FEDERAL ELECTION COMMISSIONWA5NUNCTOw~ OC. 3W

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537033 YENPIDUAL SLICYZON CONNISSIOM

~fl 3 Street, N.W.Washingtoa, D.C. 20463

C~f9The Eddie Nab. CompanySuite 200

* ~900 Second Street, S.W.Washington, D.C. 20001

Complainant,

o ~(A

Al Brown for Congress Committee COMPLAIN!_____________________ I305 W. Broadway, Suite 400Louisville, KY 40202,

Respondents.

0013!EICY 01 COLUN3Th 2 55

~v)

JADONNA Y. LEE, being first duly cautioned and sworn, submits

this complaint against The Al Brown Committee (TMRespondent0 Committee") on behalf of the Eddie Mahe Company ("Complainant"),

pursuant to 2 U.S.C. §437g(a)(l), and states as follows:2,

(~41. 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 theN 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 RespondentC'4

Committee' s reports were due. Nonetheless, Respondent Committee' s

o report does not note that the Debt was in dispute, as required bylaw, 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 disputeddebt in accordance with 11 C.F.R. 55 104.3and 104.11 if the creditor has providedsomething of value to the committee. Untilthe dispute is resolved, the committee shalldisclose on the appropriate reports anyamounts paid to the creditor, any amount thepolitical committee admits it owes, and the

o amount the creditor claims it is owed. Thepolitical coittee may also note on theappropriate reports that the disclosure of thedisputed debt does not constitute an admission

0 of liability or waiver of any claims thepolitical committee may have against thecreditor. .

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 of7)

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 EddieMahe 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 MaheCompany as of as of the cutoff date of June 30, 1991 tobe not less than $49,445.73.

c) Exhibit C - Copy of the Summary Sheets and ScheduleD of Respondent Committee's FEC Form 3, dated February6, 1991 ("Year-End" report), which is a public record of

* b

the Federal Election Commission, showing a debt owed tothe 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'sinformation and belief, was signed by Brown and sent toClayton Yeutter, chairman of the Republican NationalCommittee. (Note admissions of contributions and legalfees, 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 regulations0 promulgated thereunder:

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

b) 2 U.S.C. I 434(b)(2)(B) failing to reporto $23,873.32 in additional contributions from Brown;further, failure to report $20,000.00 of contributions

Ain kind for legal fees, or in the alternative, failureto report the obligation to pay such fees, either in itsown right, or the obligation of Brown to pay them as theRespondent 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 properlythe amount and nature of Respondent Committee'soutstanding debt to Complainant; failing to report theadditional amount of debt claimed by Complainant,pursuant to 11 C.F.R. 55 104.3 and 104.11, in additionto reporting the amount Respondent admits to owing, asset forth in the regulations at 11 C.F.R. 5 116.10(a);failure to report the $20,000.00 obligation for legalfees 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. I5

* ~'* ~

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

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

Nbtary PublicMy Commission expires ..4~1C~44ZZ3

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* 'I~?Y~ ~wm~W~rw~ ~*ATWY~ f~I~IJDANT~79 * * LLLCD L1LJUJb4E, LVLPAXIL %~~JJ.vLLL-a.J:~A

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Deoemb.x 2., 1990

To .

F~K:

RE:

Al Drown for ConressPost Off ice So: 2603.Louisville, Kentucky 40201

The Ud±e Embe Company

December Invoice

~tstan4Inq

Sign-on FeeFebz~aery Fm)brcb FmApril FeeNay Fee and Expenses

A~ust -September ExpensesOctober ExpensesNovember Expenses

June InterestJuly InterestAugust InterestSeptember InterestOctober InterestNovember Interest

$ 7,500.007,500.007,500.007,500 0009,796.89

1,637.6867.7016.293.2.21

450.00403.7363.2.78646.39657.11

TOTAL AMOUNT ~3E AND PAYABLE

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

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May 8, 3.992

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Al 3~o~mP.O. lox 2803.Lonisville, 1! 40201

~. 144±. Mahe Company

Kay Invoice

OatstaMAzW 1990

January Fm $F~uary F..March F~A~ir±1 FmMay Fm & Ixpen...

Total Fm & xaagm 6/30/90

Jume Interest on $39,798.89July Interest on 40,396.87A~ust In~.st on 41,001.80Septesber Interest on 43,244.70October Interest on 43,893.57November Interest on 44,551.97December Interest on 45,220.24

Total Interest Due for 1990

Total Amount Outstanding for 3.990

Outstanding 1991 -

January Interest on $45,898.54February Interest on 46,587.01March Interest on 47,285.81April Interest on 47,995.09May Interest on 48,715.01

TOTIL I2~UUT DUE lID P1!IDLZ

7f 5000007,500 * 007,500.007,500.009,798.89

$3,796.89

594.98605.93615.02648.67658.40668.27678.30

$ 4,471.57

4457 m~5~*

$46,587.0147,285.8147,995.0948,715.0149,445.73

$49,445.73

688.47698.80709.28719.92730.72

UOSms~ Smug. NE * Sm. 200. WuIikq~.. DC 20002 * 2024414100 * FAX 202442.4442

MAHE cOMP

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October 22, 1991

Kr. Clayton ~eutterChairmanRepublican National Committee310 First Street S. K.Washington, D.C. 2003

Dear Mr. Yeutter:

I am writing you this letter after great consternation andreservat±on. As you are aware, in 1990, I ran for congress inKentucky 'a Third Congressional District. We ran a very

CO aggress ive campaign and in the spite of many set backs, weobtaind slightly over 40% of the vote and raised over $400,000vith limited Washington support; two fund raisers, a SecretaryKemp event 528,000. a Jeannie Austin event $8,000 and lots ofhelp and advice from Thelma Duqqin. This was my first timerunning for public office, although I had been active in theRepublican party for many years.

As a Black Republican, my political life has been interesting andintense. 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 runI would be one of two campaign fund raisers that he wouldpersonally have to help ~as raise needed funds for a viablecampaign.

With my inttsic background, having been involved in the musicindustry with Motown and his background, we had great hopes of anoutstanding event. As a conservative Black Republican candidate,a vast majority of my experiences during the campaign werepositive, particularly the inspiration from ice. After Lees"home going," Charlie Black stepped in near the general electionand was very helpful in a desperate time. was given a forum totalk about what conservatism really means to me.

The true benefits of our campaign are just begi.ning toflourish. There is controversy now in the Black community.Blacks are beginning to speak up and take different sides on manyissues, i.e. quotas, affirmative action, foreed busing andself-help programs. A growing number of ycung active,influential Blacks in our community are beq.nn~.ng to request meto speak, many are openly saying that they do not supportDemocrat ideas and positions any more.....

one of the most ne7ative thinqa that happened during mycaaYa iqn was the reten: on of Eddie Wabe and LaDonna Lee for ourpol tical consultants. Zn the beginning, Z felt that Eddie labsand LaO@nzaa Lee had very serious negative feelings about Blacks

Ld:~u~ar~~ They continued toRepublican among many other things. During the Primary Campaign,I discovered that Eddie (abe a associate, LaDonna Lee' 5 uShan 'apartner had been retained by my Primary opponent. Today, EddieNahe and I are involved in a law suit over fees. The issues arebasically two:

1. When Eddie Mahe was retained, he was retained by mycittee on the besis of his arrogant, confidentportrayals that he was the 'dream team" and they couldraise more money than any of the "light weight"consultants that ye were intervievin;. He stated that

0. his fees which would be $7500 a month would be raisedmany times over by himself and his associates just fromPACs and with his contacts in Washington, p.C. alone.Eddie labs' s company did not raise any money for ourcampaign. Be continued to make excuses as to why the

0 PACe and others could not support as. Example, theypromised to raise between $200.O00'-300,O0O for the Derbyevent alone, if we could get ten tickets and fivesuites. We complied and put together 100 PLC packetsthat were sent to Eddie Babe. He was not able to sellone ticket nor one of the suites. I was highlydisa inted. We did not get one penny in PLC

o cont~Y~utions as a result of his efforts. That, coupledwith LaDonna Lees questionable Loyalties, the constantproblems they caused when involved with our staff, andthe feelings of racial insensitivit~.es caused as to Loseany faith, so we withdrew from our relationship.Sasically, our contract w~.th him was that his fees wouldbe paid from monies which he would raise. He raised nomoney, consequently, in May we cancelled his services,paid him for expenses feel Lnq that was the extent of ourobligations since he had raised no money. Obviously,this is a point of contention.

2. The second point of contention is Eddie Mahe is tryingto assert that I had personally guaranteed the contractwith him whic.'~x was totally untrue. t~e have discoveredcontracts that Mr. Mahe has wi.th other candidates wherewritten personal guarantees were obtained. He is veryaware that he was retained by the committee and not byme personally. The transmittal note with his contractwas addressed to my campaign manager and to myself withher name being listed first, and he dealt very littlewith me personally.

malor concern are the defenses. Eddie Nahe had promisedmany things that either could not or did

nOt materialize. ~7nfortunately, the trial will likely get intothe failures of the campaign and, I think, it will give negativeinformation to anyone who was looking to have something negativeto says about the relationship between Slack candidates and the

* want to consciously orammunition to the Liberals to misuse

statements made at the trial. Personally, and for your earsOnlY, I did feel durtnq the campaign after the death of ChairmanAtwater that getting support f rum the INC became very difficultand the Conuressional Committee became practically impossible.Thelma DuggiA, Jeannie Austin and I made n~erous efforts tOobtain funds and other types of support, in many cases to noavail. Ed Rollins of the Congressional Committee in the presenceof witnesses had promised that regardless of what the surveynumbers would show, even if it was as low as 2% they would back

o me 100% financially. We even discussed how the money would bebest used for media or for mailings. ~. Rollins became veryo negative; after the Primary was not helpful at all, except akind 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 reasonthat they had given Ken Slackwell so much support was because he

(N had raised $200,000. I told Nt. Rollins if he would read omrfinancial reports, he would sce that we had also exceeded$200,000 in contributions. If that were the criteria, I waswondering why he did not offer us the same kind of support. Weo were never offered Presidential support. We were very thankful

at Jeannie Austin and Secretary Kemp did come on our behalf forbrief visits, as well as Thelma Ouggin. The Vice President gave rus approximately twenty minutes including the ride from theairport on a visit previously scheduled to Louisville.

I felt that the Republican party was reluctant and very difficultduring my campaign. In spite of all of these things, the lack ofsupport or lack of the level of support that I felt we deserved,the constant antagonism caused by the cotsultants, we were stillable to raise over $400,000 in contributions without thePresident, without a fund raiser from the V~.ce President andanyone other than the officials mentioned above. We also managedto garner over 40% of the vote in a first time political electionfor me.

I am trying to make this as brief as possible and I am sure yourecognize that there are many issues I have rLot discussed that Iwould be more than willing to discuss with you face-to-face. Iam again, considering the possibility of running; however, Iwould not consider the remote possibility of running again, andgetting so little support from the Republican Party and theCongressional Committee.

My name recopiltion vent from 3% to over 90%. Z lost IWIdedS Ofthousands of dollas in income to my business. z contributedOver $40,000 to the oampaiqn and asJou sea from tile attachedbills from the 3ev fizz, this law t has cost es 1a45 of$30, 000 to date, prior to the trial which, in fact scheduledfor 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 bean outspoken, active Republican; one of the most outspokennon-elected Republicans La the state * As you can see from theattached, I need some advice from you as to boy to proceed. Thislaw suit is frivolous, I think it will be sbarrasslnq to Iddie(abe and the Republican Party; it is incredibLy costly to me andat this point, truthfully, I cannot afford to continue withoutcandidacy andthat relied on other key Republicans vbogreat diUicul These thins came about solely because of mydid not keep their vord.

I would appreciate any advice can give bvio~asly, timeis of the essence. I would te it would respond atcontinue to beapositive active Republican who hasearliest

possible conven eace.

times, it is a very difficult time, but I need your susome misunderstanding.

Sincerely,

£97j Al Brown

AS/dsenclosures

NOV- 8-91 F~RI L"3 :5 P.

FEDERAL ELECTION COMMISSIONWASHINGTON. DC. 20*3

November 21, 1991

Ladonna Y. LeeThe Eddie Nahe CompanySuite 200900 Second Street, S.W.Washington, DC 20001

RE: RUE 3454

Dear Ms. Lee:C'4

This letter acknowledges receipt on November 15, 1991, of0 your complaint alleging possible violations of the Federal

Election campoigo Act of 1971, as amended ('the Act'), by AlBrown for Congress Committee and Nancy Lampton, as treasurer.

~V) The respondents will be notified of this complaint within fivedays.

You will be notified as soon as the Federal ElectionCommission takes final action on your complaint. Should you

o receive any additional information in this matter, pleaseforward it to the Office of the General Counsel. Suchinformation must be sworn to in the same manner as the originalcomplaint, we have numbered this matter RUE 3454. Please referto this number in all future correspondence. For your

'N information, we have attached a brief description of thecommission'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. LernerAssociate General Counsel

EnclosureProcedures

~ -y - K - I

4 -w

FEDERAL ELECTION COMMISSIONWASHINGTON. DC 2O4~3

November 21, 1991

Nancy Lampton, TreasurerAl Brown for Congress CommitteeP.O. lox 2801Louisville KY 40201

RE: Mu 3454

Dear Rs. Lampton:

The Federal Election Commission received a complaint whichalleges that the Al Brown for Congress Committee (Committee')o and you, as treasurer, may have violated the Federal ElectionCampaign 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 inwriting that no action should be taken against the Committee andyou, as treasurer, in this matter. Please submit any factual orlegal 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, whichshould be addressed to the General Coun5el's Office, must besubmitted within 15 days of receipt of this letter. If noresponse is received within 15 days, the Commission may takefurther action based on the available information.

This matter will remain confidential in accordance with2 U.S.C. S 437g(a)(4)(B) and S 437g(a)(12)(A) unless you notifythe Commission in writing that you wish the matter to be madepublic. If you intend to be represented by counsel in thismatter, please advise the Commission by completing the enclosedform stating the name, address and telephone number of suchcounsel, and authorizing such counsel to receive anynotifications and other communications from the Commission.

S w

If you have any questions, please contact James Brown, theattorney assigned to this matter, at (202) 219-3690. Var yourinformation, ye have enclosed a brief description of theCommission's procedures for handling complaints.

Sincerely,

Lawrence N. Noble

General Counsel

BY:Associate General Counsel

Unclosures1. Complaint2. Procedures3. Designation of Counsel Statement

0cc: 3. Alphonso Brown

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EOLI~ L LL[CIION ~92JAN--6 RII~37

December 19, 1991~

Mr. James BrownAssociate General CounselFederal Election CommissionWashington D. C. 20463

Subject: KUR 3454

Dear Mr. Brown:

Due to a myriad of circumstances, I have just now personallyreceived the above mentioned complaint filed by the Eddie MaheCompany, specifically Ms. LaDonna Lee. The letter from youroff ice is dated November 21, and indicates that your office mustreceive a response within fifteen days.

I am writing this letter to request a brief extension in order tosubmit a response for your consideration. I strongly believethat the response will clarify this matter and hopefully answerany questions that you may have r~arding the complaint filed bythe Eddie Nahe Company. Your cons iderat ion in this matter willbe greatly appreciated.

0 Thank you.

Sincerely,

Al Brown

AB/ds

(Nj;

* c~[.,rC. ~'~CBWWN 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 AHEJ37December 19, 1991

~~~

3Mr. James BrownAssociate General CounselFederal Election CommissionWashington, D.C. 20463

Re: RUR 3454

Dear Mr. Brown

I have received a copy of the complaint filed by the Eddie MaheCompany against the Al Drown for Congress committee.First, I would like to assure you and the Federal ElectionCommission that the Al Brown for Congress Committee has, at alltimes, made every possible effort to abide by every lawapplicable in a Congressional race. We have at no time,consciously, violated any regulation. I believe the chargesfiled by Ms. LaDonna Lee were filed for malicious purposes and,hopefully, our responses will prove sufficient to theCommission. Seemingly, there are three charges made by the EddieNahe Company:

1. They allege that the Al Brown for Congress Committee isindebted to the Eddie Mahe Company for $51,654.40. Theyalso claim that this debt was guaranteed by Al Brown,

O personally.

2. The Eddie Mahe Company alleges that Al Brown contributedin 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 personallypaid $20,000 in legal fees defending himself againstcharges which were filed at~ainst him personally and theAl Brown for Congress Committee filed by the EddieMahe Company.

The complaint alleges that all of the above situations were notproperly reported to the FEC. The facts are that the Eddie MaheCompany filed a civil action against Al Brown personally, and theAl Brown for Congress Committee in the Superior Court inWashington, 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 contractand had not performed the services as agreed. The jury foundthat 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 f orthose services. I was not aware at that time, nor am I aware atthis time that my report to the FEC should include those legalfees.

I will be more than happy to amend the report to include legalfees expended to defend myself in this suit. The Committee bankaccount has had a zero balance for many months.

A ~opy of a newspaper article that appeared in the LouisvilleCourier-Journal dated December 3, regarding the jury verdict isattached.

The other item mentioned alleges that Al Brown personallycontributed over S20,000 that was not reported to the F'EC. Theevidence is a letter addressed to Mr. Clayton Yeutter, chairmanof the Republican National Committee, and signed by Al Brown.The letter included a statement that Al Brown spent over $40,000in personal funds during the campaign.

In the early stages of the campaign, the Eddie Mahe Companyadvised Al Brown that his foreign car should be put up on blocks,and that he should purchase a car made domestically. They alsoadvised that this vehicle should be purchased with campaignfunds. I purchased a 1991 Ford Explorer that cost $24,000. Idecided that the purchase should be made by me personally formany reasons; I used the vehicle during the campaign for campaignpurposes, as well as personally. I still own the vehicle and useit for my personal business. If you determine that this vehicleshould 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 harassmenttactic. We terminated their services for lack of performance inaccordance with the contract, and since then they have used everymeans possible to harass Al Brown personally, and othersupporters.

If we can be of any further assistance, you will find that. w~will be cooperative. Thank you for your consideration in thismatter.

ely,

Al Brown

enclosure

AB/ds

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

Juty says committee, ii

owes debt to political aDy WU DROWNmuff W~w

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lb. Nab. compay Sad a ddwit ~ainut km ml Ma -.- committee ~ 22 the kmcommittee -that the CO.UU1d~J Dim bad not

its agresmeat.The jay mid - that Make

did broach the agmemuw hiawarded no monotaty damagee toBrown's committee.

Also, the juty r!jected Diown'sdaim that Nab. personnel fr~- induced the campaign cm-

mum to tokm emi.i~bm -~ mm-rn -.

lb. M~ km ~ad that ~ai

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the co~ttee m a Aamcdouilng or-- that made many dac~skim wilbest Brown's InvolvemeoL

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am~sheinaivins. . . "I~~Liwea.g that the km ms~:mibe - Sl5AO(~ the ~the~frmis&ae5Opwcsat.~.. Ifew uhs' wmik (F*na~..; Ithrough Mq~) chess. lbejuy ~couwad -, - wM~.Dim chemad the campaign g~ ~m~L

Make maid he will ty to colls~ithe monoy from committee mm.bet's.

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9~Ec~,VEDW V SC~ETA~IAr

FEDERAL ELECTION COMNISSIOUI 92 JU',. ~3 P~1 3: 25999 3 Street, N.W.Washington, D.C. 20463 SENSITIVE

FIRS? GUERAL COUNSEL'S REPORT

RUE 3454DATE COMPLAINT RECEIVEDBY OGC November 15 1991DATE OF NOTIFICATION TORESPONDENTS November 21, 1991STAFF MEMBERS George F. Rishel

Jeffrey D. LongCOMPLAINANT: Ladonna Y. Lee

The Eddie Mahe CompanyRESPONDENTS: Al Brown for Congress Committee and0% 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 104.1111 C.F.R. S 116.10

INTERNAL REPORTS CHECKED: Disclosure Reports

FEDERAL AGENCIES CHECKED: None

I. GENERATION OF RATTER

This matter vas initiated by a complaint filed by Ladonna Y.K) Lee on behalf of The Eddie Mahe Company ("Mahe Company) againstVN

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

Ithat 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

4dispute or that it reserved its rights or disclaimed liability.IThus, we recommend that the Commission find reason to believe the

04Brown Committee violated 11 C.i.a. S 116.10(a). Given theresolution 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 contributionsfrom the candidate totaling $16,126.68 in 1990 plus a $5,800 loanin 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 RaheCompany advised Al Erown that his foreign car should beput up on blocks, and that he should purchase a car madedomestically. They also advised that this vehicleshould be purchased with campaign funds. I purchased a1991 Ford 3xplorer that cost $24,000. I decided thatthe purchase should be made by me personally for manyreasonsg x used the vehicle during the campaign forcampaign purposes, as well as personally. If youdetermine that this vehicle should be included as acampaign contribution, I will be more than happy toamend 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 AdvisoryC) 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 wouldbe 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 hispersonal asset. In Advisory Opinion 1992-12 the Commission alsonoted 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'sc~4

purchase of the Ford Ixplorer or the candidate's payment of legalfees to defend his personal liability.

0C. 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.

_______________ I1. In phone calls with staff of this Office in April 1992, the 42.

candidate stated that he would make these amendments ifinstructed to do so by the Commission.

-7.-.

I I I. R3~ONR3ND&T!OWS

1. Find reason to believe that Al Brown for Cony rossCommittee and Nancy Lampton, as treasurer, v olated2 U.S.C. S 434(a)(2)(B)(i) and 11 C.F.i. S 116.10but take no further action with respect to these

6

2. Find no reason to believe that Al Brown forCongress 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. NobleGeneral Counsel

LA

4

BY:Dac LernerAsso ate General Counsel

Attachments1. Response2. Report Excerpts

83F033 TEl FEDIRAL ELECTION CORNISSION

In the Ratter of

Al Brown for Congress Committeeand Nancy Lampton, as treasurer.

) RUm 3454

C3RT!FICATIOK

I, Narjorie V. Kons, Secretary of the Federal Ilection

Commission do hereby certify that on .July 29, 1992. the

Commission decided by a vote of 6-0 to take the following

actions in RUR 3454:

1. Find reason to believe that Al Brownfor 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 buttake no further action vith respect tothese sections.

2. Find no reason to believe that Al Brownfor Congress Committee and Nancy Lampton,as treasurer, violated 2 U.S.C. S 434(b).

(Continued)

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{~I

0Federal Election CommissionCertification for MUR 3454July 29, 1992

Page 2

3. Approve the appropriate letters, asrecommended in the General Counsel'sReport dated July 24. 1992.

4. Close the file.

Commissioners Aiheus, Llliott, NcDonald, McGarry, Potter

and Ihomas voted affirmatively for the decision.

Attest:

C'.

0

Received in the Secretariat: Thurs.,Circulated to the Commission: Fri.,Deadline for vote: Wed.,

dr

July 23. 1992July 24, 1992July 29, 1992

3:26 p.m.12:00 p...4:00 p.m.

VN

FEDERAL ELECTION COMMISSIONWASHINGTON. DC. 20*3

August 6, 1992

Ladonna Y. Lee, PresidentThe Eddie flahe CompanySuite 200900 Second Street, S.W.Washington, D.C. 20001

NUR 3454

Dear Ms. Lee:

This is in reference to the complaint you filed with theFederal Election Commission on November iS, 1991, concerning theAl Brown for Congress Committee.

Based on that complaint, on July 29, 1992, the COmmissionfound, on the basis of the information in the complaint andinformation provided by the respondents, that there is no reasonto believe Al Brown for Congress Committee and Nancy Lampton, astreasurer, violated 2 U.S.C. 5 434(b).

On that same date, the Commission found reason to believe0 that Al Brown for Congress Committee and Nancy Lampton, astreasurer, 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 thismatter, the Commission also determined to take no further actionand closed its file.

This matter will become part of the public record within 30days. The Federal Election Campaign Act of 1971, as amended,allows a complainant to seek judicial review of the Commission'sdismissal 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. LongParalegal

EnclosureGeneral Counsel's Report

FEDERAL ELECTION COMMISSION~ WASHNCT0N. D.C. 2O4~)

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

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

Dear ifs. Lamptozu

On November 12, 1991, the Federal Election Commission- notified the Al Brown for Congress Committee (Committee) andyou, as treasurer, of a complaint alleging violations of certainsections of the Federal Election Campaign Act of 1971, as amended

(the Act). On July 29, 1992, the Commission found, on the basisof the information in the complaint and information provided bythe Committee, that there is no reason to believe the Committee 2and you as treasurer, violated 2 U.S.C. S 434(b).o

On that same date, the Commission also found reason tobelieve 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, afterconsidering the circumstances of this matter, the Commission alsodetermined to take no further action and closed its file.

The Commission reminds you that failure to accurately reportdisputed debts as set forth at 11 C.F.R. S 116.10 and failure totimely file reports of receipts of disbursements are violations ofthe Act. You should take immediate steps to insure that thisactivity does not occur in the future.

The confidentiality provisions at 2 U.S.C. S 437g(a)(12) nolonger apply and this matter is now public. In addition, althoughthe complete file must be placed on the public record within 30days, this could occur at any time following certification of theCommission's vote. If you wish to submit any factual or legalmaterials to appear on the public record, please do so as soon aspossible. While the file may be placed on the public recordbefore receiving your additional materials, any permissiblesubmissions will be added to the public record upon receipt.

Nancy Lampton, TreasurerPage 2

If you have any questions, pleas. contact Jeffrey Long, the

staff member assigned to this matter, at (202) 219-3690.

Since rely,

~. c~i~Joan D. AikensChairman

KnclosureGeneral Counsel's Report

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FEDERAL ELECTION COMMISSIONWASNINCTOIg, S.C. RI3

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