FEDERAL ELECTION COMMISSION 

WASHINGTON; D.C. 20463 

MEMORANDUM 

TO: 

FROM: 

Patricia C. Onock 

Chief Compliance Officer 

Thomas E. Hintermister 

Assistant Staff Director 

Audit Division 

Lisa J. Stevenson "i''" 

Deputy General Counsel - Law 

Lorenzo Holloway "I'*" 

Assistant General Counsel 

Compliance Advice 

Joshua Blume "^3^ 

Attorney 

SUBJECT; Interim Audit Report on the Colorado Republican Committee (LRA 961) 

I. INTRODUCTION 

The Office of the General Counsel has reviewed the Interim Audit Report ("lAR") on the 

Colorado Republican Committee ("the Committee"). The lAR contains three findings: 

Misstatement of Financial Activity (Finding 1); Failure to File Notices and Properly Disclose 

Independent Expenditures (Finding 2); and Failure to Itemize Debts and Obligations (Finding 3). 

Our comments address each of these findings. If you have any questions, please contact Joshua 

Blume, the attorney assigned to this audit. 
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II. MISSTATEMENT OF FINANCIAL ACTIVITY (Finding 1) 

The proposed lAR addresses an apparent unreported bank account: Colorado State 

Republican Central Committee Republican National Convention Expense Account ("Convention 

Account"). The Committee possessed statements associated with this account and provided them 

to audit staff. These statements showed that the Convention Account was active for a period of 

time in 2012 and had receipts of approximately $87,000 and disbursements of approximately 

$86,000. The Audit Division believes that the vast majority of disbursements from the account 

were for the payment of travel and other expenses of delegates from Colorado to the 2012 

Republican National Convention in Tampa, Florida.' 

The Committee argues that it was not required to report the financial activity from this 

account because the account did not belong to the Committee. The Committee claims that a 

separate entity established as a non-profit corporation pursuant to.26 U.S.C. § SO 1(c)(4), and 

called the "Colorado Chairman's Host Committee for the Republican National Convention" 

("Chairman's Committee"),^ owned and controlled the account.^ The Committee stated that 

neither the Committee, nor any of its officers or agents, controlled the Chairman's Committee's 

activities. The Committee provided a copy of a June 2012 letter from the Internal Revenue Service 

addressed to the Chairman's Committee assigning it an Employee Identification Number ("EIN") 

for tax purposes, as well as a copy of the entity's Articles of Incorporation, reflecting the entity's 

incorporation in June 2012. 

The Audit Division asks whether it: (1) has the authority to review the Convention Account 

as pan of the audit; and (2) should address the Convention Account in the lAR. We conclude that 

there is insufficient information at this time to determine whether the audit staff has the authority 

to review the Convention Account as part of the audit because it is unclear whether the Committee 

owned or controlled this account, but the lAR should address this account to the extent that the 

' We recommend that the audit stafTclariiy the proposed lAR to show that the tables and charts presented in 

Finding I, Facts and Analysis, Part A (Most Recent Reports Filed Prior to the Audit) do not include an analysis of the 

Convention Account. 

^ • Although this organization referred to itself as the "Host Committee," it is not clear that the organization 

qualifies as a "host committee" under Commission regulations. See 11 C.F.R. § 9008.S0(b)(3). 

' While we currently have no reason to question the Committee's statement that it and the Convention 

Committee are separate entities, we note for your information that the Commission has in the past considered the 

question of whether a party committee's control of an ostensibly separate legal entity is so pervasive as to warrant 

considering the party committee and the ostensibly separate entity to be in fact a single entity. See Matter Under 

Review ("MUR") IS03, General Counsel's Brief In the Matter of Jefferson Marketing, Inc. and the National 

Congressional Club, at S-6 (Aug. 17,1984); MUR IS03, Consent Order, at 3, par. V (May IS, 1986); MUR 42S0, First 

General Counsel's Report, at 6-8 (May 8, 1997). However, the Commission did not approve this Office's 

recommendation by the required four votes in MUR 4250. See Statement of Reasons of Commissioner Scott E. 

Thomas and Commissioner Danny Lee McDonald in MUR 4230 (Jan. 28,2000); Statement of Reasons of 

Commissioner Lee Ann Elliott in MUR 42S0 (Mar. 10,2000). We will fully analyze this issue if information comes to 

light suggesting that the Committee exercised such control over the Chairman's Committee that they should be 

considered a single entity. 
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lAR seeks additional information from the Committee that may resolve the question of ownership 

and control of the account. ^ 

Without this additional information, the answer to the question of ownership and control is 

limited to circumstantial evidence. The Committee's possession of the Convention Account bank 

statements and the inclusion of the Committee's name in the bank statement is circumstantial 

evidence suggesting that the Committee created and claimed the Convention Account as its own, 

and that it possibly managed and controlled it as well. We cannot conclude, however, that this was 

the case. In light of the Committee's assertion that the Convention Account was owned and 

controlled by a separate entity. Audit staff would require information that might contradict that 

assertion in order to conclude that the account was controlled by the Committee and should be 

considered part of the audit. Additionally, evidence that the account became active in January 

2012 and that the Chairman's Committee was incorporated in June 2012, while raising questions, 

would not, itself, nor in combination with these other facts, necessarily warrant the conclusion that 

the Committee owned and controlled the Convention Account. 

In contrast, the BIN associated with the Convention Account may provide more direct 

evidence of ownership and control of this account. The proposed lAR explains that a prerequisite 

for an entity to open a bank account is possession of an BIN. It follows that determining whether 

the Committee's BIN has been associated with the Convention Account would be relevant to 

determining the ownership of that account. This point, however, is not clear in the lAR. We, 

therefore, recommend that the Audit Division revise the lAR to make this clearer. 

The lAR recommends that the Coiiunittee provide documentation from the Bank that 

confirms the BIN associated with the Convention Account. The Committee may not be able to 

obtain this information from the Bank if it does not own or control the Convention Account. As an 

alternative, the Audit Division should consider a subpoena and order for written answers to the 

bank or a voluntary release from the Committee for the audit staff to ask the bank whether the 

Committee's BIN was associated with the Convention Account. 

* During fieldwork, Audit staff sought informal legal guidance from this Office regarding the Convention 

Account. The auditors asked; (I) whether the Committee was responsible for reporting the transactions relating to the 

Convention Account; (2) whether, in the event that the Convention Committee, rather than the Committee, was 

responsible for reporting the activity of the Convention Account, the Convention Committee and the Committee were 

affiliated, and (3) whether the Convention Account was a Federal or a non-federal account. We concluded that we did 

not have sufficient information to determine whether the Committee was responsible for reporting the activity of the 

Convention Account, or that the Committee and the Convention Committee were affiliated, but that even if they were 

affiliated, their reporting responsibilities would remain separate. Regarding whether the Convention Account was a 

Federal or non-federal account, we declined to address the question because the answer to the question could only be 

ascertained by an examination of the Convention Account and how it was designed to be used by the Convention 

Committee - an examination beyond the permissible scope of the audit given the state of the information then 

available: See Informal Advice to Audit Division on the Colorado Republican Committee - Responsibility for 

Convention Account Reporting, LRA 961. 
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III. FAILURE to FILE NOTICES AND PROPERLY DISCLOSE INDEPENDENT 

EXPENDITURES (Finding 2) 

Finding 2 identifies a total of approximately $6.2 million in Committee spending on direct 

mail advertisements and radio advertisements that may contain express advocacy, and may 

therefore have been reportable as independent expenditures. Of this $6.2 million total, 

approximately $5.8 million relates to "undocumented" independent expenditures, whereas the 

approximate balance of $358,000 relates to "documented" independent expenditures. The Audit 

Division has explained to us that the distinction between documented and undocumented 

independent expenditures is generally based upon whether the advertisement allegedly containing 

express advocacy can be associated with an invoice or other statement reciting the cost of creating 

and disseminating the advertisement. The audit staff identified these advertisements out of a larger 

universe of Committee communications. Since these advertisements are from a larger universe, 

the advertisements at issue in the Audit should be identified for the Committee. We recommend 

that the audit staff either revise the JAR, or attach a supplemental document to the lAR that 

identifies the advertisements at issue. 

We have-three additional recommendations related to the substance of this finding. First, 

we recommend that the Audit Division alter its treatment of advertisements currently classified as 

undocumented independent expenditures, when the classification is not based on possession of the 

underlying communications. Second, we recommend that the Audit Division change the 

justification for one advertisement and include additional advertisements in the lAR that expressly 

advocate the defeat of a clearly identified candidate. Finally, we suggest that the Audit Division 

remove certain advertisements from the lAR that do not expressly advocate the defeat of the 

candidate. We concur with the Audit Division's classification of the remainder of the 

advertisements that are not addressed by these three recommendations. 

A. Independent Expenditures Not Supported By Underlying Communications 

The. lAR identifies approximately $5.8 million in apparent independent expenditures that 

the Audit staff could not completely verify vnth documentation. The lAR further subdivides these 

apparent independent expenditures into three subcategories. In the first two of these 

subcategories, the relevant communications were not available for review. Subcategory (i) 

includes disbursements totaling approximately $2.2 million that were paid to a direct mail vendor 

that were not supported with a copy of an associated direct mail piece.^ Subcategory (ii) includes 

invoices totaling approximately $761,000 that also were not supported with a copy of an 

underlying communication. The auditors apparently inferred from details on the invoices, 

however, such as inclusion of the word "persuasion" or of a candidate's name that these invoices 

covered the dissemination of independent expenditures. The third subcategory, subcategory (iii), 

apparently includes copies of 72 communications that were classified as undocumented because 

^ This subcategory also mentions approximately S2.9 million in invoices from direct mail vendors that could 

not be associated with direct mail advertising examples. 
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they lacked associated invoice numbers.' Our comments on the independent expenditures focus 

on subcategories (i) and (ii). 

To constitute an independent expenditure, a communication must expressly advocate the 

election or defeat of a clearly identified candidate and must not be made in concert or cooperation 

with or at the request or suggestion of that candidate, the candidate's authorized political 

committee, their agents, or a political party committee or its agents. 52 U.S.C. § 30101(17); 11 

C.F.R. § 100.16(a). A candidate is clearly identified in a communication when the name of the 

candidate involved appears; a photograph or drawing of the candidate appears; or the identity of 

the candidate is apparent by unambiguous.reference. 52 U.S.C. § 30101(18); 11 C.F.R. § 100.17. 

A communication can expressly advocate the election or defeat of a candidate in two ways. 

First, a communication expressly advocates the election or defeat of a clearly identified candidate 

when it uses phrases such as "vote for the President," "re-elect your Congressman," "support the 

Democratic nominee," "cast your ballot for the Republican challenger for U.S. Senate in Georgia," 

"Smith for Congress," "Bill McKay in '94," "vote Pro-Life" or "vote Pro-Choice" accompanied 

. by a listing of clearly identified candidates described as Pro-Life or Pro-Choice, "vote against Old 

Hickory," "defeat" accompanied by a picture of one or more candidate(s), "reject the incumbent" 

or communications of campaign slogan(s) or individual word(s), which in context can have no 

other reasonable meaning than to urge the election or defeat of one or more clearly identified 

candidate(s), such as posters, bumper stickers, advertisements, etc. which say "Nixon's the One", 

"Carter '76". "Reagan/Bush" or "Mondale!" 11 C.F.R. § 100.22(a). 

Second, a communication may contain express advocacy if, when taken as a whole and 

with limited reference to external events, such as the proximity to the election, it could only be 

interpreted by a reasonable person as containing advocacy for the election or defeat of one or more 

clearly identified candidate(s), because: (1) the electoral portion of the communication is 

unmistakable, unambiguous, and suggestive of only one meaning; and (2) reasonable minds could 

not differ as to whether it encourages actions to elect or defeat one or more clearly identified 

candidate(s) or encourages some other kind of action. 11 C.F.R. § 100.22(b). 

With these standards in mind, we do not believe that the Audit staff may infer that 

disbursements were for independent expenditures solely on the basis of invoice descriptions or the 

use of common vendors. Since the communications are not available, it is difficult to determine 

whether they contain express advocacy. The information in invoices, generally, may not be 

adequate because invoices are not typically created for the purpose of conveying the content of 

communications. Rather, invoices usually contain brief descriptions that are sufficient for both a 

vendor to identify the service provided and a committee to confirm that it is receiving the service 

for which it contracted prior to making payment. Similarly, although subcategory (i) suggests that 

' We believe there is some ambiguity in the wording of subcategory (iii). Subcategory (iii) states: "With 

respect to the apparent independent expenditures for which a copy of the direct mailer is missing, the Audit staff notes 

that [the Committee] has provided 72 direct mail advertisements that contained [express advocacy], however the 

identification pfthe associated invoice numbers for each advertisement was not provided." While the balance of the 

quoted statement suggests the interpretation we have offered above, the initial dependent clause may create confusion 

as to whether the discussed direct mailers are available or unavailable. We, therefore, recommend that the Audit 

Division revise this statement to eliminate any ambiguity. 
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the auditors may have inferred that disbursements were made to some of the same vendors who 

had previously been paid by the Committee for tximmunications containing express advocacy, its 

conclusion that these additional communications from the same vendor therefore contain express 

advocacy cannot be supported since it is possible that the same vendor provided services for 

communications that did not, in fact, contain express advocacy and thus were not independent 

expenditures. Given the difficulty of analyzing whether a communication contains express 

advocacy when the communication is available, we conclude that descriptive information 

contained in an invoice or the use of a common vendor is too tangential to support a finding that 

express advocacy exists absent a copy of the underlying communication or other more descriptive 

documentation than that relied upon by Audit staff here.' 

We acknowledge, however, that there are instances where drawing inferences is 

appropriate. For example, in the allocation context, we believe that Audit staff may infer that 

certain types of ordinary overhead expenses such as postage, consulting, travel reimbursements, 

printing, and accounting fees are allocable absent information demonstrating that the expenses are 

solely non-federal. See Legal Analysis Memorandum to the Audit Division, "Interim Audit 

Report on the Maine Republican Party" (LRA 817) (Dec. 17,2010). This type of adverse 

inference can be supported because the Commission, through the regulatory process, has already 

determined that administrative expenses of this type are, in fact, allocable absent a demonstration 

otherwise. There has been no such regulatory guidance by the Commission here. Audit staff also 

may use adverse inferences where a committee's internal records specifically identify the type of 

expenditure though its reports disclose the expenditure differently. See id. (Audit staff may 

conclude that printed materials costs that the committee coded in its internal records as federal 

election activity ("PEA") but reported as operating expenses represents potential PEA while 

giving the committee an opportunity to clarify the discrepancy). Such discrepancies, however, do 

not exist here. 

To address the lack of information at this stage of the audit, we recommend that the 

media-related disbursements in subcategories (i) and (ii) should not be categorized as independent 

expenditures at this stage in the audit process. Instead, the disbursements should be treated as a 

separate category of expenditures for which the Committee has not provided sufficient 

documentation to verify its disclosure reports. When a committee reports financial activity, the 

Commission requires the committee to maintain records with respect to that financial activity. 11 

C.P.R. § 104.14(b)(1). These records must provide, in sufficient detail, the necessary information 

and data from which the filed reports may be verified, explained, clarified, and checked for 

accuracy and completeness. Id. In the absence of this information, the auditors are unable to 
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verify whether the Committee correctly reported its disbursements as operating expenditures or 

whether they should have been disclosed as independent expenditures. Thus, the Committee 

should be given the opportunity to provide copies of the communications, additional 

dociunentation, or other information and/or to explain any discrepancies in its reporting. In the 

alternative, the Audit staff may request the Commission to issue a subpoena for copies of the 

communications at issue or other documents the auditors believe may enable it to verify the 

Committee's reporting of these disbursements as operating expenditures. 

B. Communications that Shouid Be Inciuded in the Audit Report Because Th^r 

Expressly Advocate the Defeat of a Clearly Identified Candidate 

Turning to the advertisement expenses for which Audit does have the underlying 

communications, we make the following recommendations. 

{ 

1. Radio Advertisements 

In the larger universe of Committee communications, there are four r^o advertisements 

and written scripts. The lAR concludes that only one of the four radio advertisements, the 

advertisement designated as "CRC-G0TVrev.mp3" ("Radio Ad 1"), contains express advocacy 

because of the presence of the opposition candidate's voice. We agree with this conclusion, 

however, it is not the presence of the opposition candidate's voice that is solely determinative, but 

rather the content of the advertisement as analyzed under section 100.22(b). 

Specifically, in Radio Ad 1, the narrator states that "America can't afford four more years 

of Barack Obama." The narrator also states that "[t]his election is about the course of our nation" 

and "[i]t is time to change course. Make your voice heard by voting." Finally, toward the end of 

the advertisement, the narrator states, "Election day is Tuesday, November 6 . The future of our 

country is in your hands. Take it back." While there is no specific call to vote against President 

Obama, the references to the election, the need to change course, and the exhortation to "take it 

back" suggest that the only reasonable interpretation of these remarks is to urge the listener to vote 

in the upcoming election and defeat the president's electoral bid by "taking back" the country or 

the future of the country. 11 C.F.R. § 100.22(b). For these reasons, we believe that Radio Ad 1 

contains express advocacy. 

• We believe that two other radio advertisements out of the larger universe of 

advertisements, while presenting closer questions, also contain express advocacy under section 

100.22(b) and should be included on the list of independent expenditures. These are "CRC 

LastDaytoReg - 60.mp3" ("Radio Ad 2") and "CO-TTMO-101812.mp3" C'Radio Ad 3"). The 

content of these advertisements is similar to each other, though not identical. Each of these 

advertisements opens with a statement about how President Obama made promises that were not 

fulfilled and describes how the country has declined economically since that time. After noting 

that "That's not the change we were promised". Radio Ad 2 states "Our country needs new 

leadership. You can make a difference, but you have to vote to make a difference. Don't just sit on 

the sidelines. Make your voice heard. Vote." Radio Ad 2 concludes by stating that a person must 

be registered in order to be able to vote, invites the reader to visit the website "Go Vote 
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Colorado.com," and exhorts the reader to "[g]et registered today". Radio Ad 3 concludes with the 

statement "We Icnow that the path we are t^ing isn't working. It's time for a new path. It's time 

for new leadership." 

While Radio Ad 2's concluding phrases contain an exhortation to the reader to register to 

vote, this appears at the conclusion of a criticism of a clearly identified candidate's record, a 

statement that "[o]ur country needs new leadership" and an exhortation to vote. Taken as a whole, 

which includes the juxtaposition of all of these elements in the.order in which they are presented, 

this advertisement contains a clear electoral portion (the exhortation to vote) that, in context, a 

reasonable person could only interpret as an exhortation not simply to vote, but to vote to defeat 

President Obama and to install new leadership. Thus, Radio Ad 2 expressly advocates the defeat 

of President Obama under section 100.22(b). 

While Radio Ad 3 presents a closer call than Radio Ad 2, we conclude that it too expressly 

advocates the defeat of President Obama. The advertisement notes that four years previously. 

President Obama made promises that were not fulfilled by subsequent events. The advertisement 

then concludes by stating "[w]e know that the path we are taking isn't working. It's time for a new 

path. It's time for new leadership." When taken as a whole, the statements that it is time for a new 

path and for new leadership, following a critique of a clearly identified candidate's performance, 

suggest only one meaning: to embark on a new path and to obtain new leadership by replacing the 

current leadership, i.e., President Obama. A reasonable mind could not but construe the statements 

as a call to replace President Obama with new leadership. Therefore, we believe that this 

advertisement contains express advocacy under section 100.22(b). 

2. Door Hangers 

We conclude that the door hangers designated as J.24.9 through J.24.1S and J.24.19 

include express advocacy and the Committee should report the related expenses as independent 

expenditures. Exhibits J.24.9 through J.24.1S are all alternate versions of the reverse side of a 

two-sided door haiiger. All of these door hangers bear the heading "America's Comeback Team" 

and contain photographs of Federal and State candidates, or blank spaces where such photographs 

would otherwise be located." All of the door hangers contain a photograph of presidential 

candidate Mitt Romney, and beneath the photograph the phrase "Mitt Romney for President". 

Appearing at the bottom is the phrase "Vote 2012". Thus, these door hangers expressly advocate 

the election of presidential can^date Mitt Romney under section 100.22(a) because they contain 

the same kinds of words or phrases as those identified in that regulation and they have no 

reasonable meaning other than to urge the election of Mr. Romney. 

' We understand from discussions with the audit staff that one or more of these door hangers may only have 

been models for proposed door hangers that were never ultimately distributed. Thus, it is not clear whether they were 

paid for and used, and, therefore, whether they ultimately were independent expenditures in this sense. Our comments 

.here are restricted to the question of whether they contain express advocacy in the form in which the Committee 

submined them to the audit staff. 
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This is also the case for J.24.19. Here, the door hanger contains the statement "A Clear 

Choice" followed by the names of Mitt Romney and Paul Ryan, the presidential and • 

vice-presidential candidates of the Republican Party in 2012. This is followed by statements of 

policy positions that the candidates support, and concludes with the statement "Vote Tuesday 

November 6""', the campaign logo of "Romney/Ryan," and photographs of the two candidates. 

This door hanger also expressly advocates the election of Mr.-Romney and Mr. Ryan under section 

100.22(a) because the phrases in the door hanger, which, again, are similar to the exemplary 

phrases listed in section 100.22(a), have no reasonable meaning other than to urge the election of 

Mr. Romney and Mr. Ryan.® 

3. Absentee Ballot and Voter Registration Form Mail Pieces 

Similarly, we conclude that certain mail pieces apparently designed to urge potential voters 

to register to vote and to vote early by absentee ballot through the mail contain express advocacy. 

These advertisements generally advocate that the reader vote for the Republican Party, but they 

also contain individualized references to President Obama. The Commission concluded in a 

recent enforcement matter that pages of a voter guide generally exhorting readers to vote for the 

Democratic Party contained express advocacy under 11 C.F.R. § 100.22(a) when they were 

accompanied by the campaign logos of President Obama and the Obama-Biden 2012 ticket. See 

MUR 6683 (Fort Bend County Democratic Party), Factual and Legal Analysis, at 7 (July 29, 

2014). It follows from this NRJR, therefore, that advertisements exhorting the reader to vote for 

the Republican Party, when accompanied by references to President Obama in the form of a 

campaign logo, a photograph, or his name, constitute express advocacy under section 100.22(a). 

Such advertisements are designated J.24.20, J.24.21, J.24.2S, J.24.26, J.24.36, J.24.42, J.24.S9, 

J.24.66, J.24.70, J.24.76, and J.24.78; 

4. Communications That Reference Obamacare 

The audit staff concluded that a number of advertisements exhorting the reader to vote for 

the Republican Party by absentee ballot or to register to vote for the Republican Party, and which 

further call upon the reader either to "repeal Obamacare" or to help the Republican Party to repeal 

Obamacare, do not contain express advocacy under 11 C.F.R. § 100.22. We conclude that these 

Door hangers may qualify as exempt from the definition of "expenditure" by reason either of their potential 

qualification as slate cards or sample ballots under 11 C.F.R. § 100.140, as materials distributed by volunteers and 

therefore exempt under the volunteer materials exemption found at 11 C.F.R. § 100.147, or both. The Committee 

should be given an opportunity to state whether it claims that these exemptions apply, and, if so, to provide evidence to 

substantiate that claim. 

In this portion of our comments, we intend to refer only to those advertisements that refer to "Obamacare" 

and do not otherwise refer to President Obama, whether by proper name, campaign logo, or photograph. Some 

advertisements both refer to "Obamacare" and refer to President Obama in this way, and these are included in our 

discussion of communications in section B.3 of these comments. 
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cotnmunications constitute express advocacy and the Committee should report the expenses 

associated with these advertisements as independent expenditures." 

The communications first raise the issue of whether "Obamacare" clearly identifies a 

federal candidate under 11 C.F.R. § 100.17. In Advisory Opinion 2012-19, the Commission 

previously considered whether "Obamacare" clearly identified a federal candidate under the 

identical definition in the context of electioneering communications under 11 C.F.R. 

§ 100.29(b)(2).In that opinion, the Commission concluded that advertisements using the terms 

"Obamacare" and "Romneycare" clearly identifled federal candidates President Obama and Mitt 

Romney, respectively. See Advisory Op. 2012-19 (American Future Fund) (discussion of 

Advertisements 7 and 8). 

As to whether these communications expressly advocate the election or defeat of a clearly 

identifled federal candidate, OGC concludes that the communications at a minimum satisfy the 

definition of express advocacy under 100.22(b). The communications expressly urge the reader, 

in a presidential election cycle, to "Vote Republican" coupled with the exhortation to "repeal 

Obamacare," an explicit reference to President Obama, a specifically identifled federal candidate. 

Thus, these communications contain an unambiguous electoral portion and, taken as a whole, 

could only be interpreted by a reasonable person as advocating that the recipient vote for the 

Republican presidential nominee and against President Obama. We therefore reconunend that the 

Audit Division include the specifled "Obamacare" communications in the findings of the Audit 

report as independent expenditures." 

C. Communications That Shouid Be Removed From The Audit Report Because 

They Do Not Expressly Advocate The Defeat of Clearly Identified Candidate 

The advertisements designated J.24.86 and J.24.118 do not contain express advocacy 

under 11 C.F.R. § 100.22. The expenditures for these advertisements, therefore, should be 

removed from the list of independent expenditures. The fl-ont of each of these two-sided mail 

pieces identifies Barack Obama by name and photograph, and state, alternately, "Barack Obama 

Doesn't Defend Life or Liberty" and "Barack Obama Supports Partial-Birth Abortion... Leaving 

Iimocent Children Without a Voice." The reverse sides of these advertisements, while containing 

different language, contain such statements as "Barack Obama Doesn't Speak For Our Families", 

" The communications at issue are J.24.27, J.24.S0, J.24.SS, J.24.62, and J.24.139. The communication 

designated J.24.46, although containing a reference to repealing "Obamacare," does not contain any exhortation to 

"vote Republican" or otherwise to support the Republican party, but simply instructs the reader to "vote early." 

Therefore, OGC concurs with the Audit Staffs conclusion to exclude this communication in its findings. 

The Commission regulation governing electioneering communications, 11 C.F.R. § 100.29, defines 

referencing "a clearly identified candidate," id. § 100.29(b)(2), in identical terms to the generally applicable definition 

of "clearly identified" found at section 100.17. Both of those definitions, in turn, mirror the statutory definition of 

"clearly identified" provided in the Federal Election Campaign Act of 1971, as amended. 52 (J.S.C. § 30101(18). 

" Although these particular communications arguably may further satisfy the definition of express advocacy 

under section 100.22(a}, it is unnecessary to reach that question to recommend that the audit staff treat the relevant 

advertisements as independent expenditures in the interim audit context. 
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"Barack Obama Doesn't Defend Life or Liberty", "Barack Obama Is Silencing Our Pro-Life 

Values" and "Barack Obama Will Not Defend Life." Both advertisements contain, in smaller 

print, specific criticisms of President Obama's record or actions relevant to the pro-life values 

mentioned in the advertisements. While both advertisements are critical of President Obama's 

character, qualifications or accomplishments,-these criticisms do not appear in the context of a 

reference to an impending election or to President Obama's status as a candidate, nor do they 

contain an exhortation to vote, or words that, in context, have no other reasonable meaning than a 

call to vote against him. Thus, they do not qualify as express advocacy under section 100.22(a). 

Further, there is no "electoral portion" in these advertisements that unmistakably and 

unambiguously carries one meaning. A reasonable person could construe these advertisements as 

containing only criticism of the President's record on an issue rather than an exhortation to vote. 

Thus, the advertisements do not qualify as express advocacy under section 100.22(b). 

IV. FAILURE TO ITEMIZE DEBTS AND OBLIGATIONS (Finding 3) 

The proposed lAR concludes that the Committee did not properly report certain items of . 

debt in Schedule D of its disclosure reports. Among the debts discussed in the report is a total debt 

of $ 13 3,487 owed to one vendor, representing the unpaid balance of a contract for get-out-the-vote 

services. Commission regulations provide for the continuous reporting of outstanding debt from 

the date on which the debt is incurred until the debt is extinguished.'^ 11 C.F.R. § 104.11(b) (debt 

or obligation, including written contract, to make expenditure over $500 to be reported as of date 

of incurrence of obligation in most circumstances). The Committee states that it tenninated the 

contract with this vendor before the vendor provided all of the contracted services and therefore 

did not have any reportable debt. In support of its contention, the Committee provided the auditors 

with a copy of an unsigned letter that the Committee sent to the vendor; the letter advised the 

vendor that the Committee was terminating the contract. 

The proposed lAR indicates that the Committee did not provide evidence that the vendor 

had agreed to the termination of the contract. Based upon a review of the contract, we do not 

believe that this contract requires the vendor to agree to the termination. The contract provides that 

either party may terminate the contract on 15 days' written notice to the other party. See Get Out 

The Vote Program Agreement, Par. 6 (Sept. 17,2012). Paragraph 6 further provides that 

termination does not release the client from the obligation to make pro rata payments of fees for 

the services the vendor actually provided under the contract. Id. 

However, there is an issue as to whether the Committee paid the vendor for services that 

the vendor provided to the Committee prior to the termination.' We recommend that the Audit 

Division revise the lAR to request information about debt remaining for any services provided 

" The Committee would have been required to report the debt up to the time when the contract was terminated, 

ii C.F.R. §104.11. 

" The Committee's statement that it terminated the contract before the vendor provided all of the contracted 

services suggests that the vendor did provide at least some of the contracted services to the Committee before the 

termination occurred. 
Comments on the Interim Audit Report 

Colorado Republican Committee (LRA 961) 

Page 12 

before the termination of the contract. Since the termination letter was not signed, the Audit 

Division should request documentation such as a signed letter to the vendor or e-mails or telephone 

logs regarding the termination.