Federal Election Commission Main Page
FEDERAL ELECTION COMMISSION
Washington, DC 20463
May 5, 2005
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
ADVISORY OPINION 2005-04
Jan Witold Baran, Esq.
Wiley, Rein & Fielding, LLP.
1776 K Street NW
Washington, DC 20006
Dear Mr. Baran:
We are responding to your advisory opinion request on
behalf of Representative John Boehner and Friends of John
Boehner ("Committee") regarding the assignment and reporting
of the payments of a court-ordered restitution under the
Federal Election Campaign Act of 1971, as amended ("the
Act"), and Commission regulations. The Committee is the
principal campaign committee of Representative Boehner. Mr.
Russell E. Roberts, a former Committee treasurer, is
required to pay restitution to the Committee as part of his
sentencing for embezzling campaign funds. The Committee
seeks to assign the restitution payments to the Community
Foundation of West Chester/Liberty ("Foundation"), a
charitable organization under section 501(c)(3) of the
Internal Revenue Code, 26 U.S.C. 501(c)(3). It also asks
whether it is required to report the embezzled amount and
the restitution payments as a debt and receipts,
respectively.
The Commission concludes that the Committee must
continue to treat and to report the restitution amount as a
debt owed to the Committee and the repayment checks it
receives as Committee receipts. However, if the court order
were to be amended to require that the restitution payments
be made to the Foundation rather than to the Committee, the
Committee could thereafter cease to report the payments and
the debt.
BACKGROUND
The facts of this request are presented in your letter
dated March 15, 2005 and subsequent electronic mail
messages.
On April 15, 2003, the Committee notified the
Commission that Mr. Roberts had misappropriated campaign
funds. At that time, the Committee filed amendments to all
reports for calendar years 2000, 2001, and 2003 to reflect
the amounts that Mr. Roberts had paid to himself. While the
Committee stated that it would seek restitution, it also
informed the FEC that restitution was highly unlikely.
Accordingly, the Committee did not report any debt owed from
Mr. Roberts.
On January 29, 2004, the District Court for the
Southern District of Ohio ordered Mr. Roberts to pay
restitution to the Committee in connection with his
sentencing for the embezzlement of funds. The order states,
in pertinent part,
The Defendant shall pay restitution of
$617,562.88. While incarcerated in the Bureau of
Prisons, the Defendant shall pay at least $25.00
per quarter toward the restitution obligation if
assigned a non-UNICOR or grade 5 UNICOR job; or at
least 50% of his monthly pay if assigned a UNICOR
grade 1-4 job. Within thirty days of the
commencement of the term of supervised release,
the Defendant shall pay restitution at a rate of
at least $10 per month. The Court will reassess
the Defendant's ability to pay from time to time
upon the probation officer's recommendation.
Pursuant to other provisions of the order, Mr. Roberts was
sentenced to imprisonment of thirty months and thereafter a
term of supervised release of three years.
The Committee recently received a $25 installment from
Mr. Roberts through the court system. For the foreseeable
future, Mr. Roberts will pay no more than $100 per calendar
year in restitution, and once released, the restitution
amount will increase to $120 per year. At this rate of
payment, the Committee does not anticipate that it will ever
obtain full restitution from Mr. Roberts.
Instead of accepting restitution to the Committee,
Representative Boehner wishes the funds to be redirected or
assigned to the Foundation. The Committee does not plan to
deposit the restitution payments into any of its accounts.
Rather, it wishes to endorse any restitution payments to the
Foundation. Further, the Committee is prepared to petition
the court to revise the sentencing and restitution order to
provide that the checks be made payable to the Foundation
directly in order to avoid future reporting of the debt and
receipts of restitution payments, if required by the
Commission.
Question Presented
If the Committee assigns the restitution payments to
the Foundation, must the full restitution amount be reported
continuously as a debt and each restitution payment be
reported as a receipt?
Legal Analysis and Conclusion
Given Mr. Roberts's obligation under the court order to
make restitution payments to the Committee, the restitution
amount must be reported as a debt owed to the Committee by
Mr. Roberts until the debt is extinguished unless the court
order is amended so that Mr. Roberts is required to pay
restitution directly to the Foundation. An amended court
order would extinguish the debt owed to the Committee and
the Committee would no longer need to report the debt and
receipt of the restitution payments. In the absence of a
modified or amended court order, the Committee must follow
the reporting requirements outlined below.
Political committees must report all debts owed to them
until the debt is extinguished. 2 U.S.C. 434(b)(8); 11 CFR
104.11(a). Mr. Roberts is required by the court order to
pay the entire restitution amount to the Committee and thus
owes a debt to the Committee that is subject to the
reporting requirements of the Act and Commission
regulations. See Advisory Opinion 1991-38 (the Commission
concluded that a court order requiring restitution payment
to an authorized committee gave rise to a debt owed to the
authorized committee that must be reported). The use of the
restitution payments to make a charitable donation, though
permissible, does not change the underlying legal
obligations that created the debt.1
Political committees must also deposit and report all
their receipts except contributions that are returned. 2
U.S.C. 432(h) and 434(b)(2); 11 CFR 103.3(a) and
104.3(a)(2). Because Mr. Roberts is obligated to make
restitution payments to the Committee, the payment checks
are receipts of the Committee. See Advisory Opinion 1991-38
(the Commission also concluded that restitution payments are
receipts that must be reported). Endorsing the payment
checks to the Foundation does not alter the fact that the
checks are made payable to the Committee and thus are a
receipt of the Committee.
Consequently, the entire amount of the restitution is a
reportable debt owed to the Committee. Similarly, each
restitution payment is a receipt of the Committee that must
be included in the Committee's reports. The reporting
requirements for the Committee are similar to those set
forth in Advisory Opinion 1991-38. The Committee is
required to report the total amount owed by Mr. Roberts as a
debt owed to it and must record the subsequent reductions of
debt. 2 See 2 U.S.C. 434(b)(8) and 11 CFR 104.3(d).
Payment checks from Mr. Roberts must be reported as "other
receipts" under 11 CFR 104.3(a)(3)(x). Donations to the
Foundation must be reported as "other disbursements" under
11 CFR 104.3(b)(2)(vi). If the payments from Mr. Roberts or
the Committee's subsequent donations to the Foundation
during an election cycle exceed $200, they must be itemized
under 11 CFR 104.3(a)(4)(vi) and 104.3(b)(4)(vi).
Further, because political committee disbursements must
be made by checks or similar drafts drawn on the political
committee's accounts at its campaign depository, the
Committee cannot simply endorse the restitution payment
checks to the Foundation as you suggest. See 2 U.S.C.
432(h)(1) and 11 CFR 103.3(a). Section 432(h) and
Commission regulations require that the Committee deposit
the funds first into its account and then draw the check
through which the donation is made.
This response constitutes an advisory opinion
concerning the application of the Act and Commission
regulations to the specific transaction or activity set
forth in your request. See 2 U.S.C. 437f. The Commission
emphasizes that if there is a change in any of the facts or
assumptions presented, and such facts or assumptions are
material to a conclusion presented in this advisory opinion,
then the requestor may not rely on that
conclusion as support for its proposed activity.
Sincerely,
(signed)
Scott E. Thomas
Chairman
Enclosure (Advisory Opinion 1991-38)
_______________________________
1 Under 2 U.S.C. 439a(a)(3), candidates and Federal office
holders may use contributed amounts for contributions to an
organization described in section 170(c) of Title 26. Thus,
the proposed donation of funds to the Foundation, a section
501(c)(3) organization, is explicitly permitted by 2 U.S.C.
439a(a) because such organizations are described in 26
U.S.C. 170(c).
2 The amount of the reported debt would be reduced by each
restitution payment made with each payment reported as an
"other receipt" under 11 CFR 104.3(a)(3)(x).