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AO 2014-01: Party Committee May Use Predecessor’s Funds

A California party committee may transfer in funds from its predecessor’s dormant federal account and use them for federal election activity, so long as the committee makes best efforts to disclose the sources of the transferred funds.

Background
The Solano County Democratic Central Committee (“SCDCC”) registered with the Commission as a political party committee in September 2004. The SCDCC filed two reports with the Commission in October 2004, but did not file any reports for the remainder of 2004 or 2005. After sending the SCDCC nine unanswered failure to file notifications, the Commission administratively terminated the committee on September 20, 2005. Nevertheless, between 2004 and 2008, the SCDCC treasurer reported monthly to the committee’s officers that the SCDCC was in full compliance with the law.

In 2008, SCDCC’s chairman discovered that the committee had been terminated, and suspended use of its federal account. The chairman then registered a new committee with the FEC—the Solano County United Democratic Central Committee (“SCUDCC”). This new committee says its predecessor’s federal account remained “nearly forgotten,” isolated and unused between 2008 and June 2012. In 2012, SCUDCC elected a new treasurer, who re-discovered the dormant account, which contained a balance of $11,654.77 as of October 2008. The committee located bank records for the account, including names and addresses of contributors and the date and amounts of those contributions received between 2005 and 2008.

Analysis
The Commission concluded that the SCUDCC may transfer funds from its predecessor’s dormant federal account to its active federal and may use the money for federal election activity, as long as the committee makes best efforts to disclose the source of the nearly $12,000 cash on hand balance.

Since the SCDCC’s federal account has not been active since 2008, it falls outside the Commission’s three-year requirement for record retention. However, the SCUDCC possesses names and addresses of previous contributors as well as amounts and the dates of their contributions. The Commission determined that the committee may attribute the remaining cash on hand balance to contributors listed on the committee’s bank records through a reasonable accounting method, such as the last in, first out method described in 11 CFR 110.3(c)(4). The SCUDCC’s treasurer must review all available contributor information for any potential excessive or prohibited contributions, making at least one written or oral request for evidence of the contribution’s legality if it cannot be determined on its face. 

Because the SCUDCC is the successor committee to SCDCC, the transfer of funds should be reported as a transfer from an affiliated committee on Line 12 of Schedule A on the committee’s FEC Form 3X. Additionally, the Commission stated that the SCUDCC should amend its Statement of Organization (FEC Form 1) to disclose SCDCC as an affiliated committee on Line 6.

(Posted 4/8/2014; By: Isaac Baker)

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