 

Disbursements: 

o Operating Expenditures 4,587,927 

o Loan Repayments 37,500 

o Contribution Refunds 138,925 

o Other Disbursements 440 

Total Disbursements $ 4,764,792 

Cash on hand @ December 31,2008 $ 34,486 
Part III 

Summary 

Finding and Recommendation 

Receipt of Contributions that Exceed Limits 

A review of contributions from individuals indicated that JKFS received excessive 

contributions totaling $224,722 that were not timely resolved. This amount includes 

contributions for which an untimely contribution refimd has been made and contributions 

that could still be resolved via presumptive reattribution or redesignation letters. 

The Audit staff recommends that JKFS provide evidence demonstrating that these 

contributions were not excessive or were resolved in a timely manner. Absent such a 

demonstration, JKFS should send notices to those contributors whose contributions are 

eligible for presumptive redesignation and/or reattribution, or refund any remaining 

excessive amounts. (For more detail, see p. 4) 
Part IV 

Finding and Recommendation 

Receipt of Contributions that Exceed Limits 

Summary 

A review of contributions from individuals indicated that JKFS received excessive 

contributions totaling $224,722 that were not timely resolved. This amount includes 

contributions for which an untimely contribution refiind has been made and contributions 

that could still be resolved via presumptive reattribution or redesignation letters. 

The Audit staff recommends, that JKFS provide evidence demonstrating that these 

contributions were not excessive or were resolved in a timely manner. Absent such a 

demonstration, JKFS should send notices to those contributors whose contributions are 

eligible for presumptive redesignation and/or reattribution, or refimd any remaining 

excessive amounts. 

Legal Standard 

A. Authorized Committee Limits. For the 2008 election, an authorized committee may 

not receive more than a total of $2,300 per election from any one person. 2 U.S.C. 

§441a(a)(l)(A), and (f); 11 CFR §§110.1(a) and (b) and 110.9(a). 

B. Handling Contributions That Appear Excessive. If a committee receives a 

contribution that appears to be excessive, the committee must: 

• retum the check to the donor; or 

• deposit the contribution and maintain sufficient fiinds to make potential refunds 

until the legality of the contribution is established; or 

• seek a reattribution or a redesignation of the excessive portion, following the 

instructions provided in the Commission regulations (see below for explanations of 

reattribution and redesignation), and, if the committee does not receive a proper 

reattribution or redesignation within 60 days of receiving the excessive 

contribution, refimd the excessive portion to the donor. 11 CFR § 103.3(b)(3), (4) 

and (5). 

C. Joint Contributions. Any contribution made by more than one person (except for a 

contribution made by a partnership) must include the signature of each contributor on the 

check or in a separate writing. A joint contribution is attributed equally to each donor 

unless a statement indicates that the funds should be divided differently. 11 CFR 

§110.1(k)(l)and(2). 

D. Reattribution of Excessive Contributions. Commission regulations permit 

committees to ask donors of excessive contributions (or contributions that exceed the 

committee's net debts outstanding) whether they had intended their contribution to be a 
joint contribution from more than one person and whether they would like to reattribute the 

excess amount to the other contributor. The committee must inform the contributor that: 

1. the reattribution must be signed by both contributors; 

2. the reattribution must be received by the committee within 60 days after the 

committee received the original contribution; and 

3. the contributor instead may request a refund of the excessive amount. 11 CFR 

§110.1(k)(3). 

Within 60 days of receiving the excessive contribution, the committee must either receive 

the proper reattribution or refund the excessive portion to the donor. 11 CFR §§ 103.3(b)(3) 

and 110.1(k)(3)(ii)(B). Further, a political committee must retain written records 

conceming the reattribution in order for it to be effective. 11 CFR §110.1 (1)(5). 

Notwithstanding the above, any excessive contribution made on a written instrument that is 

imprinted with the names of more than one individual may be attributed among the 

individuals listed unless the contributor(s) instmct otherwise. The committee must inform 

each contributor how the contribution was attributed and that the contributor instead may 

request a refimd of the excessive amount. 11 CFR §110.1(k)(3)(ii)(B). 

E. Redesignation of Excessive Contributions. The committee may ask the contributor 

to redesignate the excessive portion of the contribution for use in another election. The 

committee must inform the contributor that: 

1. the redesignation must be signed by the contributor; 

2. the redesignation must be received by the committee within 60 days of the 

committee's receipt of the original contribution; and 

3. the contributor may instead request a refimd of the excessive amount. 11 CFR 

§110.1(b)(5)(ii)(A). 

Within 60 days of receiving the excessive contribution, the committee must either receive 

the proper redesignation or refund the excessive portion to the donor. 11 CFR § 103.3(b)(3) 

and 110.1(b)(5)(ii)(A). Further, a political committee must retain written records 

conceming the redesignation in order for it to be effective. 11 CFR §110.1(1)(5). 

When an individual makes an excessive contribution to a candidate's authorized 

committee, the campaign may presumptively redesignate the excessive portion to the 

general election if the contribution: 

1. is made before that candidate's primary election; 

2. is not designated in writing for a particular election; 

3. would be excessive if treated as a primary election contribution; and 

4. as redesignated, does not cause the contributor to exceed any other contribution 

limit. 

The committee is required to notify the contributor of the redesignation within 60 days of 

the treasurer's receipt of the contribution, and must offer the contributor the option to 

receive a refimd instead. 11 CFR 110.1(b)(5)(ii)(B). 
Facts and Analysis 

A. Facts 

A review of contributions from individuals indicated that JKFS received excessive 

contributions totaling $224,722 that were resolved, but not in a timely manner, or that 

could still be resolved via presumptive reattribution or redesignation letters.^ Of these, 

JFKS untimely refimded $30,900 and provided untimely reattribution/redesignations letters 

totaling $62,700. 

Among the excessive contributions that JKFS untimely resolved are 12 contribution checks 

totaling $36,800 written on a bank account of a limited liability company (LLC). Each 

check was signed by one of three individuals associated with the LLC. JKFS attributed 

these contributions to the eight individuals whose names were imprinted on the 12 checks. 

The contribution checks are computer-generated and sequentially numbered (except for one 

missing check number). Five of the 12 checks, totaling $9,200, were dated December 20, 

2007, and were signed by one individual. Three checks, totaling $13,800, were dated 

March 13,2008 and were signed by a second individual. The remaining four checks, 

totaling $13,800, were also dated March 13,2008 and were signed by a third individual. 

JKFS attributed $4,600 to each of the eight individuals, $2,300 each to the primary^ and 

general elections. The Audit staff attributed these contributions to the three check-signers, 

resulting in excessive contributions to the primary election. 

For these 12 checks, JKFS provided photocopies of untimely presumptive redesignation 

letters, relating to the $18,400 in excessive contributions from the eight individuals. Also, 

the eight individuals associated with the LLC affirmed that the contributions were from 

their personal fiinds and not from the fimds of the LLC or any other entity. The letters 

from the three individuals also affirmed that the LLC was not an incorporated entity and 

did not file its tax retum as a corporation. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff informed JKFS representatives of this matter at the exit conference held at 

the close of audit fieldwork and in subsequent discussions. The Audit staff provided 

schedules of the contributions in question. The representatives stated that they would take 

the necessary actions. In addition, JKFS representatives pointed out that the solicitation 

devices (reply cards) used during the campaign had specific instmctions on the contribution 

limits for the primary and general elections and were filled out by the contributor. They 

added that these response devices included lines for spousal information. The Audit staff 

reviewed the solicitation devices and noted that, although they provided space for 

contributor information from more than one contributor, there is no evidence that more 

than one contributor completed the form(s). 

^ The $224,722 is comprised of $175,422, the projected dollar value of errors in the population, and $49,300 

irom a focused review of contributions not included in the sample population. The sample projection was 

made using a Monetary Unit Sample program with a 95 percent confidence level. The sample estimate of 

$ 175,422 could be as low as $ 119,124 or as high as $231,723. 

^ Date of the primary election was October 4,2008. 
JKFS also provided evidence that of the $224,722 identified by the Audit staff, untimely 

reattribution/redesignation letters were sent to contributors ($62,700) or untimely refiinds 

were made to contributors ($30,900). The remaining contributions toteding $131,122 

have not been addressed by JKFS. 

The Audit staff recommends that, within 30 calendar days of service of this report, JKFS: 

• Provide evidence demonstrating that the contributions totaling $224,722 were not 

excessive or were timely resolved. Such documentation should include copies of 

the front and back of timely negotiated refimd checks, timely signed/dated 

reattribution/redesignation letters or presumptive reattribution/redesignation letters 

for those eligible for that treatment. Should evidence be presented that 

demonstrates any sample exceptions are not excessive contributions, the Audit staff 

will calculate a revised projected error amount. 

• Absent evidence that the contributions were not excessive or were timely resolved, 

JKFS should review its contributions to determine which are excessive and how 

each can be resolved. For any excessive contributions that JKFS could have 

resolved by sending presumptive redesignation and/or reattribution notification, it 

may now send letters to inform the contributors how the committee designated 

and/or reattributed the contribution and offer a refund. For a reattribution, both the 

contributor and the individual to whom a contribution was reattributed must be 

notified. Absent a request for a refimd, these letters will obviate the need for 

contribution refimds or payments to the U.S. Treasury. For notifications sent to 

contributors, JKFS must provide a copy of each notification and evidence that it 

was sent. After a review of any additional letters provided, the appropriate 

reduction to the $131,122 in excessive contributions not yet addressed will be 

made. JKFS should refiind any contributions that are not eligible for presumptive 

redesignation or reattribution. JKFS should make a payment to the U.S. Treasury to 

account for all refimd checks that are not negotiated or for any contributor who 

cannot be located. 

• If fimds axe not available to make the necessary refimds, JKFS should disclose the 

contributions requiring refimds on Schedule D (Debts and Obligations) until fimds 

become available to make the refunds.