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ARMPAC Amends More FEC Reports

House Majority Leader Tom DeLay’s (R-Texas) political action committee continued to file amended financial reports Friday as it sought to rectify accounting problems identified by an ongoing Federal Election Commission audit.

The FEC began an audit of the Americans for a Republican Majority PAC last June, and it has already given committee officials an interim audit report outlining problems with ARMPAC’s 2001 and 2002 filings.

Last Wednesday, ARMPAC filed 23 amended reports covering those two years. On Friday, the committee submitted six more amendments for parts of 2003, 2004 and 2005.

Although the audit is not yet complete, ARMPAC lawyer Don McGahn expressed confidence that the FEC would not find any grave errors in the committee’s filings.

“The FEC auditors have recommended that certain technical allocation ratio adjustments be made,” McGahn said. “There are no serious substantive violations.”

The main differences between the original reports filed by ARMPAC and the amended reports relate to the committee’s use of a combination of hard and soft money to pay for administrative expenses and fundraising events.

Before the 2002 Bipartisan Campaign Reform Act banned soft money, FEC rules required fundraising committees that wanted to fund activities with a combination of hard and soft money to use a complicated statistical formula to determine the “allocation ratio” between the two.

While the hard-money entity falls under the purview of the FEC, the soft-money account is within the jurisdiction of the Internal Revenue Service and can only be audited by that agency.

In its amended filings, ARMPAC has adjusted its reports according to the ratios the FEC has said it should have been using in 2001 and 2002 to pay for administrative expenses and fundraising events. As a result, ARMPAC’s amended reports show that the hard-money committee owes a six-figure debt to the essentially dormant ARMPAC soft-money committee.

The amended report covering March 2005 shows that ARMPAC owed $121,456 to its soft-money arm. That reflects the total expenses that the FEC has determined should have been paid by the hard-money account but were instead paid for with soft money.

Some of those expenses went toward paying for lavish fundraising trips and “fulfillment” events designed to reward big donors to DeLay’s committees.

While the sheer number of amended reports filed by ARMPAC was described by experts as unusually high, for the most part the new reports only reflect the fact that the committee is now carrying debt from 2001 and 2002 that was previously unreported.

Although the FEC audit is ongoing, McGahn estimated that the total amount of money that will have to be re-classified in the new reports will be “less than $200,000 out of a $3.7 million enterprise.”

Some of the problems that have turned up in ARMPAC’s filings are similar to those uncovered in an FEC audit of Senate Majority Leader Bill Frist’s (R-Tenn.) Volunteer PAC.

In that case, VOLPAC ended up paying a $10,000 civil penalty after an FEC audit for, among other offenses, improperly using soft money to pay for unauthorized expenses.

In ARMPAC’s case, it is unclear what kinds of penalties the FEC might impose or what actions the committee can take to repay its newly reported debt to the soft-money account.

Larry Noble, a former FEC general counsel who now heads the Center for Responsive Politics, said the final penalties for ARMPAC could be based on what the FEC thinks the committee’s motivations were when it made the accounting errors.

“What we don’t know at this point is whether there will be some enforcement actions on all this,” Noble said. “One of the things [the FEC will] look at is whether this happened at a time when the [ARMPAC] federal account needed money.”

For their part, ARMPAC officials appear pleased so far with the way the FEC’s probe has progressed.

“It’s been a very smooth audit and it’s been very cooperative,” McGahn said.

While ARMPAC officials believe the violations uncovered by the audit are only technical in nature, the watchdog group Citizens for Responsibility and Ethics in Washington, a frequent DeLay critic, is seeking to find out whether the PAC committed more serious offenses.

CREW has filed a Freedom of Information Act request with the FEC for a copy of the agency’s interim audit report. The group has also sent a letter to the IRS requesting an audit of ARMPAC’s non-federal account.

Kate Ackley contributed to this report.

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