FEDERAL ELECTION COMMISSION

TABLE OF CONTENTS

LEGISLATION

I FEe Recommends Changes in Election Law , PUBLIC FUNDING

2 Congress Alerted to Decline in Available Fu

AUDITS

3 Final Report for Du Pont Campaign Release

REGULATIONS

3 Trade Association Rules Clarified

STATISTICS

4 Major Party Activity in 1988

4 FEDERAL REGISTER NOTICES

6 COMPLIANCE: MUR 2545

COURT CASES

7 FEe v. Furgatch (88-6047)

8 FEC v; Committee to Elect Bennie Batts

8 FEC v, Bob Richards for President (88-2832)

8 FEC v; Populist Party

800 LINE

9 Basic Recordkeeping Rules

PUBLICATIONS

11 New Compilation of Court Case Summaries

12 INDEX

Washington DC 20463 Volume 15, Numbe

o Amend 2 U.S.C. S438(b) to permit the Comm

sion to conduct random audits of political c

mittees.

Two of the recommendations submitted 

1988 were revised this year. In these, the C

mission recommended that Congress:

o Amend.2 U.S.C. S432(g) to make the FEC 

sole point of entry for all disclosure docume

filed by federal candidates and committ

House and Senate candidate committees c

rently file, respectively, with the Clerk of 

House and the Secretary of the Senate; and

o Change the reporting deadline for mon

filers from the 20th to the 15th of the month

or the remaining 23 legislative recomm

dations. which the Commission had also submi

in 1988, several sought changes in the Presiden

public funding program. The Commission ag

asked Congress to eliminate the state-by-s

contin

999 E Street NW

COGEL CONFERENCE

FEC staff will be conducting workshops on campaign finance along with their

Canadian, state and municipal counterparts

at the 11th annual conference of the Council on Governmental Ethics Laws (COGEL).

The conference will be, held December 6 to

8, 1989, at the Doubletree Hotel in New

Orleans.

For information about COGEL or the

conference, call Joyce Bullock, Council of

State Governments-COGEL, 606/231-1920.

May 1989

FEC RECOMMENDS CHANGES

IN ELECTION LA WS

On March 16, 1989, the Commission transmitted to Congress and the President 30 recommendations for changes in federal election laws.

If enacted, the recommendations would enhance

the agency's ability to administer the Federal

Election Campaign Act and the Presidential public funding statutes. The Commission is required

by law to submit recommendations each year "for

any legislative or other action the Commission

considers appropriate..••" 2 U.S.C. §438(a)(9).

Included in the package were five new proposals, urging Congress to:

o Modify the scheme of financing Presidential

elections through the $1 income tax checkoff

(26 U.S.C. S6096); at the current checkoff rate,

by 1996 the Presidential Election Campaign

Fund will lack sufficient funds to finance all

phases of the Presidential elections;

o Reevaluate the Commission's role in regulating

political committees that engage in both federal and nonfederal election activities;

o Amend the law to reflect the Supreme Court's

decision in FEe v. Massachusetts Citizens for

Life. Inc.; the Court determined that 2 U.S.C.

§441b was unconstitutional as applied to independent expenditures made by certain nonprofit

corpora ti ons;

a Revise the disclaimer notice provisions in 2

U.S.C. §'44ld to require registered committees

to display an appropriate disclaimer notice in

any communication issued to the general public.

regardless of its purpose or how it is distributed; and
May 1989 FEDERAL ELECTION COMMISSION Volume 15,Numbe

• Check-Off Fun

Disbursement

- - - ---"'""",--.,.. - - -1-·--

and that, unless Congress modifies the cur

income tax checkoff system, the Fund wil

insufficient to cover expected demands for 

1996 elections.

Financed with dollars voluntarily checked 

by individual taxpayers on their annual 1040 

returns, the Fund is the sole source of pu

money for the three phases of Presidential e

tions: primaries, conventions and general e

tions. As Commission Chairman Danny 

McDonald observed in the letter to the commi

members, the shortfall in the Fund "stems f

two conflicting trends. Tax dollars flowing 

the Fund have declined, while payouts have sh

ly increased." The chart below illustrates th

trends, depicting changes in disbursements f

the Fund and in the number of $1 checkoffs g

into it each year.

The Chairman pointed out that the cur

law provides procedures for financing Preside

elections when public funds are insufficient. G

eral elections and national conventions would 

given priority in the distribution of avail

money from the Fund. If funds left over w

insufficient to make full matching payments to 

eligible primary candidates, then prorated 

mary matching payments would be made. 

thermore, if there were insufficient funds for 

general election and convention financing, th

payments would also be prorated. See 26 U.

§§9006(c) and 9037(a). "Under these circ

stances," Chairman McDonald pointed out, "

vate contributions would be reintroduced into 

general election process to make up for 

shortfall in the Fund."

_., - -- _._ ,_._- ._- ~............ --_._. __.-- --.-. - - ---_._-

- - !-- - _.._-_._----"._....-"""_.:.._""_.....

60

20

40

80

120 1-- ---.-! --.- _..c •••••••- ••••••••••••••• _ ••_ ,------

140

100

Presidential primary expenditure limits, combine

the fundraising limit with the overall expenditure

limit, and raise the qualifying threshold for primary matching funds. Other recommendations

pertained to contributions and expenditures, compliance, disclaimers, public disclosure, registration, reporting and such miscellaneous issues as

honoraria

This year, for the first time, the Commission established a Legislative Recommendations

Committee-composed of Chairman Danny L.

McDonald and Commissioner Joan D. Aikens-to

explain and build support for the proposals in

Congress.

The full text of the recommendations will

be published later this year in the Commission's

1988 Annual Report. In the meantime, copies of

the recommendations are available from the

FEC's Public Records Office.

COMMISSION ALERTS CONGRESS TO

DECLINE IN AVAILABLB PUBLIC FUNDS

On April 3, 1989, the Commission sent a

special communication to the members of the

House and Senate oversight committees alerting

them to the crisis of declining funds in the

Presidential public funding system. The Commission alerted the members that the Presidential

Election Campaign Fund is running out of money

Millions

of Dollars

160

PRESIDENTIAL ELECTION CAMPAIGN FUND

1976 1977 1978 1979 1980 1961 1982 1963 1984 1965 1966 1987 1

2
May 1989 FEDERAL ELECTION COMMISSION Volume 15, Numbe

FEe RELEASES FINAL AUDIT REPORT

FOR DU PONT CAMPAIGN

On March 16, 1989, the FEC released the

final audit report for Pete du Pont's 1988 pr.imary

committee, Pete du Pont for President. This was

the first 1988 Presidential audit to be completed

and publicly released. . The Commission is required by law to audit

the campaign finances of all committees receiving public funds to ensure t~a~ the mo~ey has

been used only to cover "qualified campaign expenses," as defined in 26 U.S.C. S9032(9). See 26

U.S.C. §S9008(g) and 9038.

The audit report reviews and analyzes ~he

committee's compliance with the Federal Election

Campaign Act and with the Presidential public

funding statutes of the Internal Revenue Code.

Among its findings, the Commission determined that the du Pont committee had insufficiently allocated certain e~penditur~s ~o its Iowa

expenditure limit. The audit report indieated that

the du Pont committee should have allocated to

the Iowa limit a larger portion of the expenditures

incurred for a computer-based telemarketing and

mail program. According to calculations by the

FEC's Audit Division, the telemarketing program's

total costs amounted to $745,439.24; the committee allocated $117,606.04 of the total to its

expenditures for Iowa. Review of the records

revealed, however, that Iowa was the principal

focus of the telemarketing program. Consequently the Commission concluded that a greater prop~rtion of the telemarketing costs should have

been allocated to the Iowa expenditure limit.

Once the Commission reallocated the telemarketing costs, the agency found tha.t the. c?mmittee had exceeded the Iowa expenditure limitation by $77,447.42. . . The Federal Election Campaign Act prohibits Presidential primary candidates from exceeding the state-by-state expenditure limits (2 U.S.C.

§441a(b») while the Presidential Primary Matching Payment , Account Act consIders. ..

excessive

expenditures in primary election campaigns .to be

"nonqualified campaign expenses." C:0?lmlttees

using matching payments for nonqualified campaign expenses must repay a por-tion of such

expenditures to the U.S. Treasury. 26 U.S.C.

§9038(b)(2). The repayment must represent that

portion of the nonqualified expenditures that 

defrayed with public funds. The FEC calcul

the amount of the repayment with a form

described in II CFR 9007.2. Based on 

formula the Commission made an initial de

minatio~ on March 9, 1989, that the commi

had to repay $23,254.83 to the Treasury.

A copy of the complete final audit rep

for Pete du Pont for President is available fr

the FEC's Public Records Office.

RULES GOVERNING TRADE ASSOCIATION

SOLICITATIONS CLARIFffiD

On March 10 1989, the Commission sen

Congress an am~nded regu.lat.ion cl~r~fyi~g 

rules governing trade associatton solicitations 

parent and SUbsidiary cor~orations, 1 C

114.8(f). The revised regulation was published 

the Federal Register on March 15, 1989. See 

Fed. Reg. 10622.

Section 114.8 sets forth the rules under wh

a trade association and its separate segrega

fund may solicit the restricted class of its m

ber corporations. The new subsection 114

clarifies that, if a subsidiary corporation i

member of a trade association but its par

corporation is not, the trade association may 

solicit the restricted class of the parent corp

tion. By the same token, if the parent i

member of the trade association and the subs

ary is not, then the association may only sol

the restricted class of the parent.

The subsection also specifies the catego

of persons constituting t~e. restricted cl~s. 

restricted class of' a solicitable corporation 

eludes the stockholders and their families and 

executive and administrative personnel and th

families. It should be noted that this new regu

tion does not represent any change in 

Commission's longstanding policy regarding tr

assoeiation solicitations.

After this amendment to the regulations 

been before Congresss for 30 legislative days, 

Commission will publish a notice in the Fede

Register to announce its effective date.

The Record is published by the Federal Election Comm~ssion, 999 E Stree~, N.W:, Washi!,gton~

D.C. 20463. Commissioners are: Danny L. McDonald, Chairrnanr Lee Ann Elliott, VIce Chairmaru

Joan Aikens; Thomas J. Josefiak; John Warren McGarry; Scott E. Thomas; Walter J. Ste'!art,

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

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

Impaired 202/376-3136)

3
expressed in millions of dollars, combine state 

local committees with national party committe

*Excludes transfers between certain aff

ated committees.

8'1

$26

25

3

2

$12

12

1

$64.8

65.9

1.7

9.0

85-86

$255.2

258.9

3.4

14.3

Volume 15, Numbe

83-84

$297.9

300.8

4.9

20.1

Republieans

Raised*

Spent*

Contributed

Coordinated Exp,

Demoerau-------------

Raised* $98.5

Spent* 97.4

Contributed 2.6

Coord ina ted Exp, 9 .0

Chart I on the following page depicts 1

support of candidates (i.e., contributions to can

dates and coordinated party expenditures) m

by the various committees within the major p

ties-the Republican and Democratic nation

Senatorial and Congressional campaign comm

tees. The graph also shows aggregate candid

support by state and local party committees. 

Chart I demonstrates, the Republicans outsp

the Democrats in supporting House and Sen

candidates at the national level, but 

Democrats reported spending more than twice 

much as the Republleans reported at the state a

local levels. 'This difference may be explained, 

part, by "agency agreements" between Republic

state parties and the national Republic

com mittees. Under such agreements, st

committees designate the national committees 

make coordinated party expenditures instead 

the state committees.

Chart II compares contributions and coor

nated expenditures made by the two parties 

Congressional candidates over the past 10 yea

As can be seen in this chart, the Republicans 

the past election maintained their support 

candidates at approximately the same level as 

1986-i.e., increasing their overall support of c

didates for both houses of Congress by only 0

percent. At the same time, the Democrats 

1988 increased their support of House and Sen

candidates by more than 48 percent over 1986.

In addition to describing nationwide party 

tivity, the FEG's 1988 study provides state-b

state and per-candidate figures on party expen

tures in the 1988 elections.

A copy of the FEC statistical press rele

detailing this information is available from 

agency's Public Records Office. Call 800/4

9530. The Final Report on 1988 party activ

will be released later this year.

------------.-------

4

FEDERAL ELECTION COMMISSION

Title

11 CFR 114.8(f); Trade Association

Solicitations: Final Rule, Transmittal of Regulation to Congress (54

Fed. Reg. 10622, March 15, 1989)

Filing Dates for Wyoming Special

Election (54 Fed. Reg. 12954, March

29, 1989)

May 1989

1989-5

1989-4

Notice

FEDERAL REGISTER NOTICES

Copies of notices are available in the Public

Records Office.

MAJOR PARTY ACTIVITY IN 1988

On March 27, 1989, the FEC released a

statisttcel study of the financial activity of the

Republican and Democratic parties for the 1987-

88 election cycle.

The study shows that, while the Republicans

still lead the Democrats in total receipts and expenditures, Democratic committee activity in

1988 increased nearly 100 percent over, 1986 in

three key areas: fundraislng, coordinated party

expenditures and total disbursements. However,

in comparison with the last Presidential election

cycle (1984), Democratic gains in these areas

were more modest. The Democrats experienced a

30 percent increase in total receipts and a 25

percent increase in total disbursements since

.1984; coordinated party expenditures in 1988,

however, were almost 100 percent greater than in

1984. Republican gains were made primarily in

the area of coordinated party expenditures-up

58.7 percent from 1986 and up 12.9 percent from

1984. Total receipts for the Republicans were up

3.2 percent from 1986, but they were down 11.6

percent from 1984. The Republicans' total disbursements declined 0.7 percent in 1988 from

1986, while they were down 14.6 percent from

1984.

The table at the right summarizes major

party receipts, expenditures, contributions to candidates and coordinated party expenditures in the

past three election cycles. (Coordinated party

expenditures are made by parties on behalf of

federal candidates and are SUbject to special

limitations. 2 U.S.C. S441a(d).) The figures,
May 1989 FEDERAL ELECTION COMMISSION Volume 15, Numbe

CHART I

MAJOR PARTY CANDIDATE SUPPORT 1

1987 - 88

National Committees

Senatorial Campaign Committees

Congressional Campaign Committees

. StatelLocal Committees

Republican

Party

Democratic

Party

o 5 10 15 20 25 30

CHART II

PARTY SUPPORT OF CONGRESSIONAL

CANDIDATES, 1978 - 88

Millions of Dollars

• Coordinated Party Expenditures

Contributions

Millions

of Dollars

12.--------------------------------

101------

81----

61---~

41----

2

SENATE

78 80 82 84,86 88

Republican

HOUSE

"support includes both contributions to and coordinated party expenditures (§441 a(d)) on behalf of

federal candidates.

5
May 1989 FEDERAL ELECTION COMMISSION Volume 15, Numbe

MUR 2545: Excessive Contributions Made

and Accepted by PAC

This MUR, resolved through pre-probable cause

conciliation, involved the acceptance by a corporate PAC of excessive contributions made by

seven individuals (aU employees of the sponsoring

corporation). The PAC concurrently made excessive contributions to both a Senate and a House

campaign committee.

Background

The MUR was internally generated by a referral from the FEC's Reports Analysis Division

(RAn). A regular review of the PAC's 1986 reports turned up the contributions to and from the

PAC that appeared to exceed the election law's

limitations. RAD referred the matter to the

General Counsel's Office.

General Counsel's Report

The Commission found reason to believe that

the PAC a , Senate campaign committee, . a House

campaign committee and their respec~lve trea.s~rers had violated 2 U.S.C. §441a(f), which prohibits

knowingly accepting an excessive con~ribution.

The Commission also found reason to believe that

the PAC and its treasurer had violated 2 U.S.C.

S44Ia(a)(l)(A), which places a limit of $1,000, per

candidate, per election, on contributions to candidates made by individuals and committees other

than multicandidate committees. Finally, the

Commission found reason to believe that the

seven individuals had violated 2 U.S.C. §441a(a)

(l)(C) by making contributions exceeding $5,000

per year to a PAC.

On its 1986 pre-general election report, the

PAC disclosed contributions received from seven

individuals which, when combined with previous

contributions from those persons, ranged from

$10,000 to $12,800 per contributor per calendar

year. The PAC contended that the money had

been raised for use in nonfederal elections; the

PAC had mistakenly believed that federal prohibitions and limitations on contributions did not

apply to funds raised for nonfederal activity.I The

seven contributors also claimed that they had

been told by the PAC that the limitation applied

only to contributions intended for use in federal

elections and that their contributions were for use

lA committee with only one cccount for both

federal and nonfederal activity may accept only

contributions that are permissible WIder the Act

and regulations, regardless of whether the contributions are to be used for federal, state or local

elections. See 11 CFR 102.5(aX1)(li).

6

in state and local elections only. RAD adv

the PAC to refund the excessive portions of 

contributions. The PAC later refunded $45,60

the $48,000 in excessive contributions made 

the seven individuals.2

The PAC's 1986 July quarterly report 

closed a $5,000 contribution to a Senate camp

and a $2,000 contribution toa House campa

Only a multlcandidate committee can make 

tributions to federal candidates in excess 

$1,000 per candidate, per ele~tion., but the P

had not met the law's qualifications for m

candidate ccmmittees.J The PAC asserted 

its contribution to the Senate campaign 

meant for the candidate's state campaign c

mittee and that the Senate committee had 

alerted the PAC that it was a federal camp

committee. The PAC later asked the campa

to refund the excessive portions of its contr

tions; both campaigns complied.

The Commission determined that, by ma

excessive contributions of $4,000 and $1,000 

the Senate and House campaign committees, 

PAC had violated section 441a(aXl)(A). In a

tion, the two candidate committees and t

treasurers had violated section 44Ia(f) by acc

ing the excessive contributions.

Conciliation Agreements

The corporate PAC, the seven individuals 

the two campaign committees expressed a. de

to enter into conciliation agreements WIth 

Commission prior to the Commission's fin

probable cause to believe violations had occur

The House campaign was the first to settle 

matter by agreeing to pay a civil penalty of $

Later, while maintaining that its violations w

the result of reasonable errors, the PAC agree

pay a civil penalty of $7,500 for its violations. 

the same time, the seven individuals agreed 

pay civil penalties ranging fro~ $500 to $

each with a total of $4,800 paid by the se

Lastiy, the Senate cam~aig~ committee. asse

in its agreement that It "did not knowingly 

willfully violate the law," but it agreed to pa

civil penalty of $750, thereby settling the mat

2The PAC subsequently reported the rem

ing $2,398.64 in excessive contributions as a de

3To qualify as a multicundidate committe

political committee must be registered with 

FEe for six months, have more than 50 contr

tors and have made contributions to five or m

fed~ral candidates. See 2 V.S.C. section 4

(a)(4) and 11 CFR 100.5(e)(3).
May 1989 FEDERAL ELECTION COrvlrvllSSION

FEC v. FURGATCH (88-604'1)

On March 8, 1989, the U.S. Court of Appeals

for the Ninth Circuit issued an opinion affirming

in part the district court's decision in FEC v.

Harvey Furgatch (Civil Action No. 86-6047). The

appeals court upheld the lower court's imposition

of a $25,000 civil penalty assessed for violations

of the election law related to independent expenditures Mr. Furgatch had made during the 1980

Presidential campaign. The appeals court also

vacated a permanent injunction against Mr. Furg.atch imposed by the district court. The injunetton was remanded to the lower court with instructions to limit its duration and to specify the

conduct it prohibited.

On March 22, 1989, the FEC filed a petition

for rehearing by the appeals court and a suggestIon for rehearing bane. A decision in this

matter is pending.

BackgroWld

In January 1987 the appeals court issued a

separate decision related to Mr. Furgatch's independent expenditures. In FEC v. Furgatch , the

court determined that Mr. Furgateh had violated

the election law by failing to report his expenditures (amounting to $25,008) for two newspaper

ads and by failing in one of them to state that the

ad was not authorized by any candidate or candidate's committee. 2 U.S.C. §§434(c)(l-2) and

441(d)(a), respectively. The decision reversed and

remanded a district court finding that Mr. Furgatch had not violated the election law. 1

On remand, in concordance with the appeals

court's interpretation of the "express advocacy"

standards, the district court found that Mr. Furgatch had violated the election law and assessed a

civil penalty of $25,000. The court also permanently enjoined the defendant from future similar

violations of the law.

Mr. Furgatch SUbsequently petitioned the appeals court to find that the district court had

abused its discretion in assessing a $25,000 penalty. He also asked the appeals court to find that

the lower court's permanent injunction was not

authorized by the election law, was impermissibly

vague and was not imposed in compliance with

Rule 65(d) of the Federal Rules of Civil Procedure.

IFEC v. Fur~atch, 807 F.2d 857 (9th cu«

For a summary () thi:J decision, see the March

1987 Record.

7

Volume 15, Numbe

Appeals Court Decision

In finding that the district court had 

abused its discretion in imposing the civil penal

the appeals court observed that the Fede

Election Campaign Act (the Act) permits a co

to assess a civil penalty "Which does not exce

the greater of $5,000 or an amount equal to 

contribution or expenditure involved" in the vio

tion. 2 U.S.C. S437g(a)(6)(B). Since the to

expenditures Mr. Furgatch had made for the 

amounted to $25,008, the district court had 

sessed a $25,000 penalty.

With regard to the permanent injunction, M

Furgatch had claimed that the Act permitted 

court to issue an injunction only when a person 

about to cornrnit" a violation of the law. The F

claimed that the relevant statute, 2 U.S

S437g(a)(6)(B), gave a court the authority to is

an injunction on the basis of either a past o

threatened future violation. Admitting that 

language of the statute did not clearly indic

whether Congress intended to limit injunct

relief to cases of imminent violations of the A

the court cited legislative history to concl

that the FEC was correct in its interpretation 

section 437g.

Nevertheless, the court said, the distr

court could not issue an injunction pursuant 

section 437g(a)(6)(B) unless there was a likeliho

of future violations. The court found that 

though the record supported a finding that 

Furgatch was likely to violate the election l

again, it did not justify a permanent injunctio

that is, an injunction lasting the duration of 

life.

In remanding the injunction to the low

court, the appeals court instructed it to limit 

injunction to a "reasonable duration." The appe

court also required the district court to state, 

compliance with Rule 65(d), the reasons for 

injunction and the sped fic actions restrained 

it.

FEets Petition fOl' Rehearing

In petitioning for rehearing on the rema

limiting the duration of the permanent injuncti

the FEC claims that the district court's perm

nent injunction against the defendant was cons

ent with the appeals court's own observation t

Mr. Furgatch was likely to commit further vio

tions of the law. The district court's action w

also consistent, the FEC claims, with the expl

authority given to the courts in 2 U.S.C. §4

(a)(6)(B) to issue a "permanent" injunction "upo

proper showing that the person involved has co

rnitted" a violation of the election law.

The appeals court's decision on the rehear

is pending.
May 1989 FEDERAL ELECTION COMMISSION

FEC v. COMMITTEE TO ELECT BENNIE BATTS

On February 14, 1989, the U.S. District Court

for the Southern District of New York granted the

FEC's motion for summary [udgrnent in FEC v.

Committee to Elect Bennie O. Batts (Civil Action

No. 87-5789(GLG)). The committee was Mr.

Batts' principal campaign committee for his unsuccessful 1984 primary campaign in New York's

20th Congressional District.

The court found that the committee and its

acting treasurer, Evelyn Batts (the candidate's

wife), violated the election law by:

o Failing to amend its Statement of Organization

to reflect Mrs. Batts' actual role as treasurer

and as custodian of the committee's books and

accounts and to disclose a campaign depository

(2 U.S.C S433(c));

o Commingling committee funds with the personal funds of Mrs. Batts in Mrs. Batts' personal

bank account (2 U.S.C. S432(b)(3));

o Failing to use the official campaign depository

for receiving contributions and making expenditures (2 U.S.C. S432(h)(I)); and

o Knowingly accepting more than $10,000 in excessive contributions from Mrs. Batts' personal

account (2 U.S.C. S441a(f)).

The court also found that Mrs. Batts personally

violated the election law by making excessive

contributions from her personal account.

Observing that the committee's violations

had resulted from "at most...sloppy bookkeeping

and unprofessional behavior," and that there was

no implication that the defendants had been "motivated by personal gain," the court assessed civil

penalties of $100 against the committee and its

acting treasurer, Mrs. Batts. The· court also

assessed a $1 civil penalty against Mrs. Batts

personally. In addition, the court permanently

enjoined the defendants from similar future violations of the election law.

FEC v, BOB RICHARDS FOR

PRESIDENT COMMITTEE (88-2832)

On March 22, 1989, the U.S. District Court

for the District of Columbia issued a final consent

order and judgment in FEC v. Bob Richards for

President Committee, Washington, D.C. (Civil

Action No. 88-2832). The Richards (Washington)

committee is a nonauthorized committee affiliated with the Waco, Texas, Bob Richards for

President Committee, Mr. Richards' principal

campaign commitee for his 1984 Presidential

campaign.

By the terms of" the consent order, the court

declared that the Richards (Washington) committee violated the election law and FEC regulations

by:

o Failing to file an amended Statement of Organization (FEC Form l) reflecting its affiliation

with the Richards (Texas) committee (2 U.S.C.

S433(c));

8

Volume 15, Numbe

o Using Mr. Richards' name in its comm

name (a nonauthorized committee may not 

a candidate's name in its committee name

U.S.C. S432(e)(4));

o Knowingly accepting an excessive contribu

in the form of a $60,000 loan from the Pop

Party (2 U.S.C. S441a(f));

o Transferring $5,000 to the Richards (Te

committee from funds derived from exces

(l.e., prohibited) contributions (II CFR 102

(l)(iv)); and

o Failing to include an authorization notice 

solicitation letter that expressly advocated 

Richards' election (2 U.S.C. S441d(a)).

The consent order required the defendants 

o File the amended Statement of Organizat

reflecting the Richards (Washington) com

tee's affiliation with the Richards (Texas) c

mittee, with the Commission within 20 d

and

o Pay a civil penalty of $15,000 within 20 days

The court also permanently enjoined the 

fendants from future similiar violations of 

election law.

FEe v. POPULIST PARTY

On March 22, 1989, the U.S. District C

for the District of Columbia issued a final con

order and [udgrnent in FEC v. Populist Party

al. (Civil Action No. 88-0127). By the term

the consent order, the court declared that 

Populist Party, a political committee, and W

Car to, acting as treasurer, violated the elec

law and regulations by:

o Failing to file 1985 mid-year and year

reports on time (2 U.S.C. S434(a)(4)(A)(iv));

o Failing to file, in a timely manner, ame

Statements of Organization reflecting. 

Carto's role as treasurer of the committee 

a change in the committee's campaign de

tory (2 U.S.C S433(c));

o Failing to file, in a timely manner, quar

reports for April, July and October 198

U.S.C. S434(a)(A)(i»;

o Failing to file, in a timely manner, a 1986 p

general election report (2 U.S.C. S434(a)(

(iii));

o Failing to disclose in any report the purpo

approximately $8,000 in operating expendi

made to one payee (2 U.S.C. §434(a)(4)(iii»;

o Failing to disclose, in a timeiy manner, 

receipt of a $500 contribution from an 

vidual (2 U.S.C. S434(b)(3)(A));

o Failing to disclose and continuously report 

tain outstanding debts and obligations, amo

ing to. approximately $299,817 (2 U.S.C. 

(b)(8); 11 CFR 104.11); and

o Knowingly accepting corporate contribution

U.S.C. S441b(a)).

The court also found that the corpora

had violated the law in making contribution
May 1989 FEDERALELECTION COMMISSION

the committee. The Spotlight. a weekly newspaper, and its owner, Cordite Fidelity, Ine., had

made $10,479 in prohibited corporate contributions; Liberty Lobby, Ine., had contributed $7,500.

The court also found that Mr. Carto, in his

capacity as a director or officer of both corporations (in addition to being treasurer of the

Populist Party), had violated 2 U.S.C. S441(b) by

consenting to the corporate disbursements,

The consent order required the defendants

Populist Party, Liberty Lobby, Inc., Cordite Fidelity Inc., The Spotlight and Mr. Carta, both perso~al1y and as treasurer of the Populist Party, to

pay a civil penalty of $20,000 within 20 days; the

defendants were jointly and severally liable for

the payment. The court also permanently enjoined the defendants from similar future violations of the election law.

NEW LITIGATION

FEC v, Mark Weinberg

The FEC asks the district court to declare

that Mark Weinberg, an individual working in the

commodities market, violated the terms of a

conciliation agreement entered into with the

Commission in September 1988.

According to the terms of the conciliation

agreement, Mr. Weinberg agreed to pay a $17,000

civil penalty for knowing and willful violations of

sections 441a(a)(l)(A) and 441a(a)(3) of the

election law. As of the filing date of this action,

the Commission had not received any payments

from the defendant. The election law permits the

FEC to institute a civil action against persons

believed to have violated any provision of a

conciliation agreement. 2 U.S.C. S437g(aX5)(D).

The FEC also asks the court to:

o Order the defendant to comply with the terms

of the conciliation agreement within 10 days;

o Assess additional monetary penalties against

Mr. Weinberg for failing to comply with the

agreement;

o Permanently enjoin the defendant from future

violations of the agreement; and

o Award the FEC interest on the civil penalty

provided for in the conciliation agreement, as

well as costs in this action.

U.S. District Court for the District of

Columbia, Civil Action No. 89-0416, February 15,

1989.

9

Volume 15, Number 

BASIC RECORDKEEPING FOR ALL

POLITICAL COMMITTEES

All political committees must keep record

of their receipts and disbursements. Under se

tion 432(0) of the Federal Election Campaign Ac

recordkeeping is the responsibility of the com

mittee treasurer.

The FEe's recordkeeplng regulations cov

three areas:

o The information that your committee must re

cord;

a The back-Up documentation that your commi

tee must keep; and

o The recordkeeping duties of persons other tha

the treasurer.

This article answers some common question

about the recordkeeping rules. The answers a

based on provisions in the Federal Election Cam

paign Act (specifically, 2 U.S.C. §432), the FEC

regulations (11 CFR) and Commission adviso

opinions (AOs). This article does not discu

particular requirements that apply only to certa

committees, so committees should be sure also 

consult their Campaign Guide. Anyone witn 

question about recordkeeping may call the FEC

Information Services Division at 800/424-9530 

202/376-3120.

Record Maintenance

Our Statement of Organization (FEC Form 

asks us to identify a nCustodian of Records

What does this mean? Although it is the treasur

of a political committee who is legally responsib

for keeping accurate records and for filing di

closure reports, many committees assign boo

keeping duties to another individual. The nam

address and committee position of the person wh

actually maintains the financial records of a po

itical committee must be identified as the "Cu

todian of Records" on Form 1. The treasurer 

assistant treasurer may serve as custodian. 

CFR 102.2(a)(l)(iii).

How long must our committee retain re

ords? Committee treasurers must keep back-u

records for each report for three years after th

report is filed. A photocopy of each report mu

also be kept. 2 U.S.C. S432(d); 11 CFR 102.9(

and 104.l4(b)(2) and (3).

Receipts

What are the requirements for keeping ree

ords ot contributions received from individuals

Records must be kept for all contributions re

ceived. For each contribution exceeding $50

continue
May 1989 FEDERAL ELECTION COMMISSION

committee records must note the amount, the

date received and the donor's name and address.

For contributions of $50 or less, the Commission

has recommended that a committee record the

same information that the regulations require for

larger contributions. AOs 1981-48 and 1980-99. If

aggregate contributions from one individual total

over $200 in a calendar year, committee records

must identify each contribution by listing the

amount, the date received, and the donor's name,

address, occupation and employer. 2 U.S.C.

§§431(l3)(A) and 432(c); 11 CFR 102.9(a)(1) and

(2).

How do we record the contributions received

as part of a mass collection!l For small cash

contributions (not more than $50 each) collected

at a fundraiser, a committee may record the

name of the event, date and total amount collected. AOs 1981-48 and 1980-99.

Do the same recordkeeping rules apply to

contributions from PACs and parties? No. All

contributions from PACs and party committees--

regardless of amount-must be recorded in detail.

For each PAC and party receipt, the recipient

committee must record the name, and address of

the committee making the contribution, the date

received and the amount. 2 U.S.C. §432(c}(4); 11

CFR 102.9(a)(3).

Sometimes, someone other than the treasurer

receives a contribution for the committee and

forwards it to the treasurer. Does the person

collecting the contribution have any recordkeeping duties?2 Yes. Any person receiving a

contribution on behalf of a. committee must forward the contribution to the treasurer with the

required information identifying the contributor,

amount and date received. Contributions to an

authorized committee must be forwarded to the

treasurer within 10 days. Contributions to P ACs

and party committees that are greater than $50

must also be forwarded within 10 days. Contributions to PACs and party committees that are

$50 or less must be forwarded within 30 days. 2

U.S.C. S432(b); 11 CFR 102.8.

What is meant by the "date received?" The

date received is the date that the person who first

received the co'ntribution took possession of it. 11

CFR 102.8(a).

IThe entire amount paid to attend a fundraiser or other political event is a contribution. 1 1

CFR 100.7(a)(2).

20ther rules may also apply if, for example,

the contribution was earmarked or was received

by a collecting agent. Consult your for further information regarding a particular actiVity.

10

Volume 15, Numb

What. if a committee cannot obtain th

cessary information from a contributor? 

treasurer must be able to prove that he o

made "best efforts" to obtain the informa

The treasurer should keep a written record (e

a letter or a written memorandum of a telep

conversation) showing a clear request for 

necessary information. The treasurer must 

inform the contributor that the reporting of 

information is required by law. 2 U.S.C. §4

11 CFR 104.7.

Disbursements

Must our committee also keep records id

fying disbursements! Yes. The treasurer 

record all disbursements, regardless of amoun

noting the date made, the amount paid, the 

pose, and the name and address of the paye

the disbursement is made on behalf of a cl

identified candidate, the records must also 

tify the candidate and the office he or s

seeking. 11 CPR 102.9(b)(l).

How detailed does the notation of the 

pose have to be? It should identify exactly 

the disbursement was made. For example, 

penses" would not suffice, while "postage" w

11 CPR 102.9(b)(l)(iv) and I04.3(b)(3)(i).

Do we need to keep back-up documenta

Yes, usually. The treasurer must keep a rec

invoice or canceled check for each disburse

exceeding $200. 11 CFR 102.9(b)(2).

Must our committee make all disbursem

by check? Generally, yes. All disbursements

cept those made from petty cash, must be 

by check or a similar draft drawn on the com

tee's own bank account. 11 CFR 102.10 and 

(a).

When can we use our petty cash food to 

disbursements? When payments to one perso

not exceed $100 per transaction. 2 U.S.C. 

(h)(2)j 11 CFR 102.11.

Are there special recordkeeping requirem

for petty cash payments? The treasurer 

record the names and addresses of person

whom disbursements from the fund are m

along with the date, the amount and the pur

If a disbursement is made for a candidate

treasurer should also note the name of the c

date, as well as the office sought. 11 

102.11.

Our committee uses a credit union. Ma

use carbon copies of share drafts or check

back-Up documentation? Yes, as long as 

treasurer retains the monthly account state

showing payment by the credit union of the 

draft or check. 11 CFR l02.9(b)(2)(iii).
FEDERAL ELECTION COMMISSION

_.

Volume 15, Numbe

Corporations and Labor

Organizations

Political Party Committees

Nonconnected Committees

Congressional Candidat es

and Committees

Campaign Guide

CAMPAIGN GmDn ORDER FORM

city, State, Zip

A CAMPAIGN GUIDE FOR EVERY COMMITTE

To help political com mittees understand 

requirements of the federal election law, 

Commission has published a series of Campa

Guides-each one designed for a distinct type 

committee.

Written in plain English, these Guides expl

the basic provisions of the election law and F

regulations, such as contribution limitations 

prohibitions, fundraising, registration and repo

ing requirements. Citations to regulations 

included. Every Guide also provides examples 

correctly completed reporting forms to illustr

how com mittees should fill out their reports. 

addition, each Guide contains appendices deal

with such narrower topics as independent expen

tures, earmarked contributions, partnerships a

solicitations.

Anyone involved in running a political co

mittee or filing reports will find the Guide 

important resource for understanding and co

plying with the law. Committee treasure

bookkeepers, volunteers and other staff memb

should use the partleular Guide designed for th

type of committee. The four Guides-all ava

able free of charge-are:

o Campaign Guide for Congressional

Candidates and Committees

o Campaign Guide for Political P8l'ty

Committees

o Campaign Guide for Corporations and

Labor Organizations

o Campaign Guide For Nonconnected

Committes

Copies of the Guides can be ordered from 

FEC's Information Services Division (at 800/4

9530 or 202/376-3120), or fill out the form belo

The completed form should be mailed to 

Information Services Division, Federal Elect

Commission, 999 E Street, N. W., Washingtonj 

20463.

------------ I

I Name

I Address

I

I No. of I Copies

I

I

I

I

I

11

May 1989

If our committee uses a credit card for

making disbursements, what documentation should

we keep? The committee should keep either its

monthly billing statement or a receipt for each

transaction, along with the canceled check used

to pay the bill. 11 CFR 102.9(b)(2)(ii).

How should we document advances to staff

for travel and subsistence? For advances of $500

or less, the committee should keep expense account documentation of the expense account (such

as an expense voucher) and the canceled check to

the employee. If the staff member was advanced

more than $500, the name and address of the

employee should be noted, along with the amount

advanced, the date and the purpose. 11 CFR

102.9(b){l) and (2)(i).

SELECTED COU'RT CASE

ABSTRACTS, 1916-1988

The FEC has released Selected Court Case

Abstracts. 1976-1988, a compilation of summaries

of court cases involving the agency since its

establishment in 1975.

Included in the compilation are abstracts of

significant Supreme Court and appeals court cases

concerning the Federal Election Campaign Act,

FEC regulations and enforcement actions: Buckley v. Valeo, FEC v. National Right to """'WOrk

Committee. FEG v. NCPAC. FEC v. Massachusetts Citizens for Life. Inc., ete., as well as

recent district court decisions.

Selected Court Case Abstracts also contains

summaries of election law cases that did not

directly involve the FEC, such as First National

Bank of Boston v. Bellotti and Galliano v. U.S.

Postal Service.

Legal cites are provided for most cases.

Virtually all of the summaries first appeared in

the Record. The volume is current through October 1988.

Comprehensive indexes-by name and by subject-make the volume helpful to professionals

and students in the fields of campaign finance and

government ethics. Copies may be obtained for

$10.00 each from the FEC's Public Records Office. Ca11800/424-9530 or 202/376-3140.

What if our treasurer can't locate the required documentation for a disbursement? As in

the case of missing contributor information, the

treasurer should be able to show "best efforts" by

providing, for each payment, at least one written

effort to obtain a copy of a receipt, invoice or

canceled check. 11 CFR I02.9(d).

•
May 1989 FEDERAL ELECTION COMMISSION Volume 15, Numb

This cumulative index lists advisory opinions, court cases and 800

Line articles published in the Record

during 1989. The first num1ier1i\

each citation refers to the "number"

(month) of the Record issue; the sec- ond number, following the colon,

indicates the page number in that

issue.

OPINIONS

1987-3h Solicitable membership

classes of securities exchange (reconsideration), 4:3

1988-37: Affiliated status of two corporate PACs after leveraged buyout, 1:6

1988-44: Effect of statute Qf limitations on com-mittee's debts, 214

1988-45: Definition of national party

committee, 2:4

1988-46: Corporation's solicitation of

licensees, 2:4

1988-47: PUblisher's donatlon of free

magazines to candidate prohibited,

1:6

1988-48: Contributions to trade as- sociatlon PAC matched with charitable donations, 2:5

1988-49: Federal bankruptcy trustees

not considered government contractors, 2:5

FEDERAL ELECTION COMMISSION

999 E Street, NW

Washington, DC 20463

Official Business

COURT CASES

FECv.

-AFSCME-PQ, 1: II

-Batts, Committee to Elect,

5:8

-Braun for Congress Committee, 1:10

-Bull for Congress, 1:11

-Californians for a Strong

America (88-1554), 1:9; (88-

6499), 1:11

-Citizens Party, 1: 12

-Dietl for Congress, 1:10

-Furgatch (88-5047),5:7

-Haley Congressional Committee, 1:9

-Holmes Committee. 3:3

-Life Amendment PAC, 1:11

-Populist Party, 1:12 and 5:8

-Richards for President (89-

0254) 4:9J (88-2832), 5:8

-RodrIguez, hl0

-Survival Education Fund, lne.,

3s4

-Taylor Congressional Committee, hID

-Weinberg, 5:9

Fund fol' 8 Conservative Majority,

Debtor, 3:4

v.·FEC

-Oommon Cause (87-2224

-Common Cause (89-

GAG),4:9

-Maine Right to Life Co

tee, Inc., 4:9

-Miller, 3:3

-Stern, 3:4

-USDC, 1:9; 3:3

MURSUMMARIBS

MURs 1528/1739: Party activ

prohibited funds, transfers, a

tions and loans, 4:7

MUR 2175: Excessive and proh

contributions accepted by 

Presidential campaign, 3:6

MUR 2356: PAC's failure to 

reports on time, 4:7

MUR 2545: Excessive Contrib

Made and Accepted by PAC, 5:

800 LINE

Debt Retirement by Candidate 

mittees, 1:7

Designating a Principal Cam

Committee,3r2

Recordkeeping Rules for All 

mittees, 5.:9

Bulk Rate Mail

Postage and Fees Paid

Federal Election Commission

Permit Number G-31