It’s no secret that where there is lots of money there is bound to be fraud. Political committees are no exception. In fact, just last week Congressman Dave Joyce’s former campaign treasurer pled guilty to embezzling $160,000 in campaign funds. This week authorities are investigating yet another possible case of theft of more than $100,000 from Congressman Steve Chabot’s campaign accounts. Kinde Durkee embezzled over $7 Million from over 50 clients, including Senator Dianne Feinstein.
At my firm, CFS Compliance, we have a long history of protecting campaigns and PACs. And we have seen it’s not always fraud or criminal activity that causes money to go missing. Sometimes it’s just sloppy bookkeeping by campaign managers, political staff, or even accountants who just do not have a background in FEC compliance.
So how can campaigns and PACs protect themselves? The answer is straight forward. Follow the FEC’s Safe Harbor provisions. That’s what we do at CFS.
FEC Safe Harbor Provisions require:
1. Open all bank accounts using the committee’s name and Employer Identification Number that you get from the IRS, not in an individual’s name or Social Security Number.
2. Review all bank statements for unauthorized transactions and reconcile them to your accounting records each month and prior to filing. The reconciliations should be done by someone other than a check signer.
3. Have any checks in excess of $1,000 be authorized in writing and/or signed by two individuals. All wire transfers must be authorized in writing by two individuals.
4. An individual who does not handle the committee’s accounting or have banking authority should receive incoming contributions and checks. This individual should make a list of all committee receipts and stamp “For Deposit Only” on all checks.
5. Do not use cash to pay for campaign expenses. While the FEC Safe Harbor does allow petty cash to be used if you use an imprest system and the fund is less than $500, but at CFS we advise all our clients to just simply avoid dealing in cash.
Campaigns or PACs that suspect theft must notify the FEC immediately.
If you manage a campaign or a PAC you should ask yourself two questions:
1. Does your compliance/financial team follow the FEC Safe Harbor provisions? If not, they should.
2. Do you have an outside person reviewing the books and bank statements each month? If not, you should.
The bottom line is that you need to do everything you can to protect not only your money but your brand. You should be consulting with a professional compliance firm like ours to ensure that you are protected.