Preemption of state statute proh

iting solicitation and receipt of cont

butions by state employee who is 

federal candidate. (Date made publ

October 24, 1989; Length: one page)

Incorporated membership organiz

tion's distribution of voter guides 

members and nonmembers. (Da

made public: October 31, 198

Length: 84 pages, including supp

ments)

Subject

Automatic withdrawals from indiv

uals' bank accounts for contributio

to Congressional campaign. (Da

made public: October 24, 198

Length: 8 pages, including supp

ments)

TABLE OF CONTENTS

ADVISOR Y OPINIONS

1989-28

1 CONFERENCE POR PACS PLANNED

REPORTS

6 Year-End Reporting Schedule

SPECIAL ELECTIONS

7 Texas Special Election: Update

COMPLIANCE

7 MUR 2588

8 MUR 2073

COURT CASES

9 New Litigation

PUBLICATIONS

9 New Brochure for Candidates

10 INDEX

1989-27

AOR

1989-26

FEDERAL ELECTION COMMISSION

999 E Street NW Washington DC 20463 Volume 15, Number 1

ADVISORY OPINION REQUESTS

The following charts lists recent requests f

advisory opinions (AORs). The full text of a

AOR is available for public comment from t

Commission's Public Records Office.

December 1"989

An advisory opinion (AO) issued by the Commission provides guidance on a specific situation

described in an advisory opinion request (AOR).

Any person who has requested and received an AO

and acts in accordance with the opinion will not

be subject to any sanctions under the Act. Other

persons may rely on the opinion if they are

involved in an activity that is materially indistinguishable from the activity described in the

AO. Those seeking guidance on a particular

activity, however, should consult the full text of

the relevant AO and not rely only on the summaries given in the Record.

For more information on requesting an AD,

call the FEe and ask for the free brochure,

"Advisory Opinions," Telephone 800/424-9530 or

202/376-3120.

FEC TO HOST CONFERENCE FOR PACS

On January 17, 1990, the Commission

will host a conference on political activity by

corporations, labor organizations and trade

associations. The conference will offer workshops on how these organizations can enhance

their participation in the federal political

process While complying with the requirements of the election law and FEe regulations

The workshops will provide opportunities

to learn how to set up a separate segregated

fund (PAC) and how to comply with the rules

on registration, reporting and fundraising.

Special programs for more advanced committee personnel will cover new developments in

the rules and recent issues that have arisen

through advisory opinions.

The day-long conference will be held at

I the Sheraton Washington Hotel in Washing'-

D.C. The registration fee is $112. For a

registration form and more information, call •

the FEC at 800/424-9530 or 202/376-3120.

•
The Record is published by the Federal Election Commission, 999 E Street, N.W., Washington,

D.C. 20463. Commissioners are: Danny L. McDonald, Chairman; Lee Ann Elliott, Vice Chairman

Joan Aikens; Thomas J. Josefiak; John Warren McGarry; Scott E. Thomas; Walter J. Stewart

Secretary of the Senate, Ex Officio; Donnald K. Anderson, Clerk of the House of Representatives,

Ex Officio. For more information, call 202/376-3120 or toll-free 800/424-9530. (TDD For Hearing 

Impaired 202/376-3136)

2

FEDERAL ELECTIOI\J COMMISSIOI\J Volume 15, Numbe

Payroll Deduetions

The OIBB employees are no longer mem

of MCorp's solieitable class. Consequently, 

continuation by oms of the payroll deduc

plan for contributions to MBank PAC by for

MCorp employees (past the date of their de

ture from MCorp subsidiaries) would result 

corporate contribution prohibited by section 4

of the Act. Furthermore, DIBB must ob

1The Commission recently revised the af

ation and transfer rules. See the October Re

for mare information.

Contribution Limits

Since the two committees have not been 

are not affiliated, they do not share contribu

limits. They may each contribute to candid

and other committees up to their own sepa

contribution limits.

Affiliation

FEC rules permit unlimited transfers 

tween committees meeting certain standard

affiliation. 11 CFR 1l0.3(a)(l)(iii).l MBank 

and DIBB PAC, however, do not qualify as af

ated committees under these rules, which spe

that separate segregated funds are consid

affiliated if they are established by the s

organization or are commonly financed, m

tained or controlled. As a result of the F

takeover and the subsequent May agreement, 

two companies have no such connections; furt

more, they do not have common employees, 

cers, directors or members. While the two c

mittees briefly shared a treasurer prior to 

May agreement, the PACs now have no com

personnel.

A transfer between MBank PAC and D

PAC would, therefore, constitute a contribu

from one political committee to another, sub

to the $5,000 limit set forth at 11 CFR 110.1(d

companies agreed to allocate contributions 

rently held by MBank PAC and omB PAC 

tween the two committees. As a result of 

allocation, MBank PAC planned to transfe

much as $100,000 to DIBB PAC. In addition, n

agreed to absorb the costs of the transfe

funds, MBank PAC's operations and the implem

tation of the transactions described above.

December 1989

ADVISORY OPINION SUMMARIES

AO 1989-16: Transfer Between Unatfiliated

Corporate PACs

MBank Political Action Committee may not

transfer funds to the Deposit Insurance Bridge

Bank Political Action Committee, an unaffiliated

committee, in excess of the contribution limits

prescribed by the election law. In addition, as

unaffiliated committees, the two multibank holding company PACs do not share contribution limits and solicitable personnel, and the connected

organizations may not pay each other's PAC administration costs.

Background .

MBank PAC is the separate segregated fund

of MCorp, an incorporated bank holding company.

As of March 28, 1989, the U.S. Office of the

Comptroller of the Currency declared 20 of

MCorp's 25 subsidiary MBanks insolvent, and the

Federal Deposit Insurance Corporation (FDIC) was

appointed to serve as receiver for the 20 closed

banks. At the same time, the FDIC announced

the transfer of deposits and certain assets and

liabilities of the closed banks to the Deposit

Insurance Bridge Bank, N.A. (DIBB), a newly chartered institution organized and Wholly owned by

the FDIC. The FDIC also announced the transfer

to DIBS of the closed banks' management and

other personnel. All remaining assets and liabilities of the 20 banks were retained by the FDIC

for the purpose of winding down their business and

Iiquidatlng them. MCorp retained the other five

MBanks.

When the closed banks were seized, MBank

PAC held approximately $200,000 in contributions. MBank estimated that about half that

amount was made up of contributions from individuals who had become DIBB employees.

MCorp and DIBB entered into an agreement

in May concerning the future of MBank PAC. The

agreement provided for the removal of OIBB

personnel from the management of MBank PAC

and the appointment of MCorp personnel in their

places. DIBB also agreed to terminate pledges

from DIBB employees to MBank PAC; all payroll

deductions (based on prior pledges) by DIBB personnel to MBank PAC made after May 15 were to

be deposited in a DIBB PAC account. The two
FEDERAL ELECTION COMMISSION Volume 15, Number 

•

•

•

December 1989

separate authorization for DIBB PAC payroll deductions from each solicitable DIBB employee,

including former MCorp employees. 11 CFR

114.5(a)(1)-(5).

Administrative Costs

DIBB may not absorb the administrative costs

of operating MBank PAC, as the two com mittees

had agreed in May. The expenses of administering

a separate segregated fund under 2 U.S.C. §441b

(b)(2)(c) may only be paid by the connected organization.

DIBB's Name Change

DIBB has reached an agreement with Bane

One Corporation, an Ohio bank holding company,

for the acquisition of DIBB. On July 12, 1989,

DillS's name was changed to Bank One, Texas,

N.A. Since the election law requires the name of

a separate segregated fund to include the full

name of the connected organization, DIBB PAC

must change its name to include the full name of

Bank One, Texas, N.A., and must amend its Statement of Organization to reflect the change. 11

CFR 102.14(c).

Vice Chairman Elliott issued a concurring \

opinion. (Date issued: October 6, 1989; Length,

including concurrence: 7 pages)

AO 1989-17: Bank Holding Company's

Solicitable Class

Ford Sank Group, Inc. (FSG), a Texas multibank

holding company, may solicit the restricted class

of employees of four affiliate banks for a newly

established separate segregated fund, FBG PAC.

The solicitations may occur both before and after

three of the affiliates become fully-owned subsidiaries of FSG. The solicitable class of these

banks includes their stockholders, executive and

administrative personnel and their families.

FBG is run by a "control group" led by Gerald

J. Ford, who is chairman of the board of directors

and owner or controller of 57.62 percent of the

common stock. Seventeen other individuals are

also members of the control group; all are parties

to the Shareholder Agreements by which Mr.

Ford exercises his voting power. In addition to

controlling several banks that are wholly owned

subsidiaries of FBG, Mr. Ford and the other

parties control four other affiliate banks in Texas.

On December 31, 1989, three of the affiliate

banks will merge with FSG and will operate as

subsidiaries wholly owned and controlled by FSG.

The fourth bank will not merge with FBG but will

remain as an FSG affiliate.

FSG may solicit the executive and adminstrative personnel (and their families) of all these

banks, both before and after the December 31

merger. FEC regulations state that a corporation's solicitable class extends to the stockholders

and executive and adminstrative personnel of its

3

subsidiaries and affiliates, and to the families 

those persons. 11 CFR 114.5(g)(l). While the ru

do not provide a definition of "affiliate," 

Com mission has considered whether the separ

segregated funds of the entities in question 

they had such funds) would be affiliated. 

variety of relationships may serve as a basis 

affiliation. Such relationships can involve ow

ership of a controlling interest in voting shares 

securities of a corporation; provisions in gove

ing documents that give one entity authori

power or ability to direct another entity; and a

entity's authority or ability to appoint, remove 

otherwise influence the decisions of the offic

or members of another entity,! 11 C

100.5(g)(2) (ii) and 110.3(a)(1)(iiO.

The three affiliate banks that plan to mer

with FBG qualify as "affiliates" of FBG for 

purpose of solicitation because FSG, through M

Ford and the others in its control group, exerci

substantial majority control over them. In 

case of the fourth affiliate, United Bank of Dal

(UNB Dallas), which is not a subsidiary of FB

and will not become one after December 31, M

Ford is the bank's largest shareholder and ho

almost twice as many shares as the next larg

shareholder. Together, Mr. Ford and other me

bers of the FSG control group hold 27.14 perc

of the shares in UNB Dallas. Mr. Ford serves 

chairman of the bank's 16-member board of dir

tors, and four other members of the control gro

also serve on the board. Mr. Ford and tho

members, therefore, have the authority or abil

to direct or influence the decisions of UNB Dal

officers. Thus, FBG PAC may solicit the restr

ted class of all foul' banks both before and af

the merger.

The regulations do not require FBG PAC 

list affiliates or subsidiaries of the connec

organization on its Statement of Organizati

FSG PAC must list only Ford Bank Group, Inc., 

the connected organization. If, in the future, a

of FBG's subsidiaries form their own separ

segregated funds, those committees would have 

be listed on FBG PAC's Statement of Organi

tion as affiliated committees. (Date issued: O

tober 23, 1989; Length: 4 pages)

1The Commission recently revised these rul

See the October Record for more information.

NEW BROCHURE FOR CANDIDATES

A new FEC brochure answering the 10

questions most often asked by candidates is

.now available. See page 9 fOI' more information.
December 1989 FEDERAL ELECTIOI\J COMMISSIOl\J Volume 15, Numbe

AO 1989-18: Trade Association PAC's Use of . Raffle for Fundraising

The Association of Independent Colleges and

Schools (AICS), an incorporated trade association,

may use a raffle to raise money for its separate

segregated fund, AICSPAC, as long as the raffle.

is conducted in accordance with the Act and

regulations.

AICSPAC plans to offer raffle tickets to the

executive and administrative personnel of AICS

members-all of which are incorporated secondary

schools and colleges-who contribute at least $90.

Proposed raffle pri/es include:

o Free stays at vacation homes, provided by AICS

members and others;

o Slots in an AICS-run Management Institute,

provided by the organization; and

o Wide-screen television sets and other items

purchased by AICSPAC.

Organizations using raffles for PAC fundraising may cover the cost of setting up the

program with general treasury funds. 11 CF R

114.5 and 114.8; 2 U.S.C. S441b(b)(2). The prizes

purchased by the organization for the raffle,

however, must not be so numerous or valuable

that the program results in trading general treasury money for PAC contributions. The com mittee

should reimburse the organization for any administrative and solicitation costs that exceed onethird of the funds raised. This provision, known as

the "one-third" rule, is considered a reasonable

practice to follow; other methods of reimbursement are possible. Since several sources will

donate prizes, however, the one-third reimbursement to the different donors should be based on

the total value of all the prizes donated by AICS

and its members, and not on anyone prize or

group of prizes. 11 CFR 114.5(b)(2).

Donation of Prizes by AICS

AICSPAC may accept the sponsoring organization's donation of attendance slots at the Institute. The committee should reimburse AICS for

part of the costs if the dollar value of all prizes

donated exceeds one-third of the total contributions collected for the raffle.

Donation of Prizes by Members

Members' of trade associations may donate

funds and goods over and above their membership

dues to defray the solicitation costs of the raffle,

and these donations may include prizes. Members

making such donations may not be foreign nationals. AICSPAC may accept prizes donated by two

types of corporate AICS members, "members" and

"associate members." "Members" include incorporated educational institutions and divisions of

incorporated institutions accredited by AICS; "associate members" include educational institutions

that are accredited by other organizations. Both

categories qualify as members under FEC rules

because they have a significant financial and

4

organizational attachment to AICS, as dem

strated by their payment of dues and their r

under AICS bylaws to participate in AICS' affa

However, the PAC must reimburse the donors 

part of the cost of their gifts if the total valu

all prizes donated exceeds one-third of 

amount raised. See AOs 1986-13, 1984-33, 1

24, 1982-36 and 1980-59.

Donation of Prizes by Executives

AICSPAC may also accept prizes, in the f

of the use of vacation homes, from indivi

executives of member institutions. These d

tions, however, will be considered in-kind con

butions by the individuals. The individuals con

buting the use of their homes may not be fore

nationals, and the value of the in-kind contr

tion may not exceed the limits set forth a

U.S.C. S441a. The contributions are reporta

and the solicitation of the contributions mus

made in accordance with the regulations at 

CFR 114.5 and 114.8.

Donations by Nonmember Corporations Prohibi

Finally, corporations that own member-in

tutions of AICS, but are not qualified to 

members themselves, may not donate prizes

U.S.C. S441b(a).

Publicizing the Rafne

The PAC plans to send letters publlcizing 

raffle. Since the letters will constitute solic

tions for contributions, they can be sent only 

persons in AICSPAC's solicitable class, which 

cludes member institutions' stockholders, exe

tive and administrative personnel, and their fa

lies. Solicitation of such persons must be se

rately and specifically approved by the mem

corporations whose stockholders and perso

will be solicited, and those members may not h

approved a solicitation by another trade asso

tion for the same calendar year. 2 U.S.C. S44

(b)(4)(D); 11 CFR 114.8(c).

Since the parent companies that own mem

institutions are not members of AICS, their sh

holders and executive and administrative per

nel are not solicitable for the raffle.

Distribution of Tickets

AICSPAC plans to distribute a raffle ti

to anyone who contributes at least $90. Whi

is permissible for the PAC to reward minim

contributions in this way, the solicitation m

explain that the $90 minimum contribution is 

a suggestion and that a greater or -lesser am

may be contributed to the PAC. AICS and 

members may not require contributors to giv

minimum amount. 11 CFR 114.5(a)(2). (D

issued: October 6, 1989; Length: 7 pages)
FEDERAL ELECTION COMMISSION Volume 15, Number 1

•

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December 1989

AO 1989-20: Contributions by Committee Funded

by Foreign-Qwned and ForeignFinanced Corporation

Kuilima Development Company, Inc., a corporation wholly owned and almost totally financed by

an American company that, in turn, is wholly

owned and mostly financed by a Japanese parent

company, may not make contributions to a political action committee supporting candidates in

state and local elections. A committee that is

almost solely funded by those contributions may

not contribute to state and local candidates.

Kuilima is a wholly owned subsidiary of Asahi

Jyuken (U.S.A.), Inc., which, in turn, is a wholly

owned subsidiary of Asahi Juken Company, Ltd.,

of Japan. Kuilima and Asahi (U.S.A.) are incorporated under the laws of Hawaii, while Asahi

(Japan) is incorporated under Japanese law. All

of the directors and officers of both Kuilima and

Asahi (U.S.A.) are Japanese nationals, though the

two companies operate principally in Hawaii and

most of their employees and consultants are U.S.

citizens. Kuilima obtains almost all of its funding

from Asahi (U.S.A.), which is mostly funded by

Asahi (Japan). Kuilima proposes to set u? a

political committee that will be run "independently" of Kuilima by three U.S. citizens.

The election law prohibits a foreign national

from making contributions or expenditures in connection with any U.S. election. 2 U.S.C. §441e(a).

This prohibition applies to all elections, including

state and local elections.! Under federal law, the

definition of "foreign national" includes "a corporation.••organized under the laws of or having its

principal place of business in a foreign country."

22 U.S.C. S611(b). Under the election law, then,

Asahi (Japan) is a foreign national. Because Asahi

(Japan) is the predominant source of funds for

Kuilima, the committee's acceptance of funds

from Kuilima would result in contributions from

a foreign national to state and local candidates

through Kuilima. A committee entirely or almost

entirely funded by contributions from such a

source may not support state or local candidates.

Even if the source of Kuilima's funds were

not foreign, Kuilima could not contribute funds to

a committee active in state and local elections.

Since all of the directors and officers of Kuilima

are Japanese, it appears that foreign nationals

would participate in the corporation's decisions to

make contributions. See AOs 1985-3 and 1981-36.

(Date issued: October 27, 1989; Length: 4 pages)

1Hawaiian state election laws permit corporate contributions to state and local candidates of

up to $2,000 per election. HRS sections 11-191(17)

and 11-204(a). Hawaiian state election laws,

however, can not allow a corporation to engage in

activity prohibited by section 441e.

5

AO 1989-22: Congressional Campaign's Use of

Funds Raised for 1990 Bleetion

to Retire 1988 Debt

Congressman Dave Nagle may use funds raised 

his 1990 reelection campaign to pay outstandi

debts from his 1988 campaign.

Mr. Nagle's 1988 campaign committee, t

Nagle 188 Committee, has outstanding debts e

ceeding $22,000 from the 1988 elections. M

Nagle has filed a Statement of Candidacy 

1990, designating a new committee, the Na

Campaign Committee, as his principal campai

committee. The 1990 committee has raised ov

$35,000 toward Mr. Nagle's reelection effort. T

same committee has also assumed the debts 

the 1988 campaign and has raised funds expres

designated for retiring those debts.

Funds raised for the current election cy

may also be used at this time to retire 1988 deb

Contributions used for this purpose will not cou

against donors' limits with respect to the 19

elections, assuming:

o The funds were not solicited for retirement 

1988 debts;

o The contributors did not expect that their co

tributions would be used only to pay the 19

campaign's debts; and

o The 1990 campaign was not a sham--that is, t

current committee was not organized for t

exclusive purpose of raising money for 19

debts.

None of these circumstances seems to apply 

Mr. Nagle's 1990 reelection campaign; therefo

the committee may use the funds it has raised f

the 1990 elections to retire the 1988 committe

debts. See AOs 1988-5, 1987-4, 1986-12, et 

(Date issued October 27, 1989j Length: 4 pages
December 1989 FEDERAL ELECTION COrvlrvllSSION Volume 15, Numbe

JANUARY REPORTING SCHEDULE

All registered political com mittees must file

a year-end report, due January 31, 1990. The

chart below indicates the coverage and filing

dates for the different types of committees.

For more information on reporting requirements, call the FEC at 800/424-9530 or 202!376-

3120.

CHANGE IN FILING SCHEDULE

PACs and party committees may wish to 

monthly during 1990 in order to avoid filing 

and post-election reports, which are requ

from committees filing quarterly during an e

tion year. A committee that wants to change 

filing schedule must notify the Commission 

writing when filing a report under its cur

schedule. A committee may not change its f

frequency mor-e than once a year. 11 

104.5(c). The FEC r-equests that Preside

committees also inform the Commission in w

ing if they decide to change their reporting sc

ules.

*Or from the closing date of the last report

filed.

**A II other reports are Filed on the 20th of

each month and cover all financial activity of the

previous month.

ill**This category applies to any committee

which is filing its first report.

Coverage

Type of Filer Period

Authorized July 1*

Congressional through

Candidate December 31

Committees

Unauthorized July 1*

(PAC & Party) through

Committees December 31

Unauthorized December 1

(PAC & Party) through

Committees! December 31

Monthly **

Authorized October 1

Presidential through

Committees! December 31

Quarterly

Authorized December 1

Presidential through

Committees/ December 31

Monthly**

Newly Beginning of

Registered Federal

Committees* ** Election

Activity

through

December 31

Filing

Date

January 31

January 31

January 31

January 31

January 31

January 31

6

WHERE REPORTS ARE FILED

Committees must file all reports and st

ments simultaneously with the appropriate fed

and state officials. 11 CFR 108.5.

Filing with theFederal Government

o The principal campaign committees of H

candidates and committees supporting or 

posing only House candidates file with 

Clerk of the House, Office of Records 

Registration, 1036 Longworth House Of

Building, Washington, D.C. 20515. 11 C

104.4(c)(3) and 105.1.

o The principal campaign committees of Se

candidates and committees supporting or 

posing only Senate candidates file with 

Secretary of the Senate, Senate PUblic Reco

Hart Senate Office Building, Room 232, W

ington, D.C. 20510. 11 CFR 104.4(c)(2) 

105.2.

o All other committees, including the princ

campaign committees of Presidential ca

dates, file with the Federal Election Com

sion, 999 E Street, N.W., Washington, D

20463. 11 CFR 105.3 and 105.4.

Filing with State Governments

o The principal campaign committees of Cong

sional candidates seeking nomination must 

a copy of every report and statement with 

Secretary of State or the appropriate elect

official of the state in which the candi

seeks federal office. 11 CFR 108.3.

o The principal campaign committees of P

idential candidates must file copies of rep

and statements with the Secretary of Stat

the appropriate elections official of the stat

which the committee makes campaign expe

tures. These reports must contain all finan

transactions pertaining to that state during 

reporting period covered. 11 CFR 108.2.
FEDERALELECTIOI\J COIVIIVlISSIOI\J Volume 15, Number 12

Background

The matter was internally generated by a

referral from the FECls Reports Analysis Divi

sion.

An amendment to 9. state party committee'

year-end report showed a debt owed by the party'

federal account to the nonfederal account. The

debt had resulted from an expense cov~red by th

nontederal account for coordinated party expendi

tures on behalf'of federal candidates. (The Ac

permits party committees to incur campaign ex

penses that benefit their candidates. Such "co

ordinated party expenditures" have limits that are

separate from the contribution limits. 2 U.S.C

§44la(d).)

General Counsel's Report

The Commission found reason to believe tha

the state party and its treasurer had violated 1

CF R 102.5(a)(1)(i), which stipulates that, when 

com mittee maintains separate accounts for fed

eral and nonfederal activity, expenses connected

with federal. elections must be made from the

federal account.

The committee's 1986 reports disclosed

$100,749 in coordinated expenditures for direc

mailings, consulting and advertising on behalf o

six federal candidates. The committee had paid

two vendors in full and owed $82,723 to a thir

vendor. On subsequent amended reports, the

committee disclosed that the federal account had

paid the vendors $19.,909 of this debt and that th

nonfederal account had paid the balance, $62,823

That balance was reported as a debt to the

nonfederal account.

Responding to FEC inquiries, the state party

explained that there was not enough money in th

federal account in the weeks just before the

November 1986 elections to cover an advanc

payment to the vendor, so it paid the advanc

with its nonfederal funds. The committee reim

bursed the nonfederal account with several trans

fers made during 1987. While admitting th

violations had occurred, the respondents pointed

out that, because state law prohibited corporate

and labor contributions, the nonfederal accoun

did not contain funds impermissible under th

Federal Election Campaign Act. The Genera

Counsel disagreed, noting that, though state law

MUR 2588: Coordinated Party Expenditures

Paid by Nonfederal Account

This MUR, resolved through conciliation, involved

payments by a nonfederal account for coordinated

party expenditures on behalf of federal candi

dates.

7

Filing

Date

Reg./

Cert.

Mailing**

Date

Period

Covered*

Report

December 1989

TEXAS 18th DISTRICT SPECIAL ELECTION

REPORTING DATES

... The period begins with the close of books of

the last report filed by the committee. If the

committee has filed no previous reports, the period begins with the date of the committee's first

activity.

... ". Heports sent by registered or certified mail

must be postmarked by the mailing date. Otherwise, they must be received by the filing date.

... "'*Yhe Commission recommends that committees file a consolidated Post-RWlOf{ and Year-End

report by the filing date of the Post-RWlof!

Report. Otherwise, in lieu of a consolidated

report, committees must file two separate reports: a Post-Runat] report, due 1/8/90, covering

activity from 11/20/89 through 12/29/89; and a

Year-End report, due 1/31/90, covering activity

from 12/30/89 through 12/31/89.

Pre-Runoff -10/19-11/19 11/24 11/27

Post-Runoff &

Year-End* ** 11/20-12/31 1/8 1/8

TEXAS SPECIAL ELECTION: UPDATE

A special runoff election has been scheduled

on December 9, 1989, to fill the 18th Congressional District seat left vacant after the death of

Congressman Mickey Leland. Candidates eligible

for the runoff were selected in a November 7

special election. All com mittees participating in

the December 9 election should follow the reporting schedule below.

Candidates, PACs and party cornmittees involved in the special runoff should refer to the

October Record for details on reporting requirements.

o PACs and party com rnittees making' contributions or expenditures in connection with House

and Senate races fite reports and statements in

the state in which the candidate seeks election.

The law requires a copy of only that portion of

the report applicable to the candidatets) campaigning in that state. Committees supporting

Presidential candidates must file in the state(s)

in which the Presidential committee and donor

committee have their respective headquarters.

•

•
December 1989 FEDERAL ELECTION COMrvllSSION Volume 15, Numb

prohibited corporate, and labor contributions, individual contributions were not limited, as they

were under the Federal Election Campaign Act.

In addition, the committee claimed that the

misuse of funds was due to "widespread confusion," and that the misuse was mitigated by the

party's voluntary disclosure of the transaction in

its FEC reports. The General Counsel disputed

that claim, pointing out that the respondents had

encountered similar problems with the Commission during the previous election cycle--problems

that had resulted in an FEC audit and enforcement action.

After failing to reach a pre-probable cause

conciliation agreement, the General Counsel recommended that the Commission find probable

cause to believe that the party com mittee and its

treasurer had violated section 102.5(a)(1)0) of the

regulations by spending nonfederal funds to support federal candidates.

Commission Determination

The Commission adopted the General Counsel's recommendation and found probable cause to

believe the committee had violated the law. In a

SUbsequent conciliation agreement, the respondents agreed to pay a $9,500 civil penalty.

MUR 2073: Excessive Expenditures and

Acceptance of Excessive

Contributions by Presidential

Candidate's Committee

This MUR, resolved through conciliation, concerned a Presidential candidate and his com mittee's violation of Presidential primary expenditure

limits, acceptance by the committee of excessive

contributions, the committee's failure to itemize

certain contributions, and excessive expenditures

made by the candidate using his personal funds.

The enforcement matter resulted from an audit of

the committee's campaign finances.

General Counsel's Report

Misallocated and Excessive Expenditures.

Presidential primary candidates accepting public

funds must agree to adhere to expenditure limits,

which are set on a state-by-state basis during

each Presidential election cycle. The law specifies that, in each state, a Presidential candidate

may spend an amount equal to either 16 cents

times the voting age population of the state or

$200,000, whichever is greater. 2 U.S.C. §441a-

(b)(l)(a) and 26 U.S.C. S9035. The per-state limit

is further adjusted by the Consumer Price Index

each Presidential election year.

The audit revealed that the committee had

failed to properly allocate to the Iowa limit over

$200,000 in expenses incurred in connection with

the 1984 Iowa caucuses. These expenses included:

o Salaries, payroll taxes and employer FICA taxes

incurred by the campaign for certain staff

8

members who had worked in Iowa for f

more days (11 CFR 106.2(2)(ii));

o Travel and subsistence expenses incurr

some staff members who had worked in 

for five or more days (11 CF R 106.2(b)(2)(

o Advertising and polling expenses (11 

106.2(b)(2)(i);

o Overhead and miscellaneous expenses in

for offices in Iowa; and

o Compliance costs and fundraising costs (I

l06.2(c)(5».

The Com mission found reason to be

therefore, that the committee and its tre

had violated 26 U.S.C. §9035 and 2 U.S.C. §

(a), 441a(b)(l)(A) and (c) and 11 CFR 106

underallocating expenditures in Iowa and ex

ing the expenditure limits by over $100,000.

Excessive Contributions. The Comm

found reason to believe that the committe

its treasurer had violated section 44Ia(f) b

cepting excessive contributions. First, the 

mittee had accepted 77 excessive contrib

amounting to $37,920 from individuals an

political committee. The Presidential com

submitted documentation to show that m

the contributions had been refunded or rea

uted, The refunds, however, took an avera

263 days, and though the committee pr

reattrlbution forms for several contributor

committee failed to date them, as required 

11 CFR 104.8(d),1 making it impossible to 

mine how much time the Presidential com

took to reattribute the remaining excessiv

tributions. With regard to the excessive c

bution from the political committee, the 

revealed that the excessive amount was ref

to the PAC after 21 months.

The committee received six other exc

contributions, amounting to $104,600, in the 

of letters of credit from individuals. The 

mission found reason to believe that five of 

persons had violated the law by making exc

contributions. An additional prohibited cor

contribution was received-also in the form 

letter of credit-in violation of section 441b(

A final excessive contribution resulted 

an aborted investment plan undertaken o

committee's behalf by an individual working 

commodities market. The individual to

$9,000 check, drawn on committee funds, 

vest in the commodities market, The comm

later accepted two checks, for $15,000 

$30,000 respectively, and asserted to the 

mission that they were profits from the i

merit, The audit revealed, however, tha

$45,000 came from the investor's personal 

and that the $9,000 committee check was 

cashed. Committee records showed that i

the committee 140 days to reimburse him f

$15,000, and 245 days to reimburse him fo

$30,000.
FEDERAL ELECTION COMMISSION Volume 15, Number 1

o Failing to itemize all operating expenses ex

ceeding $200 in 1983 and 1984 (2 U.S.C. §43

(b){5»;

o Failing to itemize disbursements connected t

independent expenditures during 1983 and 198

(2 U.S.C. §434(b){6»;

o Failing to properly and continuously report out

standing debts in 1983 and 1984 (2 U.S.C

§434(b)(8) and 11 CF R 104.11); and

a Failing to identify contributors in the PAC

1987 mid-year report (2 U.S.C. S434(b)(3)(A)

(B».

For each violation alleged (a total of 11 counts)

the Commission asks the cou.rt to assess a civ

penalty equal to the greater of $5,000 or th

amount involved in the violation.

The Commission further asks that the cour

declare that Life PAC knowingly and willfull

committed the following additional violations:

o Failing to maintain and preserve adequate rec

ords in 1985 and 1986 (2 U.S.C. §432(c)(1)-(3

and (d»;

o Failing to maintain the committee's 1985 an

1986 bank records for three years and failing t

make them available for an audit by the Com

mission (11 CFR l04.14(b»; and

o Failing to file April, May, June and July 198

monthly reports on time (2 U.S.C. S434(a)(4

(B».

For each "knowing and willful" violation (a tota

of seven counts), the Com mission asks for civ

penalties equaling the greater of $10,000 or ZO

percent of the amount involved in the violation

(U.S. District Court for the Western District o

Washington, No. C89-1429, September 26, 1989.)

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10 QUESTIONS FROM CANDIDATES:

NEW FEC BROCHURE

The FEC has issued a new brochure answerin

the 10 questions most frequently asked about th

election law and regulations by candidates an

candidate committees.

"10 Questions from Candidates" answer

questions concerning:

o Candidate registration;

o Reporting deadlines;

o Treasurers' responsibilities;

o Itemized contributions;

o 48-hour contribution reporting notices;

o Disclaimers;

o Partnership contributions;

o Joint contributions;

o Contributions from foreign nationals; and

o Bounced cheeks.

9

December 1989

NEW LITIGATION

FEC v. Life Amendment PAC (C89-1429)

The FEC asks the district court to declare

that Life Amendment Political Action Committee

and Rick Woodrow, as treasurer, violated the

election law by:

o Failing to maintain adequate records of contributions received from individuals in 1983 and

1984' (2 U.S.C. §432(c)(l)-(3») and failing to

preserve the records for three years (2 U.S.C.

§432(d));

o Failing to maintain adequate records for 129

disbursements totaling over $72,000 in 1983 (2

U.S.C. S432(c)(5)};

o Failing to maintain Life PAC's bank records

from 1983 and 1984 for 3 years and failing to

make those records available for a Commission

audit (11 CPR l04.14(b»;

o Misreporting Life PAC's total receipts and disbursements during 1984 (2 U.S.C. S434(b)(2) and

(4»;

Com mission Determination

The Commission and the respondents entered

into a conciliation agreement in which the respondents agreed to pay a $50,000 civil penalty

for the offenses mentioned above. Separate

agreements resulted in a $17,000 penalty assessed

against the commodities investor and a $900 penalty against the corporation that had written the

letter of credit.

Itemized Contributions. The Commission

found reason to believe that the committee had

violated section 2 U.S.C. §434(b) by failing to

itemize 60 contributions from political com mittees and by failing to disclose the receipt of the

letters of credit. Under the election law, all

political committee contributions must be itemized by disclosing the name of the contributing

committee, addresss, amount and date of each

contribution. 2 U.S.C. §434(b){3)(B).

Candidate's Personal Expenditures. The

Commission found probable cause to believe that

the candidate had violated the law by spending

over $67JOOO of his own funds in excess of the

$50,000 limit set on Presidential candidates who

accept public funds. In this case, the expenses

took the form of credit card charges, loans to the

committee, direct contributions to the committee

and telephone charges paid by the candidate. The

committee took up to 217 days to reimburse the

candidate for his payments.

•

•
December 1989 FEDERALELECTIONCOMMISSION Volume 15, Numbe

10 Questions from Candidates is one of a

series of short brochures that the FEC distributes

to help candidates, political committees and the

general public comply with federal election laws

and get the most out of the agency's services.

Each brochure encapsulates a different aspect of

campaign finance law or FEC resources:

o Using FEC Campaign Finance Information explains how to gather information about the

financial activity of candidates and political

committees. It describes the FEC's computer

indexes and suggests ways to utilize them.

o Sale and Use of Campaign Information, a new

FEC publication, explains the "sale and use"

restriction that the Act places on information

taken from reports filed by candidates and

political committees.

o Public Funding of Presidential Elections gives a

brief history of the Presidential public funding

program--including the $1 tax checkoff for the

Presidential Election Campaign Fund-and an

explanation of how the process works. It also

explains the ways indi viduals may support publicly financed candidates.

o Committee Treasurers details the special responsibilities assigned to treasurers of political

committees by federal campaign finance law.

These responsibilities include authorizing expenditures, monitoring contributions, and filing

all required reports and statements.

o Filing a Complaint explains the steps that can

be taken if an individual wants to register a

for mal complaint concerning a possible violation of the election law.

Topics of other FEC brochures include:

o Advisory Opinions

o Candidate Registration

o Contributions

o Corporate/Labor Communications

o Corporate/Labor Facilities

o FEC and Federal Election Law

o Free FEC PUblications

o Independent Expenditures

o Local Party Activity

o Political Ads and Solicitations

o State Access to FEe Data

o State Elections and Federal Campaign Law

o Trade Associations

o Volunteer ActiVity

Any of these free brochures may be ordered

from the FEe by calling 800/424-9530 or 202/376-

3120, or by writing to the Commission at 999 E

St., NW, Washington, DC 20463. Multiple copies

of all brochures are available.

10

This cumulative index lists advisory opin

court cases, MUR summaries and 800 Line 

cles published in the Record during 1989. 

first number in each citation refers to the "

ber" (month) of the Record issue; the s

number, following the colon, indicates the 

number in that issue.

ADVISORY OPINIONS

1987-31: Solicitab1e member-ship classes of s

ities exchange (reconsideration), 4:3

1988-37: Affiliated status of two corporate 

after leveraged buy-out, 1:6

1988-44: Effect of statute of limitations on 

mittee's debts, 2:4

1988-45: Definition of national party comm

2:4

1988-46: Corporation's solicitation of licen

2:4

1988-47: Publisher's donation of free magazin

candidate prohibited, 1:6

1988-48: Contributions to trade association 

matched with charitable donations, 2:5

1988-49: Federal bankruptcy trustees not co

ered government contractors, 2:5

1989-1: Payment to Congressional employe

manuscript not an honorar-ium, 6:4 

1989-2: Committee's settlement of debt 

corporate creditor, 6:4

1989-3: Stockholder contributions to trade 

ciation PAC thr-ough payroll deduction, 6:5

1989-4: Federal committee's sale of asse

state committee, 7:4

1989-5: Refund of contribution made in the 

of another, 7:4

1989-6: Contribution of stock to Congres

candidate, 7:5

1989-7: Corporation's matching of PAC 

tributions with donations to charity, 8:4

1989-8: Solicitable class and name of PAC e

lished by corporation affiliated with partner

8:4

1989-9: PAC contributions matched with c

table donations, 8:5

1989-10: Candidate committee's financial s

after embezzlement by former treasurer, 9:

1989"'l'12: Act's preemption of state law gove

contributions, 9:3

1989-13: Corporation's plan to provide candi

with computer equipment for compliance 

poses, 10:5 .

1989-14: Restaurant's method of charging p

cal customers, 10:5
FEDERAL ELECTION COMMISSION Volume 15, Number 12

•

•

December 1989

1989-15: Contributions to special election nominee not running in primary runoff, 10:5

1989-16: Transfer between unaffiliated corporate

PACs, 12:2

1989-17: Bank holding company's solicitable

class, 12:3

1989-18: Trade association PAC's use of raffle

for fundraising, 12:4

1989-19: Sale of copies of FEC disclosure reports,

11:3

1989-20: Contributions by committee funded by

foreign-owned and foreign-financed corporation,

12:5

1989-22: Congressional campaign's use of funds

raised for 1990 election to retire 1988 debt, 12:5

COURT CASES

FEC v,

-AFSCME-PQ, 1:11

-Batts, Committee to Elect, 5:8

-Bookrnan &. Associates, 6:8

-Braun for Congress Committee, 1:10

-Bryant Campaign Committee, 10:8 and

11:4

-Bull for Congress, 1:II

-Californians for a Strong America (88-

1554), 1:9; (88-6499), 1:11 and 9:8

-Citizens Party, 1:12 and 7:6

-Colorado Republican Federal Campaign

Committee, 8:9

-Dietl for Congress, 1:10

-Franklin, 9:8

-Friends of Isaiah Fletcher, 6:8

-Furgatch (88-6047), 5:7 and 7:7

-Haley Congressional Committee, 1:9

-Holmes Committee, 3:3

-Life Amendment PAC (C88-860Z), 1:11

and 8:11; (C89-1429), 12:9

-National Organization for Women, 7:7

-Political Contributions Data, Inc., 11:5

-Populist Party, 1:12 and 5:8

-Richards for President (89-0254) 4:9 and

9:8; (88-2832), 5:8

- Rodriguez, 1:10

-Survival Education Fund, Inc., 3:4

-Taylor Congressional Committee, 1:10

-Webb for Congress, 10:9

-Weinberg, 5:9 and 11:5

11

Fund for a Conservative Majority, Debtor, 3:4 an

8:10

Goland v, U.S. and FEC, 6:8

United States v. Goland, 6:8

v, FEC

-Cornrnon Cause (85-1130), 9:7

-Common Cause (87-2224), 3:3

-Cornmon Cause (89-0524-GAG), 4:10

-Maine Right to Life Committee, Inc., 4:10

-Miller, 3:3 and 9:8

-Stern, 3:4 and 11:4

-USDC, 1:9 and 3:3

MURSUMMARIES

MURs 1528/1739: Party activities: prohibite

funds, transfers, allocations and loans, 4:7

MUR 1837: Impermissible activities of Senat

campaign committee, 10:9

MUR 2073: Excessive expenditures and accept

ance of excessive contributions by Presdientia

candidate's committee, 12:8 '

MUR 2175: Excessive and prohibited contribu

tions accepted 'by 1984 Presidential campaign

3:6

MUR 2262: Presidential candidate's failure t

register and report on time, 6:5

MUR 2286: Membership organization's politica

activity, 6:7

MUR 2356: PAC's failure to file reports on time

4:7

MUR 2545: Excessive contributions made and ac

cepted by PAC, 5:6

MUR 2588: Coordinated party expenditures pai

by nonfederal account, 12:7

MUR 2924: Contributions from party Senatoria

commitee to House candidates and from Con

gressional committee to Senate candidates, 9:6

800 LINE

Debt retirement by candidate committees, 1:7

Desi~nating a principal campaign committee, 3:2

Multicandldate committees, 7:10

Names of corporate and labor PACs, 9:10

Opinion polls, 8:8

Political activity and the workplace, 7:8

Recordkeeping rules for all committees, 5:9
Political Committees

Registered political committees are automatically sent the Record. Any change of address b

a registered committee must, by law, be made in writing as an amendment to FEe Form 

(Statement of Organization) and filed with the Clerk of the House, the Secretary of the Senate, o

the FEC, as appropriate.

Other Subscribers

Record subscribers (who are not political committees), when calling or mailing in a change o

address, are asked to provide the following information:

1. Name of person to whom the Record is sent.

2. Old address.

3. New address.

4. SUbscription number. The subscription number is located in the upper left hand corner of th

mailing label. It consists of three letters and five numbers. Without this number, there is n

guarantee that your subscription can be located on the computer.

Official Business

FEDERAL ELECTION COMMISSION

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'CHANGE OF ADDRESS

December 1989