Final Audit Report of the 

Commission on Kelly for 

Congress 

(March 2, 2015 - December 31, 2016) 

Why the Audit 

Was Done 

Federal law permits the 

Commission to conduct 

audits and field 

investigations of any 

political comnnittee that is 

required to file reports 

under the Federal 

Election Campaign Act 

(the Act). The 

Commission generally 

conducts such audits 

when a conunittee 

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) 

Kelly for Congress is the principal campaign committee for John 

Trent Kelly, Republican candidate for Ae United States House of 

Representatives from the state of Mississippi, 1^' Congressional 

District, and is headquartered in Tupelo, Mississippi. For more 

information, see the Campaign Organization chart, p.2. 

Financial Activity (p. 2) 

• Receipts 

o Contributions from Individuals 

o Contributions from Political 

Committees 

o Candidate Loan 

o Other Receipts 

Total Receipts 

• Disbursements 

o Operating Expenditures 

o Transfers to Other Authorized 

Committees 

o Candidate Loan Repayment 

o Contribution Refunds 

Total Disbursements 

$ 567,830 

486,658 

50,000 

420 

$ 1,104,908 

$ 839,781 

60,600 

50,000 

550 

S 950,931 

Commission Finding (p. 3) 

• Receipt of Contributions that Exceed Limits 

Additional Issue (p.3) 

• Receipt of Apparent Prohibited Contribution - Bank Loan 

' 52 U.S.C. §30111(b). 
Final Audit Report of the 

Commission on Kelly for 

Congress 

(March 2, 2015 - December 31, 2016) 
Table of Contents 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Audit Hearing 1 

Part II. Overview of Campaign 

Campaign Organization. 2 

Overviewof Financial Activity 2 

Part III. Summaries 

Commission Finding 3 

Additional Issue 3 

Part IV. Commission Finding 

Receipt of Contributions that Exceed Limits 5 

Part V. Additional Issue 

Receipt of Apparent Prohibited Contribution - Bank Loan 11 
Parti 

Background 

Authority for Audit 

This report is based on an audit of Kelly for Congress (KFC), 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 52 U.S.C. §30111(b), which permits the Commission to 

conduct audits and field investigations of any political committee that is required to file a 

report under 52 U.S.C. §30104. Prior to conducting any audit under this subsection, the 

Commission must perform an internal review of reports filed by selected committees to 

determine if the reports filed by a particular coihmittee meet the threshold requirements 

for substantial compliance with the Act. 52 U.S.C. §30111 (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 and loans; 

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 

KFC declined the opportunity for a hearing before the Commission on the matters 

presented in this report. 
Part II 

Overview of Campaign 

Campaign Organization 

Important Dates 

• Date of Registration March 11,2015 

• Audit Coverage March 2,2015^ - December 31,2016 

Headquarters Tupelo, Mississippi 

Bank Information 

• Bank Depositories One 

• Bank Accounts One checking, one savings 

Treasurer 

• Treasurer When Audit Was Conducted Fred H. Page 

• Treasurer During Period Covered by Audit Fred H. Page 

Management Information 

• Attended FEC Campaign Finance Seminar Yes 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 

Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand @ March 2,2015 $0 

Receipts 

o Contributions from Individuals 567,830 

o Contributions from Political Conunittees . 486,658 

o Candidate Loan 50,000 

o Other Receipts 420 

Total Receipts $ 1,104,908 

Disbursements 

o Operating Expenditures 839,781 

o Transfers to Other Authorized Committees 60,600 

o Candidate Loan Repayment 50,000 

o Contribution Refunds 550 

Total Disbursements $ 950,931 

Cash-on-hand @ December 31,2016 $ 153,977 

^ KFC opened its first bank account March 2,2015. 
Part III 

Summaries 

Commission Finding 

Receipt of Contributions that Exceed Limits 

During audit fieldwork, the Audit staff reviewed loans received and contributions from 

individuals to determine if any exceeded the contribution limit. This review indicated 

that KFC received apparent excessive contributions totaling $75,100. This amount 

consisted of a contribution made in connection with a loan received ($49,900) and 

contributions from individuals ($25,200). In response to the exit conference following 

fieldwork, KFC. untimely resolved excessive contributions from, individuals, totaling 

$25,200. In response to the Interim Audit Report recommendation, KFC noted that the 

bank loan was made in the ordinary course of business in that it was secured by collateral 

and guaranteed by an individual. Additionally, KFC stated that while it realized errors 

were made, that the bank loan was repaid in 30 days and all errors were ultimately 

resolved. KFC also provided copies of redesignation and reattribution letters, signed by 

the contributors, which resolved the excessive contributions from individuals totaling 

$25,200. in response to the Draft Final Audit Report, KFC stated it did not intentionally 

break the rules and hoped the Commission would take that into consideration. The Audit 

staff concluded KFC received excessive contributions totaling $75,100 and untimely 

resolved $25,200 of the excessive contributions. 

The Commission approved a finding that KFC received excessive contributions totaling 

$75,100 ($49,900 + $25,200). (For more detail, see p. 5.) 

Additional Issue 

Receipt of Apparent Prohibited Contribution - Bank Loan 

KFC received a bank loan totaling $50,000 to pay for campaign advertisement expenses. 

John Trent Kelly (the Candidate) obtained a bank loan on behalf of KFC. Based upon 

loan documents provided by KFC, it did not appear that the loan was made in the 

ordinary course of business because it was not made on a basis that assured repayment 

and, therefore, appeared to be a prohibited contribution from the bank. In response to the 

Interim Audit Report recommendation, KFC stated that it believed the bank loan was 

made in the ordinary course of business in that it was secured by collateral, guaranteed by 

an individual and repaid within 30 days. KFC requested that the Commission consider 

the totality of the circumstances and determine that the loan was made on a basis that 

assured repayment. In response to the Draft Final Audit Report, KFC stated it did not 

intentionally break the rules and hoped the Commission would take that into 

consideration. The Audit staff concluded the bank loan totaling $50,000 was not made 

on a basis that assured repayment. 
The Commission did not approve, by the required four votes, the Audit staffs 

recommended finding that KFC's bank loan totaling $50,000 was not made in the 

ordinary course of business because it was not made on a basis that assured repayment, 

and was therefore a prohibited contribution from the bank. Pursuant to Commission 

Directive 70,^ this matter is discussed in the "Additional Issue" section. (For more detail, 

seep. 11.) 

' Available at https://www.fec.gOv/about/Ieadership-and-structure/#commission-directives-and-poIicy. 
Part IV 

Commission Finding 

Receipt of Contributions that Eatceed Limits 

Summary 

During audit fieldwork, the Audit staff reviewed loans received and contributions from 

individuals to determine if any exceeded the contribution limit. This review indicated 

that KFC received apparent excessive contributions totaling $75,100. This amount 

consisted of a contribution made in connection with a loan received ($49,900) and 

contributions fh>m individuals ($25,200). In response to the exit conference following 

fieldwork, KFC untimely resolved excessive contributions from individuals, totaling 

$25,200. In response to the Interim Audit Report recommendation, KFC noted that the • 

bank loan was made in the ordinary course of business in that it was secured by collateral 

and guaranteed by an individual. Additionally, KFC stated that while it realiz^ errors 

were made, that the bank loan was repaid in 30 days and all errors were ultimately 

resolved. KFC also provided copies of redesignation and reattribution letters, signed by 

the contributors, which resolved the excessive contributions from individuals totaling 

$25,200. In response to the Draft Final Audit Report, KFC stated it did not intentionally 

break the rules and hoped the Commission would take that into consideration. The Audit 

staff concluded KFC received excessive contributions totaling $75,100 and untimely 

resolved $25,200 of the excessive contributions. 

The Conunission approved a finding that KFC received excessive contributions totaling 

$75,100 ($49,900 + $25,200). 

Legal Standard 

A. Authorized Committee Limits. An authorized corrmiittee may not receive more 

than a total of $2,700 per election from any one person. 52 U.S.C §30116; 11 CFR 

§§110.1(a) and (b) and 110.9. 

B. Contribution. A gift, subscription, loan (except a loan made in accordance with 11 

CFR §§ 100.82 and 100.83), advance, or deposit of money or anything of value made 

by any person for the purpose of influencing any election for federal office is a 

contribution. The term loan includes a guarantee, endorsement, and any other form of 

security. A loan that exceeds the contribution limitations of 52 U.S.C. 30116 and 11 

CFR part 110 shall be unlawful whether or not it is repaid. A loan is a contribution at 

the time it is made and is a contribution to the extent Aat it remains unpaid. The 

aggregate amount loaned to a candidate or committee by a contributor, when added to 

other contributions fix)m that individual to that candidate or committee, shall not 

exceed the contribution limitations set forth at 11 CFR part 110. A loan is a 

contribution by each endorser or guarantor. Each endorser or guarantor shall be 

deemed to have contributed that portion of the total amount of the loan for which he 

or she agreed to be liable in a written agreement. 11 CFR § 100.52(a) and (b)(l)-(3). 
C. Handling Contributions That Appear Excessive. If a committee receives a 

contribution that appears to be excessive, the committee must either: 

• Retum the questionable check to the donor; or 

• Deposit the check into its federal, account and: 

• Keep enough money in the account to cover all potential refunds; 

• Keep a written record explaining why the contribution may be illegal; 

• Include this explanation on Schedule A if the contribution has to be 

itemized before its legality is established; 

• Seek a reattribution or a r^esignation 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 after receiving the excessive contribution, refund the 

excessive portion to the donor. 11 CFR §§103.3(b)(3), (4) and (5) and 

110.1(k)(3)(ii)(B). 

D. Joint Contributions. Any contribution made by more than one person, except for a 

contribution made by a parmership, must include the signature of each contributor on 

the check, money order, or other negotiable instrument 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). 

E. Reattribution of Excessive Contributions. The 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: 

• The reattribution must be signed by both contributors; 

• The reattribution must be received by the committee within 60 days after the 

committee received the original contribution; and 

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

§110.1(k)(3). 

Within 60 days after 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 concerning the reattribution in order for it to be effective. 11 CFR 

§110.1(1)(5). 

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

instrument that is imprinted with the names of more than one individual may be 

attributed among the individuals listed unless instructed otherwise by the 

contributor(s). The committee must inform each contributor: 

• How the contribution was attributed; and 
• The contributor may instead request a refund of the excessive amount. 11 CFR 

§110.1(k)(3)(B). 

F. Redesignation of Excessive Contributions. When an authorized candidate 

committee receives an excessive contribution (or a contribution that exceeds the 

committee's net debts outstanding), the committee may ask the contributor to 

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

committee must inform the contributor that: 

• The redesignation must be signed by the contributor; 

• The redesignation must be received by the committee within 60 days after the 

committee received the original contribution; and. 

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

§110.1(b)(5). 

Within 60 days after 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 concerning the redesignation in order for it to be effective. 11 CFR 

§110.1(0(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: 

• Is made before that candidate's primary election; 

• Is not designated in writing for a particular election; 

• Would be excessive if treated as a primary election contribution; and 

• As redesignated, does not cause the contributor to exceed any other contribution 

limit. 11 CFR § 110.1 (b)(5)(ii)(B)(l )-(4). 

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

days of Ae 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)(5)-(6). 

Facts and Analsrsis 

A. Excessive Contribution bv Loan Guarantor 

1. Facts 

The Candidate obtained a bank loan totaling $50,000 on behalf of KFC from the First 

American National Bank (FANB) in Tupelo, Mississippi on May 14,2015. An 

associate of the Candidate guaranteed the loan and provided collateral for the loan in 

the form of two automobiles. KFC provided documentation from FANB showing 

that the automobiles had a combined National Automobile Dealers Association value 

of $52,925, as of the date of the loan. KFC repaid FANB in full for the loan on June 

5,2015 (see Additional Issue, Receipt of Apparent Prohibited Contribution - Bank 

Loan). Per 11 CFR 100.52(a), a loan that exceeds the contribution limitations of 52 
U.S.C. 30116 and 11 CFR part 110 shall be unlawful whether or not it is repaid. The 

guarantor had already given $2,600 towards the special run-ofT election held on June 

2,2015. Therefore, the excessive portion of the loan amount was $49,900 ($50,000 

less $100 remaining of the $2,700 contribution limit for the special run-off election). 

A daily cash analysis performed by the Audit staff indicated that KFC would have 

had a negative cash balance from May 18,2015 through May 25,2015 v\nthout the 

benefit of the loan. 

2. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff discussed this apparent excessive contribution 

with KFC representatives and provided a schedule of the identified excessive 

contribution. The representatives indicated that they would review the schedule. 

The Interim Audit Report recommended that KFC provide documentation 

demonstrating that the guarantor did not make an excessive contribution totaling 

$49,900 while the loan was still outstanding and/or provide any comments it deemed 

relevant to the matter. 

3. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, KFC did not provide any 

documentation demonstrating the guarantor did not make an excessive contribution. 

However, KFC noted that the error was ultimately resolved in that the bank loan was 

repaid within thirty days. KFC believed the bank loan was made in the ordinary course 

of business, including being guaranteed by an individual. 

The Audit staff maintained that the guarantor made an excessive contribution totaling 

$49,900 while the loan was still outstanding. 

4. Draft Final Audit Report 

The Draft Final Audit Report acknowledged KFC's statement but maintained that the 

guarantor made an excessive contribution in connection with a loan received totaling 

$49,900. 

5. Committee Response to the Draft Final Audit Report 

In response to the Drsil Final Audit Report, KFC stated that it did not intentionally 

break the rules and hoped the Commission would take that into consideration. 

Commission Conclusion 

On June 7, 2018, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended the Commission find that KFC 

received an excessive contribution from the guarantor totaling $49,900. 

The Commission approved the Audit staffs recommendation. 
B. Excessive Contributions from Individuals 

1. Facts 

During audit fieldwork, the Audit staff utilized a combination of sample testing and 

other reviews of contributions, not included in the sample population, to identify 

apparent excessive contributions from individuals. These reviews indicated that KFC 

received apparent excessive contributions totaling $25,200.^ All of the excessive 

contributions were made by check and were the result of KFC not resolving the 

excessive portion of contributions by timely forwarding a presumptive letter to its 

contributors informing them how their contribution had been redesignated or 

reattributed, with the offer of a refund. 

2. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with KFC representatives at the exit conference 

and provided schedules of the apparent excessive contributions. The representatives 

indicated that they would review the schedule. 

In response to the exit conference, KFC provided copies of redesignation and 

reattribution letters, signed by the contributors, aiid untimely resolved all of the 

excessive contributions, totaling $25,200. 

The Interim Audit Report recommended that KFC demonstrate the excessive 

contributions were resolved in a timely manner and/or provide any additional 

comments it deemed relevant to the matter. 

3. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, KFC stated that it made 

some errors and that the contributions in question, totaling $25,200, were resolved as 

soon as they were brought to KFC's attention. KFC provided copies of redesignation 

and reattribution letters, signed by the contributors, which resolved, albeit untimely, 

all of the excessive contributions totaling $25,200. 

The Audit staff acknowledged that KFC acquired and provided signed redesignation 

and reattribution letters in response to the audit, which resolved all of the excessive 

contributions from individuals totaling $25,200, albeit untimely. 

4. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that KFC had resolved, albeit untimely, 

all of the excessive contributions from individuals totaling $25,200. 

* The sample error estimate (S2,600) is based on a Monetary Unit Sample with a 95 percent confidence 

level. A review of other contributions not included in the sample population identified apparent excessive 

contributions totaling S22,600. The sample projection estimate of S2,600 could be as low as $488 or as 

high as $7,370. 
10 

5. Committee Response to the Draft Final Audit Report 

In response to the Draft Final Audit Report, KFC stated that it did not intentionally 

break the rules and hoped the Commission would take that into consideration. 

Commission Conclusion 

On June 7, 2018, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended the Commission find that KFC 

received excessive contributions from individuals totaling $25,200. 

The Commission approved the Audit staffs recommendation. 
II 

PartV 

Additional Issue 

Receipt of Apparent Prohibited Contribution - Bank Loan 

Summary 

KFC received a bank loan totaling $50,000 to pay for campaign advertisement expenses. 

John Trent Kelly (the Candidate) obtained a bank loan on behalf of KFC. Based upon 

loan documents provided by KFC, it did not appear that the loan was made in the 

ordinary course of business because it was not made on a basis that assured repayment 

and, therefore, appeared to be a prohibited contribution from the bank. In response to the 

Interim Audit Report recommendation, KFC stated that it believed the bank loan was 

made in the ordinary course of business in that it was secured by collateral, guaranteed by 

an individual and repaid within 30 days. KFC requested that the Commission consider 

the totality of the circumstances and determine that the loan was made on a basis that 

assured repayment. In response to the Draft Final Audit Report, KFC stated it did not 

intentionally break the rules and hoped the Commission would take that into 

consideration. The Audit staff concluded the bank loan totaling $50,000 was not made 

on a basis that assured repayment. 

The Commission did not approve, by the required four votes, the Audit staffs 

recommended finding that OC's bank loan totaling $50,000 was not made in the 

ordinary course of business because it was not made on a basis that assured repayment 

and was therefore, a prohibited contribution from the bank. Pursuant to Commission 

Directive 70,^ this matter is discussed in the "Additional Issue" section. 

Legal Standard 

A. Loans Excluded from the Definition of Contribution. A loan of money to a 

political committee by a State bank, a federally chartered depository institution 

(including national bank) or a depository institution whose deposits and accounts are 

insured by the Federal Deposit Insurance Corporation or the National Credit Union 

Administration is not a contribution by the lending institution if such loan is made in 

accordance with applicable banking laws and regulations and is made in the ordinary 

course of business. 

A loan will be deemed to be made in the ordinary course of business if it bears the 

usual and customary interest rate of the lending institution for the category of loan 

involved; is made on a basis which assures repayment; is evidenced by a written 

instrument and is subject to a due date or amortization schedule. 11 CFR § 100.82(a). 

B. Assurance of Repayment. Commission regulations state a loan is considered made 

on a basis which assures repayment if: 

^ Available at https://www.fec'.gov/about/leadership-and-structure/#commission-directives-and-policy. 
12 

• The lending institution making the loan has perfected a security interest in 

collateral owned by the candidate or political committee receiving the loan; 

• Amounts guaranteed by secondary sources of repayment, such as guarantors and 

cosigner, do not exceed the contribution limits of 11 CFR part 110; 

• The lending institution making the loan has obtained a written agreement whereby 

the candidate or political committee receiving the loan has pledged future 

receipts, such as public financing payments; and 

• If these requirements are not met, the Commission will consider the totality of 

circumstances on a case by case basis in determining whether the loan was made 

on a basis which assured repayment. 11 CFR § 100.82(e). 

Facts and Analysis 

A. Facts 

KFC received a $50,000 bank loan on May 14,2015, to pay for campaign advertisement 

expenses. The Candidate obtained the loan on behalf of KFC from the First American 

National Bank (FANE) in Tupelo, Mississippi. This loan was guaranteed by an associate 

of the Candidate, who also provided collateral in the form of two automobiles. KFC 

submitted documentation fh)m FANE showing that the automobiles had a combined 

National Automobile Dealers Association value of $52,925, as of the date of the loan. 

The loan had an interest rate of 3.875% with a maturity date of May 14,2016. KFC 

repaid FANE in full for the loan on June 5,2015. 

The loan was reported on Schedule A (Itemized Receipts) as being from the Candidate 

instead of from FANE. On Schedule C (Loans) and Schedule C-1 (Loans and Lines of 

Credit from Lending Institutions), the loan was reported as not secured, with no 

guarantor, with the incorrect interest rate and with no collateral provided. 

Eased upon the documents provided by KFC, it did not appear that the loan was made in 

the ordinary course of business because it was not made on a basis that assured 

repaynlent. Specifically, the Audit staff considered the following under 11 CFR 

§ 100.82(e) in making its determination. 

• Neither the Candidate nor KFC owned the collateral.^ KFC submitted a copy 

of the Consumer Security Agreement between the guarantor and FANE 

indicating that the guarantor provided the collateral (two automobiles), which 

he pledged as security for the loan. 

• The guaranteed loan amount exceeded the contribution limit (see Finding 

Receipt of Contributions that Exceed Limits). The guarantor made an 

excessive contribution to KFC totaling $49,900 ($50,000 less $100 remaining 

of his contribution limit afier making a $2,600 contribution to KFC on March 

2,2015). 

• Neither the Candidate nor KFC pledged future receipts as security for the 

loan, or provided the bank an assignment to access ^ds in KFC's account at 

another depository institution. FANE did not receive from either the 

' The guarantor owned the collateral. 
13 

Candidate or KFC a pledge of future receipts or an assignment to access funds 

in KFC's account at another depository institution. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff discussed the loan with KFC representatives. The 

representatives indicated that the bank planned to draft a letter indicating that bank 

officials knew the loan would be repaid promptly and asked if this would be sufficient. 

The Audit staff stated that this letter would be taken into consideration but encouraged 

them to provide documentation regarding the assurance of repayment requirements. Prior 

to the exit conference, KFC provided a letter from the Vice President of FANE 

confirming the details of the loan. 

In response to the exit conference, KFC amended its reports to correctly disclose the loan 

on Schedules A, C and C-1: 

The Interim Audit Report recommended that KFC demonstrate the loan was made in the 

ordinary course of business and was made on a basis that assured repayment. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, KFC did not provide any new 

documentation. However, KFC stated that it believed the bank loan was made in the 

ordinary course of business in that it was secured by collateral, guaranteed by an 

individual and repaid on June 5,2015 (within 30 days). KFC requested that the 

Commission consider the totality of the circumstances and determine that the loan was 

made on a basis that assured repayment. 

The Audit staff maintained that KFC had not demonstrated that the loan was made on a 

basis that assured repayment regardless of the totality of the circumstances. KFC did not 

fulfill the requirements regarding the use of collateral or future receipts because: (1) 

neither KFC nor the Candidate owned the automobiles used as collateral, (2) the amount 

guaranteed by the guarantor exceeded the contribution limit by $49,900 and (3) FANE 

did not receive a pledge of future receipts from KFC or the Candidate. 

As such, the Audit staff concluded that the totality of the circumstances did not indicate 

that the loan was made on a basis that assured repayment. 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged KFC's statement but maintained that the 

loan was not made in the ordinary course of business because it was not made on a basis 

that assured repayment. 

E. Committee Response to the Draft Final Audit Report 

In response to the Draft Final Audit Report, KFC stated that it did not intentionally break 

the rules and hoped the Commission would take this into consideration. 
14 

Commission Conclusion 

On June 7, 2018, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended the Commission find that KFC's 

bank loan totaling $50,000 was not made in the ordinary course of business and was 

therefore, a prohibited contribution from the bank. 

The Commission did not approve, by the required four votes, the Audit staffs 

recommended finding that lU^C's bank loan totaling $50,000 was not made in the 

ordinary course of business because it was not made on a basis that assured repayment 

and was a prohibited contribution from the bank. Some Commissioners voted to approve 

the Audit staffs recommendation. Others did not, citing the Commission could look at 

the totality of circumstances to find the bank loan was made on a basis that assured 

repayment. 

Pursuant to Commission Directive 70, this matter is presented as an "Additional Issue".