Compliance News Brief

We’re always on the lookout for campaign finance news here at Red Curve Solutions and some recent headlines caught our attention. We think these incidents are instructive lessons in the importance of accountability and internal controls within political committees.

Last week, Former Rep. Jesse Jackson Jr. was sentenced to 30 months in federal prison for illegally spending about $750,000 in campaign funds between August 2005 and July 2012.

Jesse Jackson Jr. gets 30 months in prison for misusing campaign funds (CNN, 8/14/13)

Some of the eye-popping spending included $60,000 at Antiques of Nevada, where Jackson bought two hats belonging to the late singer Michael Jackson costing more than $8,000; a $5,000 football signed by U.S. presidents; and memorabilia involving the Rev. Martin Luther King Jr., Malcolm X and martial artist Bruce Lee.

The Jackson's also use campaign funds to purchase Blu-Ray DVD players from Best Buy, dresses and jewelry from a small boutique and fur capes and parkas from a Beverly Hills, California, furrier.

In total, prosecutors said Jackson made more than 3,000 purchases.

Lesson: Institute a system of checks and balances for all campaign expenditures and ensure that more than one person has ownership of treasury operations. A best practice for committees is to separate access to key functions among treasury staff and require supporting documentation for all disbursements. This will automatically implement independent checks on the activities of individuals processing campaign expenditures.

Embezzler repays $275K to Democratic Governors Association (Roll Call 8/19/13)

Michael Parker, an employee at a check batching and processing company, embezzled $275,000 in contributions to the Democratic Governors Association over a two-year period.

From July 2010 to September 2012, Parker worked at the company receiving and processing campaign contributions meant for the DGA, a Section 527 political organization. Parker then deposited more than $250,000 in checks into his personal account. 

The incident is similar to a previous embezzlement case: Kinde Durkee, a well-known Democratic treasurer, was recently sentenced to eight years in prison for stealing more than $7 million from 50 clients over 11 years.

Lesson: Complete accuracy can be elusive when processing high volumes of checks, but your committee can establish internal processes that guard against inaccuracy and increase transparency. Separate contribution-processing functions. For example, the initial staffer opening mail contributions should not be responsible for making bank deposits.

Both of these stories are extreme examples of compliance violations, but they do demonstrate the pitfalls of insufficient internal controls.  Checks and balances are built into Red Curve’s online accounting, expense management, and donor platforms. Our proprietary software is built exclusively for the complex and fast-paced world of political campaigns. We’ll keep your campaign on track to spend every dollar raised to win.

Keywords: compliance, FEC, transparency, expense, management

View more blogs »