Draft Final Audit Report of the 

Audit Division 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 funds for 

the primary campaign.' The 

audit determines whether the 

candidate was entitled to all 

ofthe matching funds 

received, whether the 

campaign used the matching 

funds in accordance with the 

law, whether the candidate Js^^: 

entitled to additional ' 

matching funds, and whUie: 

the campaign otherwise 

complied with the limitation^ 

prohibitions,^ai^I^lbsure 

law. 

Future 

The Commission iM^nitiate 

an enforcement acti^^ta 

later time, with respect t 

of the matters discussed 

this report. 

About the Committo^ . 2) 

Chris Dodd for President, Inc^^^^principal campaign committee of 

Christopher J. Dodd, a candi®^^r the Democratic Party's nomination for 

the office of President of<lne#nite^tates. The Committee is 

headquartered in West^Hartford, Comiecticut. For more information, see 

chart on the Campai^fJ©rganization, p-^^|t^ 

Financial ^^^t y (p. 3) 

• Receipts ^^k , 

o/iEContributions ^^Mr(uiMduals 

I^^s R^i>^ed 

" "lltical Committees 

Committees 

o Mashing Fimt^Received 

^ o OfTs^^o Open^iig'^xpenditu^ 

^fMalReceMr'- ^ 

PisGiliEsements 

Op^mie Expenditures 

Loan Renpiayments 

ransfers toWther Authorized Committees 

o ^<«^^ntribution Refunds 

Totw^sbursements 

^ipdings and Recommendations (p. 4) 

[Net Outstanding Campaign Obligations (Finding 1) 

WW 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 

' 26 U.S.C. §9038(a). 

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

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

Audit Division on 

Chris Dodd for President, Inc. 

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

Part I. Background 

Authority for Audit 

Scope of Audit 

Inventory of Campaign Records 

Part II. Overview of Campaign 

Campaign Organization 

Overview of Financial Activity 

Part III. Summaries 

Findings and Recommendations 

Smnmary of Amoimts Potentially OwldStutbe U.S. Treasury 

Part IV. Findings and^^comme^i^^s 

Finding 1. Net Outstanding'^^^gn Obligatioi^, 

Finding 2. Receipt of Prohibit^^i^^tion an ^ 

Contributions that Ext^ed if ^ 

Finding 3. Misstatement of Fina^^ Activt^i 

Page 

8 

15 
Parti 

Background 

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 ofthe 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 candidat^Qd his authorized 

committees who received [matching] payments under s.el^9n 9037." Also, Section 

9039(b) ofthe United States Code and Section 9038^4^gWthe Commission's 

Regulations state that the Commission may conducf^^rex^inations and audits from 

time to time as it deems necessary. 

Scope of Audit 

This audit examined: 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

The receipt of excessive contributions and IQ^s 

The receipt of contributionst&Qm3,.prohibited so^MS^ 

The receipt of transfers from^iWi^^orized c()n^|ees. 

The disclosiu-e of contributions'q^d^^^^gs received!^ 

The disclosure of disbursements^^jbts^^ligations! 

The recordkeepin:^^ess and completenes^jb^eprds. 

The consisten^^ptwe¥]^ported fi'{ 

The accurac; 

The campaign' _ 

10. Other campaign (^^^tion^^^ssary to tiS^revi 

itfae Statement of Net 

^^^plianc^^ith spend!; 

^ding Campaign Obligations, 

^^imitations. 

feview. 

The^Mdi L_*»A _*. _ . _ 1 J. inventory of campaign records before it begins the t staff routin^^)nc_-.^^ ^ .^„.„ 

audit network. CDFP'simcords^^^materially complete and the fieldwork began 

immedial^ m 
Part II 

Overview of Campaign 

Campaign Organization 

Important Dates 

• Date of Registration January 11|^P)7 

• Eligibility Period Noveigj^K 2007 - January 3,2008^ 

• Audit Coverage Jan]u^PMil07 - September 30,2008^* 

Headquarters ^ ^?st Hartford, C:d6necticut 

Bank Information ^ 

• Bank Depositories 

• Bank Accounts dlie%h^M^, two investmel^ 

Treasurer W^^HL ^ 

• Treasurer When Audit Was Conducl^v i^thryn Dllfkto 

• Treasurer During Pe^j^:0xered by ^^ t K»m,PamH|% 

Management Inforn^pn "^^^ 

• Attended FEC Can$£^ Fina ^ Seminar ^ ifes 

• Who HandledjAccoim&^ai^^^^H^^ 

Recor#elMfeks 

staff 

A 

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

matching fiind 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 fimds. 
Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand ® January 24,2007 $ 0 

o Contributions from Individuals $ 9.848,996' 

o Contributions from Political Committees 750.402 

o Transfers from Affiliated Committees 4,632.357 

o Loans Received ^ 1,302,811 

o Matching Fimds Received A '• 1.961.742** 

o Offsets to Operating Expenditures JBKT mon 

o Other Receipts ^.^K^^i^i^ 47,506 

Total Receipts 18,670,826 

o Operating Expenditures ib§78,850 

o Loan Repayments y 1^.2,811 

o Transfers to Other Authorized Committee"^ SW^^IO' 

o Contribution Refimds l,365^1lk 

Total Disbursements ^ '^^ ^ ^ $ 18,155,47'2'^ 

Cash-on-hand @ September 30,2t||)K ^. ^ $ 515,354 ^ 

Approximately 25,000 contributions from more than 19,200 individuals. 

As of September 30,2008, CDFP had made four matching fimd 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 

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

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

Friends of Chris Dodd. 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Net Outstanding Campaign Obligations 

As part of audit fieldwork, the Audit staff reviewed CDFP'^^pcia l activity through 

December 31,2010. The review indicated that the Cand^^pud not receive matching fund 

payments in excess of his entitlement. In response to^^^^mninary Audit Report, Counsel 

for CDFP (Counsel) did not dispute this finding, but^^a ^^^regard to the general 

election contributions maintained in an investmej^count, the^^s value of the investment 

accoimt, not the fair market value, should hayj.hj^utilized in wm^Qn. 

(For more detail, see p. 6) 

Finding 2. Receipt of Prohibited^ Ipntiibiition and 

Contributions that Bx^^Oimits 

During audit fieldwork. Audit staff^^^^^Uill contri^^^^ from other political 

committees. The review identified a^^^^^^tribut^^^ $ 15,423 from the Intemational 

Association of Firefighters (lAFF), as w^as S'^MOQ^in exce^ke contributions from other 

political committees.^^^^^^^ited coi^^ution 

bus/recreational ve^^^pt v^^Wated to% 

The RV was provi^^o CDFP^Mts use ju 

prohibited contributii^^^ in an^timelv m; 

political comminees we^^nu^oKeJ! 

lAFF^&ulted from the rental of a 

jodd's Presidential campaign, 

to the Iowa caucus. CDFP resolved this 

The excessive contributions from other 

In ad#^n, a review^ojfgener.ii jlection contmwions indicated that CDFP received 

contnb:^j^ns totaling $2^^50 fo^^^ch it has not obtained the required redesignation letters 

necessa^Mittansfer these^^ds to m^^andidate's Senatorial Committee, Friends of Chris 

Dodd (FOCil^^CDFP did n^ make app;~ppriate refimds, either. 

^^^^ 

In its response to^i^reliminury Audit Report, Counsel maintained that: 

• CDFP had^^^gei^d a prohibited contribution from the lAFF; 

• regarding the $5^^pl^in excessive contributions from other political committees. 

Counsel demonsti^d that contributions totaling $6,700 were not excessive, provided 

copies of negotiated refunds checks for excessive contributions totaling $39,500, and 

provided non-negotiated refund checks for the remaining $4,800; and, 

• with respect to the $244,050 in general election excessive contributions, 

documentation that Counsel provided demonstrated excessive contributions totaling 

$234,850 had been resolved, a contribution of $2,100 was not excessive and excessive 

contributions totaling $7,100 remain unresolved. (For more detail, see p. 8) 
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 investment losses. As a result, receipts for 2008 remain 

misstated. (For more detail, see p. 15) 

Summary of Amounts Potentially Owed to the 

U.S. Treasury 

Finding 2 Receipt of Contributions thatJExceed| 

Limits - Unresolved 

$ 11,900 
Part IV 

Findings and Recommendations 

I 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:^'d not receive matching fimd 

payments in excess of his entitlement. In response to the^|pminary Audit Report, Counsel 

for CDFP (Counsel) did not dispute this finding, but noteB^;^ in regard to the general 

election contributions maintained in an investment acpliuht, uUiasis value of the investment 

account, not the fair market value, should have be^>utilized in vaWtion. 

Legal Standard 

A. Net Outstanding Campaign Obligation^^pCO). Whhin 15 da^^^r the candidate's 

date of ineligibility, the candidate must subniit^^tein^pof "net out^|ding campaign 

obligations." This statement i^i^ntain, amon^^the^fhings: 

B. 

The total ofall committee assjjs^h^ cas^^^ind, amoimts owed to the 

conunittee and capital assets IJteWpheir fair marketwalue; 

The total of all outstanding oblig^ons'fii^q^lified camMigii expenses; and 

An estimate of^m ^ windinSown c^^feX:FI^lt).34.5(a). 

Entitlement tol^khing Patents aft{^,|te of IneligiBility. If, on the date of 

ineligibility, a c^^ ^ has ^outstandiii^|impaign obligations as defined under 11 

CFR §9034.5, that ^^daj^ffi^^ntinuel^^eive matching payments provided that he 

or sh^^ilJ^^Met outsmd^^^^^^^^ebt^n the day when the matching payments 

are^lMf irsli%? 

Factsliild Analirsis 

A. Facts 

The Candidate's1|^of ineligipity (DOI) was January 3,2008. As part of audit fieldwork, 

the Audit staff revi^^i|Cp^^'financial activity through December 31,2010, and prepared 

the Statement of Net iGitit'stsftii^ng Campaign Obligations that appears on the next page. 
Chris Dodd for President, Inc. 

Statement of Net Outstanding Campaign Obligations 

As of January 3,2008 

Prepared through December 31,2010 

Assets 

Primaiy Election Cash in Bank 

General Election Cash in Bank 

Accounts Receivable 

Capital Assets 

Total Assets 

Liabilities 

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'^S^dirif ^2| 

Total Liabilities 

$ 271,389 

1,706,575 

46,899 

Net Outstanding Clmfaign Oblilitions (Defidtjl^f JanuarfB, 2008 

$ 54^ ^ 

1.706SS||,[a] 

1,302,8 i W 

1,301.910 [bJ 

4.800 [c] 

$2,033,270 

4.858.161 

($2.824.891) 

FootnDteslS$N'®.CO Stafemihi;. 

[a] ^l^l^nsure that the nee^^efiir^l^a^l electio^ontributions had no impact on matching fund 

en^^ment, the Audit s^^adjust^^^payable to match the general election cash in bank amount. 

Pridri^g^I. CDFP recen^generargj^^n contributions of $1,749,670; however, at DOI. the fair 

marke^^ueof the investm^^count i^^ich these contributions were maintained was $1,706,575, a 

[b] Estimated windin^own cogs^e not included above because this would only increase the deficit. It is 

likely that CDFP il«llidll jncurri^ minimal salary and legal expenses. 

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

(the date ofthe last matching fimd payment): 

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

Private Contributions and Other Receipts Received 1/4/08 

through 7/17/08 

503,712 

Matching Funds Received 1/4/08 through 7/17/08 1.961.741 

Remaining Net Outstanding Campaign Obligations 

(Deficit) as of 7/17/08 

($359,438) 

As presented above, CDFP has not received matching funi|-]^ayments in excess of its 

entitlement. 

B. Preliminary Audit Report & Audit Division^Re'commeimWon 

The Audit staff presented the NOCO to CDFR^^entatives at W^^xit conference. In 

response, CDFP did not address the NOCO.^'gf 

In the Preliminary Audit Report, the Audit staff fe^^n^ii^d^that COFPli^ogstt-ate 

whether an adjustment(s) was requi^dto any compom^^^he NOCO statemMt or provide 

any other comments it desired. ^^^^ ^'^^mr 

C. Committee Response to Preliminaiy Auai^^port 

In response to the Preliminai^Audit Cow^^^[^ot the NOCO but stated 

that incorrect amoug^^PS^I^ted fon|^n^^S^~S^^Casra Bank" and "General 

Election Accoimts^ayable" bec^e these ^i^p^re gener^d using the fair market value 

instead ofthe basis ^^^pf the ^p>unt. Th^^mher added that "While this error does not 

affect the Committee's n^t finiiucml p(l^^l^(m, il^^gnificant in light of Findings 2 and 3..." 

In accoi^^^^^^^C.F.K. §y().M..^(;i)(2)^t^Sidit staff presented the general election 

inveM^t account aff^mark^alue as of MiiCandidate's DOI. 

Finding 2^Receipt%£ Froliibited Contribution and 

Contributi(^il(vthat l^ceed Limits 

Summary 

During audit fieldwork, /ioMit staff reviewed all contributions from other political 

committees. The review identified a prohibited contribution of $15,423 from the Intemational 

Association of Firefighters (lAFF), as well as $51,000 in excessive contributions from other 

political conunittees. The prohibited contribution from the lAFF resulted from the rental of a 

bus/recreational vehicle (RV) decorated to identify Senator Dodd's Presidential campaign. 

The RV was provided to CDFP for its use just prior to the Iowa caucus. CDFP resolved this 

prohibited contribution, but in an untimely manner. The excessive contributions from other 

political committees were imresolved. 
In addition, a review of general election contributions indicated that CDFP received 

contributions totaling $244,050 for which it has not obtained the required redesignation letters 

necessary to transfer these funds to the Candidate's Senatorial Committee, Friends of Chris 

Dodd (FOCD). CDFP did not make appropriate refunds, either. 

In its response to the Preliminary Audit Report, Counsel maintained that: 

• CDFP had not received a prohibited contribution from the lAFF; 

• Regarding the $51,000 in excessive contributions from other political committees. 

Counsel demonstrated that contributions totaling $6,700 were not excessive, provided 

copies of negotiated refimd checks for excessive contributions totaling $39,500, and 

provided non-negotiated refund checks for the remainmg $4,800; and, 

• With respect to the $244,050 in general electio^^^^^ve contributions, 

documentation that Counsel provided demonj^^^Mcessive contributions totaling 

$234,850 had been resolved, a contributii^^lClOO^^%not excessive and excessive 

contributions totaling $7,100 remain unresc^lved. 

t' 

Legal Standard ^ 

A. Authorized Committee Limits. An authori^g^ommi^e may not ^^^i^ more than a 

total of $2,300 per election from 2S!^m& person i^^^jO^^^lection from'Smulticandidate 

political committee. 2 U.S.C. §44^gL)(A), (2)(A^BE); 11 CFR §§1 lO.lf^ and (b) and 

110.9. 

B. Handling Contribu^^That Appear Exiro'ss^ii If a cdmrnittee receives a contribution 

that appears to be exc^^^ne^conmiit^^must ei 

• Retum the qutsstionabletcheck to theMbnon^o'r 

• Dennsi Deposit the cfim k into its^mera l acrminfesnd" t the cWck into its^lederal accountl^d 

o Keep enqugh mon^in the accoiintto cover all potential refunds; 

itemized 

^^^^eepi a Witt^^pmfi^^j^ning'^l^the contribution may be illegal; 

||pmilfclbt,this ^mMation'i^^'^he.dul^. if the contribution has to be ite 

beforf^it|^^aliiy^establishedi^ 

Seek a redeiS|giatio^£,the excessive portion, following the instmctions 

provided in t^Commi^^^ regulations (see below for explanation of 

fe^esignation^^d 

^^^committe^ses not receive a proper redesignation within 60 days of 

re^^ng the ^^ssive contribution, refund the excessive portion to the donor. 

11 CF^^^)(3), (4) and (5). 

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

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

outstanding), the committee may ask the contributor to redesignate the excess portion ofthe 

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

1. The redesignation must be signed by the contributor; 

The redesignation must be received by the committee within 60 days ofthe 

committee's receipt of the original contribution; and 

The contributor may instead request a refund ofthe excessive amount. 

11 CFR §110.1(b)(5). 

2. 
10 

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

proper redesignation or refund the excessive portion to the donor. 11 CFR §§ 103.3(b)(3) and 

110.1(b)(5)(ii)(A). Further, a political committee must retain written records conceming the 

redesignation in order for it to be effective. 11 CFR § 110.1(1)(5). 

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

any contributions made for the general election shall be refunded to the contributors or 

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

E. Unreimbursed Value of Transportation. The unreimbui|ed value of transportation 

provided to any campaign traveler is an in-kind contributioi^ropfi the service provider to the 

candidate committee on whose behalf the campaign tra\^J^^eled. 11 CFR § 100.93(b)(2). 

F. Payment of Transportation. If a campaign trayll^F^ses^^^f^ther means of 

transportation, with the exception of an airplan^^^campaign cinaittee on whose behalf the 

travel is conducted, must pay the service proyi4e;^^witfain 30 calcn&;^ys of the date of 

receipt of the invoice for such travel, but not'l^er than 60 calendar daf ^Q;er the date the 

ti-avel began. 11 CFR § 100.93(d). '^''"^ 

G. Receipt of Prohibited ContriHllion from Lab^^^pinizations. Politicifrcampaigns 

may not accept contributions made^^^te^general treasu^ fimds of labor organizations. 2 

U.S.C. §441b. 

Facts and AnalyBiM 

1. Fac 

A. Receipt of Prohibited Contnibution 

Dux^^^i^^l^ori^m g koJted'li|t CDFP was billed $12,088 on February 

l^^-^08, by^^^^iat^^^ssociall^^l^FTfe Fighters for a share of the rental cost of 

a^^ . The RV v^^bnteo^^period of 48 days from November 18,2007 to January 

4,2*^^It was deco^^^o identt%Senator Dodd's Presidential campaign. The invoice 

from ^^^ F indicate^p^t CD^^sed the RV for 18 days in December 2007, through 

^ The total cost ofthe 

the cost of the vehicle and 

$16,810 to the^^^f'^rapping" it to identify the campaign. The invoice requested that 

payment of $12,088^^m^e within 60 days to the Intemational Association of 

Firefighters InteresteS^Registration and Education PAC (FIREPAC), a separate 

segregated fimd of the lAFF. 

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

expenditure* on November 28,2007, in 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 

" FIREPAC reported independent expenditures of approximately $374,000 in support of CDFP. 
11 

was a communication expressly advocating Senator Dodd's presidential candidacy, 

which had not been coordinated with CDFP. CDFP later sought to determine whedier it 

could obtain the use of 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 was for a portion of the cost ($12,088); however, CDFP paid the entire 

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 full cost of the RV ($32,233) and continued to report this debt 

until it reported the reimbursement in its December 2009jaonthly report^. 

2. Preliminary Audit Report & Audit Division^^^Tmendation 

In response to a discussion ofthis issue at the ex^^pF^^e, CDFP representatives 

provided a copy of a reimbursement check, d^^^^o^^^ 2009, to lAFF FIREPAC 

for $32,233. CDFP representatives stated^^^pDFP paid^^^for the use ofthe bus and 

the cost ofthe wrap to avoid receiving ai^^pad contributio^^^response to other 

inquiries from the Audit staff, CDFP rep^^tatives stated that i^^^eir understanding 

that the lAFF paid the rental cost of the bu^^at the same^bus wrapp^^^as utilized by 

both the LAFF and CDFP; and, that they are if^awa|d^any other expen||s that were 

paid by FIREPAC relating to(^use or wrap orti^^^after CDFP acquired its use. 

The Audit staff acknowledges t^ul^h^ent of $32^yby CDFP was an attempt to 

rectify this matter. However, the Mtal po^^^f the R^^ t ($15,423), apparently paid 

by the LAFF, appg^^^^^ prohibi^^contrii^^^^abol^ganizations are prohibited 

from making g^^bution^^politic^^||mp|^ was resolved in an 

untimely manS^y CDF^ft result ofH 

above. 

eimburseme ft made to FIREPAC, noted 

In^^pl^liM^u^ Audi1^^irt7Ht;'^|dit st^precommended that CDFP provide 

^d^^entatioi^dBonstra&^^that it diH^^eceive a prohibited contribution of $15,423 

from>the lAFF, inciting d^^entation to verify that the lAFF did not pay for the rental 

portiemoftheRV. 

3. ComM^iie Responsi^^ Preliminary Audit Report 

CDFP's respG|^S||did not^^^ude any additional documentation. However, Counsel 

maintained thal^j^^P^^^t be found to have received a prohibited contribution when it 

was directed (on^^^^PI invoice) to pay FIREPAC and it simply complied. In 

addition. Counsel stated that even if CDFP should have paid the lAFF, the 60-day 

timetable in 11 CFR §100.93 should not apply because it applies only to non-commercial 

forms of transportation. Counsel maintained that "the primary purpose of the wrapped 

bus was not to transport people from place to place, but rather to serve as an unusual 

form of campaign visibility, like the C-SPAN bus or the Ron Paul blimp." Analyzed in 

this manner. Counsel believed the proper question was whether the campaign paid for the 

use of the bus within a commercially reasonable time (Counsel cited 11 CFR §114.9(d) -

' A reimbursement from CDFP was inadvertently deposited into its non-federal account. The subsequent 

transfer was reflected on the year-end report. 
12 

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 the bus rental 

and wrap, in an abundance of caution, even though there was a strong argument that it 

could have paid less. 

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

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

corporate or labor organization facilities, reimbursemen^as not made within a 

commercially reasonable time. 

CDFP's possible financial difficulty after thejai^dlgn d)c(^^ot excuse its acceptance of 

the contribution or explain why CDFP didjmf^onsider resolSj^n ofthe contribution a 

high-priority obligation. 

timely. 

B. Apparent Excessive ContributlOTS ff bmlOther Political Committees 

Finally, CDFP's decision to pay the entire'T^tal cost doe^^|negate the fact 

that CDFP received a contribution from a laborprganization that it failgd<ltoj:esolve 

During audit freii\york, iliM^dit staf^^g^^''$5l,^^^n apparent excessive 

contributions ^^jotther poH^al comrS^^^which. remained unresolved. The 

contributions includgd: ^ 

fig totaliK^II^^^^^^... itael . y refunded by CDFP; however, the 

^he^^ks ne^^Ieared'^^^^s o^c account. As such, these remained 

unresolv8ifexcessiwcontributi^^^ *^ 

One for $4,00^^r whieli^DFP presented a timely, completed redesignation 

^^letter. Howe^^lDFP^either transferred the contribution to FOCD, nor 

T|nmded it. It wi^oted diaj^transferring the funds to FOCD would have 

res%%.ed this issuMf ut because the candidate was no longer seeking re-election to 

the SM%, the tra;^^r may not be plausible. The Audit staff considered this an 

unresolvMbxcesiivd contribution. 

Thirteen exte|iiS§^onttibutions totaling $39,000 for which CDFP had failed to 

provide any evidence of a refund or redesignation. 

2. Preliminary Audit Report & Audit Division Recommendation 

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

Counsel did not address these contributions in its response. 

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

documentation demonstrating that it did not receive excessive contributions. Such 

documentation was to include evidence of a transfer to FOCD for the contribution that 

had been redesignated but not transferred, copies of refund checks negotiated in a timely 
13 

manner, or redesignation letters signed and dated in a timely maimer. 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 refund checks) or make a payment of $51,000 to the 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 14 contributions totaling $44,300, refund checks dated November 30,2010, 

were submitted. 

After consideration of CDFP's response, the Audit sl^^oted that three contributions 

totaling $6,700 did not exceed the limits, 12 tot^^^^^O were refunded in an 

untimely manner, and two totaling $4,800 rei^i^hresolis^^til evidence is 

that the refund checks have been negotiatediiX^CDFP is um^j^to provide sue 

provided 

provide such 

evidence, the Audit staff recommends that^y imresolved ex^si^e contributions be 

disgorged to the U.S. Treasury. 

C. Receipt of Excessive General Election Contributionsi 

1. Facts 

During audit fieldwork, the Au^^t^Mleintified co^^^ions designated for the 

General election totaling $244,050Wpr wMcMlDFP didmbt provide the required 

Advisory OpinioL.. 

redesignation letteF||||^f§§ary to tri^J^r the ^^|||o„F001iiIn accordance with 

i^uoi^O), CD]|^^pii^gmi tfiTreceipt ofthe AO (dated 

September 2, ^|^) to obtaij^designati^^pfimake re^ds. Even if CDFP had 

obtained the reqiii^djedesignaition lette^|^acked the funds to complete the transfer or 

refund at the time.^llK^ei^Au^^i^considesidv,these unresolved excessive contributions 

2'^p^eliminary >^¥dit^Repii 

At^i|texit conferen^^i^e Audl||taff provided CDFP representatives with a schedule 

outlini^^^se excessi^^^ntributii^s. In its response. Counsel maintained that CDFP 

had propel^I^ripfunded all0ltSi general election contributions. In the Preliminary Audit 

Report, the'l^u^it staff recgmmended that CDFP provide documentation demonstrating 

that these conM^^onsj^^ not excessive. Such documentation was to include copies 

of timely negotiat^^M^8checks or timely signed and dated redesignation letters. 

Absent this documenl©^, the Audit staff directed CDFP to make appropriate refunds to 

hSi Audit Division Recommendation 

contributors and provide evidence of such actions (copies of the front and back of 

negotiated refund checks) or make a payment of $244,050 to the U.S. Treasury. 

3. Committee Response to Preliminary Audit Report 

In its response to the Preliminary Audit Report, Counsel maintained that, upon receipt of 

the Preliminary Audit Report, of the $244,050 in asserted unredesignated and unrefimded 

'° The Audit staff also noted that CDFP transferred general contributions ($67,800) to FOCD for which 

redesignation letters were not provided and has redesignation letters for $98,410 in contributions to be 

transferred, but insufficient fimds to do so. 
14 

contributions, only $14,900 awaited refund or disgorgement. The documentation 

provided by Counsel included: 

a. Copies of 30 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 dated prior 

to May 2008. 

b. A copy ofan email confirmation from its receipts processing vendor 

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

September 13,2007. 

c. A copy of a negotiated disgorgement check for a^^ntribution of $5,000 and a 

letter sent to the Bureau of Public Debt on Noj^^r 25,2008. Other 

documentation stated that the political action cominittee, which made the original 

contribution, no longer existed. j v 

d. A copy of a negotiated disgorgement phee^to thenfts. Treasury for $ 144,950 and 

dated November 30,2010. Counsel#^ed that thisc2lbk was for 82 stale-dated 

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

check stubs, it appears that nearly^ll the refimd checks we^mitten on August 

21,2008. Counsel also added that^^^ile the Committee apisjhat the stalee. 

f 

dated refund checks must be disgorged|lhasmy|gp:>not provide 

for a finding of excessi^reontributionsr^i^t^liiey were lawfully 

timely refimded." ^ 

Web page verification frB: 

ai^^ropriate basis 

^fullyWceived and 

itsre^ceigts processi^^yendor demonstrating that a 

'^^^'-ijsufficle^illmds. 

checks totaling 

$7,100^^t1ii^d disg6{^j^m^m800 to the U.S. Treasury for 

contrimi^ois that ^^sel state(i%R^lacked eviaence of refund or timely 

redesignati^All r^^d checks dated November 26,2010, and the 

^isgprgemen^^^l^p^ted November 30, 2010. 

^^isult of mi^^umS^^^ pres^o^^^lC^bunsel in response to the Preliminary 

/^^Report, whicl^ps nc^^^iously available, the $244,050 of general election 

cont^^^ons discuss^ in the F^Winary Audit Report are categorized in the following 

mann^Sk^^ 

• Exces^^^ontri^^^ns totaling $ 160,050 were resolved in an untimely manner; 

• Excessive^^^^tdons totaling $74,800 were resolved in a timely manner; 

• A contribution of $2,100 was not excessive, as it had been retumed for nonsufficient funds; and, 

• Excessive contributions totaling $7,100 remain unresolved. Cancelled check 

copies (front and back) and/or other documentation demonstrating that these 

Based on its response to the Preliminary Audit Report, there are contributions of $173,210 ($74,800 + 

$98,410) for which CDFP provided redesignation letters, but has not transferred to FOCD. As of March 31. 

2011, CDFP's reported ending cash is $14,289. 
15 

remaining refunds were negotiated should be provided or the amount should be 

disgorged to the U.S. Treasury. 

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 am^^ed its reports, but excluded 

an adjustment relating to net realized investment losses. .^^^Sult, receipts for 2008 remain 

misstated. 

Legal Standard 

Contents of Reports. Each report must discl^^ 

• The amount of cash-on-hand at the begi^^^lnd end of the repSAg period; 

• The total amount of receipts for the repoi^^^riod and for the el^^^cycle; 

• The total amount of disbursements for the lepG^mg p^^^and for the^^^n cycle; and 

• Certain transactions that requi^^^ization on^^e^^ ^ (Itemized Rec^ts) or 

Schedule B (Itemized DisbursS^^J ^ U.S.C. |^(b)( I), (2), (3), (4) and (5). 

Facts and Analysis 

A. Facts 

As a part of fieldwi^^^e Audi^^reco^^^^P&rtedHt^ty with bank records for 2008. 

The following charf^^^es thelSbrepanci^^^the beginning cash balances, receipts, 

disbursements, and the^^ng ca^^^[gnces. succeeding paragraphs explain why the 

differencei^^^Hfeed, if la^v^ ii 

2^jK:ommittee%Mty''^^ ^'^^ 

"Snorted Bank Records Discrepancy 

Openi^^h Balance (^k 

January iWiM W 

$2^19,560 $ 2,456,875 $ 32,685 

Overstated 

Receipts M i $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 

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. 
16 

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

occurred in the previous year, 2007. 

The understatement of receipts resulted from the following: 

• Matehing fund payment received 7/17/08, not reported 

• Net realized losses (investment accounts), not reported'^ 

• Vendor refimd, not reported 

• Offsets to operating expenditures, not reported 

• Political committee contributions, not reported 

• Unexplamed difference 

Net understatement of receipts 

The overstatement of disbursements resulted from thj 

• Loan repayment, over-reported 

• Disbursements and investment fees, 

• Net errors in reporting payroll and fej 

• Transfer to the Candidate's Senate comml 

• Reported disbursements that actually clei 

• Unexplained difference 

Net overstatement of disliiirsi'iSPents 

514,173 

(150,370) 

5,876 

23,954 

16,100 

(54.493^ 

355.240 

$ (144,757) 

239,950 

41,733 

(351,210) 

,300) 

.649 

$ri9Q.935^ 

The overstatement of ending cash-on id (Salm^^sulted from'^the misstatements described 

above. 

B. Preliminary ^^^^Reporl ^^udit Di^^^pRecomm[|{iiation 

At the exit conferen^^^Audit^ff discus^^me misstatement and provided CDFP 

representatives with co^^^l^^^^ytafTs Hf^^ reconciliation. In its response to the exit 

confere^^^^^M^e^^^^^tt^^^gans^^o the Candidate's Senate committee 

(totali^^^l[21^^^^P r^^^tativel^nk^^CDFP had instmcted its broker to 

transf^^je funds to 

the rep^^^discrepi 

reported th^^^sfer until 

operating exp^^tures, CDF! 

not reported be^^^^ey wer| 

debts and obligatio^^^us, 

CDFP representative^^s 

aci 

repdiwg 

:, and the^OToker's delay in making the transfer caused 

error could have been avoided if CDFP had not 

ds wiH^^ctually transferred. Regarding the reporting of 

resentatives stated that many operating expenditures were 

aware of the data processing requirements for entering 

y debt payments were not disclosed in CDFP's reports, 

dress any other discrepancies (noted above). 

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

correct the misstatements for 2008. 

It should be noted that this relates to realized gains and losses disclosed by the brokerage firm as such 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, when it actually occurred in October of2008. The Audit 

staffs bank reconciliation was done through September 2008. As such, it was reconunended that CDFP 

amend its reports to correctly disclose the transfer in October 2008. 
17 

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. Counsel maintained this was due mainly 

to problems experienced in the use of the financial database. Counsel added that this is why, 

for example, CDFP failed to disclose a matching fund payment received on July 17,2008, and 

over-reported a $144,757 loan repayment. Counsel concluded that CDFP is complying with 

the Preliminary Audit Report's recommendations by filing amendments to correct these 

misstatements. 

Counsel further added that the Preliminary Audit Report doesnt correctly present the level 

of misstatement, mainly because of its incorrect treatment o!^pFP's brokerage account. 

Counsel argued that the Preliminary Audit Report "appea^'4cm)nfuse fluctuations in the 

account's fair market value, which do not need to be reWiMl^ith the actual sale ofthe 

portfolio assets." Counsel contended that the Prelimihjpry Au^r|Report's treatment of the 

$351,210 transfer of general election contributicu^^d the $15d|i 

resulted from this incorrect treatment. 

tin net realized losses 

In response to the Preliminary Audit Report, Ci^Rfiled amended reporf^>r^alendar years 

2008 and for a portion of2009. CDFP did not a^^|di^^^t staff's ass^mbnt of its 

investment accounts and, as such,d^^ed only a pori^n^^die adjustments relfting to the 

investment accounts in its amended^pli^>.Specificall^^gse reports did not include net 

realized losses of $150,370 (see sectio^!A^%^. Howev^^ not amending its reports for 

the adjustment arising from net realized|losses^e^igts remain|msstated for 2008. CDFP 

materially corrected dsl^^^nents.