The audits could be coming. Not just the targeted ones, or a funnel into the Alternative Dispute Resolution (ADR) program. Full-blow FEC audits that campaigns will need professional assistance to handle.
That’s a prediction from Diane Evans, a well-known Democratic compliance consultant who for years was a collaborator with attorney Marc Elias, first during his days at Perkins Coie LLP and later his own practice.
Earlier this year, Evans stepped down as principal of Evans & Katz, the compliance shop she founded 27 years ago. E&K subsequently relaunched as Katz Compliance, headed by Cassie Tinsmon, a 15-year veteran of the firm.
Campaign finance enforcement has been ramping up and candidates can expect more of it, Evans told C&E in one of the first interviews she’s done after three decades in the industry. Part of the reason is that the FEC has reestablished a quorum, but at the same time it is also tightening ties with other law enforcement agencies. On April 19, the FEC approved a new Memorandum of Understanding between it and the Justice Department “to promote the enforcement of the federal campaign finance laws.”
“I do believe that, after a long period of time where things had been handled [primarily] by these targeted audits, we’re gonna see more full-blown audits taking place,” she said.
Candidates shouldn’t think about fighting one of these enforcement actions with a box of receipts and their accountant cousin who filed the forms. “I think that they’re not going to be taken seriously anymore if they don’t hire professionals —either contracting or to hire them internally,” said Evans. “I believe it’s best from a checks-and-balances perspective to have an outside compliance firm.”
Now, three decades ago compliance was a kitchen table business. In fact, that was partly where Evans’ firm started after moving out of her basement. But with campaign spending records getting continuously broken cycle after cycle, it’s grown into a sector of the campaign industry. But compliance as a budget line item still has further to grow, Evans added. Particularly if candidates want to avoid being a victim of fraud.
A fake invoice is more likely to get through approvals without a full-time compliance staffer or consultant, particularly after a cycle wraps and leadership scatter.
“There’s no one remaining with institutional knowledge of what went on during the campaign, and [if] you don’t have good record-keeping practices in place, that’s where it happens,” she said. “There’s maybe one person left who is signing the checks and issuing the e-payments to the offenders.”
Evans also said she believes that the FEC will have to revise the $200 itemized donation reporting requirement, which in the era of small-dollar contributions can push reports to thousands of pages.
“You want to be compliant, you want to make sure you’re taking money from the right sources. But we have to look at the practicality of this situation,” Evans said. “And I think that it is overly burdensome to everyone involved to have to disclose these because once they itemize a $200 [contribution], if they give another $5, they give another $10, they give another $20, all of those contributions then itemize for the duration of that election cycle.
“My belief is that we should increase the level for itemization to like $500 or $1,000.”