The Federal Election Commission (“FEC”) recently answered a common question for those involved in operating a federal PAC: When is the treasurer personally liable for violations of the rules on recordkeeping and reporting? In doing so, the FEC highlighted the importance of external oversight of PAC operations, and the value of periodic audits of the PAC that can identify problems before they grow.
The case involved a non-connected PAC affiliated with the Ute Indian Tribe (“Tribe”). The Tribe hired a consultant who claimed extensive knowledge of the FEC’s intricate rules. The Tribe allowed the PAC to operate outside its routine financial controls because the consultant told them the PAC would operate under the FEC’s recordkeeping and reporting system.
Trouble began immediately, with the FEC’s Reports Analysis Division flagging problems with 75% of the reports the PAC filed in the three years after it began receiving funds in 2016. As one measure of visible distress, the PAC amended one report five times. Because no one at the Tribe was overseeing the PAC’s correspondence with the FEC—which were available on the FEC website—the Tribe was unaware of these warning signs. The volume and magnitude of the filing errors ultimately triggered an FEC audit, which the treasurer also concealed from the Tribe, according to the complaint.
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