Federal Election Commission Main Page
FEDERAL ELECTION COMMISSION
Washington, DC 20463
May 10, 2006
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
ADVISORY OPINION 2006-16
Richard E. Coates, Esquire
200 West College Avenue, Suite 311 B
Tallahassee, FL 32301
Dear Mr. Coates:
We are responding to your advisory opinion request on behalf
of Florida State Representative Nancy Detert, concerning the
application of the Federal Election Campaign Act of 1971, as
amended ("the Act") and Commission regulations, to the
reimbursement and reporting of $94,616.90 in funds
misappropriated by the former treasurer of the Campaign to Elect
Nancy Detert ("the Detert Committee"). The Detert Committee has
already accepted a partial reimbursement in the amount of
$67,450, representing funds that were not spent by the former
treasurer. You ask whether the Detert Committee may also accept
reimbursement of the remaining $27,166.90 from funds that have
been provided to the former treasurer by his parents.
The Commission concludes that the Detert Committee may
immediately accept the $27,166.90.1 As discussed below, the
Detert Committee should report all misappropriated funds as an
"Other Disbursement," and report any reimbursement separately as
an "Other Receipt" on its July Quarterly Report.
Background
The facts presented in this advisory opinion are based on
your letters received on April 24 and April 28, 2006, and an e-
mail communication on May 3, 2006.
Ms. Detert is a candidate for the Republican nomination for
the U.S. House of Representatives from the 13th Congressional
District of Florida. In June 2005, Ms. Detert appointed Randy
Maddox to be the treasurer of her principal campaign committee,
the Detert Committee.2 On April 3, 2006, Randy Maddox
"misappropriated $94,616.90, via an unauthorized wire transfer"
from the Detert Committee to his personal bank account. Two days
later, he withdrew the funds from his bank account and took the
funds with him to Argentina. Ms. Detert was informed of the
misappropriation on April 9, 2006.3
On April 13, 2006, Randy Maddox returned to the United
States with $67,450 in cash, which was then deposited into a bank
account. On that same date, Randy Maddox's parents, Robert and
Ingrid Maddox, wishing to aid their son, applied for a home
equity loan. On
April 14, 2006, Ingrid Maddox obtained a bank check for
$94,616.90, consisting of the $67,450 deposited on the previous
day and $27,166.90 in funds drawn from the parent's home equity
loan, and delivered it to her son's attorney, Mark Reinhold. Mr.
Reinhold placed the funds in his client trust account where the
disposition of the funds is within Randy Maddox's sole
discretion. On April 28, 2006, Ms. Detert accepted $67,450 from
the client trust account and deposited the funds into the Detert
Committee's account, leaving $27,166.90 of Randy Maddox's funds
in his attorney's client trust account.
Ms. Detert has notified the Federal Bureau of Investigation
of the misappropriation and has appointed a new committee
treasurer to replace Randy Maddox.
Questions Presented
1. May the Detert Committee accept and deposit
reimbursement of misappropriated funds from the $27,166.90 that
remains in Randy Maddox's attorney's client trust account?
2. How should the Detert Committee report the
misappropriated funds and the receipt of any reimbursement?
Legal Analysis and Conclusions
1. May the Detert Committee accept and deposit
reimbursement of misappropriated funds from the $27,166.90 that
remains in Randy Maddox's attorney's client trust account?
Yes, the Detert Committee may immediately accept and deposit
the $27,616.90 from funds held in the client trust account as a
reimbursement by Randy Maddox of misappropriated funds.4
Unlike the $67,450 that has already been reimbursed by Randy
Maddox to the Detert Committee, the funds provided by Mr.
Maddox's parents replace a portion of the misappropriated funds
that Mr. Maddox spent and therefore are not directly traceable
back to the misappropriated funds. Nevertheless, where Randy
Maddox's parents have provided their son with funds solely in an
effort to mitigate potentially severe criminal liability and
financial jeopardy for their son, the provision of funds by Mr.
Maddox's parents is not for the purpose of influencing a Federal
election and would not constitute a contribution by his parents
to the Detert Committee.5 Randy Maddox's parents are only
interested in aiding their son, not the Detert Committee. The
fact that the victim of the misappropriation, and hence the
ultimate recipient of the restitution, is the Detert Committee is
merely incidental to Mr. Maddox's parents providing the funds to
their son.
2. How should the Detert Committee report the
misappropriated funds and its receipt of any reimbursement?
The misappropriation of the $94,616.90 by Randy Maddox
constituted a reduction in the Detert Committee's cash on hand at
that time and the committee should report the total amount as an
"Other Disbursement" on its 2006 July Quarterly Report. The
Detert Committee should include this amount in the total of
"Other Disbursements" on Line 21 of the Detailed Summary Page.
The Detert Committee should also itemize the disbursement by
disclosing, on Schedule B, the name and address of Randy Maddox
as the recipient, and the amount, and date of the
misappropriation. In addition, the Detert Committee should
provide a brief description of the circumstances. See 2 U.S.C.
434(b)(4)(G) and (6)(A); 11 CFR 104.3(b)(2)(vi) and (4)(vi); see
also Advisory Opinion 1989-10 (DeConcini '88 Committee).
The Detert Committee should report separately the receipt of
both the $67,450 and the $27,616.90, each as an "Other Receipt"
on its July Quarterly Report. The Detert Committee should
include both amounts in the total of "Other Receipts" on Line 15
of the Detailed Summary Page. The Detert Committee should also
itemize these receipts by disclosing, on Schedule A, the name and
address of Randy Maddox as the source, and the amounts, and dates
on which the funds were returned. In addition, the Detert
Committee should provide a brief description of the
circumstances, including a cross-reference to the "Other
Disbursement" entry for the misappropriation. See 2 U.S.C.
434(b)(2)(J) and (3)(G); 11 CFR 104.3(a)(3)(x) and (4)(vi); see
also Advisory Opinion 1991-38.
The Commission expresses no opinion regarding any tax
ramifications of the proposed activities because those questions
are not within the Commission's jurisdiction.
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)
Michael E. Toner
Chairman
Enclosures (Advisory Opinions 2000-26, 1991-38, and 1989-10)
_______________________________
1 Similarly, the Commission concludes that the Detert
Committee's acceptance of the $67,450 was permissible. See
footnote 4.
2 The Detert Committee filed its Statement of Organization with
the Commission on June 27, 2005.
3 At the time of the misappropriation, the Detert Committee had
raised approximately $125,000 and had expended some funds for
campaign expenses. You indicate that the misappropriation left
the Committee without sufficient funds to conduct Ms. Detert's
campaign effectively; the copy of the wire transfer document
attached to your April 24 letter discloses that only $3,921.82
remained in the account after the transfer. You note that Ms.
Detert is honoring the Rules of the Florida House of
Representatives by not personally soliciting campaign
contributions during the current State legislative session, which
runs through May 5, 2006. See Rules of the Florida House of
Representatives, Rule 15.3(b)(1).
4 Although the Detert Committee has already accepted a
reimbursement of $67,450 from Mr. Maddox, which as past activity
is not the subject of this advisory opinion (see 11 CFR
112.1(b)), the Commission notes that the acceptance of these
funds was permissible because the returned $67,450 was directly
traceable to the very funds misappropriated from the Detert
Committee. Thus, the transfer of these funds from the client
trust account to the Detert Committee was not a contribution to
the committee but merely a return of misappropriated funds. See
Advisory Opinion
2000-26 (Citizens for Deckard) (regarding traceable funds); see
also Advisory Opinion 1991-38 (DeConcini '88 Committee and
DeConcini '94 Committee) (regarding the treatment of repayments
of embezzled funds).
5 Randy Maddox is not himself a Federal candidate and this
situation does not involve any payment by parents to assist a
candidate-child with personal expenses that occur during his or
her candidacy, which may constitute a contribution by the parents
to the candidate. See 11 CFR 113.1(g)(6).