This file contains archived live captions of the audit hearing of the Federal Election Commission held on November 10, 2021. This file is not a transcript of the meeting, and it has not been reviewed for accuracy or approved by the Federal Election Commission. аааааааааааааааааааааааааааааааааа In this hearing will be conducted . Before us today is the counsel for the committee, along with the treasurer and a CPA. In a mall and as I did prior to this meeting started, I want to say hello to Mr. Wayne who has served as counsel to former FEC commissioner and chair, Caroline Hunter, back when I was an enforcement attorney. On September 13, 2021, our audit staff emailed the draft final audit for the audit division to the committee. On October 4th, counsel requested a hearing on behalf of the committee, which the commission granted. The committee's request is limited to challenges to conclusions with. One, the conclusion that the 1.5 million corporate checks were not for permissible sorts and two, the conclusion that the loans and lines of credit totaling $7,049,405 were not made on the basis of a repayment. Counsel, for today's hearing, I make a brief opening statement . Following the presentation, the commissioners and General Counsel and the staff director will have the opportunity to ask questions. At the end of today's hearing, you have an opportunity to make a closing statement. As stated in our August -- audit staff October 27th letter, you the statements could should present issues and arguments that you have Artie brought to the attention of the audit division. Absent a request by commissioner at the hearing or intervening events subsequence to your response to the final audit report, you may only present issues and arguments of the hearing race to the response. Our procedures also state that absent extenuating circumstances, committees may not introduce a new document that the hearing there were not previously provided to the audit division. Counsel, please proceed with your opening statement. Thank you. On behalf of Alderman Rodriguez Sanchez, I want to thank everyone for the opportunity to clarify everything and explain some of the facts that go against the findings in the finding for the draft audit report. I will say that in 15 years of representing clients before the commission, I think this is the first time I have taken advantage of the opportunity to have a hearing during the audit process. Thank you for this. I think depending on how it goes, maybe it is my last. The committee wanted to request this hearing on findings because the audit divisions to conclusions in its finding are clearly erroneous and unsupported by the facts and the law first, Senator Braun committed committed $1.5 million in stock retention proceeds to the campaign. These were not prohibited corporate contributions at the audit division contends. Second, the more than $7 million in commercial bank loans were especially permitted under regulations and presidents. These were not contributed corporate contribution as the audit commission contends. With respect to the $1.5 million industry meeting stock that was redeemed by Senator Braun. In response to the interim audit report, the committee provided a letter from Senator Braun's CPA confirming that the funds for the senator's personal funds obtained from the proceeds selling his shares back to the company. The audit division was not satisfied with this documentation. Therefore, last week, the committee provided the fully executed stock redemption agreement AND THE COMPANY'S BOARD OF THE REDEMPTION AND PROFESSION OF VALUATION OF THE SENATOR SCHEIER AND OTHER RELATED DOCUMENTS. WHILE IT CERTAINLY WOULD'VE BEEN ADVISABLE FOR SENATOR BRAUN TO DEPOSITED THAT $1.5 MILLION , YOU KNOW, FROM THE STOCK REDEMPTION INTO HIS PERSONAL ACCOUNT BEFORE MOVING THE MONEY TO THE CAMPAIGN TO AVOID THIS SCRUTINY, WE NONETHELESS I TRUST THAT THE INFORMATION WE HAVE PROVIDED TO THE COMMISSION SHOULD SUFFICIENTLY PUT TO REST THE AUDIT DIVISIONS ERRONEOUS POSITION THAT THESE WERE NOT SENATOR BRAUN'S SENT PERSONAL FUNDS. WITH RESPECT TO THE LOANS , PAGE 11 OF THE REPORT CORRECTLY RECITED THE COMMISSION'S REGULATIONS SET FORTH AT 100.82 THAT IT IS NOT REQUIRED TO BE COLLATERALIZED, SIGNED BY GUARANTOR, OR OTHERWISE BACKED BY A PLEDGE OF COMMITTEES FUTURE RECEIPTS. IN THE TOTALITY OF THE CIRCUMSTANCES INDICATE THAT THE LOANS ARE MADE UNDER CONDITIONS THAT ASSURE REPAYMENT. HOWEVER, IN APPLYING THE COMMUNITY'S REGULATIONS TO THE COMMITTEE ON PAGE 14 OF THE REPORT, THE AUDIT DIVISION AND THEN ERRONEOUSLY INSISTED THAT THE LOANS AT ISSUE WERE IMPROPER BECAUSE THEY WERE NOT COLLATERALIZED. THERE WERE NOT SIGNED BY GUARANTOR AND WERE NOT OTHERWISE BACKED BY FUTURE RECEIPTS. THE REPORT FAILED TO IT KNOWLEDGE THAT UNDER THE SAME REGULATIONS IT HAS CITED JUST THREE PAGES BEFORE , THAT THERE ARE OTHER RISK CIRCUMSTANCES UNDER WHICH THE COMMERCIAL BANK LOANS WERE PERMISSIBLE. AFTER RECEIVING THE DRAFT FINAL AUDIT REPORT IN ADVANCE OF THIS HEARING , IN WHICH THE AUDIT DIVISION FINALLY ACKNOWLEDGED THAT THE COMMERCIAL BANK LOANS ARE PERMITTED UNDER OTHER CIRCUMSTANCES . SO LAST WEEK, THE COMMITTEE PROVIDED 21 DOCUMENTS CONSISTING OF 126 PAGES TO THE COMMISSION. THOSE DOCUMENTS INCLUDE FULLY EXECUTED LOAN AGREEMENTS, SIGNED LETTERS FROM THE BANKS EXPLAINING WHY THE LOANS WERE COMMERCIALLY REASONABLE, BASED OFF THE SENATOR'S LONG-STANDING CREDIT WORTHINESS AND CLIENT STATUS SHIP AND EVEN SOME BANK LOAN POLICIES GOVERNING UNSECURED LOANS. THE COMMITTEE MUST ALSO RECOGNIZE THAT DESPITE OUR SUCCESSFUL EFFORTS TO PROVIDE A LOT OF THIS DOCUMENTATION, WE HAVE BEEN AT THE MERCY OF THE BANKS AND OBTAINING A LOT OF THIS INFORMATION. THE BANKS ARE NOT RESPONDENTS TO THE AUDIT . THEREFORE, SOME OF THEM HAVE NOT BEEN VERY EAGER IN PROVIDING US A LOT OF DOCUMENTATION. ONE OF THE BANKS IN PARTICULAR IS A LARGE INSTITUTION WITH A LOT OF IN-HOUSE LAWYERS. YOU CAN IMAGINE OUR REQUEST FOR DOCUMENTATION WAS MET WITH SOME SKEPTICISM AND BUREAUCRACY. NONETHELESS, I THINK WE WERE SUCCESSFUL IN BEING ABLE TO PROVIDE SIGNIFICANT DOCUMENTATION TO BE ABLE TO DEMONSTRATE THAT THE AUDIT FINDINGS IN FINDING FOR OUR ERRONEOUS. I WILL SAY THAT NOTWITHSTANDING OUR EFFORTS, WE HAVE YET TO OBTAIN A FEW DOCUMENTS FROM A FEW OF THE BANKS. ALTHOUGH THERE ARE AMPLE DOCUMENTS FROM ALL OF THE BANKS FOR THE LOANS AT ISSUE. REGARDLESS, BASED OFF THE OVERWHELMING DEGRADATION ALREADY PROVIDED, THE COMMISSION SHOULD FIND THAT BASED OFF THE TOTALITY OF THE CIRCUMSTANCES, THAT THESE LOANS WERE COMMERCIALLY REASONABLE AND NOT CONTRIBUTIONS UNDER 11 CFR 100.82. THE COMMISSION SHOULD ALSO RECOGNIZE THE OUTCOME , IF IT IS DETERMINED THAT THE LOANS WERE NOT MADE IN THE ORDINARY COURSE OF BUSINESS. BECAUSE WE HAVE A CIRCUMSTANCE WHERE ONE OF THE BANKS, THEY MADE THE LINE OF CREDIT, ISSUED THE LINE OF CREDIT AS EARLY AS 2010, MORE THAN SEVEN YEARS BEFORE SENATOR BRAUN EVER RUN FOR PUBLIC OFFICE. AND IF THERE WAS A FINDING THAT THIS BECAME AN IMPERMISSIBLE CONTRIBUTION FROM A LENDING INSTITUTION BECAUSE OF SOMEBODY LATER USED TO THOSE FUNDS AT SEVEN YEARS LATER WITHOUT ANY KNOWLEDGE OR CONSIDERATION OF THE BANK THAT THESE FUNDS MIGHT EVEN BE USED FOR A CAMPAIGN OF PUBLIC OFFICE, IT JUST CREATES A REALLY BAD STANDARD FOR ESSENTIALLY ANY COMMERCIAL LENDING INSTITUTION IN THIS AREA . CERTAINLY, THERE WAS NO INTENT OF THE BANKS WHEN THEY ISSUED A LINE OF CREDIT TO SENATOR BRAUN IN 2010 THAT THIS COULD EVEN POTENTIALLY REMOTELY VIA CAMPAIGN FINANCE ISSUE. WITH THAT, I AM HAPPY TO ADDRESS ANY QUESTIONS THAT THE COMMISSIONERS HAVE. OKAY. ARE THERE QUESTIONS? MADAM CHAIR? ONE QUESTION. THANK YOU FOR JOINING US. IS THERE ANYTHING IN ANY OF THE DOCUMENTATION THAT WOULD FORECLOSE THE BANKS ARE BRINGING OF A CIVIL ACTION IN THE EVENT THAT YOUR CLIENT HAD DEFAULTED ON ANY OF THE LOANS? THERE WOULD NOT BE ANYTHING THAT WOULD FORECLOSE THAT. THANK YOU. ANY FURTHER QUESTIONS? I THINK I JUST WANTED TO CLARIFY A POINT. YOU MENTIONED THAT YOU PROVIDED THESE A DOCUMENTS LAST WEEK? THAT WOULD BE FRIDAY? I BELIEVE IT WAS THURSDAY EVENING. THURSDAY EVENING? IS THERE ANY REASON WHY IT WAS FRIDAY OR THURSDAY EVENING THAT IT TOOK TO GET THESE DOCUMENTS AS OPPOSED TO PREVIOUSLY PROVIDING THEM? YEAH, IF YOU GO BACK TO THE ANTRUM OFFICE REPORT -- AUDIT REPORT, IT WAS EFFECTIVELY THE AUDIT DIVISIONS POSITION THROUGH THERE THAT ANY DOCUMENTATION, WHAT THE REQUESTED, WE HAD TO PROVIDE LOAN DOCUMENTATION TO SHOW THAT THE LOANS WERE GUARANTEED, THAT EFFECTIVELY MET THE ELEMENTS OF THE REGULATION I STATED EARLIER. OUR RESPONSE TO THE ANTRUM AUDIT REPORT WAS FOCUSED ON THE FACT THAT THIS WAS NOT A STRICT LIABILITY SITUATION. IT WAS NOT A PER SE VIOLATION BECAUSE SENATOR BRAUN HAD GOTTEN A LINE OF CREDIT THAT WAS NOT SECURED. SO BASED OFF OF THE CHANGES IN THE AUDIT DIVISION RECOMMENDATION IN THE DRAFT FINAL AUDIT REPORT WHERE THEY THEN LAID OUT THE STANDARD AND THE ELEMENTS FOR DOCUMENTATION THAT WE NEEDED TO PROVIDE IN ORDER TO REBUT THE FINDINGS, THAT IS WHEN WE SET OUT TO REQUEST AND GET BORED DETAILED INFORMATION FROM THE BANKS SPECIFICALLY REQUEST THE DOCUMENTATION THAT WAS SPECIFIED EXPLICITLY IN THE DRAFT FINAL AUDIT REPORT . AND THEN WE OBTAINED THAT INFORMATION AND WE TURNED OVER WHAT WE COULD, WHAT THE BANKS HAVE PROVIDED US AT THAT TIME ON THURSDAY. MOST OF THAT INFORMATION WAS PROVIDED TO US LAST WEEK FOR THE FIRST TIME. I WOULD LIKE TO ASK OUR STAFF TO ADDRESS THE MENTIONED THAT WE DID NOT PROVIDE SUFFICIENT INFORMATION TO HELP HIM BE ABLE TO PROVIDE THIS INFORMATION. I'M NOT SURE IF THAT IS MR. BROWN OR MAZOR COME . TAKE YOUR PICK. MR. KROGEN? ALL OF THE INFORMATION WAS THERE AS FAR AS WHAT WE WERE REQUESTING FOR DOCUMENTATION. AND SO AS IT RELATES TO ASSURANCE OF REPAYMENT, THAT WAS A 275 DAYS AGO THAT WE REQUESTED THAT DOCUMENT. ANY FURTHER QUESTIONS? MADAM CHAIR. IN THESE DOCUMENTS THAT YOU PROVIDED RECENTLY, THERE WAS SOME COMMERCIALLY SENSITIVE INFORMATION IN HERE, BUT YOU HAVE NOT ASK US IN ANY WAY TO REDACT THAT INFORMATION THAT THE BANKS PROVIDED, CORRECT? WE MADE A DETERMINATION, AND THIS IS PROBABLY ANOTHER CALLS FOR DELAY. I WILL GET TO YOUR ANSWER AND THIS IS THE LONG WAY OF GOING ABOUT IT. WE WERE PROVIDED THOUSANDS OF PAGES OF DOCUMENTS BY THE BANKS BECAUSE OF ALL OF THE DOCUMENTATION THEY HAD REQUESTED FROM SENATOR BRAUN WHEN HE WAS APPLYING FOR THESE LOANS. WE THEN HAD TO SIFT THROUGH THAT INFORMATION AND MAKE DETERMINATIONS OF WHAT WE WERE EVEN JUST SOMEWHAT COMFORTABLE WITH OF TURNING OVER TO THE COMMISSION AND IS CERTAINLY IN THIS PROCESS THERE WAS A LOT OF THAT THAT HAD DETAILED FINANCIAL INFORMATION , NOT ONLY ABOUT HIM PERSONALLY, BUT COMPANIES, OBVIOUSLY PERSONALLY IDENTIFIABLE INFORMATION LIKE SOCIAL SECURITY NUMBERS AND OTHER THINGS. JUST BECAUSE OF THE SHORT PERIOD OF TIME THAT WE HAD, WE MADE AN ASSESSMENT TO TURNOVER THE PARTICULAR DOCUMENTS WE DID. NOW, IF THERE IS AN OPPORTUNITY TO NOT MAKE A LOT OF THAT SENSITIVE INFORMATION SUCH AS ESTIMATES OF HIS NET WORTH , AVAILABLE FOR THE PUBLIC RECORD, THAT WOULD CERTAINLY BE OUR DESIRE FOR THAT NOT TO BE MADE PUBLICLY AVAILABLE. IT IS SENSITIVE. WE WERE NOT CRAZY ABOUT PROVIDING THAT INFORMATION BECAUSE FRANKLY, I DON'T THINK THAT IT WAS NECESSARY TO NECESSARILY REBUT THE FINDINGS IN THE AUDIT. CERTAINLY WE, YOU KNOW, I THINK THERE WAS A PART ON OUR PART THAT WE WANTED TO TRY TO EFFECTIVELY REBUT THESE FINDINGS WITHOUT HAVING TO TURN OVER THAT INFORMATION . BUT WE WERE EFFECTIVELY LEFT WITH NO CHOICE. I WILL LET YOU ANSWER THAT. I DID WANT TO RESPOND TO THE STATEMENT FROM EARLIER. IT IS SAFE TO SAY THAT YOU'LL HAVE DONE A HIGH-LEVEL DUE DILIGENCE TO GET DOCUMENTS FROM THE BANKS AND PROVIDE THEM AS QUICKLY AS YOU POSSIBLY COULD TO THE COMMISSION, WHETHER IT WAS LAST FRIDAY OR 100 DAYS AGO. THE AMOUNT OF TIME AND PROBABLY AMOUNT OF MONEY THAT THE SENATOR SENT ON WORKING ON THIS , TO ME, SHOWS A HIGH LEVEL OF CONFIDENCE THAT THESE ARE JUST REASONABLE LOANS THAT WERE MADE. YES. IN ONE INSTANCE, ONE BANK INSTITUTION ALONE, I BELIEVE I HAVE TALKED TO AS MANY AS SIX ATTORNEYS. I AM HAPPY FOR YOU TO RESPOND TO OUR COUNSEL. IF YOU ACTUALLY GO TO PAGE 20 OF THE DRAFT FINAL AUDIT REPORT, IT IS THE FIRST FULL PARAGRAPH. IT LAYS OUT THERE THAT CONCERNING PARAGRAPH THREE ABOVE, THE AUDIT STAFF NOTES THAT MIKE BRAUN FOR INDIANA -- IS APPLICABLE. THESE ARE ARGUMENTS THAT WE HAD MADE IN RESPONSE TO THE ANTRUM AUDIT REPORT AND THE FIRST TIME THAT THOSE PRESIDENTS HAVE BEEN ESTABLISHED OR MENTIONED AS APPLICABLE IN THESE CASES. THE AUDIT DIVISION GOES ON TO SAY, HOWEVER, MBFI FAILED TO PROVIDE A QUOTATION TO DEMONSTRATE THE LINES OF CREDIT WERE BASED ON THE ASSURANCE OF REPAYMENT TO INCLUDE THE FOLLOWING INFORMATION FROM EACH OF THE LENDING INSTITUTIONS. THE CANDIDATE'S CREDIT WORTHINESS, THE NET WORTH, ASSETS, PAYMENT AND REPAYMENT HISTORY, THE BANK'S UNDERWRITING CRITERIA FOR UNSECURED LOANS, AND INFORMATION DEMONSTRATING THAT THE LOANS WERE NOT UNDULY FAVORABLE TO THE CANDIDATE. PRIOR TO THIS, WHAT THE AUDIT DIVISION REQUESTED FROM US WHAT DOCUMENTATION SHOWING THAT THE LOANS WERE SECURED. WE ARE THE ONES , AND OUR RESPONSE TO THE ANTRUM AUDIT REPORT, THAT LAID OUT THESE FACTORS OF THE EVIDENCE WE COULD SHOW. IT WASN'T UNTIL THE DRAFT AUDIT ADDED AUDIT REPORT THAT THE AUDIT DIVISION RECOGNIZED THAT THAT WOULD BE PERMISSIBLE EVIDENCE TO SHOW THAT THESE LOANS WERE MADE IN THE ORDINARY COURSE OF BUSINESS. THANK YOU. MISS MARKHAM? THANK YOU. IF MY ADDRESSED THE LAST COMMENT. I WOULD JUST LIKE TO POINT OUT THAT IN THE ANTRUM AUDIT REPORT AND ALSO IF YOU GO TO PAGE 22 , WHICH IS PRINTED PAGE 17 AT THE BOTTOM, IF YOU GO TO THE FOURTH BULLET STARTS WHERE WE STAYED UP, THE COMMITTEE COULD DO FOR PROVIDED INFORMATION INCLUDING THE LINK THE TIME REPAYMENT HISTORY. THE BANK'S UNDERWRITING CRITERIA OF UNSECURED LOANS AND INFORMATION DEMONSTRATING THE LOANS WERE NOT UNDULY FAVORABLE TO THE CANDIDATE. THAT INFORMATION WAS IN THE ANTRUM AUDIT REPORT. WE RESTATED IN THE DFAR. WE HAVE BEEN RECEIVING THIS INFORMATION SINCE 2019 FROM THE COMMITTEE AND WORKING HAND-IN-HAND TO HELP THEM GET WHAT THEY NEEDED. I JUST WANTED TO ADDRESS THAT CONCERN. THANK YOU. THANK YOU. MADAM CHAIR? YES. FROM OUR COUNSEL'S PERSPECTIVE , IS THE INFORMATION THAT THEY PROVIDED THE ONLY WAY THAT THEY COULD PROVE THE LOANS? THE INFORMATION THAT THE AUDIT DIVISION WAS REQUESTING IS CONSISTENT WITH WHAT THE REGULATION REQUIRES. SO FOR THE AUDITORS TO VERIFY THAT INFORMATION, YES, THOSE ITEMS THAT THEY LAID OUT IS WHAT WAS NECESSARY FOR THE AUDITORS TO COMPLETE THE AUDIT FUNCTION. WHEREAS, WE DO ACKNOWLEDGE THAT THE COMMISSION ITSELF HAS DISCRETION TO GO BEYOND THOSE SPECIFIC FACTORS, THOSE SPECIFIC CRITERIA. THE LAST PART THAT I WANTED TO GO TOWARDS. IF THEY PROVIDED INFORMATION THAT THE COMMISSION FOUND SUFFICIENT TO JUSTIFY THE LOANS, THAT IS OKAY? YES, BECAUSE THE COMMISSION HAS THAT DISCRETION. THE AUDIT DIVISION IS RESTRICTED TO THE CONFINES OF THE REGULATIONS. THANK YOU. MADAM CHAIR, AND I THINK IN A FOLLOW-UP TO THAT POINT I MAKE IS BACK TO EARLIER WHAT I MENTIONED ABOUT THE BANKS NOT BEING RESPONDENTS . THERE HAS TO BE A RECOGNITION THAT THROUGH THIS AUDIT PROCESS, WE WERE ASKED TO PROVIDE INFORMATION THAT US, AS THE COMMITTEE AND RESPONDENT IN THIS AUDIT, DID NOT HAVE. WE WERE ASKED TO PROVIDE INFORMATION ABOUT WHAT WAS THE LENDING INSTITUTIONS , WHAT WAS THE RATIONALE AND THEIR PROCESS FOR A ISSUING THESE LOANS. THAT PUTS US IN A PRECARIOUS SITUATION OF HAVING TO DEFEND AND PROVIDE INFORMATION OBTAINED ON BEHALF OF A THIRD PARTY THAT IS NOT EVEN PARTY TO THE ACTION. MADAM CHAIR? IS THE CURRENT TREASURER OF THE COMMITTEE THE TREASURER AT THE TIME THAT THESE LOANS WERE MADE? NO. IN OUR GENERAL RESPONSE , I DON'T THINK IT GOES INTO ANY OF THE OTHER FINDINGS, BUT WE LAID OUT KIND OF IN THE HISTORY OF THIS PARTICULAR COMMITTEE BECAUSE IT DID HAVE A TREASURER THAT WAS RESPONSIBLE FOR DOING ALL OF THE RECORD-KEEPING AND REPORTING EFFECTIVELY JUST UP AND LEFT AND DISAPPEARED ON THE COMMITTEE . AND SHORTLY BEFORE OUR REPORTING. , SO MUCH SO THAT DURING THE COURSE OF THIS AUDIT, BECAUSE OF OUR INABILITY TO EVEN MAKE CONTACT OR GET A RESPONSE FROM THAT PREVIOUS TREASURER, WE ACTUALLY ASKED AT THE COMMISSION TO SUBPOENA THAT PERSON IN ORDER TO OBTAINED DOCUMENTS FROM THEM. WERE YOU ABLE TO OBTAIN OF THE DOCUMENT SHE NEEDED? WE HAVE NOT BEEN ABLE TO TREAT ALL OF THE DOCUMENTS WE HAVE TRULY NEEDED TO ADDRESS ALL FINDINGS. THANK YOU. ANY FURTHER QUESTIONS? NO. YOU HAVE AN OPPORTUNITY TO MAKE A CLOSING STATEMENT. I THINK WE HAVE SAID ENOUGH. I THANK YOU AGAIN FOR THE OPPORTUNITY. I REALLY DO APPRECIATE THE ABILITY TO ADDRESS THE COMMISSION AND TRY TO RESOLVE THESE ISSUES BEFORE WE MOVE ON PAST THE DRAFT FINAL AUDIT STAGE. THANK YOU. THANK YOU. AS YOU WERE NOTIFIED AND AN AUDIO RECORDING MADE AVAILABLE AT THE BEGINNING OF THE HEARING AND POSTED ON THE COMMISSION'S WEBSITE, AT THE APPROPRIATE TIME, THE COMMISSION MAY RELY ON THE CONTENTS OF THE AUDIT AUDIO RECORDING IN ITS CONSIDERATION OF ISSUES RAISED FROM ANY SUBSEQUENT ACTION. THE COMMITTEE MAY BE BOUND BY ANY REPRESENTATIONS MADE AT THIS HEARING. THANK YOU VERY MUCH FOR EVERYONE AND THE FLEXIBILITY FOR MOVING IT AROUND BECAUSE YOU ARE ASKED TO BE A PART OF THIS ON THE FLY. THANK YOU VERY MUCH. GOOD TO SEE YOU AGAIN. THIS HEARING IS ADJOURNED. THANK YOU. NOT TO SEE YOU, GENTLEMEN.