The FEC this week moved closer to enforcement action against a treasurer linked to a host of so-called scam PACs.
The commission had been auditing the filings of Freedom’s Defense Fund and Conservative Majority Fund for periods of activity from January 2011-December 2012 and July-December 2012 respectively. Both groups employed Scott Mackenzie as treasurer during those periods.
On Wednesday the commission voted unanimously to approve two Audit Division recommendation memorandums outlining nine findings against the two groups.
One audit report found FDF, which now lists Paul Kilgore as treasurer, had misstated financial activity, failed to disclose the occupation and name of employer of 2,629 individual donors who made more than $350,000 in contributions to the group, made almost $900,000 in media expenditures that were listed as operating expenditures, and didn’t have adequate record keeping on 13 disbursements totaling $90,814.
The second draft audit report found that CMF misstated disbursement of more than $2.1 million, failed to disclosure occupation and name of employer information for 527 individual donors, did not properly disclose independent expenditures of $273,297 and failed to correct vendor information on other IEs. It also failed to file 24/48 hour reports on IEs. CMF also failed to disclosure debts and obligations and didn’t provide necessary records on disbursements totally $117,933.
At a minimum, the findings in the two draft audits should give potential donors to the groups pause. The FEC only audits publicly funded presidentials by default. Its other inquests are undertaken when staff analysts identify filing discrepancies and judge that the staff resources necessary to launch an investigation are warranted.
After the commission votes to approve the final audit reports, which will likely take place at its December meetings, it could lead to enforcement action ranging from a letter of reprimand to a civil penalty to a ban on Mackenzie serving as treasurer for a period.
But a stiff penalty is unlikely as the commission’s enforcement procedures involve conciliation. Moreover, the commission produced audits of FDF in 2011 for a period when Mackenzie was treasurer. Since that report, he has continued to work for a number of conservative groups.
Now, the FEC’s action is taking place amid a growing push for additional disclosure enforcement. But even with that momentum, its enforcement measures are dictated by its makeup when it comes time for commissioners to vote.
Four commissioners need to approve enforcement action. The commission currently has five commissioners, as President Trump nominated Matthew Petersen to a federal judgeship. Trump subsequently nominated Trey Trainor to replace Petersen, but his nomination hasn’t yet been considered by the Senate.
Meanwhile, the audit documents could provide consultants with insight on what the FEC will be scrutinizing. In the audit documents relating to CMF, for instance, it notes that the group made two disbursements to a media vendor totaling $79,631.
The auditors note in their report that “without a copy of the invoices and associated communications, the Audit staff was unable to determine how CMF should have reported these disbursements.”
Going forward, the FEC may apply greater scrutiny on PACs’ and campaigns’ vendor disbursements, their descriptions in scheduled filings and the documentation used to support those payments.