AO 2016-16: Fundraising for public funding repayments and civil penalties

Gary Johnson 2012, Inc. (the "Committee") may use its cash on hand and may raise additional funds to fulfill obligations to the United States Treasury and to the Commission, consistent with the restrictions set forth in the Presidential Primary Matching Payment Account Act (the "Public Funding Act") and FEC regulations.

Background
The Public Funding Act requires payments to the Secretary of the Treasury for any public fund overpayments or payments that the candidate used for purposes other than qualified expenses. 26 U.S.C. § 9038(b)(1)-(2); see also 11 CFR 9038.2(a)(1). Such repayments must come from either the personal funds of the candidate, contributions and federal funds in the committee’s account(s), or any additional funds raised subject to the limitations and prohibitions of the Federal Election Campaign Act ("FECA"). 11 CFR 9038.2(a)(4).

Additionally, a publicly funded candidate must agree that the "candidate and the candidate’s authorized committee(s) will pay any civil penalties included in a conciliation agreement or otherwise imposed" under FECA, but such civil penalties may not be paid from contributions or matching payments that the committee received for its publicly financed primary campaign. 11 CFR 9033.1(b)(11); 11 CFR 9034.4(b)(4). Commission regulations allow committees to raise funds to pay civil penalties. 11 CFR 9034.4(b)(4). Such funds are not considered "contributions" subject to contribution limits, but must comply with the FECA prohibitions and be reported in accordance with 11 CFR Part 104. See 11 CFR 9034.4(b)(4).

After conducting a mandatory audit of the candidate and Committee under the Public Funding Act, the Commission determined that Governor Johnson and the Committee had to repay $333,441 to the U.S. Treasury. The Commission also made two audit findings concerning reporting and the use of general election contributions for primary expenses that may result in an enforcement action and civil penalty.

Analysis

The Commission concluded that the Committee may: (1) solicit and accept funds to pay its obligations from individuals who are currently allowed to contribute to candidates but who were prohibited sources (either federal contractors or foreign nationals) at the time of the 2012 election; (2) use cash on hand in its general election account to pay its obligations; and (3) raise funds outside the amount limitations of the FECA to pay civil penalties but not to repay the U.S. Treasury. The Commission also noted that payments by a third party to the U.S. Treasury or to the Commission are subject to the same source or amount limitations and the same reporting requirements as payments received by the Committee for those purposes.

Date issued: November 17, 2016; 6 pages

Resources:

• AO 2016-16 [PDF]
• Commission consideration of AO 2016-16 [mp3]
• Brochure: Public Funding of Presidential Elections