The investigation stemmed from a Commission audit of the committee which discovered financial discrepancies between the Committee's bank statements and disclosure reports. From January 1, 1999 through December 31, 2000, the Committee failed to report or misreported over $7 million dollars of financial activity in its disclosure reports to the Commission, according to the audit. Following the audit, the Committee cooperated fully with the Commission in correcting its disclosure reports and preventing future errors.

  According to the conciliation agreement, contrary to federal regulations the Committee paid $2,722,920 to six vendors directly from its federal account and $6,137,541 to the same vendors, for the same generic campaign activities from its nonfederal account. As a result, this $6.1 million in spending was not reported to the Commission.

  A party committee must pay shared federal and nonfederal activity either entirely from its federal account (and transfer funds from the nonfederal account to the federal account to cover the nonfederal portion) or by establishing a separate allocation account into which the committee deposits funds from both its federal and nonfederal accounts solely for the purpose of paying the allocable expenses of shared federal and nonfederal activity. All spending from these accounts must be disclosed on regular financial reports to the FEC.

  To prevent future violations the conciliation agreement requires the Committee to pay for allocable expenditures from its federal account and to transfer funds from its nonfederal account to cover the share of the nonfederal expenses.

  In addition, the Committee failed to report or misreported $1,558,281 in financial activity from January 1, 1999 through December 31, 2000. This figure includes contributions, refunds and rebates, party committee transfers, disbursements and transfers to the nonfederal account which were not reported; it also includes disbursements underreported, disbursements reported twice, transfers from the nonfederal account reported in error and other miscellaneous errors that also resulted in misstatements of cash-on-hand.

  The Act requires all political committees to accurately report its receipts, disbursements and cash-on hand balances. The conciliation notes that the Committee has taken substantial steps to improve its compliance with the Act's report requirements which include hiring a certified public accountant and sending representatives to FEC training conferences.

*There are four administrative stages to the FEC enforcement process:

It requires the votes of at least four of the six Commissioners to take any action. The FEC can close a case at any point after reviewing a complaint. If a violation is found and conciliation cannot be reached, then the FEC can institute a civil court action against a respondent.