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Home , Lee Atwater

FEDERAL ELECTION COMMISSION WA5NUNCTOw~ OC. 3W

This ~ MiE FILlED IL..

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537033 YEN PIDUAL SLICYZON CONNISSIOM ~fl 3 Street, N.W. Washingtoa, D.C. 20463

The Eddie Nab. Company C~f9 Suite 200 900 Second Street, S.W. * ~ Washington, D.C. 20001

Complainant,

o ~(A Al Brown for Congress Committee COMPLAIN!

______305 W. Broadway, Suite 400 Louisville, I KY 40202, Respondents.

0 013!EICY 01 COLUN3Th 2 55 ~v) JADONNA Y. LEE, being first duly cautioned and sworn, submits this complaint against The Al Brown Committee (TM Respondent 0 Committee") on behalf of the Eddie Mahe Company ("Complainant"),

pursuant to 2 U.S.C. §437g(a)(l), and states as follows: 2, (~4 1. I am President of the Eddie Mahe Company, a corporation doing business in the District of Columbia. In that capacity, I am responsible for the company's records, including bills and accounts receivable.

2. The Respondent Committee was a client of the Eddie Nahe Company, and owes the Eddie Mahe Company for services rendered to it in 1990. On Complainant's information and belief, Al Brown ("Brown") guaranteed payment of Respondent Committee's debts to Complainant; Brown disputes the guarantee. The account is in arrears in the amount of $51,654.40, as of November 7, 1991 (the Debt"). This sum includes a fee amount of $37,500.00 for the services rendered an expense amount of $2,298.89, and interest on the unpaid balance (which accrues at the rate of 1.5% each month) in the amount of $11,855.51.

3. Because of the failure of Respondent Committee or Brown, as guarantor, to pay the Debt, Complainant filed suit against the N Respondent Committee and Brown in the Superior Court for the 0 District of Columbia on October 22, 1990. That litigation was

pending on January 31, 1991 and July 31, 1991, when Respondent C'4 Committee' s reports were due. Nonetheless, Respondent Committee' s o report does not note that the Debt was in dispute, as required by law, nor does it state that the Debt exceeded the amount which Respondent acknowledges in its report. cp~ 4. The amount of the Debt as of December 31, 1990, was $45,160.19, which included the principal amount of $37,500.00, an expense amount of $4,022.97 and interest in the amount of $3,637.32. Respondent Committee's 1990 "Year End" Federal Election Commission report, filed in accordance with 2 U.S.C. S

434(a)(2)(B)(ii), purports to state a debt to the Eddie Mahe vs

Company in the amount of $30,000.00. That report does not note that the amount of the Debt reported then, is less than the amount Claimed by the Eddie Nahe Company. Neither does Respondent Committee's report reserve any rights or disclaim its liability thereunder, an option which the Commission's regulations would have permitted. ~aa 11 C.F.R. 5 116.10(a): A political committee shall report a disputed debt in accordance with 11 C.F.R. 55 104.3 and 104.11 if the creditor has provided something of value to the committee. Until the dispute is resolved, the committee shall disclose on the appropriate reports any amounts paid to the creditor, any amount the political committee admits it owes, and the o amount the creditor claims it is owed. The political coittee may also note on the appropriate reports that the disclosure of the disputed debt does not constitute an admission 0 of liability or waiver of any claims the political committee may have against the creditor. .

5. On Affiant's information and belief, Respondent has not filed the 1991 "Mid-Year" report required by 2 U.S.C. S 434(a)(2)(B)(i). The amount of Respondent Committee's Debt as of 7) June 30, 1991, the cutoff date for that report, was $48,000.41.

6. The following Exhibits support Complainant's foregoing statements:

a) Exhibit A - Statement of Account, dated December 1, 1990, showing the amount of debt claimed by the Eddie Mahe Company as of December 31, 1990 to be $45,160.15;

b) Exhibit B - Statement of Account, dated May 1, 1990, showing the amount of debt claimed by the Eddie Mahe Company as of as of the cutoff date of June 30, 1991 to be not less than $49,445.73.

c) Exhibit C - Copy of the Summary Sheets and Schedule D of Respondent Committee's FEC Form 3, dated February 6, 1991 ("Year-End" report), which is a public record of * b

the Federal Election Commission, showing a debt owed to the Eddie Mahe Company in the amount of $30,000.00.

7. On Complainant's information and belief, Brown contributed not less than $40,000.00 of his personal funds to the Respondent Committee. The Respondent Committee has only reported contributions from the Candidate in the amount of $16,122.68, leaving unreported contributions in an amount not less than $23,873.32. (Exhibit D) In addition to all the foregoing, also on Complainant's information and belief, Brown has made an further contribution to the Respondent Committee of up to $20,000.00, in the form of legal fees for work done on the Respondent Committee' s

behalf * The Respondent Committee has not reported these

~V) expenditures as contributions from the candidate, Brown * If Brown has not actually paid the legal bills, then they constitute a debt of the Respondent Committee, which it has failed to report. The Respondent Committee did not report either of these contributions from Mr. Brown, on Complainant's information and belief.

8. Brown, on Complainant's information and belief, has acknowledged expressly and in writing that he made the contribution of $40,000.00, of which the Respondent Committee has reported only $16,126.68, as noted in the attachments. Specifically, Brown, stated in the attached Exhibit C: "I contributed over $40,000 to

the campaign ... " In addition, Al Brown has expressly acknowledged the existence of either an expenditure or a debt in the amount of $20,000.00 for the legal fees incurred in litigation with Complainant. In either case, these expenditures have not been reported by Respondent Committe. as required by 2 U* S * C * S 432(e) (2), on Complainant's information and belief.

9. The following Exhibits support complainant's forgoing statements:

a) Exhibit D - Copy of letter which, on Complainant's information and belief, was signed by Brown and sent to Clayton Yeutter, chairman of the Republican National Committee. (Note admissions of contributions and legal fees, in first paragraph, final page.)

10. The Commission ought therefore to find that the Respondent Committee has violated the following provisions of the Federal Election Campaign Act, as amended, and relevant regulations 0 promulgated thereunder:

a) 2 U.S.C. 5 434(a) (2)(5) (i) - failing to file its 1991 C%1 Mid-Yearm report on or before July 31, 1991;

b) 2 U.S.C. I 434(b)(2)(B) failing to report o $23,873.32 in additional contributions from further, failure to report $20,000.00 of contributionsBrown; in kind for legal fees, or in the alternative, failure A to report the obligation to pay such fees, either in its own right, or the obligation of Brown to pay them as the Respondent Committee's agent, pursuant to 2 U.s.c. N S 432(e) (2);

c) 2 U.S.C. S 434(b)(8) - failure to report properly the amount and nature of Respondent Committee's outstanding debt to Complainant; failing to report the additional amount of debt claimed by Complainant, pursuant to 11 C.F.R. 55 104.3 and 104.11, in addition to reporting the amount Respondent admits to owing, as set forth in the regulations at 11 C.F.R. 5 116.10(a); failure to report the $20,000.00 obligation for legal fees owed by the Respondent Committee, or by Al Brown, as the Respondent Committee's agent pursuant to 2 U.S.C. 432(f), if neither the Respondent Committee nor Brown has actually paid that debt, either. I 5 * ~'* ~

1U1Y333 m @aagi~uuau~ lAZY! 3AUG31.

Before m, a Notary Public in and for the said city and district, came Ladonna Y. Lee, who, b.inq cautioned and sworn, made this affidavit of Complaint on this L~'~ay of NoVember, 1991.

Nbtary Public My Commission expires ..4~1C~44ZZ3

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Deoemb.x 2., 1990

To . Al Drown for Conress Post Off ice So: 2603. Louisville, Kentucky 40201 F~K: The Ud±e Embe Company RE: December Invoice

~tstan4Inq 0 Sign-on Fee Febz~aery Fm $ 7,500.00 ~v) )brcb Fm 7,500.00 April Fee 7,500.00 Nay Fee 7,500 000 and Expenses 9,796.89 A~ust - 0 September Expenses 1,637.68 October Expenses 67.70 November Expenses 16.29 3.2.21 June Interest July Interest 450.00 August Interest 403.73 September Interest 63.2.78 October Interest 646.39 November Interest 657.11 TOTAL AMOUNT ~3E AND PAYABLE

900 Sscon~ Stiest. NE * ' Suez. 2~O Washeagun. OC Z~O 3444W0 * ~AX :::.~4z444: ..*&. :TIE MAHE cOMP * 0 *

May 8, 3.992

TO: Al 3~o~m P.O. lox 2803. Lonisville, 1! 40201 V~M: ~. 144±. Mahe Company 31: Kay Invoice

OatstaMAzW 1990

January Fm $ 7f 500000 LI) F~uary F.. 7,500 * 00 March F~ 7,500.00 A~ir±1 Fm 7,500.00 0 May Fm & Ixpen... 9,798.89 P') Total Fm & xaagm 6/30/90 $3,796.89 Jume Interest on $39,798.89 594.98 July Interest on 40,396.87 605.93 A~ust In~.st on 41,001.80 615.02 0 Septesber Interest on 43,244.70 648.67 October Interest on 43,893.57 658.40 November Interest on 44,551.97 668.27 December Interest on 45,220.24 678.30 Total Interest Due for 1990 $ 4,471.57

Total Amount Outstanding for 3.990 4457 m~5~*

Outstanding 1991 -

January Interest on $45,898.54 688.47 $46,587.01 February Interest on 46,587.01 698.80 47,285.81 March Interest on 47,285.81 709.28 47,995.09 April Interest on 47,995.09 719.92 48,715.01 May Interest on 48,715.01 730.72 49,445.73 TOTIL I2~UUT DUE lID P1!IDLZ $49,445.73

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October 22, 1991

Kr. Clayton ~eutter Chairman Republican National Committee 310 First Street S. K. Washington, D.C. 2003 Dear Mr. Yeutter: I am writing you this letter after great consternation and reservat±on. As you are aware, in 1990, I ran for congress in Kentucky 'a Third Congressional District. We ran a very CO aggress ive campaign and in the spite of many set backs, we obtaind slightly over 40% of the vote and raised over $400,000 vith limited Washington support; two fund raisers, a Secretary Kemp event 528,000. a Jeannie Austin event $8,000 and lots of help and advice from Thelma Duqqin. This was my first time running for public office, although I had been active in the Republican party for many years. As a Black Republican, my political life has been interesting and intense. I even supported Richard Nixon over 3~ohn F. Kennedy. In 1989, I was extremely pleased when Lee Atwater strongly o encouraged me to run f or office. Re promised that if I vould run I would be one of two campaign fund raisers that he would personally have to help ~as raise needed funds for a viable campaign. With my inttsic background, having been involved in the music industry with Motown and his background, we had great hopes of an outstanding event. As a conservative Black Republican candidate, a vast majority of my experiences during the campaign were positive, particularly the inspiration from ice. After Lees "home going," Charlie Black stepped in near the general election and was very helpful in a desperate time. was given a forum to talk about what conservatism really means to me. The true benefits of our campaign are just begi.ning to flourish. There is controversy now in the Black community. Blacks are beginning to speak up and take different sides on many issues, i.e. quotas, affirmative action, foreed busing and self-help programs. A growing number of ycung active, influential Blacks in our community are beq.nn~.ng to request me to speak, many are openly saying that they do not support Democrat ideas and positions any more..... one of the most ne7ative thinqa that happened during my caaYa iqn was the reten: on of Eddie Wabe and LaDonna Lee for our pol tical consultants. Zn the beginning, Z felt that Eddie labs and LaO@nzaa Lee had very serious negative feelings about Blacks Ld:~u~ar~~ They continued to Republican among many other things. During the Primary Campaign, I discovered that Eddie (abe a associate, LaDonna Lee' 5 uShan 'a partner had been retained by my Primary opponent. Today, Eddie Nahe and I are involved in a law suit over fees. The issues are basically two: 1. When Eddie Mahe was retained, he was retained by my cittee on the besis of his arrogant, confident portrayals that he was the 'dream team" and they could raise more money than any of the "light weight" consultants that ye were intervievin;. He stated that 0. manyhis feestimes which over wouldby himself be $7500 and a hismonth associates would be justraised from PACs and with his contacts in Washington, p.C. alone. Eddie labs' s company did not raise any money for our campaign. Be continued to make excuses as to why the 0 PACe and others could not support as. Example, they promised to raise between $200.O00'-300,O0O for the Derby event alone, if we could get ten tickets and five suites. We complied and put together 100 PLC packets that were sent to Eddie Babe. He was not able to sell one ticket nor one of the suites. I was highly disa inted. We did not get one penny in PLC as a result of his efforts. That, o withcont~Y~utions LaDonna Lees questionable Loyalties, the constantcoupled problems they caused when involved with our staff, and the feelings of racial insensitivit~.es caused as to Lose any faith, so we withdrew from our relationship. Sasically, our contract w~.th him was that his fees would be paid from monies which he would raise. He raised no money, consequently, in May we cancelled his services, paid him for expenses feel Lnq that was the extent of our obligations since he had raised no money. Obviously, this is a point of contention. 2. The second point of contention is Eddie Mahe is trying to assert that I had personally guaranteed the contract with him whic.'~x was totally untrue. t~e have discovered contracts that Mr. Mahe has wi.th other candidates where written personal guarantees were obtained. He is very aware that he was retained by the committee and not by me personally. The transmittal note with his contract was addressed to my campaign manager and to myself with her name being listed first, and he dealt very little with me personally. malor concern are the defenses. Eddie Nahe had promised many things that either could not or did nOt materialize. ~7nfortunately, the trial will likely get into the failures of the campaign and, I think, it will give negative information to anyone who was looking to have something negative to says about the relationship between Slack candidates and the * want to consciously or ammunition to the Liberals to misuse statements made at the trial. Personally, and for your ears OnlY, I did feel durtnq the campaign after the death of Chairman Atwater that getting support frum the INC became very difficult and the Conuressional Committee became practically impossible. Thelma DuggiA, Jeannie Austin and I made n~erous efforts tO obtain funds and other types of support, in many cases to no avail. Ed Rollins of the Congressional Committee in the presence of witnesses had promised that regardless of what the survey numbers would show, even if it was as low as 2% they would back o me 100% financially. We even discussed how the money would be best used for media or for mailings. ~. Rollins became very negative; after the Primary was not helpful at all, except a o kind vord or two occasionally, but offered us none of the help - that he had previously promised. On one occasion, Rollins angrily stated to me that the reason that they had given Ken Slackwell so much support was because he (N had raised $200,000. I told Nt. Rollins if he would read omr financial reports, he would sce that we had also exceeded $200,000 in contributions. If that were the criteria, I was wondering why he did not offer us the same kind of support. We o were never offered Presidential support. We were very thankful at Jeannie Austin and Secretary Kemp did come on our behalf for brief visits, as well as Thelma Ouggin. The Vice President gave r us approximately twenty minutes including the ride from the airport on a visit previously scheduled to Louisville. I felt that the Republican party was reluctant and very difficult during my campaign. In spite of all of these things, the lack of support or lack of the level of support that I felt we deserved, the constant antagonism caused by the cotsultants, we were still able to raise over $400,000 in contributions without the President, without a fund raiser from the V~.ce President and anyone other than the officials mentioned above. We also managed to garner over 40% of the vote in a first time political election for me. I am trying to make this as brief as possible and I am sure you recognize that there are many issues I have rLot discussed that I would be more than willing to discuss with you face-to-face. I am again, considering the possibility of running; however, I would not consider the remote possibility of running again, and getting so little support from the Republican Party and the Congressional Committee. My name recopiltion vent from 3% to over 90%. Z lost IWIdedS Of thousands of dollas in income to my business. z contributed Over $40,000 to the oampaiqn and asJou sea from tile attached bills from the 3ev fizz, this law t has cost es 1a45 of $30, 000 to date, prior to the trial which, in fact scheduled for the Monday preceding ?hanlcsqivinq. ~n addition to the above, ye still are carrying approximately $9,000 in bills that were not paid during the election. In spite of frustrations that I have bad, I have continued to be an outspoken, active Republican; one of the most outspoken non-elected Republicans La the state * As you can see from the attached, I need some advice from you as to boy to proceed. This law suit is frivolous, I think it will be sbarrasslnq to Iddie (abe and the Republican Party; it is incredibLy costly to me and at this point, truthfully, I cannot afford to continue without candidacy andthat relied on other key Republicans vbo great diUicul These thins came about solely because of my did not keep their vord. I would appreciate any advice can give bvio~asly, time is of the essence. I would te it would respond at continue to beapositive active earliest Republican who has times, itsome is a possiblevery difficult misunderstanding. time, but I need your su conven eace. £9Sincerely, 7j Al Brown AS/ds enclosures P. NOV- 8-91 F~RI L"3 :5 FEDERAL ELECTION COMMISSION WASHINGTON. DC. 20*3 November 21, 1991

Ladonna Y. Lee The Eddie Nahe Company Suite 200 900 Second Street, S.W. Washington, DC 20001 RE: RUE 3454 Dear Ms. Lee: C'4 This letter acknowledges receipt on November 15, 1991, of 0 your complaint alleging possible violations of the Federal Election campoigo Act of 1971, as amended ('the Act'), by Al Brown for Congress Committee and Nancy Lampton, as treasurer. ~V) The respondents will be notified of this complaint within five days.

You will be notified as soon as the Federal Election Commission takes final action on your complaint. Should you o receive any additional information in this matter, please forward it to the Office of the General Counsel. Such information must be sworn to in the same manner as the original complaint, we have numbered this matter RUE 3454. Please refer to this number in all future correspondence. For your 'N information, we have attached a brief description of the commission's procedures for handling complaints. If you have any questions, please contact Retha Dixon, Docket Chief, at (202) 219-3410. Sincerely, Lawrence N. Noble General Counsel

BY: Lois G. Lerner Associate General Counsel Enclosure Procedures ~ -y - K - I

4 -w

FEDERAL ELECTION COMMISSION WASHINGTON. DC 2O4~3

November 21, 1991

Nancy Lampton, Treasurer Al Brown for Congress Committee P.O. lox 2801 Louisville KY 40201 RE: Mu 3454

Dear Rs. Lampton: The Federal Election Commission received a complaint which alleges that the Al Brown for Congress Committee (Committee') o and you, as treasurer, may have violated the Federal Election Campaign Act of 1971. as amended ('the Act'). A copy of the - complaint is enclosed. We have numbered this matter RU! 3454. Please refer to this number in all future correspondence. Under the Act you have the opportunity to demonstrate in writing that no action should be taken against the Committee and you, as treasurer, in this matter. Please submit any factual or legal materials which you believe are relevant to the 0 Commission's analysis of this matter. Where appropriate, statements should be submitted under oath. Your response, which should be addressed to the General Coun5el's Office, must be submitted within 15 days of receipt of this letter. If no response is received within 15 days, the Commission may take further action based on the available information. This matter will remain confidential in accordance with 2 U.S.C. S 437g(a)(4)(B) and S 437g(a)(12)(A) unless you notify the Commission in writing that you wish the matter to be made public. If you intend to be represented by counsel in this matter, please advise the Commission by completing the enclosed form stating the name, address and telephone number of such counsel, and authorizing such counsel to receive any notifications and other communications from the Commission. S w

If you have any questions, please contact James Brown, the attorney assigned to this matter, at (202) 219-3690. Var your information, ye have enclosed a brief description of the Commission's procedures for handling complaints. Sincerely, Lawrence N. Noble General Counsel

BY: Associate General Counsel Unclosures 1. Complaint 2. Procedures 3. Designation of Counsel Statement 0 cc: 3. Alphonso Brown

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December 19, 1991 ~

Mr. James Brown Associate General Counsel Federal Election Commission Washington D. C. 20463 Subject: KUR 3454 Dear Mr. Brown: Due to a myriad of circumstances, I have just now personally received the above mentioned complaint filed by the Eddie Mahe Company, specifically Ms. LaDonna Lee. The letter from your off ice is dated November 21, and indicates that your office must receive a response within fifteen days.

I am writing this letter to request a brief extension in order to submit a response for your consideration. I strongly believe that the response will clarify this matter and hopefully answer any questions that you may have r~arding the complaint filed by the Eddie Nahe Company. Your cons iderat ion in this matter will be greatly appreciated. 0 Thank you. Sincerely,

Al Brown AB/ds

(Nj; * c~[.,rC. ~'~C BWWN COIWJLFIHG Gwxiw MANAG LTANTS. EPdMAWU. LAmaR RELATIONS* ~ALCON3ULTINO Fiiu THE~ STARKS U SUITE 1490 455 SdNJTH Fouwni A/F.NUE LL)UISVILLTUCKY 402Q j~-S6OO 80044S1 ~( (I.FCTION COMtIISSICIW

92JAN-8 AHEJ37 December 19, 1991

~ ~ ~ 3 Mr. James Brown Associate General Counsel Federal Election Commission Washington, D.C. 20463

Re: RUR 3454 Dear Mr. Brown I have received a copy of the complaint filed by the Eddie Mahe Company against the Al Drown for Congress committee. First, I would like to assure you and the Federal Election Commission that the Al Brown for Congress Committee has, at all times, made every possible effort to abide by every law applicable in a Congressional race. We have at no time, consciously, violated any regulation. I believe the charges filed by Ms. LaDonna Lee were filed for malicious purposes and, hopefully, our responses will prove sufficient to the Commission. Seemingly, there are three charges made by the Eddie Nahe Company: 1. They allege that the Al Brown for Congress Committee is indebted to the Eddie Mahe Company for $51,654.40. They also claim that this debt was guaranteed by Al Brown, O personally. 2. The Eddie Mahe Company alleges that Al Brown contributed in excess of $40,000 to the campaign and only reported $16,126.60 to the FEC. 3. The Eddie Mahe Company alleges that Al Brown personally paid $20,000 in legal fees defending himself against charges which were filed at~ainst him personally and the Al Brown for Congress Committee filed by the Eddie Mahe Company. The complaint alleges that all of the above situations were not properly reported to the FEC. The facts are that the Eddie Mahe Company filed a civil action against Al Brown personally, and the Al Brown for Congress Committee in the Superior Court in Washington, D.C., Civil Action #90-12303. A jury trial was held before Judge Salzman on November 26, 27, and December 2. The jury ruled against the Eddie Mahe Company, and LaDonna Lee and found that they had breached their contract and had not performed the services as agreed. The jury found that the Al Brown for Congress Committee was liable for only $15,000. Unfortunately, because the suit was filed against Al iN U.

Brown personally, I was forced to retain counsel and pay for those services. I was not aware at that time, nor am I aware at this time that my report to the FEC should include those legal fees. I will be more than happy to amend the report to include legal fees expended to defend myself in this suit. The Committee bank account has had a zero balance for many months. A ~opy of a newspaper article that appeared in the Louisville Courier-Journal dated December 3, regarding the jury verdict is attached. The other item mentioned alleges that Al Brown personally contributed over S20,000 that was not reported to the F'EC. The evidence is a letter addressed to Mr. Clayton Yeutter, chairman of the Republican National Committee, and signed by Al Brown. The letter included a statement that Al Brown spent over $40,000 in personal funds during the campaign. In the early stages of the campaign, the Eddie Mahe Company advised Al Brown that his foreign car should be put up on blocks, and that he should purchase a car made domestically. They also advised that this vehicle should be purchased with campaign funds. I purchased a 1991 Ford Explorer that cost $24,000. I decided that the purchase should be made by me personally for many reasons; I used the vehicle during the campaign for campaign purposes, as well as personally. I still own the vehicle and use it for my personal business. If you determine that this vehicle should be included as a campaign contribution, I will be more O than happy to amend the report. I strongly believe that the Eddie Mahe Company, specifically Ms. LaDonna Lee, is using the FEC and this process as a harassment tactic. We terminated their services for lack of performance in accordance with the contract, and since then they have used every means possible to harass Al Brown personally, and other supporters. If we can be of any further assistance, you will find that. w~ will be cooperative. Thank you for your consideration in this matter. ely,

Al Brown enclosure AB/ds ~1

82 THE COURIER-JOURNAL, TUE$~Y, DECEMBER 3, 1991

Juty says committee, iiot I ~ owes debt to political a~~nsultanLFL~FWU, Dy WU DROWN mum to to 1~ Make Dim wee inkkg ake&. I muff W~w km emi.i~bm - ~ mm-rn -. WASIEWOTON A ~ E 85MW bamad - Ave C~k -y Mm~ that .~hesmm.Mw56qihebmq~ lb. M~ km ~ad that ~ai ELukeineb Dl,,..~ ~ not pummeDy Nakie Ma emuI~ ~~Wkmh~b4m~ wi' - mi w Ma Wmlkps .in~mgse muM ~ he tquIw~ width ~ -m aksglglladpiibapum.k: ml cmi~ to ~ he Ems ~- jay ~ -~ w*kmkm p~h that the Vih M~ ~. b P5AWbbueuksbwwa~&i ~ 0 ~ - yew bat ~ that km~ km. ~ ~ GOP - h* ~ ~ ml dali he Dip N~ km km W~buum~mUie~Wb.~' aol, abi ~ wsiat a ulatmy. I~, a ~ -~ Di - ~ he - ~u~lw, auM w aat M ~ - to pI~ eumhlug b~ ~ 1m mi~ mid ~ =qIm~~mumeeh ~ he ds wiN km s~km M mumm 0 pa.-. b~ mm. M Mm m~ km~ydbm. He adi he wE muinsad geJ lb. Nab. compay Sad a dd mmdm~ -t wit ~ainut km ml Ma -. - dkm W I am~sheinaivins. . . "I - committee ~ 22 the km ~~Liwea.g that the km ms~: committee - mibe - Sl5AO(~ the ~ that the CO.UU1d~J Dim bad not the~frmis&ae5Opwcsat.~.. I its agresmeat. few uhs' wmik (F*na~..; I The jay mid - that Make through Mq~) chess. lbejuy ~ did broach the agmemuw hi couwad -, - wM~. awarded no monotaty damagee to the co~ttee m a Aamcdouilng or- Dim chemad the campaign g~ ~ Brown's committee. - that made many dac~ m~L Also, the juty r!jected Diown's skim wilbest Brown's InvolvemeoL Make maid he will ty to colls~i daim that Nab. personnel fr~ By hwml Mandarda, the amowi the monoy from committee mm. - induced the campaign cm- it money at atak. wee not large. bet's. p 9~Ec~,VED W V SC~ETA~IAr

FEDERAL ELECTION COMNISSIOUI 92 JU',. ~3 P~1 3: 25 999 3 Street, N.W. Washington, D.C. 20463 SENSITIVE FIRS? GUERAL COUNSEL'S REPORT

RUE 3454 DATE COMPLAINT RECEIVED BY OGC November 15 1991 DATE OF NOTIFICATION TO RESPONDENTS November 21, 1991 STAFF MEMBERS George F. Rishel Jeffrey D. Long COMPLAINANT: Ladonna Y. Lee The Eddie Mahe Company RESPONDENTS: Al Brown for Congress Committee 0% and Nancy Lampton, as treasurer o RELEVANT STATUTES: 2 U.S.C. S 434(b) 11 C.F.R. S 100.7(a)(1)(iii) 11 C.F.R. S 104.11 11 C.F.R. S 116.10 INTERNAL REPORTS CHECKED: Disclosure Reports FEDERAL AGENCIES CHECKED: None I. GENERATIONOF RATTER This matter vas initiated by a complaint filed by Ladonna Y. K) Lee on behalf of The Eddie Mahe Company ("Mahe Company) against VN the Al Brown for Congress Committee and Nancy Lampton, as treasurer ("Brown Committee"). The complaint alleges that the Brown Committee failed to report a disputed debt with the Mahe Company, did not report all of the candidate's in-kind contributions to the committee or the payment of legal fees in defending a suit brought by the Mahe Company on the debt, and did not file a 1991 Mid-Year Report. On December 6, 1991, the Brown Committee filed its 1991 Mid-Year Report. Attachment 2, -2-. pages 19-23. On December 19, 1991, it responded to the complaint. Attachment 1.

Al Brown was the Republican candidate for Congress in the Third Congressional District of Kentucky in the 1990 general election. He lost the election with 39.44 percent of the vote. The Drown Committee vas his principal campaign committee for that election. Through December 31, 1990, the Drown Committee reported total receipts of $331,636.08 and total disbursements of $330,696.30 with ending cash on hand of $1,137.78 and debts owed o by the committee of $40,443.19. The amount of the debts owed

- included a $30,000 debt owed to the Rahe Company. The 1991 Rid-Year Report disclosed total receipts of $4,360.20 and total disbursements of $5,340.65 with ending cash on hand of $177.13 and debts owed by the committee of $56,679.14. The amount of debts owed included a $46,000.14 debt owed to the Nahe Company with $16,000.14 noted as incurred during the reporting period. II. FACTUAL AND LEGAL ANALYSIS A. Disputed Debt 'N Commission regulations provide that a committee must report disputed debts until the debt is resolved and paid. 11 C.F.R.

S 116.10(a). This regulation took effect October 3, 1990. The complaint contends that as of December 31, 1990, the Brown Committee owed the Nahe Company a total of $45,160.19 (which included a principal of $37,500, an expense of $4,022.97, and interest of $3,637.32), but reported only a $30,000 debt on its 1990 Year End Report without noting any reservation of rights or disclaimer of liability. The complaint alleges that as of * ~ ~j,*. -. ~

~ j

June 30, 1991, the amount of the debt owed to the Mahe Company vas $48,000.41. In response, the candidate states that the Mahe Company filed suit against him and the Brown Committee on the subject debt in the Superior Court in Washington, D.C. Following a jury trial on November 26 and 27 and December 2, the jury found that the Brown Committee was liable for only $15,000 of the disputed debt and I that Al Brown personally was not liable on the debt. As noted, the Brown Committee filed on December 6, 1991, its 1991 Rid-Year

- Report to disclose the debt in the amount alleged in the

- complaint. it did not note, however, that the debt vas in dispute or that it reserved its rights or disclaimed liability. 4 Thus, we recommend that the Commission find reason to believe the I 04 Brown Committee violated 11 C.i.a. S 116.10(a). Given the resolution of the matter in the court decision, the debt status of the Brown Committee, and that Brown is no longer a candidate for Congress, we further recommend that the Commission exercise its prosecutorial discretion and take no further action on this recommendation. See, e.g., MUR 3081 and MUR 3312. B. Alleged In-Kind Contributions The complaint next alleges that the Brown Committee failed to report two types of in-kind contributions. First, it alleges that in a letter to the Republican National Committee (WRNC~~), the candidate claims to have contributed $40,000 of his own funds to his campaign, but the reports disclosed only $16,122.68 in contributions from the candidate. Second, the complaint alleges that Brown spent up to $20,000 in legal fees in his defense of -4-. the Mahe Company's lawsuit, but did not report it as an in-kind contribution to his campaign. Reports filed by the Drovn Committee disclose contributions from the candidate totaling $16,126.68 in 1990 plus a $5,800 loan in 1989 of which $4,974.84 had been repaid by December 31, 1990. Zn his response to the complaint, the candidate states: In the early 5tages of the campaign, the Eddie Rahe Company advised Al Erown that his foreign car should be put up on blocks, and that he should purchase a car made domestically. They also advised that this vehicle should be purchased with campaign funds. I purchased a 1991 Ford 3xplorer that cost $24,000. I decided that the purchase should be made by me personally for many reasonsg x used the vehicle during the campaign for campaign purposes, as well as personally. If you determine that this vehicle should be included as a campaign contribution, I will be more than happy to amend the report. Thus, it appears that the remaining $24,000 the candidate claimed he spent on the campaign was for the purchase of the Ford 0 Explorer.

In various advisory opinions, most recently in Advisory C) Opinion 1992-12, the Commission has addressed the use of a vehicle purchased with campaign funds. In these opinions, the Commission has approved arrangements whereby the campaign would be reimbursed by the candidate for the personal use of the vehicle purchased by the campaign. To this extent, these opinions are distinguishable from Brown's situation. The Brown Committee did not purchase the Ford Explorer; the candidate purchased it from his personal funds because he saw it as his personal asset. In Advisory Opinion 1992-12 the Commission also noted that once the candidate assumed the lease payments for the -5- Vehicl, from his campaign committee after the 1992 elections and made it his personal vehicle, any subsequent 'use" by the candidate for a possible 1994 congressional campaign would 'be viewed as an in-kind contribution from him.' Accordingly, in Brown's situation, because th. vehicle vas used in part for campaign activity, the Brown Committee should have reported as in-kind contributions the candidate's use of the Ford Explorer for campaign purposes. The amount of the in-kind contribution would be the usual and normal charge for the use of the vehicle and would include the candidates actual out-of-pocket expenses

- for the use of the vehicle or a reasonable per diem based on such

- use. See Advisory Opinion 1964-S. As noted, the Srown Committee reported $16,126.68 in in-kind contributions from the candidate. The itemization of these receipts indicates that several of them were for travel. See Attachment 2 at pages 6 and 9. Therefore, we cannot determine at this point whether the Brown Committee fully reported in-kind contributions from the candidate related to the campaign use of the Ford Explorer. We note, however, the allegation related to the purchase of the vehicle. With regard to the payment of legal fees to defend the suit brought by the Mahe Company, the candidate states that because the suit was filed against him personally as well as the committee, he was forced to retain counsel and pay for those services. He adds that he was not aware that he should report *1 the payment of legal fees as a contribution, but would be happy -6- to do 50.1 He attached a news article regarding the outcome of the suit.

We note that the candidate was named personally in the suit and that the jury verdict found for him on the question of his liability. Also, the news article suggests that the defense apparently focused primarily on the candidate's personal liability. We do not believe that the candidate's legal fees to defend his personal liability in this suit need to be reported as contributions to his committee. Furthermore, we note that the Brown Committee reported a $1,000 payment on February 26, 1991,

- to a Washington law firm as a retainer for law suit." Therefore, we conclude that the Brown Committee did not violate 2 U.5.c. 5 434(b) by failing to report the candidate's c~4 purchase of the Ford Ixplorer or the candidate's payment of legal fees to defend his personal liability. 0 C. Rid-Year Report riling

-~ The complaint further alleges that the Brown Committee had failed to file its 1991 Mid-Year Report. As noted, following the filing of this complaint, the Brown Committee did file such report.

Therefore, we recommend that the Commission find reason to believe the Brown Committee violated 2 U.s.c. s 434(a)(2)(B)(i) and take no further action on this recommendation.

______I 1. In phone calls with staff of this Office in April 1992, the 42. candidate stated that he would make these amendments if instructed to do so by the Commission. -7.-. II I. R3~ONR3ND&T!OWS 1. Find reason to believe that Al Brown for Cony ross Committee and Nancy Lampton, as treasurer, v olated 2 U.S.C. S 434(a)(2)(B)(i) and 11 C.F.i. S 116.10 but take no further action with respect to these

6 2. Find no reason to believe that Al Brown for Congress Committee and Nancy Lampton, as treasurer, violated 2 U.S.C. S 434(b). 3. Approve the appropriate letters. 4. Close the file. Lawrence N. Noble General Counsel LA 4 Dac BY: Asso ateLerner General Counsel

Attachments 1. Response 2. Report Excerpts 83F033 TEl FEDIRAL ELECTION CORNISSION

In the Ratter of Al Brown for Congress Committee ) RUm 3454 and Nancy Lampton, as treasurer.

C3RT!FICATIOK

I, Narjorie V. Kons, Secretary of the Federal Ilection {~I Commission do hereby certify that on .July 29, 1992. the e4 Commission decided by a vote of 6-0 to take the following

0 actions in RUR 3454:

1. Find reason to believe that Al Brown for Congress Committee and Nancy Lampton, as treasurer, violated 2 U.S.C. S 434(a) (2)(S)(i) and 11 C.F.R. S 116.10 but take no further action vith respect to these sections. 2. Find no reason to believe that Al Brown for Congress Committee and Nancy Lampton, as treasurer, violated 2 U.S.C. S 434(b).

(Continued) 0

Federal Election Commission Certification for MUR 3454 Page 2 July 29, 1992

3. Approve the appropriate letters, as recommended in the General Counsel's Report dated July 24. 1992. 4. Close the file.

Commissioners Aiheus, Llliott, NcDonald, McGarry, Potter and Ihomas voted affirmatively for the decision. Attest:

C'.

Received in the Secretariat: Thurs., July 23. 1992 Circulated to the Commission: 3:26 p.m. VN Fri., July 24, 1992 Deadline for vote: 12:00 p... Wed., July 29, 1992 4:00 p.m. dr FEDERAL ELECTION COMMISSION WASHINGTON. DC. 20*3

August 6, 1992

Ladonna Y. Lee, President The Eddie flahe Company Suite 200 900 Second Street, S.W. Washington, D.C. 20001

NUR 3454 Dear Ms. Lee:

This is in reference to the complaint you filed with the Federal Election Commission on November iS, 1991, concerning the Al Brown for Congress Committee. Based on that complaint, on July 29, 1992, the COmmission found, on the basis of the information in the complaint and information provided by the respondents, that there is no reason to believe Al Brown for Congress Committee and Nancy Lampton, as treasurer, violated 2 U.S.C. 5 434(b). On that same date, the Commission found reason to believe 0 that Al Brown for Congress Committee and Nancy Lampton, as treasurer, violated 2 U.S.C. S 434(a)(2)(B)(i) and 11 C.r.a. S 116.10. However, after considering the circumstances of this matter, the Commission also determined to take no further action and closed its file.

This matter will become part of the public record within 30 days. The Federal Election Campaign Act of 1971, as amended, allows a complainant to seek judicial review of the Commission's dismissal of this action. See 2 U.S.C. S 437g(a)(8). If you have any questions, please contact me at (202) 219-3690. Sincerely,

Jeff rey 0. Long Paralegal Enclosure General Counsel's Report FEDERAL ELECTION COMMISSION ~ WASHNCT0N. D.C. 2O4~)

Nancy Lampton, Treasurer - August 6, 1992 Al Brown for Congress Committee P.O. Box 2601 U. Louisville, Kentucky 40201

RE: NOR 3454 Al Brown for Congress Committee and Nancy Lampton, as treasurer

Dear ifs. Lamptozu On November 12, 1991, the Federal Election Commission - notified the Al Brown for Congress Committee (Committee) and you, as treasurer, of a complaint alleging violations of certain sections of the Federal Election Campaign Act of 1971, as amended (the Act). On July 29, 1992, the Commission found, on the basis of the information in the complaint and information provided by the Committee, that there is no reason to believe the Committee 2 and you as treasurer, violated 2 U.S.C. o S 434(b). On that same date, the Commission also found reason to believe that the Committee and you as treasurer, violated 2 U.S.C. S 434(a)(2)(B)(i) and 11 C.F.R. S 116.10. However, after considering the circumstances of this matter, the Commission also determined to take no further action and closed its file. The Commission reminds you that failure to accurately report disputed debts as set forth at 11 C.F.R. S 116.10 and failure to timely file reports of receipts of disbursements are violations of the Act. You should take immediate steps to insure that this activity does not occur in the future.

The confidentiality provisions at 2 U.S.C. S 437g(a)(12) no longer apply and this matter is now public. In addition, although the complete file must be placed on the public record within 30 days, this could occur at any time following certification of the Commission's vote. If you wish to submit any factual or legal materials to appear on the public record, please do so as soon as possible. While the file may be placed on the public record before receiving your additional materials, any permissible submissions will be added to the public record upon receipt. Nancy Lampton, Treasurer Page 2 If you have any questions, pleas. contact Jeffrey Long, the staff member assigned to this matter, at (202) 219-3690. Since rely,

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