Arent Fox LLP / Washington, DC / New York, NY / Los Angeles, C^A 

Arent fox 

RECEIVE'-

2012 JUN 20 PM 3:53 

FEC MAIL CEUTER 

Craig Engle 

Patncr 

202.77S.S791 DIRECT 

202.8S7.639S FAX 

engle.craig@)arentfox.com 

June 20,2012 

Brett G. Kappel 

Counsel 

202.8S7.6494 DIRECT 

202.8S7.639S FAX 

kappel.brett@arentfox.coni 

Reference Number 

BYHANDDELVERY 032567.00001 

Tfaomas Hintermister 

Assistant Staff Director, Audit Division 

Federal Election Coinmission 

999 EStreet, N.W. 

Wasfaington, D.C. 20463 

Re: Response to Draft Final Audit Report on Rigfatmarcfa.com PAC. Inc. 

Dear Mr. Hintermister: 

On May 18,2012, tiie Audit Division of tiie Federal Election Commission ("FEC" or "tiie 

Commission") issued a Draft Final Audit Report ("DFAR") on Rigfatmarcfa.com PAC, Inc. 

("Rigfatmarcfa") covering tfae period from January 1,2007 tfarougfa December 31,2008. Tfae 

Commission requested tfaat Rigfatmarcfa respond to tfae DFAR by June 5,2012. On June 4,2012, 

Rightmarcfa requested and tfae Commission granted a seven-day extension until June 5,2012 so 

Rigfatmarcfa could respond to the findings and recommendations of tfae DFAR. 

Tfae Audit Division made tfaree findings and recommendations with regard to Rightmarcfa. First, 

the Audit Division found that Rigfatmarcfa misstated its financial activity in botfa 2007 and 2008. 

DFAR at 4-6. Second, tfae Audit Division determined tfaat a campaign vendor faad not extended 

credit to Rigfatmarcfa outside of its normal course of business. DFAR at 6-12. Inexplicably, 

faowever, tfae Audit Division tfaen concluded tfaat Rigfatmarcfa must nevertfaeless amend its reports 

for 2007 and 2008 to report as debts potential fees and expenses tfaat Rigfatmarcfa may, at some 

future point, owe to tfae vendor. DFAR at 12. Finally, tfae Audit Division found tfaat Rigfatmarcfa 

did not properly disclose independent expenditures during tfae audit period. DFAR at 12-16. 

SMART IN YOUR WORLD" 

1050 Connecticut Avenue, NW 

Washington, DC 20036-5339 

T 202.857.6000 F 202.857.6395 

1675 Broadway 

New York, NY 10019-5820 

T 212.484.3900 F 212.484.3990 

555 West Fifth Street, 48th Roor 

Los Angeles, GA 90013-1065 

T 213.629.7400 F 213.629.7401 
Tfaomas Hintermister 

June 20,2012 

Page 2 

Arent Fox 

As tfae Audit Division reported, Rigifatmarcfa, in its response to tfae Interim Audit Report, 

concuired witfa tfae Audit Division's finduig tfaat Rightmarcfa misstated its financial activity in 

2007 and 2008 and will work with tfae Audit Division to amend its disclosure reports 

appropriately. (DFAR at 4). 

Rigfatmarcfa is pleased tfaat tfae Audit Division faas concluded tfaat, based on Rigfatmarcfa's 

response to tfae Interim Audit Report, tfae commercial vendor tfaat tfae committee used for 

fundraising services did not make an impermissible extension of credit to Rigifatmarcfa. DFAR at 

6-12. Rightmarcfa is mystified, faowever, by tfae Audit Division's conclusion tfaat the "fees and 

expenses listed on tfae weekly invoices... are debts subject to the reporting requirements of 11 

C.F.R. § 104.11." DFAR at 12. As we explained m both our Request for Consideration of Legal 

(Questions Arising in the Audit ofRigfatmarcfa.com PAC, Inc. (pages 4-6) and our Response to 

Interim Audit Report of tfae Audit Division on Rigfatmarcfa.com PAC, Inc. (pages 3-4), tfae *fees 

and expenses listed on tfae weekly invoices" do not constitute debts pursuant to 2 U.S.C. § 

438(b)(8) and 11 C.F.R. § 104.11. Tfae fees and expenses referred to by tiie Audit Division only 

become due and payable if certain events were to occur in tfae future, i.e., Rigfatmarcfa were to 

terminate tfae contract or tfae vender were to exceed fundhaising expectations. Accordingly, tfae 

"fees and expenses Usted on tfae weekly invoices" are, at best, contingent liabilities. We are not 

aware of any instance in wfaicfa tfae Commission faas faeld tfaat a committee must report contingent 

liabilities as debts under 2 U.S.C. § 438(b)(8) and 11 C.F.R. § 104.11. 

Rigfatmarcfa is disappointed tfaat the Audit Division reiterated its findings from the Interim Audit 

Report that Rightmarcfa failed to file 24- and 48-faour reports for certain independent 

expenditures and did not properly disclose independent expenditures on Scfaedule E. DFAR at 

12-16. Rigfatmarcfa disputed tfais issue witfa Audit Division staff during audit fieldwork and at 

tfae exit conference. Following tfae exit conference, Rigfatmarcfa filed its Request for Early 

Consideration of Legal Questions asking tfae Commission wfaetfaer tfae fimcfaaising scripts utilized 

by Rightmarcfa's fundraising vendor constituted independent expenditures. 2 U.S.C. § 431(17). 

After considering the recommendations of the Office of General Counsel, the Conimission was 

unable to reach a conclusion with regard to this question by tfae requisite four votes. 

Tfaere has been no cfaange in tfae law defining independent expenditures since tfae Commission 

responded to our Request for Early Consideration of Legal Questions on April 5,2011. 

Accordingly, Rightmarcfa objects to tfais issue being included in tfae Audit Report as a finding of 

tfae Coinmission. Instead, Rigfatmarcfa requests tfaat tfae DFAR be revised to move tfae discussion 

regarding Rigfatmarcfa's alleged failure to report independent expenditures to an Additional 
Tfaomas Hintermister 

June 20,2012 

Page 3 

Arent fox 

Issues section at the end of the Audit Report. See, e.g.. Final Audit Report of tfae Coinmission on 

SEIU COPE at 4-5 (October 31,201 l)(ciiscussing the Commission's &ilure to adopt a 

recommendation regarding tfae reporting of independent expenditures in tfae form of payments to 

individuals for door-to-door voter ID and get-out-tfae-vote efforts.) 

Sincerely, 

Craig Et^^ Q Brett 0. Kappel