Obama to Most Likely Avoid FEC Audit

A new article by Kenneth Vogel at Politico.com explains why Obama will most likely avoid an FEC audit, despite legitimate complaints and documentation of fraud.  While the article doesn’t satisfactorily cover the background of why Obama is in hot water over this (namely turning off online fraud checks), it does provide an excellent write-up on the process by which the FEC determines an audit:

The Federal Election Commission is unlikely to conduct a potentially embarrassing audit of how Barack Obama raised and spent his presidential campaign’s record-shattering windfall, despite allegations of questionable donations and accounting that had the McCain campaign crying foul.

Adding insult to injury for Republicans: The FEC is obligated to complete a rigorous audit of McCain’s campaign coffers, which will take months, if not years, and cost McCain millions of dollars to defend.

Obama is expected to escape that level of scrutiny mostly because he declined an $84 million public grant for his campaign that automatically triggers an audit and because the sheer volume of cash he raised and spent minimizes the significance of his errors. Another factor: The FEC, which would have to vote to launch an audit, is prone to deadlocking on issues that inordinately impact one party or the other – like approving a messy and high-profile probe of a sitting president.

So, by declining public funding, Obama decreased the odds of an audit.  And the FEC may not investigate due to political party affiliations of the FEC commission members.

Seizing on Obama’s reversal on a pledge to accept public financing if his Republican opponent agreed to do the same, as well as his campaign’s refusal to voluntarily release the names, addresses and employers of donors who gave less than $200 each – a group that accounted for about half of the more than $600 million that the campaign had raised through the end of September – the RNC asked the FEC “to immediately conduct a full audit” of all of Obama’s contributions.

It’s very rare for a complaint to trigger an audit, campaign finance insiders say.

And ironically, the historic volume of Obama’s small contributions, which may have made it tough for the campaign to weed out problem donations, may also help spare Obama an audit.

That’s because the byzantine formula the FEC staff uses to determine whether a campaign has engaged in “substantial” violations of federal election rules – the trigger to recommend an audit to commissioners – takes into account the size of the campaign’s coffers, according to David Mason, who served as a Republican appointee to the FEC until this year.

“So if a House campaign makes a $100,000 error, that’s huge and they’re likely to get audited,” he said. “If a campaign the size of the Obama campaign has a $100,000 error, then maybe not. It would depend on what the error is, obviously,” he said, explaining that mere accounting snafus are unlikely to prompt an audit. More serious and systemic problems, such as illegal contributions, result in campaigns getting tagged with more “audit points,” Mason explained. “If you get enough audit points, you get audited,” he said, adding “nobody outside the commission would know how many audit points the Obama campaign has.”

Mary Brandenberger, an FEC spokeswoman, declined to comment on the likelihood of an Obama audit. But she explained that if campaigns adequately answer the agency’s requests for information, it’s less likely they’ll be recommended for an audit.

Even if Obama’s campaign reached the audit recommendation trigger point, it’d be tough to muster the majority commission vote necessary to initiate the audit. That’s because the FEC is comprised of three Democratic commissioners and three Republicans and, as such, is prone to deadlock on partisan issues.

So this leads to several questions for the FEC that we, as members of the public, deserve to have answers to:

  1. What questions did the FEC ask the Obama campaign?
  2. How many “audit points” did the Obama campaign earn and why?
  3. How did the 6 commissioners (3 Democrats, 3 Republicans) of the FEC vote on the audit?  And why?
  4. What is the “byzantine formula” that the FEC uses to determine audits?  Did the Obama campaign know the formula and find a way to exploit it?

We will remain on the case and if it requires Freedom of Informaiton Act requests to get the answers, then that’s what we’ll pursue.

Hat tip: Thanks to reader Jim “the scrutinator” for the referral.

3 Comments to “Obama to Most Likely Avoid FEC Audit”

  1. Jim says:

    Thanks for the hat-tip! (BTW, your link to the politico article is broken.)

    See if you can corner David Mason for an interview, and find out what grounds would be sufficient for the FEC to at least look at his small contributions.

    Keep up the excellent work, and watch your back.

    Reply from John Jim, thanks for pointing out the broken link. I fixed it.

  2. AMac says:

    Here is an issue I haven’t seen discussed: Did the Obama campaign disable AVS (and similar anti-fraud measures) only for donations under $50, or for larger amounts as well?

    It’s a significant question because of the way the FEC regulations are written. They implicitly allow anonymous contributions of under $50, by not requiring campaigns to maintain records on who gave these small amounts.

    Over $50, the FEC requires that donor records be maintained. As noted on this blog, two separate but related matters are (1) whether the names of donors of $50 to $200 should be disclosed and (2) what steps are adequate to determine the identities of donors who gave an aggregate of $200 or more, in multiple tranches of less than $200 each.

    I have read accounts of individuals who went to the Obama campaign website and documented that donations of $5 to $25 were accepted, even when an obviously false name and address accompanied the credit card number.

    Because of the $50 threshold, on October 27th, I attempted to make a $60 contribution (good cc #, bad name/address).

    I had thought that the transaction had not cleared. However, when I reconciled my statement last week, I saw that it had gone through without any problem.

    It seems to me that practices that are this friendly to “distributed campaign finance fraud” come closer to violating the letter of FEC regulations on record-keeping. Disabling AVS for contributions over $50 might be worth a couple of “audit points,” it would seem.

    My experience is described as Comment #82 to this ‘Winds of Change’ post.

  3. Steve says:

    This issue is a disgrace. If the FEC does not investigate, it proves that our electoral system is a corrupt joke. Welcome to the Third World.

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