Final Audit Report of the 

Commission 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 

(die 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 McLean, Virginia. For more information, see 

chart on the Campaign Organization, p. 2. 

Financial Activity (p. 2) 

• Receipts 

o Contributions From Individuals $3,550,103 

o Contributions From Political 

Committees 1,201,190 

o Offsets to Operating 

Expenditures 18,488 

o Otiier 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 

Commission Finding (p. 3) 

• Receipt of Contributions that Exceed Limits 

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

Commission 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 

Audit Hearing 1 

Part II. Overview of Campaign 

Campaign Organization 2 

Overview of Financial Activity 2 

Part III. Summary 

Finding and Recommendation 3 

Part IV. Commission Finding 

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 audit 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 risk 

factors and as a result, this audit examined: 

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. 

Audit Hearing 

JKFS declined the opportunity for a hearing before the Commission on the matter 

presented in this report. 
Part II 

Overview of Campaign 

Campaign Organization 

Important Dates 

• Date of Registration Febmary 9,2004 

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

Headquarters McLean, Virginia 

Bank Information 

• Bank Depositories Two 

• Bank Accounts Two savings and two checking accounts 

Treasurer 

• Treasurer When Audit Was Conducted Keith A. Davis 

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

2008) 

Keidi A. Davis (May 6, 2008 to Present) 

Management Information 

• Attended FEC Campaign Finance Seminar No 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 

Overview of Financial Activity 

(Audited Amounts) 

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

Receipts 

o Contributions From Individuals 3,550,103 

o Contributions From Political Committees 1,201,190 

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 

Commission Finding 

Receipt of Contributions that Exceed Limits 

A review of contributions from individuals indicated that JKFS received excessive 

contributions totaling $224,722. This amount includes contributions for which JKFS made 

an untimely contribution refund, contributions for which JKFS sent an untimely 

redesignation and/or reattribution letter to the contributor and contributions for which JKFS 

made a payment to the U.S. Treasury. 

In response to the Interim Audit Report, JKFS provided copies of presumptive 

redesignation and/or reattribution letters, photocopies of negotiated refund checks and a 

check to the U.S. Treasury. The Audit staff reviewed these materials and concluded that 

through these actions, JICFS had materially resolved all excessive contributions, albeit in an 

untimely manner. 

The Commission approved a finding that JKFS received excessive contributions. 

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

Commission Finding 

Receipt of Contributions that Exceed Limits 

Summary 

A review of contributions from individuals indicated that JKFS received excessive 

contributions totaling $224,722. This amount includes contributions for which JKFS made 

an untimely contribution refund, contributions for which JKFS sent an untimely 

redesignation and/or reattribution letter to the contributor and contributions for which JKFS 

made a payment to the U.S. Treasury. 

In response to the Interim Audit Report, JKFS provided copies of presumptive 

redesignation and/or reattribution letters, photocopies of negotiated refund checks and a 

check to the U.S. Treasury. The Audit staff reviewed these materials and concluded that 

through these actions, JKFS had materially resolved all excessive contributions, albeit in an 

untimely manner. 

The Commission approved a finding that JKFS received excessive contributions. 

Legal Standard 

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

receive no 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 funds to potentially make a refund 

until the legality of the contribution is established; or 

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

instmctions 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, refund 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. both contributors must sign the reattribution; 

2. the committee must receive the reattribution within 60 days of receiving 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 refund 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 contributor must sign the redesignation; 

2. the committee must receive the redesignation within 60 days of receiving the 

original contribution; and 

3. the contributor may instead request a refund 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 refund instead. 11 CFR 110.1(b)(5)(ii)(B). 

Facts and Analysis 

A. Facts 

A review of contributions fh)m individuals indicated that JKFS received excessive 

contributions totaling $224,722 that were resolved in an untimely manner or could still be 

resolved via presumptive reattribution or redesignation letters.^ Prior to receiving the 

Interim Audit Report, JKFS provided evidence that it sent untimely reattribution/ 

redesignation letters to contributors (conceming $62,700) and made untimely refunds to 

contributors (conceming $30,900). The remaining contributions, totaling $131,122 

($224,722 - $62,700 - $30,900), had not been addressed by JKFS prior to receiving tiie 

Interim Audit Report. 

Among the excessive contributions that JKFS resolved in an untimely manner were 12 

contribution checks totaling $36,800, written on a bank account of a limited liability 

company (LLC). One of three individuals associated with the LLC signed each check. 

JKFS attributed these contributions to the eight individuals whose names were imprinted 

on the 12 checks. The contribution checks were 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 tiiird individual. JKFS attributed $4,600 to each ofthe 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 firom the eight individuals. 

Also, the Audit staff asked JKFS to provide information as to the permissibility of these 

contributions. JKFS provided letters from the eight individuals associated with the LLC, 

which affirmed that the contributions were from their personal funds and not from the 

funds of the LLC or any other entity. The letters from the three individuals who signed the 

checks also affirmed that the LLC was not an incorporated entity and did not file its tax 

retum as a corporation. 

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

from focused reviews of contributions not included in tlie 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. The $49,300 from two focused reviews 

resulted from a review of high-dollar contributions ($30,900) and a review of contributions from individuals 

associated with a limited liability company ($18,400). 

^ Date of the primary election was October 4,2008. 
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 the contributor filled 

them out. 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 Interim Audit Report recommended that JKFS provide evidence demonstrating that the 

contributions totaling $224,722 were not excessive or that they were resolved in a timely 

manner. Examples of such evidence given included: copies of timely negotiated refund 

checks; timely signed/dated reattribution/redesignation letters; and/or presumptive 

reattribution/ redesignation letters. The Interim Audit Report noted that the Audit staff 

would calculate a revised projected error amount if any such evidence was presented that 

demonstrated any of the sample exceptions were not excessive contributions. 

Absent evidence that the contributions were not excessive or were resolved in a timely 

manner, the Interim Audit Report further recommended that JKFS review its contributions 

to determine which were excessive and how each could be resolved. The Interim Audit 

Report noted that JKFS could have resolved any excessive contributions by sending 

presumptive redesignation and/or reattribution letters to inform the contributors how the 

JKFS designated and/or reattributed the contribution along with an offer for a refund. For a 

reattribution, JKFS was to notify both the contributor and the individual to whom a 

contribution was reattributed. Absent a request for a refund by the contributors, these 

letters would obviate the need for contribution refunds or a payment to the U.S. Treasury. 

For notifications sent to contributors, the Audit staff requested that JKFS provide a copy of 

each notification and evidence that it was sent. The Audit staff noted that the appropriate 

reduction to the $131,122 in excessive contributions not yet addressed as of the close of 

fieldwork would be made after a review of any additionsd letters submitted by JKFS in 

response to the Interim Audit Report. For all refund checks not negotiated by the 

contributors or for any contributor JKFS was unable to locate, the Interim Audit Report 

further recommended that JKFS make a payment to the U.S. Treasury. 

In addition, the Interim Audit Report recommended that if funds were not available to 

make the necessary refunds, JKFS should disclose the contributions requiring refunds on 

Schedule D (Debts and Obligations) until funds became available to make the refunds. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, JKFS provided copies of 

presumptive redesignation and/or reattribution letters sent after it had received the Interim 

Audit Report. The Audit staff reviewed these letters along with the corresponding 

contributor checks/credit card documentation and concluded that $121,100 in excessive 

contributions were eligible for such action. As a result, the Audit Staff considered 
$121,100 as resolved but not in a timely manner. JKFS also provided photocopies of 

negotiated refund checks sent to three individuals, totaling $6,900, which JKFS sent to the 

contributors subsequent to audit fieldwork but before transmittal of the Interim Audit 

Report. Finally, JKFS submitted a check to the U.S. Treasury in the amount of $22,600 for 

stale-dated refund checks, which included $4,500 in excessive errors from the Audit staffs 

sample review of contributions from individuals. 

In summary, the Audit staff's review of contributions from individuals indicated that 

JKFS received excessive contributions totaling $224,722 that were resolved, but not in a 

timely manner. The Interim Audit Report recommended that JKFS address $131,122 in 

excessive contributions not yet addressed as of the close of fieldwork. JKFS's response 

provided evidence that resolved, albeit in an untimely manner, $132,500 ($121,100 + 

$6,900 + $4,500) in excessive contributions."^ 

D. Draft Final Audit Report 

In the Draft Final Audit Report, the Audit staff acknowledged that JKFS provided evidence 

that resolved, albeit in an untimely manner, the excessive contributions. 

E. Committee Response to the Draft Final Audit Report 

In response to the Draft Final Audit Report, JKFS stated that the conimittee appreciates that 

the audit report acknowledges it fully complied with the Audit staffs recommendation. 

Commission Conclusion 

On February 10,2012, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit Division recommended that the Commission adopt a 

finding that JKFS received excessive contributions. 

The Commission approved the Audit staffs recommendation. 

* The $132,500 resolved by JKFS's response exceeded the $131,122 the Audit staff recommended that JKFS 

address in the Interim Audit Report recommendation. This occurred because the $131,122 was partially 

based on a projected dollar value of excessive errors in the population and JKFS located a slightly larger 

dollar value of excessive contributions eligible for presumptive redesignation and/or reattribution treatment.