FEDERAL ELECTION COMMISSION

•

April 1991 999 E Street NW Washington DC 20463 Volume 17, Number

TECHNICAL 'IO IODWU:tE RULES

The Commission recently amended its

honorarium rules (11 CFR 110.12) to limit

their application to Senators and officers

and employees of the Senate. Previously,

the rules applied to all officers and employees of the federal government, including Members and employees of the House of

Representatives. The Ethics Reform Act of

1989 (Pub. L. 101-194) amended section 44li

of the Federal Election Campaign Act and

thereby limited the Commission's jurisdiction over honoraria to the acceptance of

honoraria by Stnators and Senate officers

and employees. (The limit on honoraria

remains the same--$2,OOO per appearance,

speech or article.)

The technical amendments to the Ethics

Reform Act of 19B9 (Pub. L. 101-280) further amended section 441i by excluding from

the definition of honorarium any amounts

accepted for the travel and subsistence

expenses of a child accompanying the honorarium recipient. Thus, the exemption

applies to the honorarium recipient and to

a child or spouse or aide accompanying the

recipient. Revised FEe rules at 11 eFR

110.12(bl now reflect this change as well.

The technical amendments to 11 eFR

110.12 became effective upon their publication in the Federal Register on March 6,

1991 (56 FR 9275).

IThe Ethics Reform Act of 1989 prohibits

Members of the House of Representatives and

all other federal officers and employees

except those from the senate from accepting

honoraria.

CANDIDI\TE AND PAC <nlFERENCES

For more information on the

conferences listed below, call

800/424-9530 or 202/376-3120.

Conference for candidate CCllmittees

washington, OC, April 19

This one-day conference will

focus on winding down the 1990 campaign and gearing up for the 1992

elections.

Conference for PACs

washinqt.on, OC, May 2-3

This conference will cover the

campaign finance law's requirements

for corporations. labor organizations, trade associations and their

PAGs. The new allocation rules will

will also be discussed.

TABLE OF <XI'n'ENl'5

1 REGJIATICliS: Honoraium Provisions

2 PUBLIC FUNDr:NG: Education Program on

Tax Checkoff

SPECIAL ELECTICN5

3 Texas and Illinois

5 Massachusetts: Reminder

5 Party Spending Limit~~for Specials

5 AIJIIlISQRY OPINICfiS

6 OOJRT CASES: FEC v. Friends of Isaiah

Fletcher

7 800 LINE: Debt Retirement by Candidate

Cormni ttees

10 CCMPLI1\NCE: MURs Released to the Publ

14 PUBLICATIONS: Brochure Order Form

15 INDEX
Federal Election Ccanission, 999 E street, Rtf, washington, IX: 20463

800/424-9530 202/376-3120 202/376-3136 (TOO)

April 1991 FEDERAL ELECTION COMMISSION

.- . - ...,- - -- -- -

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. - "'----- - .. --" -- - -_. --- - -_.....:._. - - - ~. ._~ - ~-

FEe LAUNCHES EOOCATIm PROGRAP.I CI'l'

'l2\X aJECKOFF

on March 5, 1991, the commission

launched a nationwide public information

program to educate citizens about the

dollar tax checkoff.for the Presidential

Election Campaign Fund. The education

program featured television and radio

public service announcements in English and

spanish. The media announcements ut'ged

taxpayers to make "an Lnformed choice" when

deciding whether to designate one dollar of

their taxes for the Presidential public

funding program. Citizens respond to this

question on their 1040 federal income tax

forms. The FEC's education -program was

timed to reach the public at the height of

the tax season.

The percentage of 1040 forms on which

taxpayers checked "yes" to the one dollar

designation has steadily dropped since 1980

from a high of 28.7 percent to 19.9 percent

for 1989 tax returns. Moreover, according

to an Internal Revenue Service sample

survey, taxpayers left the checkoff blank

on 15 percent of the 1989 tax returns. The

decline in taxpayer participation has

contributed to a projected shortfall in the

Presidential Fund of $3 ndllion in 1992 and

well over $100 million in 1996. A research

project funded by the Commission late last

year concluded that there is a widespread

lack of knowledge about the checkoff. The

study also concluded that people are interested in kyowing more about the Presidential Fund.

In his statement to the press, FEC

Chaionan John Warren McGarry said that the

public education program is but one element

in the Commission's effort to salvage

1s ee "Focus Groups Discuss Tax Checkoff,"

page 2 of the March 1991 Record.

John Warren McGarry, Chairman

Joan D. Aikens. Vice Chairman

Lee Ann Elliott

'l11omas J. Josefiak

Danny L. J'lCDonald

Scott E. '1tlomas

Volume 17, Number 

Presidential public funding. The FEe has

also asked the Treasury Department to adop

a rule to "more fairly allocate li~ted

dollars" to 1992 primary candidates and

has urged Congress to consider legislation

to correet a n structural flaw" in the

program that may cause a massive shortfall

in 1996.

The FEe was joined by the Letlgue of

Woman Voters, the American Association of

Retired Persons and the National Society o

Public Accountants to kick off the multimedia program. In addition to the public

service spots, the FEe developed a new

flyer (published in the March 1991 Record)

and a new brochure: The $1 Tax Checkoff

(see order form on page 14).

FEDERAL ROOISTER fCrICES

Copies of Federal Register

notices are available from the

Public Records Office.

1991-1

Filing Dates for Massachusetts

Special Elections (56 FR 9359, March

6, 1991)

1991-2

11 CFR Part 110: Honoraria; Final

Rule; Technical Amendment (56 Fa

9275, March 6. 1991)

2See "FEC Comments on Treasury Rules," pag

1 of the March 1991 Record.

walter J. stewart, Secretary of the senate,

Ex Officio Commdssioner

Donnald K. Anderson, Clerk of the House of

Representatives. Ex Officio commissioner

2
FEDERAL ELECTION COMMISSION

•

April 1991

TEXAS AND ILLI~>IS SPECIAL ELECTIOOS

Texas and Illinois have scheduled

special elections to fill recently vacated

House seats. political committees

authorized by candidates participating in

these elections must file the appropriate

pre- and post-election reports according to

the schedules that appear on page 4. PACs

and party committees may also have to report their special election activity, as

explained below.

Texas Special Election

Texas will hold a special election on

May 4, 1991, to fill the 3rd Congressional

District seat formerly held by Congressman

Steve Bartlett, who resigned on March 11 to

run for mayor of Dallas.

If no candidate wins a majority of the

votes in the May 4 election, a special

runoff election will be held on May 1B.

Only the two top vote-getters in the

previous election--regardless of party

affiliation--will participate in the second

election.

See the tables of reporting dates on

page 4.

Illinois Special Elections

Illinois has scheduled special elections to fill the 15th congressional

District seat of Congressman Edward R.

Madigan, who resigned on March 8 to become

secretary of Agriculture. The special

prima ry wi11 be held May 21, 1991; the

special general will be held July 2.

See the tables of reporting dates on

page 4.

Authorized Conmi.ttees

Authori~ed committees of candidates

running in the special elections must file

reports according to the schedule given in

the tables below. All candidates known to

be on the ballot are automatically sent FEC

reporting forms.

Authorized committees must additionally

file special notices on contributions of

$1,000 or more received after the close of

books for a report but more than 48 hours

before the election. The notice must reach

the appropriate federal and state filing

offices within 48 hours after the committee's receipt of the contribution. Please

note that this special notice requirement

applies to all types of contributions,

including:

o In-kind contributions;

3

Volume 17, Number 4

o Loans (other than bank loans);

o Guarantees and endorsements of bank

loans; and

o Contributions and loans from the

candidate.

For information on the content of the

notice, see 11 CrR 104.5(f).

PACs and Party ComDittees

semiannual Filers. A PAC or party committee that reports on a semiannual basis

during 1991 may have to file special election reports if it makes contributions or

expenditures in connection with a special

election during the coverage dates shown in

the tables. 11 crn l04.5(h).

Monthly Filers. PACs and party committees that file monthly during 1991 do not

have to file special·election reports, but

PACs may have to file 24-hour reports on

independent expenditures, as explained

below.

PAC Reports on Independent Expenditures. Any PAC (including a monthly filer)

that makes independent expendi tures in

connection with a special election may have

to file a 24-hour- report. This reporting

requirement is triggered when a committee

makes independent expenditures aggregating

$1,000 or more between 2 and 20 days before

an election. The report must be fi led wi th

the appropriate federal and state filing

offices within 24 hours after the expenditure is made. For more information on this

reporting requirement, see 11 CFR 104.4(b).

(c) and 104.5(g).

State Filing

In addition to filing with the appropriate federal office--the Clerk of the

House or the FEC--committees filing Texas

or Illinois special election reports must

also file copies of reports with the

appropriate state office.

o Texas: Disclosure Filing Division,

Office of the Secretary of state, P.O.

Box 12070, Austin, TX 78711.

o Illinois: State Board of Elections, P.O.

Box 4187, Springfield, IL 62708.

Authorized commdttees of candidates

must file the entire report; other committees must file only the portion of the

report that is applicable to the candidate

(for example, the Form 3x Sl.lllIflary page and

any schedules that disclose contributions

or expenditures on behalf of the candidate). 2 U.S.C. §439(a); 11 CFR 108.3.

(continued)
ILLIOOIS SPECIAL ELECl'ICN

REPORTIRi MTES

April 1991

TEXAS SPECIAL ELEC'TICN

REPORTIOO DATES

FEDERAL ELECTION COMMISSION Volume 17,Numbe

Conmittees '!bat SUpport candidates

in the 5/21 Primary Only

Reg/Cert

Mail~ng Filin

Date Date

Only One Election Held:

Coomi.ttees '!hat Support candidates

in the 5/4 Special

Reg/Cert

Period 1 Mail~ng Filing

Report Covered Date Date

Pre-special 1/1-4/14 4/19 4;22

Post-special 4/15-5/24 6/3 6/3

Mid-year 5/25-6/30 7/31 7/31

Rep:lrt

pre-primary

Mid-year

Period 1

Covered

1/1-5/1

5/2-6/30

5/6

7/31

5/9

7/31

Ccmni.ttee& 'Ittat Support candidates in Bot

the 5;21 primary and the 7/2 Gene["al

TWo Elections Held:

Carmittees '!hat SUpport candidates in Both

the Special (5/4) am the Runoff (5/18)

Report

Period 1

Covered

Reg/Ce["t

l1ail~ng Filin

Date Date

TWo Elections Held:

Comdttees '!hat SUpport candidates in the

5/4 Special cnl.y (not the nmoff)

~rt

Period 1 Mai1~n9 Filing

Report Covered Date Date

pre-sped al 1/1-4/14 4/19 4/22

Pre-rWloff 4;15-4/28 5/3 5/6

Post-rWloff 4;29-6;7 6/17 6/17

Mid-year 6/8-6/30 7/31 7/31

11£ the pre-special report is the first

report filed by the committee, the report

must disclose all activity that occurred

before the committee registered and before

the individual became a candidate.

2Reports sent by registered or certified

mail Im.1st be postmarked by the mailing

date. Otherwise, they must be received by

the filing date.

1/1-5/1 5/6 5/9

5/2-6/12 6/17 6/20

---------waived----------

6/13-7/22 8/1 8/1

pre-primary

pre-gene]al

Mid-year

Post-general

1I f the pre-primary report is the first

report filed by the committee, the report

must disclose all activity that occurred

before the committee registered and befor

the individual became a candidate.

2Reports sent by registered or certified

mail must be postmarked by the mailing

date. Otherwise, they must be received b

the filing date.

3A regularly scheduled report may be waiv

if it is due within 10 days of the filing

date of a special election report. 11 eF

104.5(h)(2l. Therefore, the mid-year

report is waived for those committees

required to file the Illinois pre-general

election report.

4

4/22

7/31

4/19

7/31

Re<JlCert

Mail~ng Filing

Date Date

Period 1

Covered

1/1-4/14

4/15-6/30

Report

Pre-special

Mid-year
April 1991 FEqERAL ELECTION COMMISSION Volume 17,Number 4

•

MASSACHUSETTS SPECIAL ELEC'l'I<m

Massachusetts will hold special elections in the 1st Congressional District of

Massachusetts to fill the seat held by the

late congressman Silvio Conte. The special pri~ry will be held April 30, the special

general election, June 4. The reporting

dates were published in the March 1991

Record and the Federal Register (56 FR

9359, March 6, 1991).

The FEC has sent notices of the reporting dates to all candidates on the ballot

for the primary election.

PACs and party committees that plan to

make contributions or expenditures in connection with these special elections should

call the FEC to find out if they are required to file any special election reports

(800/424-9530; 202/376-3120).

PARTY EXPENDITURE LIMITS FOR

SPECIAL ELECTIrn8

'!be coordinated party expenditure limit

Eor the Massachusetts, Texas and Illinois

special elections is $26,500 ($10,000 multiplied by 2.650, the 1990 cost-oE-living

adjustment). This amount may be spent by

the party's national committee in connection with the each state's special election. The party's Massachusetts, Texas and

Illinois state committees may also each

spend up to $26,500 in connection with the

special election in their state.

please note, however, that the coordinated party expenditure limit is applied

differently in the Texas specials than in

Massachusetts and Illinois elections. In

Massachusetts and Illinois, the national

and state party committees may each spend

up to s26, 500 on behalf of the party' s

candidate running in the special general

election (that is, the nominee selected in

the special primary).

In Texas, however, both the May 4 election and the May 28 election (if held) are

considered general elections; the second

election is considered a continuation ot

the first. AO 1983-16. The national and

Texas state party committees may therefore

make coordinated party expenditures on behalf of candidates running in both those

elections. Note, however, that each co~

mittee has only one limit ($26,500), regardless of whether the second election is

held.

5

ADVISORY OPINICN RQ.JESTS

Recent requests for advisory opinions

(AORs) are listed below. The full text of

each AOR is available for review and comment in the FEe's Public Records Office.

ME 1991-3

Distribution of corporate PAC newsletter

outside restricted class. (Date Made Public: reb4Uary 21, 1991; Length: 5 pages)

AOR 1991-4

Payment to Senate employee as guest lectur

er at university. (Date Made Public: Fe~

ruary 22, 1991; Length: 8 pages)

.NJR 1991-5

Corporate contributions to building fund

account established by state party

committee. (Date Made Public: February

26, 1991; Length: 6 pages)

N1R 1991-6

Calculation of- allocation ratio (ballot

composition method) by california state

party committee. (Date Made Public: February 26, 1991; Length: 9 pages plus

attachments and supplement)

l\OR 1991-7

Corporate in-kind donation applied to

nonfederal portion of national party

committee's administrative expense. (Date

Made Public: March 11, 1991; Length: 2

pages)

AOR 1991-8

Payment to Senator for series of radio

programs (Date Made Public: March 12,

1991; Length: 3 pages)

ADYISOOY OPINI(JIJ stI9IARIES

NJ 1990-29: Return to Fedecal Account of

Funds Transferred to State

Account

Given the special circumstances set forth

in the advisory opinion request, Joseph E.

seagram 6< Sons, Inc. Poli tical Action Committee (the federal account) may accept

funds that are now being held in escrow bu

were preViously transferred from the federal account to an affiliated nonfederal

account.

In late 1989, seagram transferred

$5,000 from the federal account to an

(continued)
April 1991 FEDERAL ELECTION COrvlMISSION

affiliated nonfederal PAC formed by Seagram

under Arizona law (the state account). In

August 1990, the office of the Arizona

secretary of State established a new policy

precluding such transfers (i.e., transfers

from an out-of-state committee to a conunittee established under Arizona law). Arizona and Seagram officials agreed that "the

most prudent and efficient means of assuring compliance" with the new policy was for

seagram to seek a refund of the one contribution the state account had made ($2,000)

and then close the account. The contribution was duly refunded in October 1990.

The state account then terminated in November, transferring its $4,979 cash balance--

$5,000 minus a $21 payment for checks--to

the federal account. On December 10, after

consulting with the FEC, Seagram transferred the funds to a separate escrow

account.

Commission regulations prohibit the

transfer of funds from a committee's noofederal account to its federal account

(except for payment of allocated expenses

under Part 106). 11 CrR 102.5(a)(1)(i).

The Commission has, however, in specific

situations, pennitted nonfederal accounts

or lobbying accounts to transfer funds to

the federal account when the funds so

transferred were legal under the Federal

Election Campaign Act. See AOs 1984-31 and

1961-34.

In this case, the funds originally

transferred to the state account were legal

unde r the Act (L, e., they were raised for

federal-election purposes under solicitations subject to the Act and, presumably,

from sources permissible under the Act).

The state account received no other funds

except the return of a $2,000 contribution

within four months after it had been made.

It is unlikely that funds making up the refund were impermissible under federal law

since they were raised under Arizona law,

whose limdts and prohibitions are largely

consistent with those of the Act. Given

these circumstances--and the fact that the

funds were disqualified by the state for

use in Arizona State elections subsequent

to their transfer--Seagram may transfer the

$4,979 balance from the escrow account to

the federal account.

(Date Issued: February 15, 1991;

Length: 5 pages)

N) 1990-30: Designation of Post-Election

Contributions to Retire Debts

Even if solicitations by the Helms for

Senate committee clearly inform potentional

donors that all contributions will be used

to retire 1990 general election debts, the

6

Volume 17, Number 

contributions will not be properly designated as post-election contributions unle

a signed designation accompanies the

contribution. The contributor may note th

designation on the check itself or may

attach a separate, signed statement.

The Helms Committee proposed satisfyin

the written-designation requirement for

post-election contributions by stating in

the solicitation that contributions would

be used to payoff the co~tteers 1990

general election debt. The committee also

planned to repeat similar information on

contributor slips and in the disclaimer.

In order to confirm donor intent, however,

FEC regulations require that the contributor's signature appear on the same docu

ment that contains the words of designatio

(in this case, "1990 general election

debt"). 11 CFR 110.1(b)(4)(i) and (Hl.

Any contributions received by the committ

that are not properly designated for the

1990 general election debt must be-treated

as contributions for the 1996 primary cam

paign. 11 eFR 110.l(b)(2)(iil. (Date

Issued: February 11, 1990; Length: 4

pages)

. -, - -. -... - - - . ... - - - -.- -- - -, -,

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- .. -~ ~. - ~-~ -- ~~. - - .... - .

FEe v. FRIENDS OF ISAIAH FLE'IUtER

on February 5, 1991, the U.s. Distric

Court for the District of Maryland held th

Fletcher committee and its treasurer, Isa

ah Fletcher, Sr., in civil contempt of

court for failing to comply with past cou

orders issued in 1989 and 1990. (Civil

Action No. PN 88-2323.)

On April 24, 1989, the court ordered

defendants to pay (1) a $5,000 civil pena

ty for failing to file the committee's 198

October quarterly report and (2) the FEC'

court costs. on May 18, 1990, after defendants failed to pay the penalties, the

court ordered them to begin paying in

monthly installments.

In its current contempt action, the

court ordered defendants to pay:

o An additional penalty of $100 per day

until they fully comply with the previou

orders;

o Interest charges on the unpaid court

costs owed to the FEC; and

o The FEC's costs in prosecuting the

contempt proceeding.
FEPERAL ELECTION COfV1MISSION

•

April 1991

_ •• ~~ __ ~~_ __........ _.~ ~. .......~~~r............ _ "~.~ _..,.,......_~~~~_ .~... '\

. .:>~~,,:, >::,.>:~'. <"'~j/U~ :-·n-;~~;~Y·.'-::~;'~" ::>~ .... '.: ~< • ....L_..::..~_~~,.._~_~ ••• ~."-_ I ~=...::.._~ .............. ~~~:::~h"'_"': _ _ ....

DImT RETIREfID!N'l' BY CANDIDM'E CtI1M.ITl'EES

At the end of an election cycle, the

Commission receives questions fram candidate committees on how to deal with campaign debts. This article responds to

those questions. For additional information, call the FEe's Information services

Division at 800/424-9530 or 202/376~3120.

Continuous Reporting of Debts

Does an authori zed coamittee have to

keep reporting even if its only activity is

debt retire-ent? Yes. Committees must

continue reporting until all debts and

obligations have been extinguished and the

committee has terminated. 11 CFR 102.3 and

104.1l(a). (Termination is discussed later

in this article.)

Accepting Post-Election

contributions

Kay an authorized coanittee accept contributions after an election to retire

debts for that election? Yes, campaigns

may receive contributions after the election to retire d~bts, but they should

remember three general rules:

o First, such contributions are still subject to the limits and the prohibitions

of the Federal Election Campaign Act (the

Actl, even if the candidate lost the

election and does not plan to run for a

future federal office. This means that

the contributions must come from permissible sources and, when added to other

contributions from the same donor for

that election, the contributions may not

exceed the donor's contribution limit.

11 CFR 110.I(b)(1), 110.2(b){I),

110.4(a), 110.9(a), l14.2(b) and 115.2.

o Second, contributions made after an election to retire debts must be specifically

designated for that election by the

contributor, who may note the election

(e.g., "1990 general") right on the check

or in a signed statement accompanying the

contribution. 11 CFR 110.1{b){2){i) and (b){4)~ 1l0.2(b)(2)(i) and (b)(4). See

also AD 1990-30, a summary of which

appears in this issue.

o Finally, contributions designated for

debt retirement may not exceed the campaign's net debts outstanding for that

election. 11 CFR 110.1{b)(3); Il0.2(b)

(3). If a contribution exceeds the

amount of net debts, the committee must

7

Volume 17, Number 4

either refund it or ask the contributor

to redesignate it for another election•

Bow'do we calculate the campaign's net

debts outstanding? Net debts outstanding

consist of unpaid debts incurred with

respect to the election minus cash on hand.

o Total unpaid debts incIiiiethe estimated

cost of raising funds to liquidate outstanding debts and, in the case of a

terminating committee, estimated windingdown costs.

o Cash on hand consists of currency, deposited funds, traveler's checks, certificates of deposit, treasury bills and

amounts owed to the committee in the form

of credits, refunds, returns and receivables (or a reasonable estimate of the

collectible amount). 11 CFR 110.1(b}(3l

(ii) .

A campaign must keep adjusting its net

debts outstanding af additional foods are

received and spent. 11 CFR 110.1(bl

(3){iii).

Selling Assets

May a committee sell off its assets in

order to raise money to pay i t8 debts?

Yes. However, the entire amount paid is

usually considered a contribution, subject

to the prohibi tions and lirnits of the Act.

11 CFR 100.7(a)(2)i ADs 1989-4 and 1988-12.

The Commission has, however, recognized

narrow exceptions to this general rule.

What are these exceptions? Under the

circumstances described below, the sale of

a committee asset does not result in a

contribution, and the proceeds are not

subject to the Act's limits and prohibi~

tions, as long as the item is sold at the

"usual and normal charge":

a The isolated sale of a committee asset if

the asset was purchased or developed for

the committee's own particular use,

rather than as a fWldraising item, and

the asset has an ascertainable market

value. A mailing list developed by the

committee might be considered such an

asset.

o The sale of campaign equipment or leftover campaign supplies by candidate committees that wish to terminate and plan

to use the proceeds for debt retirement.

See AO 1990-26.

(continued)

lse e illustration in the Explanation and

Justification to the cited regulations, 52

FR 762, January 9, 1987.
April 1991 FEDERAL ELECTION COfv1fVlISSION Volume 17, Number 

Remember that, under either of these

exceptions, a contribution is avoided only

if the purchaser pays no more than the

"usual and normal charge," as defined under

11 CFR 100.7(a)(I)(iii).

Receiving outside SUpport

Maya party· eatmittee help pay a

Dittee's caopaign debts? Yes, a party

committee may contribute directly to the

campaign (subject to the contribution

limits, of course). If the contributions

are made after the election, they must be

properly designated. 11 CFR 110.l(b)(4)

and 110.2(b)(4). Alternatively, the party

committee may pay the candidate's creditors. Payments to creditors may be considered in-kind contributions to the candidate

(subject to the contribution limits) or, in

the case of general election candidates,

the payments may be regarded as coordinated

party expenditures on behalf of the candidate (subject to thi special limiEs of

2 U.S.C. §44la(d).) 11 CFR 1l0.7. .

May a COIlIlli.ttee join with other cODlBittees in an effort to retire debts? Yes.

Committees that want to retire their debts

may fonn a joint fundraising committee.

Committees should follow the joint fundraising regulations at 11 CFR 102.17 or, in

the case of Presidential primary campaigns

receiving matching funds, 11 eFR 9034.8.

May a corporation pay for a fundraising

event designed to retire a debt frem a past

campaign? No. payments to sponsor a fW1draising event for a candidate are considered contributions to the candidate. Contributions and expenditures by corporations

are prohibited, even if made to help retire

campaign debts.

using the candidate's Personal Funds

May candidates use their personal funds

to help payoff debts? Ye_s • House and

Senate candidates are not limited in the

amount of personal funds they may spend on

their own campaigns. 11 CFR lI0.l0(a). A

Presidential candidate receiving public

funds. however, may contribute no more than

$50,000 to his or her own campaign. 11 eFR

9003.2(c) and 9035.2.

2Local party committees may not make coordinated party expenditures without the

prior, written authorization of the nationalar state committee. 11 eFR 110.7{a)(4)

and (c).

6

May the campaign repay the candidate

for personal funds loaned to the cauplign?

Yes, but only if the funds were originally

reported as loans from the candidate. As 

general rule, personal funds that are donated by the candidate (as distinct from

loaned) may not later be converted to a

loan. A refund of such a donation would

represent the conversion of excess campaig

funds to the candidate's personal use,

which is prohibited (except for "grandfathered" candidates). 2 u.s.C. §439a; 11

CrR l13.2(d); AOs 1987-1, 1986-45 and 197

58.

using Funds fre- Another COlIIIi.ttee

Established by the candidate

May a candidate transfer funds frOll h

or her nonfederal campaign e:a-aittee to h

or her federal caapaign COIIIIlittee to retir

debts? Yes, provided that none of the

funds transferred violate the limits or

prohibitions of the Act. Moreover, such

transfers may trigger registration and

reporting obligations for the nonfederal

campaign committee. See 11 eFR 110.3(c)(6

for further information.

May a cMKlidate COIIIlli.ttee retire debt

by usinq funds transferred from another

federal ce-i.ttee authorized by the same

candidate for a different election cycle?

Yes, as long as:

o The candiate is not actively seeking

election to more than one federal office

and

o The conmittee making the transfer has no

net debts outstanding. 11 CFR 116.2(c)

(2) •

For further information, including the

application of contribution limits to fund

contained in such transfers, see 11 CFR

110.3(c)(4) and (5). Note also that

publicly funded Presidential campaigns are

subject to further restrictions. See ADs

1990-11 and 1988-5.

Assigninq Debts

May one authorized committee assign i

debts to another authorized COIIIIli ttee of

the salE! candidate in order to terminate?

Yes, under certain conditions.

o First, the committee assigning the debt

must qualify as a "terminating conunittee," that is, a committee that receive

contributions and makes expenditures on

for the purpose of paying debts and

winding-down costs.

o Second, the assigning committee must no

have any cash on hand or assets to pay

any part of its debts and lm.lst have bee
FEDERALELECTION COIV1MISSION

•

April 1991

organized for an election already held. 3

11 CFR l16.1(a) and 116.2(c)(3).

Moreover, both the assigning committee

and the committee receiving the debts must

follow special notification rules.

What are these special,rules? The assigning coromittee must notify each creditor

in writing of the name and address of the

committee that will receive the debts.

This notification must be made at least 30

days before the assignment takes place.

Once the debts are assigned, the committee

may terminate.

The committee that receives the assigned debts must notify the Commission in

writing that it has assumed the obligation

to pay the debts and to report both the

debts and the contributions received to

retire them. 11 CFR 116.2{c)(3)(i) and

(if) •

Terminating the COIIIDittee; settling Debts

When may a COJlIllittee terminate and stop

filing reports? A co~ttee may file a

termination report if:

o It has paid, settled or otherwise extinguished all its debts;

o Has ceased raising or spending funds; and

o Does not have any funds or assets available to pay debts owed by a comni ttee

authorized by the same candidate if t~at

committee is unable to pay its debts.

11 CFR 102.3, 116.1(a), 116.2(c) and

116.7.

A carom!ttee that plans to extinguish

its debts by settling them for less than

the amount owed must file a debt settlement

plan that is subject to Commission review.

11 ern 116.7. The committee may not terminate until after the Commission has completed review of all debt settlements.

What is a debt settlement plan? A debt

settlement plan gives pertinent information

on all of the committee's debts and its

agreements with creditors to settle some or

all of them for less than the amount owed.

The committee must postpone paying

3SPecial rules apply to Presidential candidate committees receiving.public funds.

See 11 CFR 116.2{c)(3).

4Not e that if a candidate has authorized

more than one committee for the same

election, the principal campaign committee

may not terminate until the other

authorized committees have also met the

qualifications for termination. 11 CFR

102.3(b) •

9

Volume 17, Number4

creditors the agree-upon amounts for debts

that are being settled until after the

Commission has reviewed the debt settlement

plan. See 11 CFR 116.7 for procedures on

filing debt settlement plans on FEe Form 8.

Once the committee has settled or

otherwise extinguished all of its outstanding debts and the aommission has reviewed

all debt settlement plans, the committee

may pay the creditors the settlement

amounts and then file its termination

report.

Note that only "terminating comni t.tees"

are permitted to settle debts for less than

the amount owed. 11 CFR 116.2 (a) and (b).

As previously explained, a "terminating

committee" is one that receives contributions and makes expenditures only for the

purpose of paying debts and winding-down

costs. 11 CFR 116.1(a).

Does the unpaid aJOO1Jnt of a settled

debt re5U1t in contribution from the c0mmercial vendor? Not under the following

conditions:

o Creditwas initially extended by the

vendor in the ordinary course of business

with terms substantially the same as

those extended to nonpolitical debtors of

similar risk and with debts of similar

size;

a The committee undertook all reasonable

efforts to satisfy the outstanding debt

(e.g., through fundraising, reducing

overhead costs and liquidation of

assets);

o The commercial vendor made the same

efforts to collect on the debt as those

made to collect from a nonpolitical

debtor in similar circumstances (e.g.,

late fee charges, referral to a debt

collection agency, litigation); and

o The committee submitted a debt settlement

statement on FEC Form 8 for Commission

review in accordance with 11 CFR 116.7.

11 eFR 100.7(a)(4) and 116.4(a)-(c).

Bankruptcy

How should a COl'lIlli.ttee handle debts

discharged thrOUgh bankrupcy? If a

candidate or committee is released from

debts through a bankruptcy court decree

pursuant to Chapter 7, the committee must

(continued)

SA commercial vendor is any business or

individual who provides the goods or

services in question to a candidate or

political committee in the usual and normal

course of business. 11 CFR 116.1{c).
April 1991 FEDERAL ELECllON COMMISSION

include in a debt settlement plan the court

oede' as well as a list of the obligations

from which the committee is released.

11 crn 116. 7 (g) • AIthough a politi cal

committee may not be eligible for a Chapter

7 discharge, the Commission will treat an

authorized committee's debts as settled for

purposes of the Federal Election Campaign

Act if the candidate received a Chapter 7

discharge that applies to the committee's

debts.

DiSputed Debts

What should a COJllllli.ttee do about disputed debts? Commission regulations define

a disputed debt as a bona fide disagreement

between the creditor and the committee as

to the existence of a debt or the amount

owed. If something of value was provided

to the committee, the committee must continue to report the following information

until the dispute is resolved:

o The amount the committee admits it owes;

o The amount the creditor claims is owed;

and

o Any amounts the committee has paid the

creditor.

In the case of a "terminating committee," the cot'lll'littee must describe in its

debt settlement plan any disputed debts and

the committee's efforts to resolve them.

11 CFR 116.10.

Unpayable Debts

What if a carmittee cannot pay a debt

because the creditoe can't be located or

has gone out of business? The committee

must continue to report the debt until it

has been outstanding at least two years.

At that point, the committee may request a

Commission determination that the debt is

unpayable. The coutrnittee must submit its

request in writing, following procedures

described in 11 CFR 116.9. (A terminating

committee must include the request in its

debt settlement plan.) Once the committee

receives FEe notification that the debt is

unpayable, it may list the debt as unpayable on its next report and thereafter

cease reporting the debt.

Debt Liabili ty

May the candidate, treasurer or

cOllllllittee members be held personally liable

for debts owed by the cOlllllittee? The Act

and FEe regulations do not govern personal

liability for payment of committee debts.

Debt claims and liabilities are generally

governed by state law. AOs 1989-2, 1979-1

and 1975-102.

10

Volume 17, Numbe

-.r~ -"""'r"-........... ~. - - - -~- - - - ~- - • ~- ,;::--,~~~~ ..... -------~~ -:--? -

~, I ~.

~_~L~::?~'; ':;''::_'i<;.:~;~ ~,~.:~,

MURS RELEASED 'IO mE PUBLIC

Listed below are MORs (FEe enforcemen

cases) recently released for public review

The list is based on the FEC press releas

of January 16, 25 and 31, and February 4

and 19, 1991. Files on closed MURs are

available for review in the Public Record

Office.

Unless otherwise noted, civil penalti

resulted fram conciliation agreements

reached between the respondents and the

Commission.

MUR 2557

Respondents: (a) Dick Ailanjian (CAl;

(b) Committee to Elect Robert B. (Rob)

scribner, Harrison W. Sommer, treasurer

(CA); (c l windsor Financial Company (CA);

(d) Bayco Financial Company {CA);

(e) Wilshire westweod Financial Group (CA

(f) W,O. Hoag, Inc. (CA); (9) Bracy

Plumbing (CA); (h) Hebson Agency, Inc.

(CA); (i) C&M Transportation Company (CA)

(jl Henry K. Hasserjian, M.D. (CA);

(k) General Security Service, Inc. (CA);

(II Robert W. Boos & Company (CA)

Complainant: FEC initiated

Subject: Corporate and excessive contrib

tions; failure to disclose contributor

identities

Disposition: (a) $150 civil penalty;

(b) $1,500 civil penalty; (c)-(e) no prob

ble cause to believe; (f}-(l) reason to

believe but took no further action

MUR 2719

Respondents: (a) Populist party of the

united States, Faye Miller, treasurer (AL

(bl William Shearer (CA); (c) Nancy Shear

(CAl

complainant: FEC initiated

SUbject: Failure to disclose contributions; failure to fo~rd contributions

PUBLIC APPFARANCES

4/6 The Council of State Governments

Santa Fe, New Mexico

John C. Surina, Staff Director

5/3 Reinsurance Association of

America

Naples, Florida

Commissioner Lee Ann Elliott
April 1991 FEDERAL ELECTION COMMISSION Volume 17,Number 4

•

•

•

i

I

I

(

S

t _,

D.. SpO

properly; unauthorized disbursements

Disposition! (a) $100 civil penalty:

(b) $1,000 civil penalty; (c) $150 civil

penalty

I'IUR 2762

Respondents: (a) Alamo Political Action

committee, James Meadow, treasurer (TX);

(b) Bruce W. Eberle (VA); (c) Bruce W.

Eberle and Associates, Inc. (VA); (dl Computer Cormnunications, Inc. (VA); (e) Omega

List Company (VA)

Cooplainant: Charles H. Damron (WV).

SUbject: In-kind corporate contributions;

failure to disclose debts and settlement

statement

Disposition: (a) $300 civil penalty;

(b)-(e) no probable cause to believe

MUR 2784

Respondents: (a) Max Beacon for Congress

committee, William R. Compere, treasurer

(MOl: (b) Max Beacon (MOl

Coq;>lainant: Jean Paul Bradshaw, II,

Chairman, Green County Republican Central

Committee of Missouri

Subject: Disclaimers

Disposition: (al and (b) Reason to believe

but took no further action

.MUR 2787

:Respondents: (a) William M. Templeton

(tA) (b) Paragon Resources, Inc. (LA);

(c) stan Tiner Campaign Committee. Bill

wene Smith, treasurer (LA)~ (d) POlitical

Action Company (LA)

C~ainant: FEC initiated

SUbject: Excessive and corporate contribu-·

tions; failure to disclose contributions

and debts on time

Disposition: (a} $50,000 civil penalty

(knowing and willful violationsJi

(b) $10,000 civil penalty (knowing and

willful violations); (c) $1,500 civil

penalty; (dJ reason to believe but took no

further action

MUR 2837

Respondents: (a) Glem David Lane and

Cynthia Lane (TX)~ (b) Carl R. channell;

National EndoWIl'.ent for the Preservation of

Liberty, et al. (DC)

Complainant: Referral from Election Crimes

Branch, Public Integrity Section, Criminal

Division. U.S. Department of Justice

Subject: Contributions in the name of

another; corporate contributions

Disposition: (a) $200 civil penalty;

lb) reason to believe but closed the file

following Mr. Channell's death

KUR 2891

Respondents: New Hampshire state Democratic Committee and treasurer

COOlplainant: Fee initiated

Subject: Failure to file disclosure

reports and amend Statement of Organization

on time

Disposition: $1,900 civil penalty

l'kJR 2921/2671

Bespondents: (a) engel '881 charlotte B.

Friedman, treasurer lfederal committee]

(NY); (b) Friends of Eliot Engel, Charlotte

B. Friedman, treasurer [nonfederal committee j (NY/; {c} Judith McGowan (NY)

Complainant: Vincent A. Marchiselli (NY) i

FEC initiated

SUbject: Failure to register and file

accurate disclosure reports; corporate and

union ccntributions; excessive contributions

DISPOSITION: (a) and (b) $6.500 civil

penalty (joint conciliation agreement);

(c) $800 civil penalty

MUR 2987

Respondents: (a) Committee to Re-Elect

Senator Zorinsky, Michael N. Abramson,

treasurer (NE); (b) Cece zorinsky for

Congress, Alvin Abramson, treasurer (NE}

cGq?lainant.: FEe initiated

SUbject: Excessive contribution; failure

to file amendment to Statement of Organiza

tion on time

Disposition: (a} $1,500 civil penalty;

(b) $500 civil penalty

MUR 2988

Respondents: The Arrangements COIM\i ttee o

the Republican National Committee for the

1988 Republican National convention,

William J. McManus, treasurer (DC)

complainant: FEC initiated

SUbject: Expenditures in excess of

spending limits

Disposition: Reason to believe but took n

further action

.... 2994

nespcodentae Wyoming State Democratic

Committee, John D. Shennan, treasurer

Complainant: FEe initiated

SUbject: Excessive coordinated party

expenditures

Disposition: $3,000 civil penalty

IllJR 3023

Respondents: (a) American Association of

Museums, Edward H. Able, Jr., Executive

Director (DC); (bl Edward H. Able, Jr.,

(DC); (c~ Geoffrey Platt. Jr •• lHO);

Cd) Yates for congress Committee, Sherman

(continued

11
April 1991 FEDERAlELECTION COMMISSION Volume 17, Num

CAMPAIGN FINANCE BROCHURE SERIES

The FEcr~ Information Services Division distribut@s a series of fre~ brochures 

help candidates, political co~mittees and the general public comply vith the federal

campaign financ~ lav and get the most out of the agQncy's serviCEs. Each brocnure

summarizes a different aspect of the law or FEe resources. To order, fill out the form

below and mail it to the FEe.

---------------------------------- Name:

Street

Address:

City/State

& Zip C<lde:

----- ------------

----- ----- ---- -----------

Check the brochures you want and mail to: Federal Election Commission, ATTN: Patr

Parrish, 999 E Street, NY, Vashington, DC 20463

The $1 Tax Checkoff answers questions taxpayers may have when deciding whethe. 

--- check "yes" cr tl no" to the 1040 ta.x-form question: Do you want $1 of your fede

taK to go to the Presidential Election Campagin Fund?

Public Funding of Presidential Blections gives a brief history of the President

public funding program--including the $1 tax checkoff for the Presidential Elec

Campaign Fund--and an explanation of how the process vorks.

Using FEC Campaign Finance Information explains how to gather information about 

financial activity of candidates and political committees. It describes the FE

computer indexes and suggests ways to use them.

Sale and Use of campaign Finanee Information discusses the legal and illegal us

of JnformatJon contained in reports and statements fil~d vith the FEC. The

brochure also ~xplains what steps a committee may take to ensure that its

individual contributors are not solicited illegally.

10 Questions from Candidates answers Questions on the lav most frequently asked 

candidates and candidate committees.

Advisory Opinions explains how individuals and committ@~s may seek guidance from

the Commission by requesting advisory opinions (AOs). An AO is an official

Commission response to a question concerning the application of the law to a

specific activity.

Filing a Complaint explains how to register a formal complaint with tne Commiss

concerning a possible violation of the la~. The brocbure also describes how

complaints are processed.

Candidate Registration Local Party A~tivity

Committee Tr@asurers Political Ads and Solicitations

Cont ribudons State Access to fEC Data

__ Co~purate/Labor Communications State/Local Elections and Federal 

Corporate/Labor Facilities Trade Associations

___ Independent Expenditures Volunt~cr Activity

-~--~--~--------------o---

14 •
FEDERAL ElECTION COMMISSION

•

•

•

April 1991

The fi rst ntll'l'he r in each citation

refers to the "number" (month) of the 1991

Record issue in which the article appeared; the second number, folla~ing the colon,

indicates the page number in that issue.

ArJIlISORY OPINICfiS

1990-14: AT&T's 900-line fundraising service, 2:4

1990-19: vendor/committee relationship;

sale and repurchase of fundraising items,

1:8

1990-22: Blue Cross/Blue Shield's solicitation of member plans' personnel, 1:9

1990-25: Parent corporation's obligations

to labor organization under twice-yearly

provisions, 2:5

1990-26: sale of campaign asset; personal

use of excess funds after November 30,

1989/ 3:7

1990-27: Transfer to party's federal

account of funds mistakenly deposited in

state account, 3:9

1990-29: Return to federal account of funds

transferred to state account, 4:5

1990-30: Designation of post-election

contributions to retire debts, 4:6

15

Volume 17, Number 4

CWRT CASES

FEe v ,

- AugUStIiie for congress, 2: 7 - Dramesi for co~ress, 3:10 - FletCher, Frie s of Isaiah, 4:6

- Legi-Tech, Inc., 3:11 - Mid-America Conservative PAC, 2:10

- NRA POlitical Victory fundi 3:10 - Political contributions Data, Inc., 2:8 -- --- -

- s~elman, 3:10 - W~b for OongreSs Committee, 2:10 - West Virginia Republican state

Executive Committee, 3:10

v. FEC

----=-Common Cause1 National Republican

Senatorial Coromi ttee I Appellant (90-

5317), 1:7

- stern, 2:7

800 LINE

Allocating expenses through ballot composition, 2:1

Debt retirement by candidate comndttees,

4:7

Staff advances and salaries, 2:6
Political Coomittees Trea5ure~s of registered political comadttees automatically receive the Record.

A change of address by a political comncittee (or any change to information disclose

on the Statement of Organization) must, by law, be made in writing on FEe Form 1 or 

letter . The treasure r must si911 the amendment and fiLe it wi th the Secretacy of th

Senate, the Clerk of the House or the FEe (as appropriate) and with the appropriate

state office.

Volume 17, Num

Bulk Rate Mail

Postage and Fees Paid

Federal Election Commissio

PermitNumber G·31

FEDERAL ELECTION COMMISSION

other SUbscribers

BeCOtd subscribers who are not registered political committees should include th

following information when requesting a change of address:

o Subscription number (located on the upper left hand corner of the mailing label);

o Name of the subscribert

o Old address; and

o New address.

Subscribers (other than political committees) may correct their addresses by

phone as well as by mail.

Official Business

FEDERALELECTION COMMISSION

999 E Street, NW

Washington, DC 20463

April 1991