Final Audit Report of the 

Commission on 

Chris Dodd for President, Inc. 

January 24, 2007 - September 30, 2008 

Why the Audit 

Was Done 

Federal law requires the 

Commission to audit every 

political committee 

established by a candidate 

who receives public fiinds for 

the prinmry campaign.^ The 

audit determines whether the 

candidate was entitied to all 

of the matching fiinds 

received, whether the 

campaign used the matehing 

fiinds in accordance with the 

law, whether the candidate is 

entitf ed to additional 

matehing funds, and whether 

the campaign otherwise 

complied witii the limitations, 

prohibitions, and disclosure 

requirements of the election 

law. 

Future Action 

The Commission may initiate 

an enforcement action, at a 

later time, with respect to any 

of the matters discussed in 

this report. 

About the Committee (p. 2) 

Chris Dodd for President, Inc. is the principal campaign committee of 

Christopher J. Dodd, a candidate for the Democratic Party's 

nomination for the office of President of the United States. The 

Committee is headquartered in West Hartford, Connecticut. For 

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

Financial Activity (p. 3) 

• Receipts 

o Contributions from Individuals 

o Contributions from Political Committees 

o Transfers from Affiliated Committees 

o Loans Received 

o Matehing Funds Received 

o Offsets to Operating Expenditures 

o Other Receipts 

Total Receipts 

• Disbursements 

o Operating Expenditures 

o Loan Repayments 

o Transfers to Other Authorized Committee^ 

o Contribution Refimds 

Total Disbursements 

Commission Findings (p. 4) 

• Net Outstanding Campaign Obligations (Finding 1) 

• Receipt of Prohibited Contribution and Contributions 

that Exceed Limits (Finding 2) 

• Misstatement of Financial Activity (Finding 3) 

$ 9,848,996 

750,402 

4,632,357 

1,302,811 

1,961,742 

127,012 

47,506 

$ 18,670,826 

$ 14,978,850 

1,302,811 

507,910 

1.365,901 

$ 18,155,472 

' 26U.S.C.§9038(a). 

^ This represents the transfer of general election contributions redesignated to the Candidate's Senate 

committee. Friends of Chris Dodd. 
Final Audit Report of the 

Cominission on 

Chris Dodd for President, Inc. 

January 24, 2007 - September 30, 2008 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Inventory of Campaign Records 1 

Audit Hearing 1 

Part II. Overview of Campaign 

Campaign Organization 2 

Overview of Financial Activity 3 

Part III. Summaries 

Conunission Findings 4 

Summary of Amounts Owed to the U.S. Treasury 5 

Part IV. Commission Findings 

Finding 1. Net Outstanding Campaign Obligations 6 

Finding 2. Receipt of Prohibited Contribution and 

Contributions that Exceed Limits 9 

Finding 3. Misstatement of Financial Activity 16 
Parti 

Backgroimd 

Authority for Audit 

This report is based on an audit of Chris Dodd for President, Inc. (CDFP), undertaken by 

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

by Section 9038(a) of Title 26 of tfie United States Code. That section states "After each 

matching payment period, the Commission shall conduct a thorough examination and 

audit of the qualified campaign expenses of every candidate and his authorized 

committees who received [matching] payments under section 9037." Also, Section 

9039(b) of tfie United States Code and Section 9038.1(a)(2) ofthe Commission's 

Regulations state that the Commission may conduct other examinations and audits from 

time to time as it deems necessary. 

Scope of Audit 

This audit examined: 

1. The receipt of excessive contributions and loans; 

2. The receipt of contributions from prohibited sources; 

3. The receipt of transfers from other authorized committees; 

4. The disclosure of contributions and transfers received; 

5. The disclosure of disbursements, debts and obligations; 

6. The recordkeeping process and completeness of records; 

7. The consistency between reported figures and bank records; 

8. The accuracy of the Statement of Net Outstanding Campaign Obligations; 

9. The campaign's compliance with spending limitations; and 

10. Other campaign operations necessary to the review. 

Inventory of Campaign Records 

The Audit staff routinely conducts an inventory of campaign records before it begins the 

audit fieldwork. CDFP's records were materially complete and the fieldwork began 

immediately. 

Audit Hearing 

CDFP requested a hearing before the Conunission. The request was granted and the 

hearing was held on August 31,2011. At the hearing, CDFP addressed issues related to 

the receipt of prohibited and excessive contributions, as well as, the misstatement of 

financial activity. 
Part II 

Overview of Campaign 

Campaign Organization 

Important Dates 

• Date of Registration January 11,2007 

• Eligibility Period November 26,2007 - January 3,2008^ 

• Audit Coverage January 24, 2007 - September 30, 2008'' 

Headquarters West Hartford, Coimecticut 

Bank Information 

• Bank Depositories Two 

• Bank Accounts One checking, two brokerage 

Treasurer 

• Treasurer When Audit Was Conducted Kathryn Damato 

• Treasurer During Period Covered by Audit Kathryn Damato 

Management Information 

• Attended Commission Campaign Finance 

Seminar 

Yes 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid staff 

^ The period during which the Candidate was eligible for matching fiinds began on the date of certification of his 

matching fund eligibility and ended on the date the Candidate announced his withdrawal from the campaign. See 

11 CFR §9033. 

* Limited reviews of receipts and expenditures were performed after September 30,2008, to determine whether the 

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

(Audited Amounts) 

Cash-on-hand @ January 24,2007 $ 0 

o Contributions from Individuals $ 9,848,996' 

o Contributions from Political Conunittees 750,402 

o Transfers from Affiliated Conunittees 4,632,357 

o Loans Received 1,302.811 

o Matching Funds Received 1,961,742*' 

o Offsets to Operating Expenditures 127,012 

o Other Receipts 47,506 

Total Receipts $ 18,670,826 

o Operating Expenditures $ 14,978,850 

o Loan Repayments 1,302,811 

o Transfers to Other Authorized Conunittee 507,910' 

o Contribution Refimds 1,365,901 

Total Disbursements $ 18,155,472 

Cash-on-hand @ September 30,2008 $ 515,354 

Figure includes approximately 25,000 contributions from more than 19,200 individuals. 

As of September 30,2008, CDFP had made four matching fund submissions totaling $1,999,514 of which 

$1,961,742 was certified by the Commission and paid to CDFP. This represents 9 percent of the maximum 

entitiement ($21,025,000) a 2008 Presidential candidate could receive. 

This represents the transfer of general election contributions redesignated to the Candidate's Senate committee. 

Friends of Chris Dodd. 
Part III 

Summaries 

Commission Findings 

Finding 1. Net Outstanding Campaign Obligations 

As part of audit fieldwork, tiie Audit staff reviewed CDFP's financial activity through December 

31,2010. The review indicated that the Candidate did not receive matching fimd payments in 

excess of his entitlement. In response to the Preliminary Audit Report, Counsel for CDFP did 

not dispute tfiis fmding, but noted that, in regard to the general election contributions maintained 

in a brokerage account, the basis value of the brokerage accoimt, not the fair market value, 

should have been utilized in valuation. 

The Commission approved a fmding tfiat CDFP did not receive matching fund payments in 

excess of the Candidate's entitlement. (For more detail, see p. 6) 

Finding 2. Receipt of Prohibited Contribution and 

Contributions that Exceed Limits 

During audit fieldwork, the Audit staff reviewed all contributions from other political 

conimittees. The review identified a prohibited in-kind contribution of $15,423 from the 

Intemational Association of Firefighters (lAFF) for the primary election, as well as, $51,000 in 

excessive primary election contributions from other political committees. In addition, the Audit 

staffs review of general election contributions indicated that CDFP had not resolved 

contributions totaling $244,050 which required a redesignation and transfer out or a refimd to tfie 

contributor. 

In response to die Preliminary Audit Report, CDFP disputed whether it had in fact received a 

prohibited contribution and the amount of the prohibited in-kind contribution from the lAFF, 

which CDFP believed to be lower based on the documentation it provided. Regarding the 

excessive contributions from other political conimittees of $51,000, CDFP demonstrated that 

$6,700 did not exceed limits and untimely refimded contributions totaling $39,500. Finally, 

CDFP's response reduced tfie amount of general election contributions which required a 

redesignation and transfer out or a refimd to the contributor to $7,100. 

The Coirunission approved a finding tiiat CDFP received a prohibited in-kind contribution from 

lAFF of $5,784 and received excessive contributions from otiier political committees totaling 

$44,300 of which $39,500 were refimded in an untimely manner and $4,800 were not resolved. 

The Commission also approved a finding that CDFP has not resolved general election 

contributions of $7,100. (For more detail, see p. 9) 

Finding 3. Misstatement of Financial Activity 

During audit fieldwork, a comparison of reported figures with bank records revealed that CDFP 

understated its receipts by $355,240 and overstated its disbursements by $190,935 in 2008. In 

response to the Preliminary Audit Report, CDFP amended its reports, but excluded an 

adjustment relating to net realized brokerage losses. As a result, receipts for 2008 remain 

misstated. 

The Commission approved a finding tfiat CDFP misstated financial activity for 2008. 

(For more detail, see p. 16) 
Summary of Amounts Owed to the U.S. Treasury 

• Finding 2 Receipt of Contributions that Exceed $ 11,900 

Limits - Unresolved ($4,800 + $7,100) 
Part IV 

Commission Findings 

Finding 1. Net Outstanding Campaign Obligations 

Summary 

As part of audit fieldwork, the Audit staff reviewed CDFP's financial activity through December 

31,2010. The review indicated that the Candidate did not receive matching fiind payments in 

excess of his entitlement. In response to the Preliminary Audit Report, Counsel for CDFP did 

not dispute this finding, but noted that, in regard to the general election contributions maintained 

in a brokerage account, the basis value of the brokerage account, not the fair market value, 

should have been utilized in valuation. 

The Commission approved a finding that CDFP did not receive matching fund payments in 

excess of the Candidate's entitlement. 

Legal Standard 

A. Net Outstanding Campaign Obligations (NOCO). Within 15 days after the candidate's 

date of ineligibility, tfie candidate must submit a statement of "net outstanding campaign 

obligations." This statement must contain, among other things: 

• The total of all committee assets including cash-on-hand, amounts owed to the conunittee 

and capital assets listed at their fair market value; 

• The total of all outstanding obligations for qualified campaign expenses; and 

• An estimate of necessary winding-down costs. 11 CFR §9034.5(a). 

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

ineligibility, a candidate has net outstanding campaign obligations as defmed under 11 CFR 

§9034.5, that candidate may continue to receive matching payments provided that he or she still 

has net outstanding campaign debts on the day when the matching payments are made. 

11 CFR §9034.1(b). 

Facts and Analysis 

A. Facts 

The Candidate's date of ineligibility was January 3,2008. As part of audit fieldwork, the Audit 

staff reviewed CDFP's financial activity through December 31,2010, and prepared the 

Statement of Net Outstanding Campaign Obligations that appears on the next page. 
Chris Dodd for President, Inc. 

Statement of Net Outstanding Campaign Obligations 

Asof January 3,2008 

Prepared through December 31,2010 

Assets 

Primary Election Cash in Bank 

General Election Cash in Bank 

Accounts Receivable 

Capital Assets 

Total Assets 

Liabilities 

$ 271,389 

1,706,575 

46,899 

8,407 

$2,033,270 

Primary Election Accounts Payable 

General Election Accounts Payable 

Loans Payable 

Winding Down Costs: 

Actual 1/4/08-12/31/10 

Amounts Payable to U.S. Treasury for: 

Unresolved Excessive Contributions (See Finding 2) 

Total Liabilities 

Net Outstanding Campaign Obligations (Deficit) as of January 3,2008 

$ 542.065 

1.706.575 [a] 

1,302,811 

1.301.910 [b] 

4.800 [c] 

4.858,161 

($2.824.891) 

Footnotes to NOCO Statement: 

[a] The NOCO statement represents the primary campaigns fmancial position at the date of ineligibility 

(DOI). To ensure that the need to refimd general election contributions had no impact on matching fund 

entitiement. the Audit staff adjusted this payable to match the general election cash in bank amount. 

Prior to DOI. CDFP received general election contributions of $1,749,670; however, at DOI, the fair 

market value of the brokerage account in which these contributions were maintained was $1,706,575, a 

loss of $43,095. 

[b] Estimated winding down costs are not included above because this would only increase the deficit. It is 

likely that CDFP is stfll incurring minimal salary and legal expenses. 

[c] This amount does not include $7,100 in unresolved excessive general election contributions. 
Shown below are adjustments for fiinds received after January 3,2008, through July 17,2008 

(the date of the last matching fimd payment): 

Net Outstanding Campaign Obligations (Deficit) as of 1/3/08 ($2,824,891) 

Private ConUributions and Other Receipts Received 1/4/08 

through 7/17/08 

503,712 

Matching Funds Received 1/4/08 through 7/17/08 1,961,742 

Remaining Net Outstanding Campaign Obligations 

(Deficit) as of 7/17/08 

($359,437) 

As presented above, CDFP has not received matching fimd payments in excess of its entitlement. 

B. Preliminary Audit Report & Audit Division Recommendation 

The Audit staff presented the NOCO to CDFP representatives at the exit conference. In its 

response, CDFP did not address the NOCO. 

In the Preliminary Audit Report, the Audit staff recommended that CDFP demonstrate whether 

an adjustment(s) was required to any component of tfie NOCO statement or provide any other 

comments it desired. 

C. Committee Response to Preliminary Audit Report 

In response to the Preliminary Audit Report, Counsel for CDFP (Counsel) did not dispute the 

NOCO but stated that incorrect amounts were presented for "General Election Cash in Bank" 

and "General Election Accounts Payable" because these figures were generated using the fair 

market value instead of the basis value of the account. Counsel fiirther added that "While this 

error does not affect the Committee's net financial position, it is significant in light of Findings 2 

and 3..." 

D. Draft Final Audit Report 

In tfie Draft Final Audit Report, the Audit staff concluded that the general election brokerage 

account was correctly presented at fair market value as of the Candidate's date of ineligibility, m 

accordance witfi 11 CFR §9034.5(a)(2)(i). 

E. Committee Response to the Draft Final Audit Report 

CDFP did not mention this matter in its response to the Draft Final Audit Report. 

F. Audit Hearing 

Counsel for CDFP did not discuss this matter during the audit hearing. 

Commission Conclusion 

On March 1,2012, the Commission considered the Audit Division Reconunendation 

Memorandum in which the Audit staff recommended the Commission adopt a finding that the 

Candidate did not receive matching fimd payments in excess of his entitlement. 

The Commission approved tfie Audit staffs recommendation. 
Finding 2. Receipt of Prohibited Contribution and 

Contributions that Exceed Limits 

Summary 

During audit fieldwork, the Audit staff reviewed all contributions from other political 

committees. The review identified a prohibited in-kind contribution of $15,423 from the 

Intemational Association of Furefighters (lAFF) for the primary election, as well as, $51,000 in 

excessive primary election contributions from other political comniittees. In addition, the Audit 

staffs review of general election contributions indicated that CDFP had not resolved 

contributions totaling $244,050 which requued a redesignation and transfer out or a refimd to the 

contributor. 

In response to tiie Preliminary Audit Report, CDFP disputed whether it had in fact received a 

prohibited contribution and the amount of tiie prohibited in-kind contribution from the lAFF, 

which CDFP believed to be lower based on the documentation it provided. Regarding the 

excessive contributions from other political committees of $51,000, CDFP demonstrated that 

$6,700 did not exceed limits and untimely refiinded contributions totaling $39,500. Finally, 

CDFP's response reduced the amount of general election contributions which required a 

redesignation and transfer out or a refimd to the contributor to $7,100. 

The Commission approved a fmding tiiat CDFP received a prohibited in-kind contribution from 

lAFF of $5,784 and received excessive contributions from other political committees totaling 

$44,300 of which $39,500 were refunded in an untimely maimer and $4,800 were not resolved. 

The Commission also approved a finding that CDFP has not resolved general election 

contributions of $7,100. 

Legal Standard 

A. Authorized Committee Limits. An authorized conunittee may not receive more than a total 

of $2,300 per election from any one person or $5,000 per election from a multicandidate political 

committee based on limits determined for tiie 2008 cycle. 2 U.S.C. §441a(a)(l)(A), (2)(A) and 

(f); 11 CFR §§110.1(a) and (b) and 110.9. 

B. 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 accoimt and: 

o Keep enough money in the account to cover all potential refimds; 

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

o Include tfiis explanation on Schedule A if tfie contribution has to be itemized 

before its legality is established; 

o Seek a redesignation of the excessive portion, following the instructions provided 

in the Commission regulations (see below for explanation of redesignation); and 

o If the committee does not receive a proper redesignation witfiin 60 days of 

receiving the excessive contribution, refimd the excessive portion to the donor. 

11 CFR §103.3(b)(3), (4) and (5). 

C. Redesignation of Excessive Contributions. When an authorized candidate conunittee 

receives an excessive contribution (or a contribution that exceeds the committee's net debts 
10 

outstanding), tfie committee may ask the contributor to redesignate tiie excess portion of the 

contribution for use in another election. The committee must inform the contributor that: 

1. The redesignation must be signed by the contributor; 

2. The redesignation must be received by tiie committee witiiin 60 days of tiie committee's 

receipt of the original contribution; and 

3. The contributor may instead request a refund of tiie excessive amount. 

11 CFR §110.1(b)(5). 

Within 60 days of receiving the excessive contribution, the committee must either receive the 

proper redesignation or refimd tiie 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 tiie 

redesignation in order for it to be effective. 11 CFR §110.1(l)(5). 

D. General Election Contributions. If a candidate is not a candidate in the general election, 

any contributions made for tiie general election shall be refimded to tiie contributors or 

redesignated in accordance witii 11 CFR §§ 110.1(b)(5) or 110.2(b)(5), as appropriate. 

E. Unreimbursed Value of Transportation. The unreimbursed value of transportation 

provided to any campaign traveler is an in-kind contribution from the service provider to the 

candidate committee on whose behalf the campaign traveler traveled. 11 CFR § 100.93(b)(2). 

F. Payment of Transportation. If a campaign traveler uses any other means of transportation, 

with the exception of an airplane, the campaign committee on whose behalf the travel is 

conducted, must pay the service provider within 30 calendar days of the date of receipt of the 

invoice for such travel, but not later tiian 60 calendar days after the date the travel began. 

11 CFR § 100.93(d). 

G. Receipt of Prohibited Contribution from Labor Organizations. Political campaigns may 

not accept contributions made from the general treasury funds of labor organizations. 

2 U.S.C. §441b. 

Facts and Analysis 

A. Receipt of Prohibited Contribution 

1. Facts 

During audit fieldwork, the Audit staff noted tiiat tiie Intemational Association of Fire 

Fighters billed CDFP $12,088 on February 12,2008, for a share of tiie rental cost of an RV, 

which was decorated to identify Senator Dodd's presidential campaign. The lAFF invoice, 

printed on its letterhead, read as an agreement between the lAFF and CDFP. It stated that 

tiie RV was rented for a period of forty-eight days from November 18,2007 to January 4, 

2008. The invoice indicated tiiat CDFP used tiie RV for eighteen days in December 2007, 

through the date of ineligibility. The lAFF prorated the cost using a daily rate. The total 

cost of tiie rental for tiie forty-eight days was $32,233, witii $15,423 attributed to tiie cost of 

tiie RV and $16,810 to the cost of "wrapping" it to identify the campaign. The invoice 

requested tiiat payment of $12,088 be made witiiin sixty days to tiie Intemational 

Association of Firefighters Interested in Registration and Education PAC (FIREPAC), a 

separate segregated fund of the lAFF. 
8 

9 

11 

In its December 2007 monthly report, FIREPAC disclosed making an independent 

expenditure^ on November 28,2007, m support of Dodd for "RV Art & Wrapping" in the 

amount of $16,810^. When questioned, CDFP representatives stated that the lAFF initially 

paid for the RV to use as transportation to events involving communications with the 

lAFF's restricted class. They stated that FIREPAC paid to wrap the RV because it was a 

communication expressly advocating Senator Dodd's presidential candidacy, which had not 

been coordinated with CDFP. CDFP later sought to determine whether it could use the 

wrapped RV from the lAFF for its own purposes. The lAFF made the RV available and 

CDFP used it just prior to the Iowa caucus. As mentioned above, the invoice for $12,088 

was for a portion of the cost to rent and wrap the RV; however, CDFP paid the entu:e RV 

rental and wrapping cost of $32,233. It should also be noted that CDFP's payment occurred 

more than one-and-a-half years after the invoice date. After reporting the independent 

expenditure, FIREPAC disclosed a debt owed by CDFP in its March 2008 monthly report 

for the fiill cost of the RV ($32,233) and continued to report this debt until it reported the 

reimbursement in its December 2009 monthly report'^. 

2. Preliminary Audit Report & Audit Division Recommendation 

In response to a discussion of this issue at tiie exit conference, CDFP representatives 

provided a copy of a reimbursement check, dated October 21,2009, to FIREPAC for 

$32,233. CDFP representatives stated tfiat CDFP paid botfi for tfie use of the RV and tfie 

cost of the wrap to avoid receiving an in-kind contribution. In response to other inquiries 

from the Audit staff, CDFP representatives stated that it was their understanding that the 

lAFF paid the rental cost of the RV; that the same RV wrapping was utilized by both the 

lAIT and CDFP; and that they were not aware of any other expenses that were paid by 

FIREPAC relating to the use or wrap of the RV after CDFP acquired its use. 

The Audit staff acknowledged tiiat tiie payment of $32,233 to FIREPAC by CDFP was an 

attempt to rectify this matter. However, the rental portion of the RV cost ($15,423), 

apparently paid by the lAFF, appeared to be a prohibited contribution. Labor organizations 

are prohibited from making contributions to political campaigns. The contribution was 

resolved in an untimely maimer by CDFP as a result of the reimbursement made to 

FIREPAC, noted above. 

In the Preliminary Audit Report, the Audit staff recommended that CDFP provide 

documentation demonstrating that it did not receive a prohibited contribution of $15,423 

from the lAFF, including documentation to verify that the lAFF did not pay for the rental 

portion of the RV. 

3. Committee Response to Preliminary Audit Report 

CDFP's response did not include any additional documentation. However, Counsel 

maintained that CDFP could not be found to have received a prohibited contribution when it 

was directed (on the lAFF's invoice) to pay FIREPAC and it simply complied. In addition. 

FIREPAC reported independent expenditures of approximately $374,000 in support of CDFP for the 2008 

election. 

This payment was not verified with lAFF or FIREPAC as having been made for the rental or the wrap. 

A reimbursement from CDFP was inadvertentiy deposited into FIREPAC's non-federal account. The 

subsequent transfer to correct the deposit error was reflected on FIREPAC's 2009 Year-End report. 
12 

Counsel stated that even if CDFP should have paid tiie lAFF, tiie 60-day timetable in 11 

CFR §100.93 should not apply because it applied only to non-commercial forms of 

transportation. Counsel maintained that "the primary purpose of the wrapped bus [RV] was 

not to transport people from place to place, but rather to serve as an unusual form of 

campaign visibility, like tiie C-SPAN bus or tiie Ron Paul blimp." Analyzed in tiiis manner. 

Counsel believed the proper question was whether the campaign paid for the use of tiie RV 

within a commercially reasonable time (Counsel cited 11 CFR §114.9(d) - Use or Rental of 

Corporate or Labor Organization Facilities by Other Persons). Counsel further added that 

the circumstances that led to the delay in payment were not adequately considered. The 

response stated that while the payment remained outstanding, CDFP was in a deficit 

position with many competing obligations that it sought to manage as best it could. Counsel 

maintained that CDFP chose to pay the full cost of tiie RV rental and wrap, in an abundance 

of caution, even though there was a strong argument that it could have paid less. 

Regardless of whetiier tiie payment for the use of tiie RV is considered under 11 CFR 

§100.93 - use of non-commercial forms of transportation or 11 CFR §114.9(d) - use of 

corporate or labor organization facilities, reimbursement was not made within a 

commercially reasonable time. 

4. Draft Final Audit Report 

The Draft Final Audit Report concluded tiiat CDFP received a prohibited contribution of 

$15,423 from tfie L\FF. 

5. Committee Response to the Draft Final Audit Report 

In response to the Draft Final Audit Report, Counsel stated there was no sound basis for a 

finding that CDFP received a prohibited contribution from the lAFF. Counsel stated tiie 

following factors for the Commission's consideration. First, the amount in question should 

be $12,088, not $15,423, since tiiis was tiie amount billed to CDFP. Second, tiie billing was 

actually not from the union itself, but rather the union's separate segregated fimd, 

FIREPAC. Third, CDFP paid FIREPAC for tiie full cost of tiie RV rental and wrap out of 

an abundance of caution, and FIREPAC appropriately reported a debt owed by CDFP and 

subsequently deposited CDFP's payment into its account. 

6. Audit Hearing 

During the audit hearing. Counsel reiterated the points made in response to the Draft Final 

Audit Report to support that CDFP did not accept a prohibited contribution from the lAFF. 

Counsel further mentioned that a possible explanation for the invoice being printed on the 

lAFF's letterhead could be that tiie lAFF handled tiie administrative fimctions of its separate 

segregated fimd, FIREPAC. 

Commission Conclusion 

On March 1,2012, tiie Coinmission considered tiie Audit Division Recommendation 

Memorandum in which the Audit staff recommended the Coinmission find that CDFP 

received a prohibited contribution of $15,423 from tiie lAFF. 

Based on the documented pro rata share of usage by CDFP, tiie Commission approved a 

finding for tiie receipt of a prohibited contribution of $5,784 (18 days/48 days x $15,423). 
13 

However, CDFP's receipt of a prohibited contribution was mitigated by CDFP's repayment 

(albeit untimely) of the entire RV rental and wrapping cost. 

B. Apparent Excessive Contributions from Other Political Committees 

1. Facts 

During audit fieldwork, the Audit staff identified seventeen apparent excessive contributions 

totaling $51,000 from other political coinmittees. The contributions initially identified by 

the Audit staff included: 

• Three contributions totaling $8,000 that had been timely refunded by CDFP; 

however, the refimd checks never cleared CDFP's bank account. 

• A contribution of $4,000 for which CDFP presented a timely, completed letter of 

redesignation to the Candidate's Senatorial Committee, Friends of Chris Dodd 

(FOCD). CDFP neitiier transferred tiie contribution to FOCD, nor refunded it". 

• Thirteen contributions totaling $39,000 for which CDFP had failed to provide any 

evidence of a refimd or redesignation. 

2. Preliminary Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff provided a listing of these apparent excessive 

contributions. Counsel did not address these contributions in its response. 

In tiie Preliminary Audit Report, tiie Audit staff recommended that CDFP provide 

documentation demonstrating that it did not receive excessive contributions. Such 

documentation was to include copies of refimd checks negotiated in a timely manner, or 

redesignation letters signed and dated in a timely manner. Absent such documentation, the 

Audit staff recommended that CDFP make appropriate refunds to contributors and provide 

evidence of such actions (copies of the front and back of negotiated refimd checks) or make 

a payment of $51,000 to tiie U.S. Treasury. 

3. Committee Response to Preliminary Audit Report 

In response to the Preliminary Audit Report, Counsel provided documentation 

demonstrating that three contributions totaling $6,700 were not excessive. For the 

remaining fourteen contributions totaling $44,300, copies of refiind checks dated November 

30,2010, were submitted. 

4. Draft Final Audit Report 

In the Draft Final Audit Report, tiie Audit staff noted tiiat CDFP demonstrated tiiat tiiree 

contributions totaling $6,700 did not exceed the limits, twelve contributions totaling 

$39,500 were refimded in an untimely manner, and two contributions totalmg $4,800 

remained imresolved until evidence was provided that the refimd checks had been 

negotiated. The Audit staff also recommended that, if CDFP was unable to provide such 

evidence, tiie unresolved excessive contributions of $4,800 should be disgorged to the U.S. 

Treasury. 

5. Committee Response to the Draft Final Audit Report 

Counsel did not offer any comments regarding the apparent excessive contributions from 

otiier political committees in CDFP's response to the Draft Final Audit Report. 

" It was later determined that this contribution was not excessive. 
14 

6. Audit Hearing 

At the audit hearing. Counsel did not discuss this matter. 

Commission Conclusion 

On March 1,2012, the Coinmission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended the Coinmission find that CDFP 

received excessive contributions from other political coinmittees totaling $44,300. Of this 

amount, CDFP demonstrated that contributions totaling $39,500 were refiinded in an 

untimely maimer and the remaining contributions of $4,800 are unresolved. 

The Commission approved the Audit staffs recommendation. 

C. Receipt of General Election Contributions 

1. Facts 

During audit fieldwork, the Audit staff identified contributions designated for the general 

election totaling $244,050. As the Candidate did not participate in the general election, 

these contributions had to be either redesignated and transferred out, or refunded. In 

accordance with Advisory Opinion 2008-04 (AO), CDFP had six days from the receipt of 

the AO (dated September 2,2008) to obtain redesignations or make refimds of the general 

election contributions. Initially, the Audit staff did not locate redesignation letters 

associated with these contributions and noted that sufficient CDFP fimds were not available 

to transfer these fimds to FOCD or make refimds to tiie contributors. The Audit staff 

considered these apparent excessive contributions unresolved until CDFP provided 

associated redesignation letters. 

2. Preliminary Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff provided CDFP representatives with a schedule 

outlining tiie general election contributions. In response. Counsel maintained that CDFP 

had properly refimded all its general election contributions. 

In the Preliminary Audit Report, the Audit staff recommended that CDFP provide 

documentation demonstrating that these contributions were not excessive. Such 

documentation was to include copies of timely negotiated refund checks or timely signed 

and dated redesignation letters. Absent this documentation, the Audit staff directed CDFP 

to make appropriate refimds to contributors and provide evidence of such actions (copies of 

the front and back of negotiated refimd checks), or make a payment of $244,050 to the U.S. 

Treasury. 

3. Committee Response to Preliminary Audit Report 

In response to the Prelimmary Audit Report, Counsel maintained that only $14,900 of the 

$244,050 in general election contributions awaited refimd or disgorgement. Counsel also 

provided the following documentation in regards to the general election contributions: 

a. Copies of thirty redesignation letters for contributions totaling $74,800, which were 

all completed and signed by the contributors. All the letters requested redesignation 

to the FOCD 2010 primary or general election and were timely obtained by CDFP. 
15 

b. A copy of an email confirmation from CDFP's receipts processing vendor 

demonstrating that it had processed a refimd of a $2,300 contribution on September 

13,2007. 

c. A copy of a negotiated disgorgement check for a contribution of $5,000 and a letter 

sent to tiie Bureau of Public Debt on November 25,2008. Other documentation 

stated that the political action conunittee which made the original contribution no 

longer existed. 

d. A copy of a negotiated disgorgement check to the U.S. Treasury for $144,950, dated 

November 30,2010. Counsel stated that this check was for eighty-two stale-dated 

refund checks. Counsel provided check stubs for all the refund checks. From the 

check stubs, it appeared that nearly all the refimd checks were written on August 21, 

2008. Counsel also added that, "While the Coinmittee agrees that the stale-dated 

refimd checks must be disgorged, many do not provide an appropriate basis for a 

finding of excessive contributions, in that they were lawfiilly received and timely 

refunded." 

e. Web page verification from CDFP's receipts processing vendor demonstrating that a 

$2,100 contribution was retumed for non-sufficient fimds. 

f. Copies of a negotiated refimd check for $5,000, four refimd checks totaling $7,100, 

and a negotiated disgorgement check for $2,800 to the U.S. Treasury for 

contributions for which Counsel stated CDFP lacked evidence of refimd or timely 

redesignation. All refimd checks were dated November 26,2010, and the 

disgorgement check was dated November 30,2010. 

4. Draft Final Audit Report 

In the Draft Final Audit Report, the Audit staff acknowledged that for the general election 

contributions totaling $244,050 CDFP demonstrated that $2,100 was actually retumed for 

non-sufficient fimds and that contributions totaling $234,850 were resolved. With respect to 

the remaining $7,100, the Audit staff considered these contributions imresolved until 

documentation of the negotiated refiinds was provided or the amount was disgorged to the 

U.S. Treasury. 

5. Committee Response to the Draft Final Audit Report 

In response to the Draft Final Audit Report, Counsel mamtained that the audit report should 

make clear that, for the bulk of the general election contributions, CDFP timely obtained 

redesignations and issued refimds. Counsel stated that CDFP transferred all its general 

election contributions to FOCD. Counsel objected to the Draft Final Audit Report 

statements that (1) CDFP had not provided the requured redesignation letters necessary to 

transfer the excessive contributions, (2) CDFP resolved excessive contributions of $160,050 

in an untimely maimer, and (3) contributions of $173,210 have not been transferred to 

FOCD. 

6. Audit Hearing 

At the audit hearing. Counsel presented the arguments outlined in CDFP's response to the 

Draft Final Audit Report (discussed above). 

Commission Conclusion 

On March 1,2012, the Coinmission considered the Audit Division Recommendation 

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

received general election contributions totaling $241,950 ($244,050 less a contribution of 

$2,100 that CDFP demonstrated was actually retumed for non-sufficient fimds). Of this 
16 

amount, CDFP demonstrated that contributions totaling $234,850 were resolved'^. The 

remaining contributions of $7,100 are unresolved. 

The Coinmission approved the Audit staffs recommendation. 

I Finding 3. Misstatement of Financial Activity 

Summary 

During audit fieldwork, a comparison of reported figures with bank records revealed that CDFP 

understated its receipts by $355,240 and overstated its disbursements by $190,935 in 2008. In 

response to the Preliminary Audit Report, CDFP amended its reports, but excluded an 

adjustment relating to net realized brokerage losses. As a result, receipts for 2008 remain 

misstated. 

The Coinmission approved a finding that CDFP misstated financial activity for 2008. 

Legal Standard 

Contents of Reports. Each report must disclose: 

• The amount of cash-on-hand at the beginning and end of the reporting period; 

• The total amount of receipts for the reporting period and for the election cycle; 

• The total amount of disbursements for the reporting period and for the election cycle; and 

• Certain transactions that require itemization on Schedule A (Itemized Receipts) or Schedule 

B (Itemized Disbursements). 2 U.S.C. §434(b)(l), (2), (3), (4) and (5). 

Facts and Analsrsis 

A. Facts 

As a part of fieldwork, the Audit staff reconciled reported activity with bank records fof 2008. 

The following chart outlines the discrepancies for the beginning cash balances, receipts, 

disbursements, and the ending cash balances. The succeeding paragraphs explain why the 

differences occurred, if known. 

2008 Committee Activity 

Reported Bank Records Discrepancy 

Opening Cash Balance @ 

January 1,2008 

$ 2,489,560 $ 2,456,875 $ 32,685 

Overstated 

Receipts $ 1,910,177 $ 2,265,417 $ 355,240 

Understated 

Disbursements $ 4,397,873 $ 4,206,938 $ 190.935 

Overstated 

Ending Cash Balance @ 

September 30,2008 

$ 515,970" $ 515,354 $616 

Overstated 

This figure includes contributions totaling $15,100 that were resolved in an untimely manner. 

The reported ending cash balance is incorrect because CDFP decreased its beginning cash-on-hand by $12,949 in 

its August 2008 Monthly Report and increased beginning cash-on-hand by $527,055 in its October 2008 

Monthly Report. The unexplained changes in cash may have been an attempt to correct the cash discrepancies 

that resulted from the misstatements of receipts and disbursements. Absent these incorrect adjustments by 

CDFP. the reported ending cash balance at September 30,2008, would have been $1,864. 
17 

The overstatement of opening cash-on-hand ($32,685) resulted from discrepancies tiiat occurred 

in the previous year, 2007. 

The understatement of receipts resulted from the following: 

• Matching fund payment received 7/17/08, not reported $ 514,173 

• Net realized losses (brokerage accounts), not reported^^ (150,370) 

• Vendor refimd, not reported 5,876 

• Offsets to operating expenditures, not reported 23,954 

• Political coinmittee contributions, not reported 16,100 

• Unexplained difference (54.493) 

Net understatement of receipts $ 355.240 

The overstatement of disbursements resulted from the following: 

• Loan repayment, over-reported $ (144,757) 

• Disbursements and brokerage fees, not reported 239,950 

• Net errors in reporting payroll and fees 41,733 

• October Transfer to FOCD reported in September^^ (351,210) 

• Reported disbursements that actually cleared bank in Dec. '07 (3,300) 

• Unexplained difference 26.649 

Net overstatement of disbursements $ (190.935^^ 

The overstatement of ending cash-on-hand ($616) resulted from the misstatements described 

above. 

B. Preliminary Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff discussed the misstatements and provided CDFP 

representatives with copies of the Audit staff's bank reconciliation. In response to the exit 

conference, regarding the over-reporting of transfers to the Candidate's Senate committee 

(totaling $351,210), CDFP representatives stated that CDFP had instructed its broker to transfer 

tiie funds to the FOCD account, and the broker's delay in making the transfer caused tiie 

reporting discrepancy. The reporting error could have been avoided if CDFP had not reported 

the transfer until the fimds were actually transferred. Regarding the reporting of operating 

expenditures, CDFP representatives stated that many operating expenditures were not reported 

because CDFP was unaware of the data processing requirements for entering debts and 

obligations. Thus, many debt payments were not disclosed in CDFP's reports. CDFP 

representatives did not address any of the other discrepancies noted above. 

In the Preliminary Audit Report, the Audit staff recommended that CDFP amend its reports to 

correct the misstatements for 2008. 

14 It should be noted that this relates to realized gains and losses disclosed by the brokerage fu-m in its monthly 

statements, which were not reported by CDFP. These net realized losses resulted from the decline in the stock 

market. 

CDFP reported this transfer in September 2008, while it actually occurred in October 2008. The Audit staffs 

bank reconciliation was done through September 2008. As such, it was recommended that CDFP amend its 

reports to correctiy disclose the transfer in October 2008. 
18 

C. Committee Response to Preliminary Audit Report 

In response to the Preliminary Audit Report, Counsel stated that, after the date of ineligibility, 

CDFP had some difficulty in preparing its reports due mainly to problems experienced in the use 

of its financial database. Counsel added that this was why, for example, CDFP failed to disclose 

a matching fimd payment received on July 17,2008, and over-reported a $144,757 loan 

repayment. Counsel indicated that CDFP would file amendments to correct tiiese misstatements. 

However, Counsel fiirther added that the Preliminary Audit Report did not correctly present the 

"level of misstatement", mainly because of its treatment of CDFP's brokerage account. Counsel 

argued that the Preliminary Audit Report ".. .appears to confiise fluctuations in the account's fair 

market value, which do not need to be reported, with the actual sale of the portfolio assets." 

In response to the Preliminary Audit Report, CDFP filed amended reports for 2008 and a portion 

of 2009. CDFP did not accept the assessment of its brokerage accounts presented in the 

Preliminary Audit Report and therefore did not make all the recommended adjustments relating 

to the brokerage accounts in its amended reports. Specifically, the amended reports did not 

include net realized losses of $150,370 (see section A above), and as a result, receipts remained 

misstated for 2008. CDFP materially corrected disbursements for 2008. 

D. Draft Final Audit Report 

In the Draft Final Audit Report, the Audit staff acknowledged the amendments filed by CDFP 

but noted that receipts remained materially misstated for 2008 as a result of CDFP's decision to 

not disclose the realized losses from the brokerage accounts. 

E. Committee Response to the Draft Final Audit Report 

In response to the Draft Final Audit Report, Counsel disagreed with the Audit staffs treatment of 

CDFP's brokerage account losses. Counsel contended that this finding stemmed from a 

misunderstanding of the law and made comparisons to the treatment of imrealized gains and 

losses in tiie audit of Friends of Antiiony Weiner for the 2003-2004 election cycle. 

Counsel further stated that the statute and regulations provided no explicit guidance on how 

realized losses must be reported. Counsel asserted that neither explicitly referred to tiie 

disclosure of losses, especially within a brokerage account. 

Counsel expressed tiiat tiie Draft Final Audit Report also demonstrated tiie lack of clarity on tiiis 

issue. Counsel pointed to the different means of disclosuig the realized losses presented in the 

Draft Final Audit Report (in "Other Receipts") and tiie Office of General Counsel's legal 

analysis of the Draft Final Audit Report (in "Otiier Disbursements"). 

F. Audit Hearing 

At tiie audit hearing, Counsel reiterated CDFP's position that tiie statute and regulations lack 

guidance on the reporting of realized losses. Counsel also stated that tiiey did not believe there 

was legal authority tiiat required CDFP to disclose realized losses on a brokerage account. 

Subsequent to tiie audit hearing, tiie Audit staff clarified to Counsel tiiat CDFP's net realized 

losses of $150,370 should be reported on Schedule A-P (Itemized Receipts), Line 21 (Other 

Receipts) as a negative receipt. 
19 

Commission Conclusion 

On March 1,2012, tiie Coinmission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended the Coinmission find that CDFP misstated 

its financial activity for 2008 by understating its receipts by $355,240 and overstating its 

disbursements by $190,935. 

The Commission approved the Audit staffs recommendation.