FEDERAL ELECTION COMMISSION ''5 P.'l I,: PI 

WASHINGTON, D.C. 20463 . June 18,2014 

MEMORANDUM 

To: The Commission 

Through: Alec Palmer 

StafT Director 

From: Patricia C. Orrock 

Chief Compliance Officer 

^fThomas E. Hintermister 

* Assistant Staff Director 

Audit Division 

Alex BoniewiczjJ^ 

Audit Manager 

Marty Favin 

Audit Manager 

By: ^RosaCrussiah^^ 

Lead Auditor 

Subject: Audit Division Recommendation Memorandum on Buddy Roemer for 

President, Inc. (BRFP) 

Pursuant to Commission Directive No. 70 (FEC Directive on Processing Audit Reports), 

the Audit staff presents its recommendations below and discusses the findings in the 

attached Draft Final Audit Report (DFAR). The Office of General Counsel has reviewed 

this memorandum and concurs with the recommendations. 

Finding 1. Net Outstanding Campaign Obligations 

The Audit staffs review ofBRFP's financial activity through March 31,2014*, 

and estimated winding down costs indicated that the Candidate did not receive 

matching fund payments in excess of his entitlement. In response to both the 

BRFP filed a Termination Report on January 4,2014, which disclosed an ending cash-on-hand balance of 

SO. On April 9,2014, BRFP filed another Termination Report which disclosed a cash-on-hand balance of 

SO and no receipts or disbursements. The Audit staff has notified BRFP that the committee must continue 

to file all required reports until notified by the Commission that their request to terminate has been 

approved. 
Preliminary Audit Report (PAR) and the DFAR, BRFP provided no further 

comment. 

The Audit staff recommends that the Commission And that the Candidate did not 

receive matching funds in excess of his entitlement. 

Finding 2. Reporting of Debts and Obligations 

The Audit staff identified debts totaling $42,097 that were not disclosed on 

Schedule D-P (Debts and Obligations), as required. Subsequent to the exit 

conference BRFP clarified the public record with respect to these debts. In 

response to both the PAR and the DFAR, BRFP provided no further comment. 

The Audit staff recommends that the Commission find that BRFP failed to 

disclose debts and obligations totaling $42,097. 

BRFP did not request an audit hearing. 

If this memorandum is approved, a Proposed Final Audit Report will be prepared within 

30 days of the Commission's vote. 

In case of an objection. Directive No. 70 states that the Audit Division Recommendation 

Memorandum will be placed on the next regularly scheduled open session agenda. 

Documents related to this audit report can be viewed in the Voting Ballot Matters folder. 

Should you have any questions, please contact Rosa Crussiah or Alex Boniewicz at 694-

1200. 

Attachment; 

- Draft Final Audit Report of the Audit Division on Buddy Roemer for President, Inc. 

cc: Office of General Counsel 
Draft Final Audit Report of the 

Audit Division on Buddy Roemer 

for President, Inc. 

(February 28, 2011 - December 31, 2013) 

' The audit 

Why the Audit 

Was Done 

Federal law requires the 

Commission to audit 

every political committee 

established by a candidate 

who receives public funds 

for the primary 

campaign 

determines whether the 

candidate was entitled to 

all of the matching funds 

received, whether the 

campaign used the 

matching funds in 

accordance with the 1^^^ 

whether the candi<|ai^:^^ 

entitled to additional 

matching funds,,9jid 

whether t 

otherwi.^"compl ied 

the limtj^ons, 

prohibitiSHgi-and 

disclosure r^irements 

of the election 

Future Actibl^ki'' 

The Commission ma;^' 

initiate an enforcement 

action, at a later time, 

with respect to any of the 

matters discussed in this 

report. 

About the Campaign 

Buddy Roemer for President, 

committee for Charles E. 

Party's^ nomination for th^'bffi 

States. The Committet^Js neadquai 

For more informatipri', se'fe the chart oi 

Organization, p 

' is the principal campaign 

III, a candidate for the Reform 

President of the United 

in Newport, Kentucky. 

,Campaign 

Financial 

• Receipts 

/iduals 

iidate 

o &^i^ibutions from 

o Matp^^:Funds Recei\ 

o Coh^ibul^l^m the i 

o LoanStfrom;^ 

o Offsetra^^peratin^^penditures 

Total I^eipts 

^-'pisbursemen^~ 

j^.h?^i,|gperating Expenditures 

o 'L'bm^^^'ayments 

Contribution Refunds 

!otai Disbursements 

$ 374,937 

351,961 

25,100 

24,900 

3,997 

S 780,895 

$671,827 

4,900 

30,412 

S 707,139 

Findings and Recommendations (p. 4) 

Finding 1. Net Outstanding Campaign Obligations 

Finding 2. Reporting of Debts and Obligations 

• 26 U.S.C.§9038(a). 

^ Buddy Roemer (the Candidate) originally was affiliated with the Republiean Party and ehanged party 

affiliation during the audit period. 

' Finaneial Activity audited from February 28,20.11 through July 31,2012; limited review thereafter. 
Draft Final Audit Report 

of the Audit Division on 

Buddy Roemer for President, Inc. 

(February 28, 2011 - Decemljier 31, 2013) 
Table of Contents 

Part I. Background 

Authority for Audit 

Scope of Audit 

Inventory of Campaign Records 

Part II. Overview of Campaign 

Campaign Organization 

Overview of Financial Activity 

Part III. Summaries 

Findings and Recommendations 

Part IV. Findings and Recom: 

Net Outstanding Campaign Obligations 

Reporting of Debts and Obligations 

.4:,. I 

Page 
Part I 

Background 

Authority for Audit 

This report is based on an audit of Buddy Roemer for President, Inc. (BRFP), undertaken 

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

mandated by Section 9038(a) of Title 26 of the United States Code. That section states, 

"After each matching payment period, the Commission shall conduct a thorough 

examination and audit of the qualified campaign expenses of evqj^^andidate and his 

authorized committees who received [matching] payments un^'section 9037." Also, 

Section 9039(b) of the United States Code and Section 903^^)(2) of the Commission's 

Regulations state that the Commission may conduct othe^^xanii^ions and audits from 

time to time as it deems necessary. 

Scope of Audit 

This audit examined: - * ^ 

1. the campaign's compliance with limitations foi 

2. the campaign's compliance with limitations for c 

3. the campaign's compliance with tf^prohibition on 

4. the disclosure of contributions and l^uj^^eived; 

5. the disclosure of disbursements, debVianaf^jggtions; 

6. the consistency between reported figures an|^>] 

7. the accuracy of the ^te^ent of Net OiT^^'nding Cl 

8. the campaign's c^pHan^^jth spending'limitations; 

9. the compieteness'ib^ecordsf^nd 

10. other campaign opeftitions nroqssary to the rdview. 

...... Inventp^'dr^iunpii^^ RecSlfcIt 

The A^t staff routihebgj^nduS^^ipventory of campaign records before it begins 

audit'fibjd^ork. BRFP^^ords materially complete and fieldwork commenced 

thereaflei 

itTohs and loans,*-' 

ite contributions and loans; 

iting prohibited contributions; 

aign Obligations; 
Part II 

Overview of Campaign 

Campaign Organization 

Important Dates 

On December 29,2011, the Candidate submitted a signed lener to the Commission seeking to become 

eligible to receive Presidential primary matching funds and agreeing that he and his authorized 

committee would comply with the conditions set forth in 11 CFR §9033.1(b). A threshold submission 

was submitted on December 30,2011, and the Commission certified the Candidate as eligible to receive 

matching funds on February 3,2012. The period during which the Candidate was eligible for matching 

funds ended on May 31,2012, the date of ineligibility. 

The Audit staff conducted limited reviews of receipts and expenditures after July 31,2012, to determine 

whether the Candidate was eligible to receive additional matching funds. 
Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand &i February 28,2011 S 0 

o Contributions from Individuals 374,937® 

o MatchinK Funds Received 351,961' 

o Contributions from the Candidate ...t. 25.100 

o Loans Received from the Candidate 24,900 

o Offsets to Operating Expenditures .^^54- 3,997 

Total Receipts 780,895 

o Operating Expenditures •5., \ ^^671.827 

o Loan Repayments ^M,900 

o Contribution Refunds 3'(£^J2 

Total Disbursements 'f;. s707:!tiF 

Cash-on-hand @ July 31,2012 S 73,756 

"..'•rW • Vr'V, 

.;f •-if'-a;-., ••:^ = 

N/i:;. 

% •>• •%, ••^•••K's -..vl" 

V*.: 

.<£? 

' BRFP received approximately 5,900 contributions from more than 5,890 individuals. 

^ As of the Candidate's date of ineligibility on May 31,2012, BRFP had received matching funds in the 

amount of 8285,470. BRFP received an additional 866,491 on July 5.2012, for a total of 8351,961. 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Net Outstanding Campaign Oblirations 

The Audit staff's review of BRFP's financial activity through BScembcr 31,2013, and 

estimated winding down costs indicated that the Candidate^^tpt receive matching fund 

payments in excess of his entitlement. 

In response to the Preliminary Audit Report recotT^!Ie 

comment. (For more detail, see p. 5.) 

Finding 2. Reporting of Debts anil 

During audit fleldwork, the Audit staff identified debt: 

disclosed on Schedule D-P (Debts andp^bligations) as i 

lion, BRFP^^^ded no further 

tions 

iling $42,097 that were not 

1. Subsequent to the exit 

conference, BRFP clarified the public hj^i^with respect it s.debts. 

In response to the Preliminary Audit Repon rec^nif ^|ipn;"BRFP provided no further 

comment. (For more di—" " •" 
Part IV 

Findings and Recommendations 

I Finding 1. Net Outstanding Campaign Obligations 

Summary 

The Audit staff's review of BRFP's financial activity through December 31, 2013, and 

estimated winding down costs indicated that the Candidate did not receive matching fund 

payments in excess of his entitlement. , 

In response to the Preliminary Audit Report recommendatidifC^^y^P provided no further 

comment. ^1" 

Legal Standard 

A. Net Outstanding Campaign ObIigations.|^CO). Within 1S days! 

candidate's date of ineligibility (see defmitioii'befq^, thej^didate must si|bbiit a 

statement of "net outstanding campaign obiigations'^^^iif statement must contain, 

among other things: 

• The total of ail committee assdts^ppjuding cash oH'^^and, amounts owed to the 

committee and capital assets listeafitljEhe^ fair markev^lu'e; 

• The total of all outstanding obligaUpns^fo^M^fied cwpaign expenses; and 

• An estimate of necesMiy winding-qowmcbstl^^^FR §9034.S(a). 

B. Dateof IneligiNliiy. "" "" The * of ineligioiyty is whichever of the following dates 

occurs first: 

• The day on whi 

• The 30tlHiay folio 

ceases tp-Oe active in more than one state; 

i^secutive primary in which the candidate 

it of the popular vote; 

it period, which is generally the day when the 

j^ity nominates iti^^ndidaB'tor the general election;>or 

In tlipcase of a caridi^ate whose party does not make its selection at a national 

conveiitipn, the last^8ay of the last national convention held by a major party in 

the calend§^year. CFR §§9032.6 and 9033.5. 

• -'The end of the ! > 

i the I 

C. Qualified Camf gn Expense. Each of the following expenses is a qualified 

campaign expense. ' 

• An expense that is: 

o Incurred by or on behalf of the candidate (or his or her campaign) during the 

period beginning on the day the individual becomes a candidate and 

continuing through the last day of the candidate's eligibility under 11 CFR 

§9033.5; 

o Made in connection with the candidate's campaign for nomination; and 

o Not incurred or paid in violation of any federal law or the law of the state 

where the expense was incurred or paid. 11 CFR §9032.9. 
• An expense incurred for the purpose of determining whether an individual should 

become a candidate, if that individual subsequently becomes a candidate, 

regardless of when that expense is paid. 11 CFR §9034.4. 

• An expense associated with winding down the campaign and terminating political 

activity. 11 CFR §9034.4(a)(3). 

D. Entitlement to Matching Payments after Date of Ineligibility. If, on the date of 

ineligibility (see above), a candidate has net outstanding campaign obligations as defined 

under 11 CFR §9034.5, that candidate may continue to receive matching payments 

provided that he or she still has net outstanding campaign debts oj^e day when the 

matching payments are made. 11 CFR §9034.1(b). 

Facts and Analsrsis 

The Candidate's date of ineligibility (DOI) was May 31 ,'^012. Il^^dit staff reviewed 

BRFP's financial activity through December 31,203:3^^yzed esmf^d winding down 

costs and prepared the Statement of Net Outstanding Campaign Obligu^sthat appears 

b«low. \ 

nc. 

Obligations 

Buddy Roemer for PresI 

Statement of Net Outstanding Cam 

' 3I,20li -

r 31,201 

Assets 

Cash in Bank 

Accounts Receivable 

Total Assets 

. •• $ 38,987 

154 

S 39,141 

Accoimjis Payable foi Expenses at 5/31/12 $ 2,547 

Windin|,^wn Costs: 

ActuaWnding Downmpensef Paid (6/1/12 - 12/31/13) 103,304 

Estimatel%mding Do^Costs (I/I/I4 - 9/30/14) 34.650 fal 

Total LiabiiifW:,^. 140.501 

Net Outstanding Campaign Obligations (Deficit) as of May 31,2012 S/1Q1.3601 

[a] Estimated winding down costs will be compared to actual winding down costs and adjusted 

accordingly. 
Shown below are adjustments for funds received after the Candidate's DOI. 

Net Outstanding Campaign Obligations (Deficit) as of May 

31,2012 

($101,360) 

Less: Contributions Received (June 1,2012 to July S, 2012) 245 

Less: Matching Funds Received July S, 2012" 66,491 

Remaining Net Outstanding Campaign Obligations 

(Deficit) as of July S, 2012 

$ (34,624) 

As presented above, BRFP has not received matching fund 

entitlement. 

... t ... Audit staff presented a preliminary NOCO statement iiiAd related w61 

BRFP representatives at the exit conference. A bcief discussion ensu 

representatives. Audit staff subsequently provide^ a revise^ NOCO state 

representative, who stated that the workpapers woiiljjl^be re^e^yed and he 

any additional comments as necessary. 

lents in excess of its 

to both 

the BRFP 

16 BRFP's 

lid provide 

instrate any 

6f the NOCO statement 

Preliminary Audit Report Recommi 

The Preliminary Audit Report staff rec 

adjustments it believes are required in cdi^ectit 

or provide any other additional comments.! 

Committee Respoq^io Preiim|pary Audif^eport 

In response to the^Pfetiiiqinary A^it Report re^nimendation, BRFP provided no further 

comment. 

Fin 2. Rei I^Debts and Obligations 

Sumsha^-r^;.-

During audit 

disclosed on 

conference, BRFP 

if'.'. 

ork, the^udit staff identified debts totaling S42,097 that were not 

DT?XDebts and Obligations) as required. Subsequent to the exit 

id the public record with respect to these debts. 

In response to the Preliminary Audit Report recommendation, BRFP provided no further 

comment. 

Legal Standard 

A. Continuous Reporting Required. A political committee must disclose the amount 

and nature of outstanding debts and obligations until those debts are extinguished. 

2 U.S.C. §434(b)(8) and 11 CFR §§104.3(d) and 104.11(a). 

* BRFP's last matching fund payment was deposited on July S, 2012. 
B. Separate Schedules. A political committee must file separate schedules for debts 

owed by and to the comminee with a statement explaining the circumstances and 

conditions under which each debt and obligation was incurred or extinguished. 

11 CFR §104.11(a). 

C. Itemizing Debts and Obligations. 

• A debt of SSOO or less must be reported once it has been outstanding 60 days from 

the date incurred (the date of the transaction); the committee reports it on the next 

regularly scheduled report. ^ 

• A debt exceeding SSOO must be disclosed in the report ^t^Wrs the date on 

which the debt was incurred. 11 CFR § 104.11 (b). 

Facts and Analsrsis . ^ 

During audit fieldwork, the Audit staff reviewed dis^d^^ment recoli^^md disclosure 

reports for proper reporting of debts and obligatippf. BRFP reported during the 

audit period; however, the review identified de,t^totaling'S42,097' to fiv^^dbrs that 

BRFP should have disclosed on Schedule D-P. Bii^ on t^>records, these^e vendors 

provided mainly legal services, website developmem^^d'consulting services. Most of 

the identified debts were greater than^$500 and all remau^ outstanding during the 

reporting period in which they were irtc^ired. These debhi^re outstanding for periods 

ranging from 31 to 238 days. Further, oft^e^g,097 in dem;,^ disclosed, debts 

totaling S15,737 were paid within 40 days,of tKg^^j^V^jpe date,.-

kudlt Divuidp' Recomiiiitadation 

the i^rting of debts and obligations with BRFP 

ponfer^ce and provi^j^a schedule detailing the transactions 

il D^bjcJsiJhe exit ^Hference. During the exit conference, 

In^^^ould be filed during the post-exit 

lucnt to the exit conference, BRFP clarified the public 

Lpbligations. 

Preliminary Audit 

The Audit staff disc 

representatives at ah 

requiring disclosure via' 

BRFP repre.:^ 

conferencbies] 

recor^^h respect to 

The Preli' 

it conside 

rps indi^ I ame 

Audit Re^ 

ssary witfi 

: recommended that BRFP provide any additional comments 

espect to this matter. 

Committee Respdn^tj^Preliminary Audit Report 

In response to the Prejifninary Audit Report recommendation, BRFP provided no further 

comment. 

* Each debt in this amount was counted once even if it required disclosure over multiple periods. In order 

for BRFP to correctly file amended reports, schedules were provided that included the amount of each 

debt'required to be reported for each reporting period.