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Frist’s VolPAC Pays $10,000 Penalty

The leadership political action committee of Senate Majority Leader Bill Frist (R-Tenn.) has agreed to pay a $10,000 civil penalty to settle a case with the Federal Election Commission after the watchdog agency found problems with Volunteer PAC’s financial transactions and disclosure methods.

The modest monetary fine closes the book on the long-running enforcement matter, which resulted from an FEC-initiated audit of Volunteer PAC, which raised $4.6 million in the three most recent election cycles and made more than $1 million in contributions to candidates.

The matter was resolved through the FEC’s Alternative Dispute Resolution program, which is aimed at quickly resolving those enforcement matters in which the respondents show a willingness to negotiate a mutually agreeable settlement.

An official of the PAC called the audit “routine” and said the errors were easily resolved.

Since it was launched in 1998, the Nashville-based fundraising entity has evolved into one of the nation’s most successful leadership PACs. It could prove pivotal if Frist decides, as expected, to make a bid for the White House in 2008.

But according to the FEC’s final audit report, which was released last fall, the PAC has suffered from a number of accounting problems in recent years.

Specifically, auditors from the FEC discovered that the committee had misstated financial transactions in 2001 and 2002 and failed to properly report a total of $183,000 in “earmarked” contributions to various Senate candidates.

According to the auditors, the PAC also improperly used soft money to pay for unauthorized activities and failed to provide full disclosure on 74 contributions to candidates, totaling $281,000.

In 73 of the 74 contributions, PAC officials should have checked certain boxes on its filings to indicate the state, the office sought and, where appropriate, the Congressional district of the candidates it was supporting.

With respect to the soft-money error, the committee overfunded its activities with soft money by about $166,000.

“Contributing significantly to this result was the allocation ratio used by VolPac, which allocated such expenses 71 percent to the non-federal account, when it should have only been 15 percent,” the FEC noted in its audit report.

But FEC records since show that the PAC has filed numerous amendments to correct its reports, and the committee’s treasurer and a campaign consultant agreed to attend an FEC seminar to ensure that similar errors don’t occur in the future.

And Jill Holtzman Vogel, the attorney who represented VolPac during the audit, painted the audit and penalty as a relatively “routine” matter and noted that any mistakes uncovered by the FEC were easily, and gladly, corrected by the PAC.

“As a general matter, we were pleased with the outcome. It was a relatively clean audit,” Vogel said, adding that the PAC’s “compliance was very near perfect in virtually every category.”

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