FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

NOV 1 0 20U 

MEMORANDUM 

TO: Patricia C. Oirock 

Chief Compliance Officer 

Thomas E. Hintermister 

Assistant Staff Director 

Audit Division 

FROM: Lisa J. Stevenson i ^ 

Deputy General Counsel - Law 

Lorenzo Holloway 

Assistant General CounseP^ 

Compliance Advice 

Danita C. Alberico i /g. 

Attomey ^ 

SUBJECT: Interim Audit Report on the Oakland County Democratic Party (LRA 946) 

I. INTRODUCTION 

The Office of the General Counsel has reviewed the Interim Audit Report ("lAR") on the 

Oakland County Democratic Party. The lAR contains five findings: (1) Misstatement of Financial 

Activity; (2) Recordkeeping for Employees; (3) Disclosure of Occupation and Name of Employer; 

(4) Recordkeeping for Receipts; and (S) Use of Campaign Depository. We concur with the li^ 

Endings but have specific comments on the findings oh Recordkeeping for Receipts and Use of 

Campaign Depository. If you have any questions, please contact Danita C. Alberico, the attomey 

assigned to this audit. 

II. RECORDKEEPING FOR RECEIPTS (Finding 4) 

The lAR finds that the Committee failed to maintain adequate documentation to 

demonstrate that its gaming night contributions did not exceed $S0 per contributor. The 

Committee received contributions during twice-weekly "bingo nights." The lAR finds that the 
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Oakland County Democratic Party (LRA 946) 

Page 2 

average contribution at a gaming night was $88 per person and that the Committee did not properly 

record and account for contributions totaling $1,820,466. The Committee contends that, for 

purposes of the recordkeeping requirements under 11 C.F.R. § 102.9(a), each bingo night 

constituted three separate fondraising events rather than a single event because three separate 

gaming events were offered during the night. The Conunittee thus argues that it was not required 

to keep itemized records when participants spent less than $50 on each of three possible gaming 

activities that typically took place during a bingo night, regardless of whether the participant's 

total spending in one night exceeded $50. 

The lAR correctly states that the Commission considered the Committee's position, sought 

information about separation of gaming activities and their administrative functions, and 

concluded that the Committee's bingo nights were not separate fimdraising events, but rather were 

one event, requiring the Committee to obtain the name and address of any person who made 

contributions in excess of $50 during a gaming night. See Request for Commission Directive 69 

Guidance Involving the Oakland County Democratic Party, LRA 946 (Jan. 30,2014) and Request 

for Consideration of a Legal Question, LRA 946 (Mar. 28,2014). The lAR, however, does not 

make clear whether the Commission's interest in obtaining infprmation about the separation of 

gaming activities was communicated to the Committee and, if so, the response the auditors 

received from the Committee. 

The auditors advised this Office that it sought and received the information during a 

telephone conference call with the Committee and that it conununicated the information to the 

Commission for its consideration. To clarify the lAR and assist the Commission with addressing 

this issue in the context of the lAR, we recommend that the Audit Division revise the lAR to 

discuss the Committee's response. 

III. USE OF CAMPAIGN DEPOSITORY (Finding S) 

The lAR finds that the Committee failed to comply with 11 C.F.R. § 103.3(a) because the 

Committee did not use its campaign depository to deposit cash receipts and make cash 

disbursements related to its bi-weekly gaming activities. As part of this finding, the lAR notes that 

the cash disbursements did not comply with the Commission's regulations at 11 C.F.R. § 102.10, 

which require committees to use checks or similar drafts for disbursements over $100.' 

The Committee contends that it used vouchers for some of its disbursements, and the 

vouchers should be considered checks or similar drafts. See 52 U.S.C. § 30102(h)(1) and 11 

C.F.R. § 102.10. The Committee used its vouchers in the following manner. For prize awards 

over $50, the Committee required the winner to complete a voucher. This voucher form contained 

the winner's name and address, the date on which the prize money was disbursed, the winner's 

signature, the signature of the bingo worker disbursing the money, the amount of the prize 

' Since the requirement to use a campaign depository and the requirement to make disbursements with checks 

or similar drafts stem from separate regulatory provisions, compare 11 C.F.R. § 103.3(a) (campaign depository) with 

11 C.F.R. § 102.10 (disbursements using checks or similar drafts), the Audit Division should consider whether 

separate findings or severable sub-findings are appropriate for the Draft Final Audit Report. Commission Directive 

70. This allows the Commission to vote on the issues individually. Id. 
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Oakland County Democratic Party (LRA 946) 

Page 3 

awarded, and the nature of the game or activity for which the prize was awarded. When the 

prizewinner returned the completed voucher form to the bingo worker, the bingo worker paid the 

prize money to the prizewinner in cash. The Committee apparently retained the completed 

voucher forms as records of the prize payments, and report^ these as prize payments to the 

applicable individuals. 

We conclude that the Committee's vouchers are not checks or similar drafts. The Act 

requires political committees generally to make disbursements with checks drawn on accounts that 

the committees maintain at their designated depository institutions. 52 U.S.C. § 30102(h)(1). 

Commission regulations implementing this requirement have expanded the range of instruments 

or methods that corrunittees may use to effect their disbursements by allowing committees to use 

"similar drafts" to checks. See 11 C.F.R. § 102.10. Fundamental to both the applicable statute and 

regulation is the requirement that the check or similar draft be drawn on an account or accounts 

established at the committee's campaign depository. 52U.S.C. § 30102(h)(1); 11 C.F.R. § 102.10. 

Although there is no direct legislative history regarding these statutory provisions, the 

Commission has observed that the provisions seem^ designed to assure a complete and reliable 

"paper trail" for record keeping, disclosure and audit purposes. See Advisory Opinion 1993-04 

(Cox), n.2., citing Advisory Opinion 1986-18 (Bevill) (Commissioner Josefiak concurring). The 

Explanations and Justifications for 11 C.F.R. § 102.10 and its regulatory predecessors and 

cognates do not explain why the words "or similar draft" were added to the statutory language.^ 

However, the Commission has applied the quoted language to various fact si^tions in advisory 

opinions, allowing for alternative means of making disbursements so long as the funds are drawn 

from a campaign depository account.^ 

In this case, the Committee's method of disbursing prize awards to prize winners was to 

pay the winners cash drawn from that evening's gate receipts maintained in a cash tray, not from a 

campaign depository account. The cash itself was not drawn upon an account at a campaign 

depository, and the Committee's requirement that the prize winner submit a completed voucher 

does not change this &ct. Although the Coiiunittee argues that the voucher form is a "similar 

draft" that must be presented to a bingo worker in order for payment of the prize to ensue, the 

function of the voucher is not analogous to the function of a check, or of a wire transfer or 

computer-mediated instruction to debit an account Unlike checks or other kinds of drafts, the 

voucher is not an instrument of payment that will cause a debit at the Committee's campaign 

' See, e.g., House Document No. 94-293, Transmitting Proposed Reguiations Governing the Disclosure of 

Campaign Finances by Candidates and Committees Involved in Federal Elections Pursuant to Section 316(c) of the 

Federal Election Campaign Act of 1971, as Amended, at 32 (94"' Cong., 1" Sess.) (DM. 4,1973); House Document 

No. 93-44, Transmitting The Commission's Proposed Regulations Governing Federal Elections, Pursuant to Section 

316(c) of the Federal Election Campaign Act, as Amended, at 43 (93"* Cong., 1" Sess.) (Jan. 12, 1977); Explanation 

and Justification of Regulations Concerning Amendments to Federal Election Campaign of 1971,43 Fed. Reg. 15080, 

13083 (Mar. 7,1980). 

' See Advisory Opinions 1982-23 (Sigmund) (wire transfer of funds fiom political committee's campaign 

depository to creditor's bank account is "similar draft."); 1993-04 (Cox) (electronic bili-paying service to make 

disbursements is "similar draft" because it draws on an account maintain^ at a campaign depository). See also 

Advisory Opinion 1986-18 (Bevill) (committee must transfer funds it wished to use for Federal election purposes from 

investment account back to depository account before spending them.). 
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Oakland County Democratic Party (LRA 946) 

Page 4 

depository. See Advisory Opinion 1993-04 (Cox) (the fact that the computer bill paying service's 

operation does not involve the use of an article of paper that serves as the operative commercial 

instrument is not dispositive, but rather the fact that Ae bill-paying service involves a debiting of 

the campaign depository account). We, therefore, conclude that the vouchers are not checks or 

similar ^afts, and concur with the Audit Division's finding.