FEC Launches Audit of Obama’s 2008 Campaign

Posted April 16, 2011 at 8:38am

The Federal Election Commission has launched an audit into President Barack Obama’s record-breaking 2008 campaign.

Individuals familiar with the campaign told Roll Call Friday that the FEC has been investigating the financial records of Obama’s previous campaign. The scope of the probe, which began approximately two
years ago, is unknown. Presidential audits typically take years to complete and can cost millions of dollars.

The newly formed 2012 Obama campaign did not deny there was an audit, but a spokeswoman called it a “review.”

“The FEC is conducting a routine review — as is true with the McCain Campaign, the Romney Campaign and many others — to determine if they have any questions with the information reported,” said Katie Hogan, deputy press secretary for the campaign. “Given that there was an historic number of contributors and contributions — nearly four million and over nine million respectively — this takes time.”

The FEC was not required to audit the president’s campaign because Obama chose not to accept $84 million in federal funds following the Democratic National Convention in 2008. However, the agency was obligated to launch a similar investigation into Republican nominee Sen. John McCain’s (Ariz.) 2008 White House bid after he opted to receive government funds.

FEC spokespeople would not confirm the audit of Obama’s 2008 bid or say why the agency used its discretion to launch its investigation. But the decision came in the wake of Republican allegations of illegal contributions, as well as dozens of letters from the agency questioning transactions that appeared out of compliance with campaign finance laws.

The FEC’s decision to audit the campaign is not surprising, given that it was the largest federal campaign in history, raising more than $750 million in receipts. If Obama’s campaign were not audited, it would have been the first presidential nominee’s campaign to escape such scrutiny since the public financing system was created in 1976.

The potential for the FEC’s audit became increasingly more likely as the FEC questioned some of Obama campaign filings. In all, the FEC wrote 26 letters to Obama for America warning the campaign that if it did not adequately respond to the agency’s questions that it “could result in an audit or enforcement action.”

These letters totaled more than 1,500 pages of questions and data that outlined compliance concerns — including the longest one ever sent to a presidential candidate.

The Obama campaign has shown signs of an audit for years as it has ramped up its spending on legal fees and other similar expenses, according to CQ MoneyLine study of disclosure reports.

As of the end of March, Obama for America had spent nearly $3 million on legal fees since the 2008 election. In all, the president’s campaign spent three times more on lawyers after Election Day than in the two years preceding it.

The lion’s share of Obama’s legal spending went to Perkins Coie, a well-known Democratic legal and accounting firm. Perkins Coie is representing the Obama campaign in all major legal matters, including
seven of the FEC’s known investigations involving the White House bid. In each of these cases, the FEC voted to dismiss the case or found “no reason to believe” that the Obama for America or related committees had violated any laws.

Perkins Coie may be also representing Obama for America in the FEC’s spending investigation of a Republican National Committee complaint. A few weeks before the election, the RNC alleged that Obama’s campaign accepted donations from foreign nationals, received contributions that had exceed limits and submitted fictitious donor names to the agency. The status of this investigation is unknown, though the FEC confirmed it received the complaint.

Obama campaign officials said they have made significant efforts to track down elusive donor information for some of its contributors. In many situations, it has chosen to make large refunds or give any questionable money to the government.

During the 2010 cycle, the Obama campaign led all organizations when it came to sending refunds to individual donors. Following the election, it disclosed disbursement transactions totaling more than $5.7 million in refunds.

Though the FEC has not penalized Obama, the president’s campaign has also voluntarily paid more than $400,000 to the Treasury Department during the past two years for donations that were out of compliance
with campaign finance rules.

This sum is not just the most of any campaign; it is greater than all other similar spending by House, presidential and political action committees put together during the 2010 cycle. The Obama campaign paid the Treasury Department $232,000 at the end of 2009 for “disgorgement of unverifiable contributors” and another $182,000 in June 2010 for “uncashed checks.”

“Legal fees and disgorgement are consistent with FEC proceedings,” said Jan Baran, who heads the election law and government ethics group at Wiley Rein.