FAR: Leroy Comrie - Welcome | New York City … for Leroy Comrie 4 July 25, 2012 CFB staff conducted a comprehensive review of all financial transactions reported in the Campaign’s

July 25, 2012

Tyrone SellersPeople for Leroy Comrie

Dear Mr. Sellers:

Please find attached the New York City Campaign Finance Board’s (the “CFB” or “Board”) Final Audit Report for the 2009 campaign of Leroy G. Comrie (the “Campaign”). The report is based on a comprehensive review of the Campaign’sfinancial disclosure statements and submitted documentation, and incorporates the Board’s final determination of June 21, 2012 (attached). As detailed in the report, the Campaign failed to demonstrate compliance with the Campaign Finance Act (the “Act”) and the Rules of the Board (the “Rules”).

As detailed in the attached Final Board Determination, at this time the Campaign must repay the following:

The full amount owed must be paid no later than August 24, 2012. Please send acheck in the amount of $28,673.43, payable to the “New York City Election Campaign Finance Fund,” to: New York City Campaign Finance Board, 40 Rector Street, 7th Floor, New York, NY 10006.

If the CFB is not in receipt of the full amount owed by August 24, 2012, the Candidate’s name and the amount owed will be posted on the CFB’s website. The CFBalso may initiate a civil action to compel payment. In addition, any principal committee of the Candidate will not be eligible to receive public funds for any future election until the full amount is paid. Further information regarding liability for this debt can be found in the attached Final Board Determination.

Public Funds Repayment (Final Bank Balance) $12,401.43Penalties AssessedTotal Owed

$16,272.00$28,673.43

Tyrone SellersPeople for Leroy Comrie

- 2 - July 25, 2012

The January 15, 2010 disclosure statement (#16) was the last disclosure statement the Campaign was required to file with the CFB for the 2009 elections. The Campaign is required to maintain its records for six years after the election, and the CFB may require the Campaign to demonstrate ongoing compliance. See Rules 3-02(b)(3), 4-01(a), and 4-03. In addition, please contact the Board of Elections for information concerning their separate filing requirements.

The CFB thanks you for your cooperation during the 2009 election cycle. Should you have any questions about the enclosed report, please contact the Audit Unit at 212-306-5250 or [email protected].

Sincerely,

Julius PeeleDirector of Auditing and Accounting

c: Leroy G. Comrie

People for Leroy Comrie

Lawrence A. Mandelker, Esq.Kantor, Davidoff, Wolfe, Mandelker, Twomey & Gallanty, P.C.

Attachments

traphael

Typewritten Text

[signature on original]

1

July 25, 2012

CAMPAIGN FINANCE BOARDFINAL AUDIT REPORT OF

PEOPLE FOR LEROY COMRIE

Among the purposes of the Act are to diminish the role and influence of private

money in New York City elections, to increase the information available to the public

about elections and candidates' campaign finances, and to reduce the potential for actual

or perceived corruption. The CFB is a nonpartisan, independent city agency that serves

the public interest by enhancing the role of New York City residents in the electoral

process. All candidates for the five covered offices - mayor, public advocate,

comptroller, borough president, and City Council member - are required to disclose all

campaign activity to the CFB.

BACKGROUND

All candidates must adhere to strict contribution limits and the ban on

contributions from corporations, and beginning January 1, 2008, partnerships and limited

liability entities. Additionally, participating candidates are prohibited from accepting

contributions from unregistered political committees. The CFB also administers the

voluntary Campaign Finance Program (the “Program”). Candidates who voluntarily

participate in the Program can qualify to have private contributions matched with public

money in exchange for agreeing to strict spending limits.

People for Leroy Comrie 2 July 25, 2012

The table below provides detailed information about the Campaign:

CAMPAIGN INFORMATION

Name: Leroy G. Comrie ID: 420Office Sought: City Council District: 27Classification: Participant Certification Date: June 3, 2009Committee Name: People for Leroy Comrie Ballot Status: Primary, GeneralPrimary Election Date: September 15, 2009 General Election Date: November 3, 2009Other Committees: No Party: Democratic, Working Families

Public Funds:Received: $88,330

Contribution Limit: $2,750

Returned: $0Expenditure Limit:2006-2008: $43,0002009 Primary: $161,0002009 General: $161,000


The overall objective of the CFB’s audit was to determine whether the Campaign

complied with the Act and Rules. Specifically, CFB staff evaluated whether (1) the

Campaign accurately reported financial transactions and maintained adequate books and

records; (2) the Campaign adhered to contribution limits and prohibitions; (3) the

Campaign disbursed funds in accordance with the Act and Rules and complied with the

expenditure limits; and (4) the correct amount of public funds was received, any

additional funds are due, or any return of public funds is required in accordance with the

Act and Rules.

OBJECTIVES

Prior to the election, CFB staff performed an initial review of the Campaign’s

reporting and documentation of contributions for public funds eligibility and compliance

with the Act and Rules. After the election, CFB staff performed an audit of financial

disclosure statements one through sixteen (see Appendix #1), covering the period from

January 13, 2007 through January 11, 2010. The audit was conducted in accordance with

generally accepted government auditing standards (GAGAS) and included tests of

records and other auditing procedures as necessary. This audit was performed in

accordance with the audit responsibilities of the CFB as set forth in Administrative Code

§3-710.

SCOPE AND METHODOLOGY

CFB staff examined the bank statements submitted by the Campaign from June 1,

2007 through May 31, 2012 and reconciled transactions to the Campaign’s disclosure

statements during this period to verify that all financial transactions were accurately

reported and documented.


CFB staff conducted a comprehensive review of all financial transactions reported

in the Campaign’s disclosure statements to determine whether contribution limits and

prohibitions were adhered to. Additionally, CFB staff reviewed the Campaign’s reported

expenditures to ensure that the Campaign disbursed funds in accordance with the Act and

Rules and complied with the expenditure limits.

CFB staff reviewed the Campaign’s eligibility for public matching funds, all

matchable contribution claims by the Campaign for compliance with the Act and Rules,

and the Campaign’s disbursements of public funds. The review was done to ensure that

the correct amount of public funds was received by the Campaign, and to determine

whether any additional public funds are due or whether any return of public funds by the

Campaign is necessary.

On November 30, 2010, CFB staff issued a Draft Audit Report to the Campaign

that contained preliminary findings of non-compliance with the Act and Rules and

recommended corrective actions. The Campaign subsequently responded to the Draft

Audit Report.

Based on CFB staff recommendations and the Campaign’s responses, the Board

issued this Final Audit Report.


The Campaign failed to demonstrate compliance with the Campaign Finance Act

and the Rules of the Board as detailed below:

CONCLUSION

Disclosure Findings - Accurate public disclosure is an important part of the CFB’s mission. Findings in this section relate to the Campaign’s failure to completely and timely disclose the Campaign’s financial activity.

� The Campaign did not report or inaccurately reported financial transactions to the Board (see Finding #1).

� The Campaign did not report all advances correctly (see Finding #2).

Contribution Findings - All campaigns are required to abide by contribution limits and adhere to the ban on contributions from prohibited sources. Further, campaigns are required to properly document and disclose all contributions. Findings in this section relate to the Campaign’s failure to comply with the requirements for contributions under the Act and Rules.

� The Campaign did not provide intermediary contribution affirmation statements for contributions received through intermediaries and/or report that contributions were received through intermediaries (see Finding #3). The Board found the Campaign in violation and assessed a $100 penalty for failure to provide intermediary statements and a $100 penalty for failure to report intermediaries.

� The Campaign did not deposit all contributions in an account listed on its Certification (see Finding #4).

� The Campaign did not document the fair market value of in-kind contributions received and/or did not disclose in-kind contributions received (see Finding#5).

� During the pre-election period, the Campaign accepted the following unregistered political committee contributions: Friends of Bill Scarborough, $65 on March 27, 2009; and Shirley Hunter [sic] for State Senate, $100 on September 18, 2008. The Campaign refunded Friends of Bill Scarborough onJuly 10, 2009 and did not refund Shirley Hunter [sic] for State Senate. The Board found the Campaign in violation and assessed $600 in penalties: Friends of Bill Scarborough, $250; and Shirley Hunter [sic] for State Senate, $350.

� During the pre-election period, the Campaign accepted three over-the-limit contributions. See Exhibit I. The Board found the Campaign in violation and assessed $375 in penalties, $125 for each violation.


� During the pre-election period, the Campaign accepted a contribution that exceeded the applicable $250 City Council Doing Business Limit from the following contributor, and failed to issue a refund within 20 days of receiving notice from the CFB:

The Campaign refunded the over-the-limit portion on August 7, 2009, which was after the 20-day time limit. The Board found the Campaign in violation and assessed a $125 penalty.

Expenditure Findings - Campaigns participating in the Program are required tocomply with the spending limit. All campaigns are required to properly disclose and document expenditures and disburse funds in accordance with the Act and Rules. Findings in this section relate to the Campaign’s failure to comply with the Act and Rules related to its spending.

� The Campaign exceeded the applicable $161,000 expenditure limit for the primary election (see Finding #6). The Board found the Campaign in violation and assessed a $11,172 penalty.

� The Campaign made cash disbursements greater than $100 (see Finding #7).The Board found the Campaign in violation and assessed a $50 penalty.

� The Campaign may not have properly reported and documented its joint expenditures (see Finding #8).

� The Campaign did not demonstrate that activity was independent of the Campaign (see Finding #9). The Board found the Campaign in violation and assessed a $3,750 penalty.

Statement/

NameSchedule/ Date of

Transaction IDRefund

NotificationContribution

Due Date

Amount

AmountOver-the-

Manshel, AndrewLimit

7/ABC/R0001546 04/01/09 04/21/09 $400 $150


1.

FINDINGS AND RECOMMENDATIONS

Campaigns are required to report every contribution, loan, and other receipt

received, and every disbursement made. See Administrative Code §3-703(6) and Rule 3-

03. In addition, campaigns are required to deposit all receipts into an account listed on

the candidate’s Certification. See Administrative Code §3-703(10) and Rule 2-06(a).

Campaigns are also required to provide the CFB with bank records, including periodic

bank statements and deposit slips. See Administrative Code §§3-703(1)(d), (g), and

Rules 4-01(a),(b)(1),(f).

Financial Disclosure Reporting - Discrepancies

The Campaign provided CFB staff with its bank statements covering the period

June 1, 2007 through May 31, 2012:

a) The Campaign reported the following transaction that does not appear on its bank

statements:

b) The Campaign did not properly report the following transactions (see also

Findings #4 and #7):

BankChase

Account TypeChecking

Check No./Name

Statement/

TransactionSchedule/ Paid

Transaction ID DateBoard of Elections

Amount1146 10/F/R0002505 08/06/09 $118.75

ReportedName

ActualTransaction Type

Statement/

Transaction TypeSchedule/

Transaction IDAmount

DatePowell, Gerald

ReportedIn-kind contribution Monetary contribution 10/D/R0002513 08/01/09 $80.00

Paul, Rufus In-kind contribution Monetary contribution 10/D/R0002514 08/01/09 $5.00Morgan, Claudette In-kind contribution Monetary contribution 10/D/R0002515 08/01/09 $50.00Powell, Gerald In-kind contribution Monetary contribution 10/D/R0002516 08/01/09 $20.00Lewis, Kenny In-kind contribution Monetary contribution 10/D/R0002517 08/01/09 $100.00

Total $255.00


c) The Campaign did not report the following expenditures:

� See also Finding #7.

a) For each transaction reported in the Campaign’s disclosure statements but not

appearing on the Campaign’s bank statements, you must provide evidence to

show that the transaction cleared the bank (i.e., a copy of the front and back of the

check, or the missing bank statement), was reported in error, or amend your

disclosure statement to void the check and forgive the expenditure payment. Any

forgiven liabilities will be considered an in-kind contribution.

Previously Provided Recommendation

b) For inaccurately reported transactions, you must amend your disclosure

statements to accurately report the transactions.

c) You must amend your disclosure statements to report these unreported

transactions.

Please note that any newly entered transactions will only appear as new

transactions in an amendment to the last disclosure statement, even if the transaction

dates are from earlier periods. Also note that the Campaign must file an amendment for

each disclosure statement in which transactions are being modified. Once all data entry

is completed, you should run the Modified Statements Report in C-SMART to identify

the statements for which amendments must be submitted. If any new transactions have

been added, you must amend Disclosure Statement 16.

Check No./ PaidTransaction DateDexter Sanders

Amount08/06/09 $80.00

Mona Lisa The Art of Photography* 08/06/09 $175.00Total $255.00


b, c)

a) The Campaign explained that check number 1146 was issued to the Board of

Elections (BOE) but it did not cash the check. The Campaign stated that it

contacted the BOE to inquire whether a replacement check should be issued or

whether the liability would be forgiven. The Campaign stated that it never

received a response from the BOE.

Campaign’s Response

b) The Campaign stated that five individuals paid for the services rendered by

Dexter Sanders and Mona Lisa Photography. The Campaign submitted monetary

contribution cards for the individuals and a handwritten note dated August 1,

2009 that was signed by the Campaign and Lisa Hall from Mona Lisa

Photography. The note indicated that Lisa Hall was paid in cash for her services

from the funds collected at the August 1, 2009 fundraiser.

c) The Campaign stated it reported the expenditures as in-kind contributions.

a) The Board has taken no further action on this matter other than to make it a part

of the Candidate’s record with the Board.

Board Action

See Finding #7.

2.

For each advance, campaigns are required to report the name and address of the

person making the purchase (the advancer), the amount, and the name of the vendor from

whom the purchase was made. See Administrative Code §§3-703(1)(g), 3-708(8) and

Rule 3-03(c)(3).

Advances


The Campaign’s reporting indicates that the expenditures listed on Exhibit II may

actually be advances.

You must amend your disclosure statements to report the transactions as

advances, and the advance repayments with the name and address of the advancer and the

name and address of the vendors from whom the purchases were made.



The Campaign stated that it corrected the transactions. However, the Campaign’s

filings with the CFB do not show that the transactions were modified to report the

advance purchases correctly.

The Board has taken no further action on this matter other than to make it a part


Board Action

3.

Campaigns are required to report all contributions delivered or solicited by an

intermediary. Intermediaries are people who solicit and/or deliver contributions to

campaigns. See Administrative Code §3-702(12), 3-703(6) and Rules 3-03(c)(1) and (7).

Intermediary Statements and Possible Unreported Intermediaries

Campaigns are required to provide a signed intermediary affirmation statement for each

intermediary containing the intermediary’s name, residential address, employer and


business address, names of the contributors, the amounts contributed and specific

affirmation statements. See Rule 4-01(b)(5).

a) CFB staff’s review of the contribution cards provided by the Campaign indicated

that the Campaign may not have reported four intermediaries for the contributions

shown on Exhibit III.

b) A review of the Campaign’s response to the Draft Audit Report revealed that the

Campaign did not submit intermediary affirmation statements for 15 contributors

shown on Exhibit III.

a) You must indicate how each contribution was solicited and/or delivered. If they

were solicited and/or delivered by an intermediary, you must amend your

disclosure statements to reflect this information and provide an intermediary

contribution statement for each previously unreported intermediary. You should

also explain the fundraising methods used to solicit these contributions, including

the nature of Women for Comrie and its role in fundraising.


b) The Draft Audit Report did not include this finding.


a) The Campaign stated that “Women for Comrie” was a group of women in the

district who organized a fundraiser for the Campaign and solicited contributions

by word of mouth. The Campaign stated that it amended its disclosure statements

to report the individuals listed on Exhibit III as intermediaries. However, the

Campaign failed to report four intermediaries.


b) The Campaign did not provide intermediary statements for the intermediaries

reported with its response to the Draft Audit Report.

a) The Board found the Campaign in violation and assessed a $100 penalty for

failing to report intermediaries.

Board Action

b) The Board found the Campaign in violation and assessed a $100 penalty for

failing to provide intermediary affirmation statements.

4.

Campaigns are required to deposit all contributions into an account listed on the

candidate’s Filer Registration or Certification. See Administrative Code § 3-703(10) and

Board Rules 1-04(b) and 2-01(a). The Campaign stated that it did not deposit the

following cash contributions, and instead used them to pay vendors directly (see also

Findings #1b and #7):

Failure to Deposit Contributions

You must explain and provide evidence as to why this does not constitute a

violation of Board Rules.


Statement/

NameSchedule/ Received

Transaction IDAmount

DatePowell, Gerald

Reported10/D/R0002513 08/01/09 $80.00

Paul, Rufus 10/D/R0002514 08/01/09 $5.00Morgan, Claudette 10/D/R0002515 08/01/09 $50.00Powell, Gerald 10/D/R0002516 08/01/09 $20.00Lewis, Kenny 10/D/R0002517 08/01/09 $100.00

Total $255.00



The Campaign stated that the contributions were not cash donations. The

Campaign explained that five individuals covered the costs for two expenditures during a

Campaign event; therefore, the Campaign reported the transactions as in-kind

contributions. However, the Campaign documented the donations by submitting

monetary contribution cards from each of the five individuals.

See Finding #7.

Board Action

5.

In-kind contributions are goods or services provided to a campaign for free, paid

by a third party, or provided at a discount not available to others. The amount of the in-

kind contribution is the difference between the fair market value of the goods or services

and the amount your Campaign paid. Liabilities for goods and services for the Campaign

which are forgiven, in whole or part, are also in-kind contributions. In addition, liabilities

for goods and services outstanding beyond 90 days are in-kind contributions unless the

vendor has made commercially reasonable attempts to collect. An in-kind contribution is

both a contribution and expenditure subject to both the contribution and expenditure

limits. See Administrative Code §3-702(8) and Rules 1-02 and 1-04(g). Volunteer

services are not in-kind contributions. See Administrative Code §3-702(8) and Rule 1-

02.

Unreported In-Kind Contributions

Campaigns are required to report all in-kind contributions they receive. See

Administrative Code §3-703(6) and Rule 3-03. In addition, campaigns are required to


maintain and provide the CFB with documentation demonstrating the fair market value of

each in-kind contribution. See Administrative Code §3-703(1)(d),(g) and Rules 1-

04(g)(2) and 4-01(c).

In response to the CFB staff’s letter dated October 16, 2009 (see Exhibit VII)

regarding alleged non-independent activity that occurred at or involved Guy R. Brewer

United Democratic Club (“GRBDC”), the Campaign submitted an affidavit by the

Candidate on November 4, 2009 and attached an invoice (see Exhibit IV) dated

September 15, 2009 from the GRBDC for $1,200. The invoice covers “June 15, 1009

[sic] to September 15, 2009 4 months @ $300 per month = $1,200.” The Campaign also

provided a copy of a cancelled check to GRBDC for $1,200. The affidavit stated that the

Campaign “rented a space from the GRBDC from June 15 – September 15, 2009 for

$300/mo. as its headquarters…which, upon information and belief, reflects its estimated

value.” The period from June 15 to September 15, 2009 reflects a period of three

months, not four; therefore, it is unclear whether the Campaign paid fair market value for

the space.

Further, in 2003, the Candidate’s campaign committee, Friends of Comrie 03,

appears to have paid GRBDC approximately $1,500 per month for the use of GRBDC.

Therefore, it appears that in 2009 the Campaign may have received an unreported in-kind

contribution from GRBDC.

You must address the following:


1) Clarify the monthly rent paid for the use of the GRBDC in 2009.


2) Substantiate that this amount reflects the fair market value for the use of these

premises.

3) Where did the Campaign operate from prior to June 15, 2009?

4) Why did the Campaign fail to report an outstanding liability to the GRBDC

beginning in June 2009?

5) If the invoice from GRBDC was dated September 15, 2009, why did the

Campaign fail to report the expenditure until disclosure statement #14, covering

the period September 29 – October 19, 2009?

6) Explain why payments for use of the GRBDC in 2009 appear to be significantly

less than that paid by Friends of Comrie 03 in 2003.

If use of the GRBDC was provided to your Campaign free of charge or at a

discount/below market rate, you must amend your disclosure statement to report the

difference between the fair market value and the amount paid by the Campaign as an in-

kind contribution.


The Campaign stated that it agreed to occupy the GRBDC space for three months

at a rate of $300 per month, but the Campaign was not able to vacate until October 15,

2009. The Campaign explained that the submitted invoice was erroneously dated

September 15, 2009 and that it should have been dated October 15, 2009. Therefore the

amount due to GRBDC was $1,200 (4 months x $300). The Campaign stated that it

could not substantiate the amount GRBDC charges other tenants, but that the 2009

Campaign occupied one-third of the GRBDC space, in contrast to 2003, when it occupied

the full space. The Campaign stated that prior to June 15, 2009, its operations were


conducted at the Candidate’s home. The Campaign stated that “by choice of the

GRBDC” it was invoiced upon vacating the GRBDC premises on October 15, 2009.



Board Action

6.

CFB Program participants must abide by strict limits on the amount of money

they can spend on their campaigns. An expenditure is considered made when the good

and/or service is received, used or rendered regardless of when payment is made. Certain

types of expenditures do not count toward the expenditure limit:

Expenditures – Exceeding the Legal Limit

� Challenging or defending the validity of petitions or canvassing and re-canvassing

election results,

� Preparing for an appearance before the Board, and

� Limited expenses to prepare for the post-election audit.

See Administrative Code §3-706, 3-703(1)(i), 3-711(2)(a), and Rules 1-08, (b), (d), and

(l).

CFB staff’s review found that the Campaign exceeded the primary expenditure

limit. See Exhibit V which provides the expenditure limit calculation.

If you disagree with the calculation, you must provide a detailed explanation and

documentation such as invoices, contracts and consultant agreements to support your



argument. You should address each line of the calculation you dispute and amend your

disclosure statements as appropriate.


In response to the Draft Audit Report, the Campaign stated that prior to May 2009

the Candidate intended to run for Queens Borough President. The Campaign requested

that expenditures totaling $56,179 paid to Chung Seto, a fundraising consultant “hired to

help the Candidate run for Borough President,” should be removed from the expenditure

limit calculation because they were made in connection with the Candidate’s aborted

election. According to the Campaign, it spent $96,186.37 during the out years [2006 –

2008], and that of that amount, $60,500 was paid to Chung Seto. The Campaign argued

that because Queens County is divided into 14 Council districts, only 1/14th

The Campaign also amended its disclosure statements to report $5,319.60 in

outstanding fines to the New York City Environmental Control Board.

of the

$60,500 paid to the consultant benefited the re-election campaign ($60,500 ÷ 14 =

$4,321). Thus, by adjusting $56,179 from the out-year expenditure limit, the Campaign

would remain under the spending limit.

In response to the Alleged Violations and Recommended Penalties Notice, the

Campaign submitted a contract for Chung Seto’s services dated April 9, 2007. The

Contract stipulated that Chung Seto was retained to “serve as an independent fundraising

consultant for the candidate’s bid for Borough President.” To support its assertion that

the Candidate sought higher office, the Campaign also submitted a compilation of online

news reports mentioning the Candidate’s anticipated candidacy in the 2009 Queens

Borough President race.


The Campaign stated that after the extension of term limits it relied on the

provisions of CFB Advisory Opinion No. 2008-7, which gave candidates who previously

sought election to higher office the option of maintaining their existing 2009 committee

in order to seek re-election to their lower office. The Campaign acknowledged that,

pursuant to CFB Rules 1-08(c) and 7-03(c), expenditures made by a candidate who

subsequently abandons a candidacy for higher office and seeks re-election to a lower

office are presumptively subject to the lower office’s spending limits. However, the

Campaign argued that it could overcome the presumption if it could demonstrate that

such expenditures were used for the aborted Campaign with no or minimal benefit to the

Candidate’s re-election campaign. The Campaign conceded that it failed to submit a

written statement to the CFB by January 15, 2009, as instructed by Advisory Opinion No.

2008-7, Option 1-B.1

In its appearance at the June 21, 2012 Board meeting, the Campaign reiterated

these arguments.

The Campaign stated that failing to submit the Higher Office Proof

form “should not be considered as a circumstance warranting imposition of a penalty.”

The Board found the Campaign in violation and assessed a $11,172 penalty based

on an overage of $33,516.

Board Action

1 CFB Advisory Opinion No. 2008-7, Option B, instructed candidates who had previously intended to run for higher office before changes to the term limits law that if they wished to run again for their lower, incumbent offices, they were required to submit a Higher Office Proof Form by January 15, 2009, and demonstrate that they were originally seeking higher office in 2009.


7.

Campaigns are prohibited from maintaining a petty cash fund greater than $500.

See Rule 4-01(e)(2). Campaigns are also prohibited from spending amounts greater than

$100 except by checks from a bank account reported to the CFB and signed by the

Campaign’s authorized signatory. See Rule 1-08(i).

Cash Disbursements Exceeding $100

Based on documentation submitted, the CFB staff’s review revealed that the

following unreported expenditure in excess of $100 was made in cash:

*The Campaign stated that cash contributions from Rufus Paul, Claudette Morgan, Gerald Powell and Kenny Lewis were used to pay the vendor (see also Finding #1b).

You must explain and provide evidence as to why this expenditure does not

constitute a violation of Board Rules.



The Campaign explained that the contributors paid the vendor directly for the

services rendered, and therefore the payments were in-kind contributions rather than cash

donations or expenditures. However, the Campaign did not provide in-kind contribution

forms or any other documentation showing that the intent of the contributors was to pay

for the service rendered. Instead, the Campaign submitted monetary contribution cards

from the contributors.

Check No./ PaidTransaction DateMona Lisa The Art of Photography*

Amount08/06/09 $175.00


The Board found the Campaign in violation and assessed a $50 penalty.

Board Action

8.

Campaigns are permitted to engage in joint campaign activities, provided that the

benefit each candidate derives from the joint activity is proportionally equivalent to the

expenditure. See Administrative Code §3-715 and Rule 1-08(h). Upon request from the

Board, a campaign is required to provide copies of checks, bills, or other documentation

to verify contributions, expenditures, or other transactions. See Administrative Code §§3-

703(1)(d), (g), and Rule 4-01.

Joint Expenditures

In its response to the CFB’s post-election request for documentation dated

December 9, 2009, the Campaign stated, “People for Leroy Comrie did not engage in any

joint campaign activities.” However, the Campaign also submitted a copy of a palm card,

which was the same as one obtained by the CFB on the day of the primary election. The

card includes the name and picture of the Candidate, as well as those of Bill Thompson,

John Liu, Bill de Blasio and Helen Marshall (see Exhibit VI). In addition, in an affidavit

from the Candidate dated November 4, 2009, the Candidate affirmed that “the Campaign

printed a slate card….Each candidate who appeared on the card (Thompson, Liu,

deBlasio, Marshall and [Comrie]) paid a portion of the printing cost and, upon

information and belief, had its volunteers distribute the card in the 27th Council District.”

Based on a review of this information, it appears that the Campaign did not fully account

for this joint activity.


If the Campaign has reported the transaction(s) for the palm card, it must identify

the associated transaction(s) reported by the Campaign by statement and transaction ID.

If the expenditure(s) has not been reported, the Campaign must provide an explanation

for the initial failure to report and must amend its disclosure statements to report this

transaction(s). Additionally, the Campaign must provide a methodology for the cost

allocations for each campaign and provide documentation for the expenditure(s). The

Campaign must clarify to what extent and to whom the other campaigns paid their

portions of the cost of the palm card.



The Campaign stated that each Campaign paid the vendor directly for its portion

of the palm card and affirmed it was a joint activity. The Campaign stated that the

Treasurer’s statement that it did not engage in joint activities was correct at the time

because the other campaigns did not cover the Candidate’s portion of the cost. The

Campaign identified the reported expenditure (Transaction ID 12/F/R0002693), but it did

not provide the allocation methodology for the cost of the palm card.



Board Action


9.

Administrative Code §3-702(8) defines contribution to mean "any gift,

subscription, advance, or deposit of money or any thing of value, made in connection

with the nomination for election, or election, of any candidate…provided however, that

none of the foregoing shall be deemed a contribution if it is made, taken or performed by

a person or a political committee independent of the candidate or his or her agents or

political committees….For purposes of this subdivision, the term 'independent of the

candidate or his or her agents or political committees…' shall mean that the candidate or

his or her agents or political committees so authorized by such candidate did not

authorize, request, suggest, foster or cooperate in any such activity…." Rules 1-08(f)(1)

and (2) set forth several factors for determining whether third party activity is

independent. See also Advisory Opinion No. 2009-7 (August 6, 2009).

Independent Activity

On October 16, 2009, CFB staff sent the Campaign a letter regarding alleged non-

independent activity that occurred at or involved the GRBDC (see Exhibit VII). An

affidavit by the Candidate was submitted in response on November 4, 2009. In the

affidavit, the Candidate asserted that the activity “at the GRBDC does not constitute non-

independent activity that benefited the Campaign” and addressed several of the factors in

Board Rule 1-08(f)(1) for determining whether third party activity is independent.

However, the Candidate did not address the factor in Board Rule 1-08(f)(1)(vi): whether

the candidate, any agent of the candidate, or any political committee authorized by the

candidate shares or rents space for a campaign-related purpose with or from the person,

political committee, or other entity making the expenditure.


The Campaign must address the applicability of the factor in Rule 1-08(f)(1)(vi)

to the circumstances described in the October 16, 2009 letter and responded to in the

November 4, 2009 affidavit. The response to this finding must be separate from the

Campaign’s response to other findings in this Draft Audit Report, in the form of a

verified answer (sworn to or affirmed by the candidate, the treasurer, and/or any agent of

the Campaign with relevant knowledge).



In response to the Draft Audit Report, the Campaign submitted an affidavit from

the Treasurer, Tyrone Sellers, dated October 11, 2011. The Treasurer stated therein that

activities on or around September 14, 2009 and September 15, 2009 by SEIU Local 1199,

Local 32 BJ or any other union did not constitute non-independent activities on behalf of

the Campaign. The Treasurer also stated that, in the absence of other factors, the mere

renting of space in the same facility that another group has rented is insufficient to

support a finding of engaging in non-independent activity.

In its response to the Alleged Violations and Recommended Penalties Notice, the

Campaign asserted that “it was an error to presume that the [Campaign] and 1199 SEIU

were sharing space” because “[w]hatever arrangements that 1199 SEIU and the

[GRBDC] made” are unknown to CFB staff and to the Campaign. With regard to

Campaign literature, the Campaign argued that because its palm cards were distributed by

unpaid union volunteers, the “activity cannot constitute coordination with a third party

expenditure since volunteer activities are not an expenditure in the first place.” With

regard to the critical mass of union members observed by CFB staff, the Campaign


argued that because CFB staff does not know whether the union members were paid for

their services to the Campaign, “the observations were insufficient to create a

presumption that any third party expenditures had been made at all.” The Campaign

further argued that in the interest of due process, the burden set forth by CFB Advisory

Opinion No. 2009-7 should shift to CFB staff once a campaign produces a responsive

affidavit.

In its appearance at the June 21, 2012 Board meeting, the Campaign reiterated

these arguments.

The Board’s regulations place the “burden of demonstrating” the independence of

third-party activity on campaigns because “the information about whether campaign-

related activity has been discussed or otherwise coordinated between a campaign and a

third party is uniquely within the campaign’s possession” (see CFB Advisory Opinion

No. 2009-7). The Board found the Campaign in violation and assessed a $3,750 penalty.

Board Action

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Exhibit I


2009 Elections

Contributions Over the Limit

(1) The Campaign refunded this portion of the aggregate contribution prior to notification from the CFB and therefore it was not subject to penalty.

Notes:

Statement/

NameSchedule/ ReceivedTransaction ID

RefundedDate Date Amount

DCC2, LLCNotes

3/ABC/R0000650 05/30/07 $1,000.00DCC2, LLC 4/ABC/R0000757 08/24/07 $4,000.00DCC2, LLC 4/M/R0000820 01/11/08 ($1,150.00) (1)DCC2, LLC 10/M/R0002076 07/24/09 ($1,100.00)Benjamin, Stephen 10/ABC/R0002108 07/24/09 $1,100.00Benjamin, Stephen 10/M/R0002109 07/24/09 (1)($1,100.00)

Total $2,750.00

IUOE Local 14-14B 3/ABC/R0000616 05/30/07 $500.00IUOE Local 14-14B 4/ABC/R0000753 08/24/07 $1,000.00IUOE Local 14-14B 4/ABC/R0000856 11/09/07 $500.00IUOE Local 14-14B 5/ABC/R0000911 02/01/08 $1,000.00IUOE Local 14-14B 10/M/R0002077 07/24/09 ($250.00)

Total $2,750.00

New York State Laborers' PAC 4/ABC/R0000791 07/19/07 $2,000.00New York State Laborers' PAC 5/ABC/R0001177 03/27/08 $500.00New York State Laborers' PAC 9/ABC/R0001955 07/11/09 $1,000.00New York State Laborers' PAC 10/M/R0002078 07/24/09 ($750.00)

Total $2,750.00

Exhibit II


2009 Elections

Advances

(see Finding #2)

Name

Statement/

ExplanationSchedule/ Invoice

Transaction ID DateSeto, Chung

AmountFood, beverage 3/F/R0000699 05/31/07 $5,060.00

Seto, Chung Thank you cards 3/F/R0000681 06/05/07 $435.00Seto, Chung invitation design 4/F/R0000892 07/24/07 $180.00Seto, Chung mailing invitations 4/F/R0000875 08/01/07 $335.00Seto, Chung reimbursement for food 4/F/R0000890 08/29/07 $2,600.00Seto, Chung invitation design 4/F/R0000900 09/24/07 $240.00Seto, Chung postage for event 4/F/R0000896 10/11/07 $683.00Seto, Chung reimbursement for event 4/F/R0000902 11/07/07 $3,565.00Seto, Chung Event expenses 5/F/R0001192 03/07/08 $2,141.32

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2009

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Total Reported Primary Expenditures:

Claimed Exempt Expenditures:

$141,330.10

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$96,186.37

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Less Prior Year Expenditure Limits ($43,000.00)

Prior Year Amounts Over the Limit $53,186.37$53,186.37

Pre-Elect Expenditures Attributable to Primary Election $0.00

$194,516.47

($161,000.00)

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Adjusted Expenditures

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November 30, 2010People for Leroy Comrie

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Exhibit VII


2009 Elections

Independent Activity

(see Finding #9)

traphael

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Documents

FAR: Leroy Comrie - Welcome | New York City … for Leroy Comrie 4 July 25, 2012 CFB staff conducted a comprehensive review of all financial transactions reported in the Campaign’s