Advisory Opinion 2006-37: campaign may reimburse candidate for misreported loans

A campaign committee may reimburse the candidate for loans made from his personal funds that the committee had mistakenly reported as contributions.

Background

Barry Kissin was a candidate in the 2006 Democratic primary election for the U.S. House of Representatives. This was Mr. Kissin's first candidacy for political office at any level. On March 3, 2006, Mr. Kissin deposited $5,000 of his personal funds into the campaign depository of his principal campaign committee, Kissin for Congress (the Committee). On March 21, 2006, Mr. Kissin deposited an additional $20,000 of his personal funds into the campaign depository. The committee reported both deposits as contributions, not loans, from the candidate to the Committee.

Analysis

The Federal Election Campaign Act (the Act) provides for acceptable uses of campaign funds and prohibits the personal use of campaign funds by any person. See 2 U.S.C. 439a. The repayment of candidate loans is permissible, since debt repayment is an authorized expenditure in connection with a candidate's campaign for federal office. See 2 U.S.C. 439a(a)(1) and AO 2003-30.

The Act requires that all funds received from the candidate, including loans made or guaranteed by the candidate, as well as contributions, must be disclosed on the committee's regularly scheduled reports. 2 U.S.C. 434(b)(2)(B), (G) and 434(b)(8). All outstanding debts owed by and to a political committee must be reported on every report until the debts are repaid. 11 CFR 104.11(a).

When determining the nature of a transaction, the Commission has historically not only looked at the way that the transaction was reported, but has also considered affidavits from the individuals involved explaining their intent. See AO 1997-21 and Statement of Reasons—Final Repayment Determination of Buchanan for President.

The Commission held that affidavits submitted by Mr. Kissin and members of his staff supported the conclusion that the $25,000 was intended to be a loan to the committee, not a contribution as it was mistakenly reported. Therefore the funds remaining in the committee's account may be used to repay Mr. Kissin's loans. The Commission required the Committee to amend its April 2006 report and all subsequent reports within 30 days of the date of the advisory opinion to show the debt owed by the Committee to Mr. Kissin. The Committee should continue to report as a debt the amount of the loan that remains unpaid or report Mr. Kissin's forgiveness of the debt, should he choose to forgive the unpaid portion of the loan.

AO 2006-37; Date: January 25, 2007; length: 5 pages