CES Response to Defendant Peterson MTD w Exhibits NYSSC Kings 6500-2011

8/4/2019 CES Response to Defendant Peterson MTD w Exhibits NYSSC Kings 6500-2011

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Page 130 GAO-11-696 Federal Reserve Syste

documentation for exceptional uses could help to ensure the proper leveof transparency and accountability for any such uses in the future.

To assess whether program use was consistent with the Federal ReservBoards announced policy objectives, we analyzed program transactiondata to identify significant trends in borrowers use of the programs.According to Federal Reserve Board staff, they designed program termsand conditions to discourage use that would have been inconsistent withprogram policy objectives. As discussed earlier, program termssuch asthe interest charged and haircuts appliedgenerally were designed to be

favorable only for institutions facing liquidity strains. Within and across thprograms, certain participants used the programs more frequently andwere slower to exit than others. Reserve Bank officials noted that marketconditions and the speed with which the participant recovered affecteduse of the program by individual institutions. As a result of its monitoringof program usage, the Federal Reserve Board modified terms andconditions of several programs to reinforce policy objectives and programgoals.

Several of the programs saw greater use by large global institutions thatwere significant participants in the funding markets targeted by theFederal Reserve Board. Tables 8 and 9 rank the largest borrowinginstitutions according to aggregate borrowing (irrespective of differencesin term to maturity) and total borrowing after adjusting for differences inloan terms. For both tables, we show transaction amounts for AMLF andTALF, but do not factor these amounts into the rankings as entitiesparticipating in these programs served as intermediary borrowers whosepurchases provided liquidity support to other market participants. Weaggregated dollar transaction amounts for borrowing entities at the parencompany level. For each parent company, total amounts borrowedinclude amounts borrowed by the parent company, its subsidiaries,branches or agencies, and in the case of CPFF, dollar amounts of ABCPissued by entities sponsored by the holding company or one of its

subsidiaries. In cases where we identified an acquisition that took placeduring the operation of a program, we consolidated transaction amountsfollowing the completion of the acquisition. Table 8 aggregates total dollatransaction amounts by adding the total dollar amount of all loans butdoes not adjust these amounts to reflect differences across programs inthe term over which loans were outstanding. For example, an overnightPDCF loan of $10 billion that was renewed daily at the same level for 30business days would result in an aggregate amount borrowed of $300billion although the institution, in effect, borrowed only $10 billion over 30

The Federal Reserve BoardTook Steps to Prevent Usethat Would Be Inconsistentwith Its Policy Objectives

Large Global Institutions WereAmong the Largest Users of

Several Programs


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days. In contrast, a TAF loan of $10 billion extended over a 1-monthperiod would appear as $10 billion. As a result, the total transactionamounts shown in table 8 for PDCF are not directly comparable to thetotal transaction amounts shown for TAF and other programs that madeloans for periods longer than overnight.

Table 8: Institutions with Largest Total Transaction Amounts (Not Term-Adjusted) across Broad-Based Emergency Program(Borrowing Aggregated by Parent Company and Includes Sponsored ABCP Conduits), December 1, 2007 through July 21,2010

Dollar in billions

Borrowing Parent Company TAF PDCF TSLF CPFF Subtotal AMLF TALF Total loanCitigroup Inc. $110 $2,020 $348 $33 $2,511 $1 - $ 2,51

Morgan Stanley - 1,913 115 4 2,032 - 9 2,04

Merrill Lynch & Co. 0 1,775 166 8 1,949 - - 1,94

Bank of America Corporation 280 947 101 15 1,342 2 - 1,34

Barclays PLC (United Kingdom) 232 410 187 39 868 - - 86

Bear Stearns Companies, Inc. - 851 2 - 853 - - 85

Goldman Sachs Group Inc. - 589 225 0 814 - - 81

Royal Bank of Scotland Group PLC (UnitedKingdom) 212 - 291 39 541 - - 54

Deutsche Bank AG (Germany) 77 1 277 - 354 - - 35

UBS AG (Switzerland) 56 35 122 75 287 - - 28JP Morgan Chase & Co. 99 112 68 - 279 111 - 39

Credit Suisse Group AG (Switzerland) 0 2 261 - 262 0 - 26

Lehman Brothers Holdings Inc. - 83 99 - 183 - - 18

Bank of Scotland PLC (United Kingdom) 181 - - - 181 - - 18

BNP Paribas SA (France) 64 66 41 3 175 - - 17

Wells Fargo & Co. 159 - - - 159 - - 15

Dexia SA (Belgium) 105 - - 53 159 - - 15

Wachovia Corporation 142 - - - 142 - - 14

Dresdner Bank AG (Germany) 123 0 1 10 135 - - 13

Societe Generale SA (France) 124 - - - 124 - - 12

All other borrowers 1,854 146 14 460 2,475 103 62 2,63

Total $3,818 $8,951 $2,319 $738 $15,826 $217 $71 $16,11

Source: GAO analysis of Federal Reserve System data.


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Note: The total dollar amounts borrowed represent the sum of all loans and have not been adjusted reflect differences in terms to maturity for the loans. Total borrowing is aggregated at the parentcompany level and generally includes borrowing by branches, agencies, subsidiaries, and sponsoreABCP conduits that we could identify. Total borrowing for each parent company consolidatesamounts borrowed by acquired institutions following the completion of acquisitions. PDCF totalsinclude credit extensions to affiliates of some primary dealers and TSLF totals include loans under tTSLF Options Program (TOP).

To account for differences in the terms for loans that were outstanding,we multiplied each loan amount by the number of days the loan wasoutstanding and divided this amount by the number of days in a year(365). Table 9 shows the top 20 borrowing institutions in terms of term-adjusted total transaction amount for emergency programs and other

assistance provided directly to institutions facing liquidity strains.

Table 9: Institutions with Largest Total Term-Adjusted Borrowing across Broad-Based Emergency Programs, December 1,2007 through July 21, 2010

Dollars in billions

Borrowing Parent Company TAF PDCF TSLF CPFF Subtotal AMLF TALFTotalloans

Percenof tota

Bank of America Corporation $48 $6 $8 $6 $67 $0 - $67 6%

Citigroup Inc. 15 8 27 8 58 0 - 58

Royal Bank of Scotland Group PLC (UnitedKingdom)

25 - 23 10 58 - - 58

Barclays Group PLC (United Kingdom) 24 2 15 10 50 - - 50

UBS AG (Switzerland) 7 0 9 18 35 - - 35

Deutsche Bank AG (Germany) 9 0 22 - 30 - - 30

Wells Fargo & Co. 25 - - - 25 - - 25

Dexia SA (Belgium) 10 - - 13 23 - - 23

Credit Suisse Group AG (Switzerland) 0 0 21 - 21 0 - 21

Bank of Scotland PLC (United Kingdom) 20 - - - 20 - - 20

Commerzbank AG (Germany) 16 - - 4 20 - - 20

Goldman Sachs Group Inc. - 2 17 0 20 - - 20

Merrill Lynch & Co. 0 5 14 - 19 - - 19

BNP Paribas SA (France) 11 0 3 4 19 - - 19

Societe Generale SA (France) 17 - - - 17 - - 17

Morgan Stanley - 8 8 1 17 - 28 45

Wachovia Corporation 16 - - - 16 - - 16

JP Morgan Chase & Co. 13 0 3 - 16 15 - 31

AIG - - - 15 15 - - 15

Norinchukin Bank (Japan) 15 - - - 15 - - 15


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Dollars in billions

Borrowing Parent Company TAF PDCF TSLF CPFF Subtotal AMLF TALFTotalloans

Percenof tota

All other borrowers 204 4 11 94 313 13 211 537 4

Total $474 $35 $179 $183 $870 $ 29 $ 240 $1,139 100%

Source: GAO analysis of Federal Reserve System data.

Note: The dollar amounts borrowed for each loan were term-adjusted by multiplying the loan amounby the term to maturity for the loan and dividing by 365 days. Term to maturity is calculated as thedifference between the original loan maturity date and the trade date and does not reflect repaymenof loans that occurred before the original loan maturity date. Total borrowing is aggregated at theparent company level and generally includes borrowing by branches, agencies, subsidiaries, andsponsored ABCP conduits that we could identify. Total borrowing for each parent company

consolidates amounts borrowed by acquired institutions following the completion of acquisitions.PDCF totals include credit extensions to affiliates of some primary dealers and TSLF totals includeloans under the TSLF Options Program (TOP).

U.S. branches and agencies of foreign banks and U.S. subsidiaries offoreign institutions received over half of the total dollar amount of TAFand CPFF loans made (see fig. 10). As noted previously, such institutionwere permitted to borrow under the terms and conditions of the lendingprograms. For both programs, FRBNY staff explained that as long asparticipating institutions were eligible to use the program, monitoringwhether certain types of institutions accessed a program more thanothers was not relevant to the programs objectives. Federal ReserveBoard officials told us the programs sought to support funding markets

that were global, and agencies and branches of foreign firms weresignificant participants in lending to U.S. households and businesses.


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Figure 10: Total Transaction Amount by Parent Company Country of Domicile for TAF and CPFF

Note: For TAF, the total dollar amount of TAF loans are aggregated at the level of the parentcompany for participating depository institutions. For CPFF, the total dollar amount of issuancethrough CPFF is aggregated at the parent company level and includes ABCP issuance by entitiessponsored by the parent company or one of its subsidiaries. The country of domicile for parentcompanies is based on SNL Financial data.

Under TAF, approximately 65 percent of the loans were made to U.S.branches, agencies, and subsidiaries of foreign institutions. FederalReserve Board officials told us that the use of the program by U.S.branches and agencies of foreign banks was expected because theseinstitutions were facing liquidity strains in dollar funding markets. FRBNYstaff identified a few possible reasons for high use by U.S. branches andagencies of foreign banks. First, many of them faced liquidity strains

arising from the need to bring certain illiquid U.S. dollar assets back onto

16%

UnitedKingdom

UnitedStates

United States

Othercountries

Japan

Germany

France

35%

17%

16%

7%

8%

9%

9%

7%

6%

Source: GAO analysis of Federal Reserve System data .

TAF

United Kingdom

France

Germany

Other countries

Belgium

Switzerland

41%

18%

10%

CPFF


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their balance sheets and could not finance these assets elsewhere.128 In

addition, many of these institutions held U.S.-dollar dominated collateralthat could be pledged to TAF but not in their home country. A FRBNYmemorandum noted that U.S. banks generally bid for smaller loanamounts and could not bid as aggressively as their foreign counterparts,because they did not have enough collateral pledged at the discountwindow.

Under CPFF, approximately 60 percent of the commercial paper wasissued by U.S. subsidiaries of foreign institutions over the life of theprogram. At the time CPFF was created, U.S. companies owned by

foreign institutions were among the most significant participants in theU.S. commercial paper market.

The Federal Reserve Boards analysis of TALF showed that under TALFwhile the majority of the U.S. companies that received loans had U.S.domiciled material investors, 36 percent had one or more non-U.S.domiciled material investors.129 Federal Reserve Board officials noted

that the loans were made to TALF borrowers, not to the material investorin the companies that borrowed from TALF. While only U.S. companieswith eligible collateral could participate in TALF, material investors thatinvested in TALF borrowers could be foreign entities. According to the

Federal Reserve Board, 26 percent of material investors were domicileabroad with a majority of non-U.S. domiciled material investors located inCayman Islands, followed by Korea and Bermuda. As with TALFborrowers, primary dealers and other firms acting as TALF agents alsoconducted due diligence on material investors to help ensure that theydid not present credit, fraud, or reputational risk to FRBNY. FRBNYofficials commented that by requiring all TALF-eligible securities to beentirely or almost entirely backed by loans to U.S. residents or U.S.

128When the turmoil in the markets began in 2007, some banks had to finance the assetsheld by off-balance-sheet entities when those entities were unable to refinance their

expiring debt due to market concerns over the quality of the assets. In some cases, theseoff-balance-sheet entities relied on financing commitments that banks had extended tothem. In other cases, financial institutions supported troubled off-balance sheet entities toprotect their reputations with clients even when no legal requirement to do so existed. Fomore information about liquidity problems that emerged in connection with off-balance-sheet entities, see GAO-09-739.

129A material investor is an investor who owns, directly or indirectly, an interest in anyclass of securities of a borrower that is greater than or equal to a 10 percent interest insuch outstanding class of securities.
http://www.gao.gov/products/GAO-09-739http://www.gao.gov/products/GAO-09-739


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businesses, TALF benefited the intended beneficiaries, such as smallbusinesses. Additionally, FRBNY officials commented that like manyfirms, some TALF borrowers were partly owned by foreign entities or hadinvestors that were based abroad.

Use of the programs generally peaked during the height of the financialcrisis and fell as market conditions recovered. Figure 11 shows how theuse of broad-based programs changed over time. Federal Reserve Boarofficials told us that even as the market recovered, funding conditionsimproved for certain borrowers but not others. As a result, in PDCF,TSLF, and CPFF, several participants remained in the programs even as

others exited. However, all activities wound down before the programswere terminated, and in the case of TSLF and PDCF, several monthsbefore program termination. Federal Reserve Board officials told us asmarket conditions improved and use of CPPF declined, they were inactive discussions with firms that remained in CPFF to confirm they weregoing to be able to leave CPFF in an orderly manner.

Use of the Programs Peaked atthe Height of the FinancialCrisis and Fell as MarketConditions Recovered


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AGENDA DOCUMENT N O . l l - ~ - A . ; ,'.'::CTIONiSON. '\T

FEDERAL ELECTON COMMISSIONWashington, DC 20463

September 1, 2011AGENDA ITEM

MEMORANDMTO: Te Commission For Meeting of _-l-l/FROM: Christopher Hughey C 1-1Acting General Counsel (6"I I!CS I/ SUBMITTED LATE

. ' - ~ - , Rosemary C. Smith / , . . ' " , , - ~ ..Associate General CounselRobert M. Knop r h 1 1 . ~/.J. l , Jt,t.-Assistant General Coun elJoanna S. Waldstreicher&0Attorney

Subject: Draft AO 2011-15 (Hassan) - Draft CAttached is a proposed draft of the subject advisory opinion. We have been askedthat this draft be placed on the Open Session agenda for September 1, 2011.

Attachment


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5

10

15

20

25

1 ADVSORY OPINION 2011-1523 Abdul Karim Hassan, Esq.4 215-28 Hillside AvenueQeens Vllage, New Yrk 1142767 Dear Mr. Hassan:

DRAFIe

8 We are responding to your advisory opinion request concerning the application of9 the Federal Election Campaign Act of 197, as amended (the "Act"), the Presidential

Primary Matching Payment Account Act, as amended, and Commission regulations to11 your campaign for President of the United States, given your status as a naturalized12 citizen.13 Te Commission concludes that the Act does not prohibit Mr. Hassan, a14 naturalized citizen, from becoming a "candidate" as that term is defined under the Act.

However, Mr. Hassan will not be eligible to receive Federal matching funds under the16 Presidential Primary Matching Payment Account Act. Te Commission also concludes17 that Mr. Hassan will not be in violation of2 U.S.C. 441h(b) ifhe solicits and receives18 contributions. Finally, Mr. Hassan will be required to comply with the Act's provisions19 regarding expenditures, contributions, recordkeeping, and reporting.

Bckound21 Te facts presented in this advisory opinion are based on Mr. Hassan's letter22 received on July 72011, as supplemented by emails received on July 19 and 20 and23 August 25, 2011.24 Mr. Hassan is a naturalized U.S. citizen who announced his candidacy for

President in March 2008 on his website. Subsequently, he made statements related to his26 candidacy and used his website to communicate to voters. In order to further


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AO 2011-15Draft CPage 2

1 communicate his message and platform to the public, Mr. Hassan also purchased

2 campaign advertisements through a contract with Google.3 Mr. Hassan indicates that he satisfies all of the constitutional requirements for4 serving as President, except the natural born citizen requirement in Article II, Section 1,5 Clause 5 of the Constitution.6 Questions Presented7 1 As a naturalized American citizen, will Mr. Hassan be considered a8 "candidate" or "person" runningfor President under the Act?9 2 As a naturalized American citizen, is Mr. Hassan eligible to receive

10 presidential matchingfunds under the Presidential Primary Matching Payment Account11 Act?12 3. As a naturalized American citizen, will Mr. Hassan violate 2 Us. C.13 441h(b) ifhe solicits and receives contributions for his presidential campaign?14 4. Is Mr. Hassan required to comply with the Act's provisions regarding15 expenditures, contributions, recordkeeping, and reporting?16 Legal Analysis and Conclusions1 1 As a naturalized American citizen, will Mr. Hassan be considered a18 "candidate" or "person" running for President under the Act?19 The Act defines "candidate" as "an individual who seeks nomination for election,20 or election, to Federal office." 2 U.S.C. 431(2); see also 11 CFR 100.3. An individual21 becomes a candidate when he or she "has received contributions aggregating in excess of


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AO 2011-15Draft CPage 3$000 or has made expenditures aggregating in excess of $000." 2 U.S.C. 431 (2); see

2 also 11 CFR 100.3.3 Te Act and the Commission's regulations do not address a candidate's4 citizenship or any other qualifications for office. Indeed, the Act 's definition of5 "candidate" applies to those who seek nomination for election or election to Federal6 office rather than those eligible to be nominated or elected to, or to serve in Federal7 office. Tus, the Act's definition of "candidate" does not tum on whether an individual8 is a natural born citizen or a naturalized citizen, so long as that person meets the other9 criteria that define a "candidate." I

10 Mr. Hassan states that he seeks election to Federal office. Mr. Hassan has not yet11 fulfilled the statutory definition of candidate, by either receiving more than $000 in12 contributions or making more than $000 in expenditures, and therefore he is not a13 candidate at this time. Ifhe either raises more than $000 in contributions or makes more14 than $000 in expenditures, he will satisfy the definition and will become a candidate15 under the Act. Mr. Hassan states he is not eligible to be seated for the Office of President16 because he is a naturalized citizen. Te Act, however, does not prevent him from holding17 himself out as a candidate because the statutory definition does not tum on a person's18 eligibility to be seated for the office he or she seeks.19 Te Act defines "person" to include "an individual, partnership, committee,20 association, corporation, labor organization, or any other organization or group of21 persons, but such term does not include the Federal Government or any authority of the

I Te Act does not contain separate definitions for candidates for different Federal offices. TeConstitution's "natural born Citizen" provision only pertains to "the Office of President." U.S. Const., art.II, sec. I, cl. 5.


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AO 2011-15Draft CPage 4Federal Government." 2 U.S.c. 431 (11); see also 11 CFR 100.1 O. Like the definition of

2 "candidate," the definition of "person" makes no reference to natural born or naturalized3 citizens. Tus, as an individual, Mr. Hassan is a "person" under the Act. 24 2 As a naturalized American citizen, is Mr. Hassan eligible to receive5 presidential matchingfunds under the Presidential Primary Matching Payment Account6 Act?7 No, as a naturalized American citizen, Mr. Hassan is not eligible to receive8 presidential matching funds under the Presidential Primary Matching Payment Account9 Act ("Matching Payment Act").

10 Te United States Constitut ion provides that "[n]o Person except a natural born11 Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution,12 shall be eligible to the Office of President . . . . " U.S. Const. art. II, sec. 1, d. 5.13 Although the Matching Payment Act does not specifically address the citizenship14 requirement for serving as President, it sets forth the eligibility requirements to receive15 matching funds. See 26 U.S.C. 9033; 11 CFR 9033.2. See also, e.g., Advisory Opinion16 1996-07 (Browne for President) (describing the steps a candidate must take to become17 eligible for matching funds). Tese provisions collectively reflect Congressional intent to18 ensure that U.S. Teasury funds in the form of matching funds are only paid to eligible19 candidates. 3

2 Mr. Hassan also asks whether he qualifies as an "individual" under the Act. Neither the Act nor theCommission 's regulations define "individual." Te term "individual" is used throughout the text of theAct, without any reference to either natural born or naturalized citizens. Mr. Hassan is an individual underthe common usage of the term.3 See S. Rep. 93-689, at 7 (197).


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AO 2011-15Draft CPage 51 Te Commission is charged under the Matching Payment Act with administering

2 the Federal matching funds program and has some discretion when certifying eligibility3 for matching funds. While the Commission may not "appraise candidates' good faith,4 honesty, probity or general reliability when reviewing the agreements and other forward5 looking commitments required" by the Matching Payment Act, see LRuche v. FEe,6 996 F.2d 1263, 1269 (D.C. Cir. 1993), situations may exist in which, "without assessment7 of subjective candidate intent, the Commission might conceivably withhold funds despite8 formal compliance with the statutorily expressed criteria." !d. Clear and self-avowed9 constitutional ineligibility for office is one of the few instances where the Commission's

10 exercise of its discretion to withhold funds is appropriate.11 Because Mr. Hassan has clearly stated that he is a naturalized citizen of the12 United States, and not a natural born citizen under the constitutional requirement in13 Article II, Section 1, Clause 5, the Commission concludes that Mr. Hassan is not eligible14 to receive matching funds.15 3 As a naturalized American citizen, will Mr. Hassan violate 2 Us.c.16 441h(b) ifhe solicits and receives contributions for his presidential campaign?17 No, Mr. Hassan will not violate 2 U.S.C. 441h(b) ifhe solicits and receives18 contributions for his presidential campaign because the Act's definition of "candidate"19 does not tum on his citizenship status.20 Section 441 h(b) states that "no person shall . . . fraudulently misrepresent the21 person as speaking, writing, or otherwise acting for or on behalf of any candidate or22 political party or employee or agent thereof for the purpose of soliciting contributions or


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AO 2011-15Draft CPage 61 donations." 2 U.S.c. 441h(b)(1); see also 11 CFR 110.16(b). Additionally, "no person2 shall . . . willfully and knowingly participate in or conspire to participate in any plan,3 scheme, or design" to partake in such fraudulent misrepresentation. 2 U.S.c. 441h(b)(2);4 see also 11 CFR 110.16(b).5 Senator Bill Nelson of Florida introduced the amendment that led to this provision6 in the debate over the Bipartisan Campaign Reform Act of 2002. Senator Nelson stated7 that the need for such a provision arose from the Commission "receiving a number of8 complaints that people have fraudulently raised donations by posing as political9 committees or candidates." 147 Congo Rec. S3122 (daily ed. Mar. 29,2001) (statement

10 of Sen. Bill Nelson). He described the types of situations the amendment aimed to11 prevent, including "phony fundraising letters" sent from supposed lawyers for12 presidential candidates that "urged $,000 contributions to seemingly prestigious13 Pennsylvania Avenue addresses." !d.14 Although Mr. Hassan is a naturalized citizen running for President, he would not15 be engaging in fraudulent misrepresentation as described in section 441 h(b) by soliciting16 or receiving contributions for his presidential campaign committee because nothing in the17 Act requires a candidate to be eligible for the office he or she seeks. Mr. Hassan does not18 intend to falsely represent or solicit funds for a campaign that is not his own, as was19 contemplated by Congress when it enacted this provision. Tus, Mr. Hassan would not20 be in violation of section 441 h(b) when soliciting and receiving contributions for his21 presidential campaign committee.


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AO 2011-15Draft CPage 71 4. Is Mr. Hassan required to comply with the Act's provisions regarding2 expenditures, contributions, recordkeeping, and reporting?3 Ys, Mr. Hassan must comply with the Act's provisions regarding expenditures,4 contributions, recordkeeping, and reporting.5 Once an individual seeking election to Federal office has either made more than6 $000 in expenditures or received more than $000 in contributions, that individual7 becomes a candidate for the purposes of the Act. 2 U.S.C. 431(2); 11 CFR 100.3.8 Candidates must comply with several requirements under the Act.9 No later than 15 days after becoming a candidate, an individual must file a

10 Statement of Candidacy with the Commission in which he or she designates a principal11 campaign committee with a treasurer who will accept contributions and make12 expenditures. See 2 U.S.c. 432(e); 11 CFR 101.1. Within 10 days of being designated as13 a candidate's principal campaign committee, the campaign committee must file a14 Statement of Organization. Te committee must also file a report detailing the15 contributions received and the expenditures made before the individual became a16 candidate. Specifically, these reporting requirements mandate that the treasurer "shall17 keep records of the name of each contributor, the date of receipt and amount of all18 contributions received, and all expenditures made in connection with . . . the individual's19 campaign prior to becoming a candidate." 11 CFR 101.3; see also 2 U.S.C. 432(e)(2).20 Following this initial report, the committee must continue to file quarterly reports of21 contributions and expenditures. 2 U.S.c. 434(a)(2); 11 CFR 104.5. Tese reports must22 detail the total amounts of receipts and disbursements for the reporting period and for the


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AO 2011-15Draft CPage 8calendar year. See 2 U.S.c. 434; 11 CFR 104.3. Te principal campaign committee

2 must also comply with recordkeeping requirements related to contributions it receives3 and expenditures it makes. 11 CFR 102.9. All records required to be kept pursuant to4 these provisions must be retained for three years. Id.5 Candidates must also comply with the Act's contribution limits (see 2 U.S.C.6 441a(a); see also 11 CFR 110.1,110.2, and 110.5) and source prohibitions (see 2 U.S.C7 441b, 441c, 441e, 441f, and 441k; see also 11 CFR 110.4,110.20, 114.2, and 115.2).8 Once Mr. Hassan has received more than $000 in contributions or made more9 than $000 in expenditures for his campaign, he will become a candidate under the Act.

10 As a candidate, Mr. Hassan will be subject to the statutes and regulations applicable to all11 candidates. Upon obtaining candidate status, he therefore will need to take the steps12 outlined above to register his principal campaign committee with the Commission and13 comply with the provisions of the Act regarding expenditures, contributions,14 recordkeeping, and reporting. In order to comply with these requirements, prior to15 becoming a candidate, in the testing-the-waters phase, Mr. Hassan will need to maintain16 records of all funds received and payments made in connection with his campaign, and he17 will need to comply with all contribution limitations and source prohibitions set forth in18 the Act and Commission regulations.19 Tis response constitutes an advisory opinion concerning the application of the20 Act and Commission regulations to the specific transaction or activity set forth in your21 request. See 2 U.S.C. 437. Te Commission emphasizes that, if there is a change in any22 of the facts or assumptions presented, and such facts or assumptions are material to a


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A02011-15Draft CPage 91 conclusion presented in this advisory opinion, then the requestor may not rely on that2 conclusion as support for its proposed activity. Any person involved in any specific3 transaction or activity which is indistinguishable in all its material aspects from the4 transaction or activity with respect to which this advisory opinion is rendered may rely on5 this advisory opinion. See 2 U.S.c. 437(c)(1)(B). Please note the analysis or6 conclusions in this advisory opinion may be affected by subsequent developments in the7 law including, but not limited to, statutes, regulations, advisory opinions, and case law.8 Te cited advisory opinion is available on the Commission's website, www.fec.gov, or9 directly from the Commission' s Advisory Opinion searchable database at

10 http:/www.fec.gov/searchao.1112 On behalf of the Commission,1141516 Cynthia L. Bauerly17 Chair18


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FEIIERAL ELECTIO:i

Abdul K. Hassan, Esq. 201 lJUL -7 PHAttorney and Counselor at Law OFFICE OF L-ENERAL

215-28 Hillside Avenue, Queens Village, New York 11427 COUMSELPhone: 718-740-1000Fax: 718-468-3894 Email: [email protected] ExpressJulys, 2011Federal Election CommissionOffice of General Counsel999 E Street, N.W.,Washington, D.C. 20463.

Re: Advisory Opinion Request

Dear General Counsel:My name is A bdul Karim Hassan and I am making this request for an advisory opinionon my own behalf. InMarch 2008,1 publicly declared my candidacy for the Presidency of theUnited States in 2012 through my presidential website at www.abdulhassanforpresident.com andhave made statements and held myself out as a candidate since then. Like most presidentialwebsites, mine is being used to communicate my message and platform to the public, to

advertise and promote my candidacy, and to urge the public to vote for me in iie2012presidential elections. Currently, through a paid contract with Google, I am running a nationaladvertising campaign in support of my presidential candidacy - the advertisement links to mypresidential website.I satisfy all the constitutional requirements for holding the office of President except thenatural bom citizen requirement contained in Article II, 1, Clause 5, of the U.S. Constitution -I am a naturalized American citizen. Up to this point, I have refrainedfromsoliciting presidentialcampaign contributions because of the obstacles created by the natural bom provision. Becausethe Federal Elections Campaign A ct ("FECA") imposes numerous obligations on candidates orpersons running for President and even on persons in the 'testing the waters" phase, I am seeking

this advisory opinion now. I would like the opinion of the Federal Election Commission ("FEC")on the following questions:1. Whether, as a naturalized American citizen, I am included in the meaning of"candidate" or "person" or "individual" running for President as used in the Federal ElectionCampaign A ct ("FECA")?

( Copy courtesy of www.ObamaReleaseYourRecords.com - www.BirtherReport.com )


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2. Whether, as a naturalized American citizen, I am prohibitedfromreceiving matchingfunds under the FECA?3. Whether, asa naturalized American citizen, I would be in violation of2 USC 441h(b) ifi solicit and/or receive presidential campaign contributions?4. Whether, in light ofthe steps I have taken in my presidential runas outlined above, Iam subject to the expenditure, contribution and record-keeping requirements ofFECA and theregulations thereunder? (Note: I have not yet crossed the $5,000threshold that triggers theregistration and reporting requirements - it is therefore important that I receive an answer beforethese requirements are triggered.).Time is ofthe essence. I thank the Commission in advance for its time and consideration.

Respectfully submitted.

Abdul Karim Hassan



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PUBLIC COMMENTS O N DRAFT ADVISORY OPINIONSMembers of the public may submit written comments on draft advisory opinions.DRAF TS A and B of ADVISORY OPINION 2011-15 are now available for

comment. It was requestedby Abdul Karim Hassan and is scheduled to be considered bythe Commission at its public meeting on September 1,2011..If you wish to conmient on DRAFT A or DRAFT B of ADVISORY OPINION

2011-15, please note the following requirements:1) Comments must be in writing, and they must be both legible andcomplete.2) Conmients must be submitted to the Office of the Commission Secretary byhand delivery or fax ((202) 208-3333), with a duplicate copy submitted to the

Office of General Counsel by hand delivery or fax ((202) 219-3923).3) Comments must be received by noon (Eastem Time) on August 31,2011.4) The Commission will generally not accept comments received after thedeadline. Requests to extend the comment period are discouragedandunwelcome. A n extension request will be considered only if receivedbeforethe comment deadline and then only on a case-by-case basis in specialcircumstances.5) . A ll timely received comments will be made available to the public at theCommission's Public Records Office and will be postedon the Commission's

website at http://saos.mctusa.com/saos/searchao.

REOUESTOR APPEARANCES BEFORE TH E COMMISSIONThe Commission has implemented a pilot program to allow advisoiy opinionrequestors, or their counsel, to appear before the Commission to answer questions at theopen meeting at which the Commission considers the draft advisory opinion. Thisprogram took effect on July 7, 2009.



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Under the program:1) A requestor has an automatic right to appearbefore the Commission ifanypublic draft ofthe advisoryopinion is made available to the requestor orrequestor's counsel less than one weekbefore the publicmeeting at whichthe

advisory opinion requestwill be considered. Under these circumstances, noadvance written notice ofintent to appear is required. This one-weekperiod isshortened to three days for advisoryopinions under the expedited twenty-dayprocedure in 2U.S.C. 437f{a)(2).2) A requestor mustprovidewritten notice ofintent to appearbefore theCommission ifall public drafts ofthe advisoryopinion are made available torequestor orrequestor's counsel at least one weekbefore the publicmeeting atwhichthe Commission willconsider the advisoryopinion request. This one-weekperiod is shortened to three days for advisoryopinions under theexpedited twenty-dayprocedure in 2U.S.C.437f(a)(2). The notice ofintent to

appearmustbe received by the Office ofthe Commission Secretaryby handdelivery, email ([email protected]). or fax ((202)208-3333), no later than48hours before the scheduledpublicmeeting. Requestors are responsible forensuring that the Office ofthe Commission Secretaryreceives timelynotice.3) Requestors or their counsel unable to appearphysically at a publicmeetingmay participate by telephone, subject to the Commission's technicalcapabilities.4) Requestors or their counsel who appearbefore the Commissionmaydo soonly for the limitedpurpose ofaddressing questions raised by the Commission

at the publicmeeting. Their appearance does not guarantee that anyquestionswill be asked.



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FOR FURTHER INFORMA TIONPress inquiries: Judith IngramPress Officer(202) 694-1220Commission Secretary: Shawn Woodhead Werth(202) 694-1040Comment Submission Procedure: Rosemary C . Smith

Associate General Counsel(202) 694-1650Other inquiries:

Toobtain copies of documents related to Advisory Opinion 2011-15, contact thePublic Records Office at (202) 694-1120 or (800) 424-9530, or visit the Commission'swebsite at http://saos.nictusa.com/saos/searchao.

ADDRESSESOffice of the Commission SecretaryFederal Election Commission999 EStreet, NWWashington, D C 20463Office of General CounselAT T N : Rosemary C . Smith, Esq.Federal Election Commission999 E Street, NWWashington, D C 20463



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D O C U M E N T N O , 11- ^

F E D E R A L E L E C T I O N COMMISSIONWashington, DC 204632011 AUG 2b P 2- US

MEMORANDUMTO :

F R O M :

Subject:

August 26,2011AGENDA ITEM

The Commission

Christopher HugheyActing General Counsel IRosemary C. Smith/^C^Associate General Counsel

For Meeting of ^-j-iiSUBMITTED LATE

Robert M . KnopAssistant General CounselJoanna S. Waldstreicher ^ ^ V \ /AttomeyDraft AO 2011-15 (Hassan) - Drafts A and B

Attached are two proposed drafts of the subject advisory opinion (Drafts Aand B). We have been asked to place these drafts on the Open Meeting agenda forSeptember 1,2011.Attachment



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1 ADVISORY OPINION 2011-1523 AbdulKarimHassan, Esq. DRAFT A4 215-28 Hillside Avenue5 Queens Village, New York 1142767 Dear M r. Hassan:8 We are responding to your advisory opinion request conceming the application of9 the Federal Election Campaign Ac t of 1971, as amended (the "Act"), the Presidential

10 Primary Matching Payment Account Act, as amended, and Commission regulations to11 your campaign for President ofthe UnitedStates, given your status as a naturalized12 citizen.13 The Commission concludes that M r. Hassan may qualify as a "candidate" under14 the Act. However, M r. Hassan will not be eligible to receive Federal matching funds15 under the Presidential Primary Matching Payment Account Act. The Commission also16 concludes that M r. Hassan will not be in violation of 2 U.S.C. 441h(b) if he solicits and17 receives contributions. Finally, M r. Hassan will be required to comply with the Act's18 provisions regarding expenditures, contributions, recordkeeping, and reporting.19 Background20 The facts presented in this advisory opinion are based on M r. Hassan's letter21 received on July 7,2011, as supplemented by emails received on July 19 and 20, 2011.22 M r. Hassan is a naturalized U.S. citizen who announced his candidacy for23 President in March 2008 on his website. Subsequently, he made statements related to his24 candidacy and used his website to communicate to voters. In order to further25 communicate his message and platform to the public, M r. Hassan also purchased26 campaign advertisements through a contract with Google.



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AO 2011-15Draft APage 21 Mr. Hassan indicates that he satisfies all of the constitutional requirements for2 serving as President, except the national bom citizen requirement in Article II, Section 1,3 Clause 5 of the Constitution.4 Questions Presented5 1. As a naturalized American citizen, will Mr. Hassan be considered a6 "candidate " or "person " running or President under the Act?7 2. Asa naturalized American citizen, is Mr. Hassan ineligible to receive8 presidential matching funds under the Presidential Primary Matching Payment Account9 Act?

10 3. As a naturalized American citizen, will Mr. Hassan violate 2 U.S.C.11 441h(b) if he solicits and receives contributions for his presidential campaign?12 4. Is Mr. Hassan required to comply with the Act's provisions regarding13 expenditures, contributions, recordkeeping, and reporting?1 4 Legal Analysis and Conclusions15 1. As a naturalized American citizen, will Mr. Hassan be considereda16 "candidate " or "person " runningfo r President under the Act?17 Yes, as a naturalized American citizen, Mr. Hassan may be a "candidate" and18 "person" as those terms are defined in the Act.19 The Act defines "candidate" as "an individual who seeks nomination for election,20 or election, to Federal office." 2 U.S.C. 431(2); see also 11 CFR 100.3. An individual21 becomes a candidate when he or she "has received contributions aggregating in excess of



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AO 2011-15Draft APage 31 $5000 or has made expenditures aggregating in excess of $5000." 2 U.S.C. 431(2); see2 a/jo 11 CFR 100.3.3 The Actand the Commission's regulations do not address a candidate's status as4 either a natural bom citizen or naturalized citizen. Thus, the Act's definition of5 "candidate" applies broadly to all individuals, regardless ofwhether an individual is a6 natural bom citizen or a naturalized citizen.'7 Mr. Hassan has not yet either received more than $5000 in contributionsor made8 more than $5000 in expenditures, and therefore is not yet a candidate and has not filed9 withthe Commission asa candidate. Once he either raises more than $5000 in

10 contributions or makes more than $5000 in expenditures, he willbecome a candidate11 under the Act.

' Although Mr. Hassan may notbe ehgible under Article II, Section 1 ofthe U.S. Constitution to assumethe office ofthe presidency because he is not a natural bom citizen, it is not for the Conunission to decideon this basis that Mr. Hassan maynotbe a candidate for thatoffice. As one federal courthas statedregarding the issue ofeligibility for the presidency:

Arguments conceming qualifications or lackthereofcan be laid before the voting publicbefore the election and, once the election is over, can be raisedasobjectionsastheelectoral votes are counted in Congress. The members ofthe Senate and the House ofRepresentatives are well qualified to adjudicate anyobjections to ballots for allegedlyunqualified candidates...Judicialreview- ifany - should occur only after the electoral and congressionalprocesses have run their course.Robinson v. Bowen, 567 F. Supp. 2d 1144,1147 (N.D. Cal. 2008) (citing Texas v. UnitedStates, 523U.S. 296, 300-02 (1998).

Thus, if it is inappropriate for a federal court to adjudicate in the fu-st instance a candidate's eligibility foroffice, it is similarly inappropriate for an administrative agency to determine in the first instance anindividual's ability to even be considered a candidate for that office.^ The Commission's conclusion that Mr. Hassan is a "candidate" for purposes ofthe Act does notnecessarily mean thathe is a viable candidate for purposesof qualifying to receive matching funds underthe Presidential PrimaryMatching PaymentAccountAct, which is addressed in the answer to Question 2,below.



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AO 2011-15DraftAPage 41 The Act defines "person" to include "an individual, partnership, committee,2 association, corporation, labor organization, or any other organization or group of3 persons, but suchterm does not include the Federal Govemment or any authority of the4 Federal Govemment."2 U.S.C.431(11); see also 11 CFR 100.10. Like the definition of5 "candidate," the definition of "person"makes no reference to natural bom or naturalized6 citizens. Thus, as an individual, Mr. Hassan qualifies as a "person"under the Act.7 2. Asa naturalized American citizen, is Mr. Hassan ineligible to receive8 presidential matchingfiindsunder the Presidential Primary Matching Payment Account9 Act?

10 Yes, as anaturalized American citizen, Mr. Hassan is not eligible to receive11 presidential matching funds under the Presidential Primary Matching PaymentAccount12 Act ("Matching PaymentAct").13 The United States Constitutionprovides that "[n]o Person excepta natural bom14 Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution,15 shall be eligible to the Office of President " U.S. Const, art. II, sec. 1, cl. 5.16 Although the Matching Payment Act does not specifically address the citizenship17 requirement for serving as President, it places several conditions and limitations on18 candidates regarding the eligibility for receiving matching funds and contains numerous1 9 requirements to receive them. See 26 U.S.C. 9033(a); 11 CFR 9033.2(b). See also, e.g.,20 Advisory Opinion 1996-07 (Browne for President) (describing the steps a candidate must

^ Mr. Hassan also asks whether he qualifies as an "individual" under the Act. Neither the Act nor theConunission's regulationsdefine "individual." The term "individual" is used throughout the text of theAct, without any reference to eithernatural bom or naturalized citizens. Mr. Hassan is an individual underthe common usage of the term, as well as a "candidate" and "person" under the Act.



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AO 2011-15Draft APage 51 take to become eligible for matching fimds). Implicit in allofthese requirements,2 conditions, and limitations is the legitimacy ofthe individual'scandidacy; that is to say,3 that the candidate notbe clearlyconstitutionally ineligible for the office which is sought.4 Further, unlike in Question 1, in whichthe Commission lacks the authorityto5 adjudicate on whether individualshave therightto hold themselves outas candidates and6 to campaign for office notwithstanding questions about their constitutional eligibility to7 hold suchoffice (see footnote 1, above), the Commission is charged under the Matching8 PaymentActwith administering the Federeil matching funds program. Additionally, the9 Commission has some discretion when certifying eligibility for matching fimds. While10 the Commission maynot "appraise candidates' good faith, honesty, probity or general11 reliabilitywhen reviewing the agreements and other forward-looking commitments12 required" by the Matching PaymentAct, seeLaRouche v. FEC, 996 F.2d 1263,126913 (D.C. Cir. 1993), situations may exist inwhich, "withoutassessment ofsubjective14 candidate intent, the Commission might conceivablywithhold funds despite formal15 compliance withthe statutorily expressed criteria."Id. Clear and self-avowed16 constitutional ineligibility for office is one ofthe few instances where suchdiscretion is17 appropriate.18 As Mr. Hassan has clearly stated thathe is a naturalized citizen ofthe United19 States, and not a natural bom citizen under the constitutional requirement in Article II,20 Section 1,Clause 5, the Commission concludes that Mr. Hassan is noteligible to receive21 matching fimds.



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AO 2011-15Draft APage 61 3. Asa naturalized American citizen, will Mr. Hassan violate 2 U.S.C.2 441h(b) ifhe solicits and receives contributions for his presidential campaign?3 No, Mr. Hassan will not violate 2 U.S.C.441h(b) if he solicits and receives4 contributions for his presidential campaign.5 Section 441h(b) states that "no person shall... fraudulentlymisrepresent the6 person as speaking, writing, or otherwise acting for or on behalf of any candidate or7 political party or employee or agent thereof for the purpose of soliciting contributions or8 donations." 2 U.S.C.441h(b)(l); see also 11 CFR 110.16(b). Additionally, "no person9 shall... willfiilly and knowingly participate in or conspire to participate in any plan,

10 scheme, or design" to partake in such fraudulent misrepresentation. 2 U.S.C. 441h(b)(2);11 jeea/jo 11 CFR 110.16(b).12 Senator Bill Nelson of Florida introduced the amendment that led to this provision13 in the debate over the Bipartisan Campaign Reform Act of 2002. Senator Nelson stated14 that the need for such aprovision arose from the Commission"receiving a number of15 complaints thatpeople havefiraudulentlyraised donations by posing as political16 committees or candidates." 147 Cong. Rec. S3122 (daily ed. Mar. 29,2001) (statement17 of Sen. BillNelson). He described the types of situations the amendment aimed to18 prevent, including "phony fundraising letters" sentfi-omsupposed lawyers for19 presidential candidates that "urged $1,000 contributions to seemingly prestigious20 Pennsylvania Avenue addresses." Id .21 Although Mr. Hassan is a naturalized citizen miming for President, he would not22 be engaging in fraudulentmisrepresentation as described in section 441h(b) by soliciting



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AO 2011-15Draft APage 71 or receiving contributions for his presidential campaigncommittee. Mr. Hassan does not2 intend to falsely represent or solicit funds for a campaign that is not his own, as was3 contemplated by Congresswhen it enacted this provision. Thus, Mr. Hassan would not4 be in violation of section441h(b) when soliciting and receiving contributions for his5 presidential campaigncommittee.6 4. Is Mr. Hassan required to comply with the Act's provisions regarding7 expenditures, contributions, recordkeeping, and reporting?8 Yes, Mr. Hassan must comply with the Act'sprovisions regarding expenditures,9 contributions, recordkeeping, and reporting.

10 Once an individual seeking election to Federal office has either mademore than11 $5000 in expenditures or received more than $5000 in contributions, that individual12 becomes a candidate for the purposes ofthe Act. 2 U.S.C.431(2); 11 CFR 100.3.13 Candidatesmustcomply withseveral requirements under the Act.14 No later than 15 days after becoming a candidate, an individual mustfilea15 Statement of Candidacy with the Commission in whichhe or she designates a principal16 campaign committee witha treasurer who willacceptcontributions and make17 expenditures. See 2 U.S.C.432(e); 11 CFR 101.1. Within 10 days of being designated as18 a candidate's principal campaign committee, the campaign committee mustfilea19 Statement of Organization. The committee mustalsofilea report detailing the20 contributions received and the expenditures made before the individual became a21 candidate. Specifically, these reporting requirements mandate that the treasurer "shall22 keep records of the name of eachcontributor, the date of receipt and amount of all



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AO 2011-15DraftAPage 81 contributions received, and all expenditures made inconnection with ... the individual's2 campaignprior to becoming a candidate." 11 CFR101.3; see also 2 U.S.C. 432(e)(2).3 Following this initial report, the committee must continue tofilequarterlyreports of4 contributions andexpenditures. 2 U.S.C. 434(a)(2); 11CFR 104.5. These reports must5 detail the total amounts ofreceipts anddisbursements for the reporting period and for the6 calendar year. See 2 U.S.C. 434; 11 CFR 104.3. The principal campaign committee7 must also comply with recordkeeping requirements related to contributions itreceives8 andexpenditures itmakes. 11CFR 102.9. All records required to be kept pursuant to9 these provisions must be retained for three years. Id.

10 Candidates must also comply withthe Act's contribution limits {see 2 U.S.C.11 441a(a); see also 11 CFR 110.1,110.2, and 110.5) and source prohibitions {see 2 U.S.C12 441b, 441c, 441e, 441f, and 441k; see also11CFR 110.4,110.20,114.2, and 115.2).13 Once Mr. Hassan has received more than $5000 incontributionsor made more14 than $5000 inexpenditures for his cainpaign, he will become a candidate under the Act.15 Asa candidate, Mr. Hassan will be subject to the statutes andregulations applicable to all16 candidates. Upon obtaining candidate status, he therefore will need to take the steps17 outlined above to register his principal campaign committee with the Commission and18 comply withthe provisions of the Actregarding expenditures, contributions,19 recordkeeping, and reporting. Inorder to comply withthese requirements, prior to20 becoming a candidate, in the testing-the-waters phase, Mr. Hassan will need to maintain21 records of all fimds received andpayments made inconnection withhis campaign, and he22 willneed to comply withall contribution limitations and source prohibitions set forth in



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AO 2011-15DraftAPage 91 the Actand Commission regulations.2 This response constitutes an advisory opinion conceming the application ofthe3 Actand Commission regulations to the specific transaction or activityset forth in your4 request. See 2U.S.C.437f The Commission emphasizes that, ifthere is a change in any5 ofthe facts or assumptions presented, and such facts or assumptions are material to a6 conclusion presented in this advisory opinion, then the requestor maynot rely on that7 conclusionas support for its proposed activity. Anyperson involved in any specific8 transaction or activity which is indistinguishable in all its material aspectsfiomthe9 transaction or activity withrespectto whichthis advisory opinion is rendered may rely on

10 this advisory opinion. See 2U.S.C.437f(c)(l)(B). Please note the analysis or11 conclusions in this advisory opinion may be affected by subsequent developments in the12 law including, butnot limited to, statutes, regulations, advisory opinions, and case law.13 The cited advisory opinion is available on the Commission'swebsite, www.fec.gov, or14 directlyfiromthe Commission's AdvisoryOpinion searchable database at15 http://www.fec.gov/searchao.1617 On behalfofthe Commission,18192021 Cynthia L. Bauerly22 Chair23



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I ADVISORY OPINION 2011-1523 Abdul KarimHassan, Esq. DRAFT B4 215-28 Hillside Avenue5 Queens Village, New York 1142767 Dear M r. Hassan:8 We are responding to your advisory opinion request conceming the application of9 the Federal Election Campaign Act of 1971, as amended (the "Act"), the Presidential

10 Primary Matching Payment Account Act, as amended, and Commission regulations toII your campaign for President of the United States, given your status as a naturalized12 citizen.13 The Commission concludes that M r. Hassan may qualify as a"candidate" under14 the Act. Whether M r. Hassan will be eligible to receive Federal matching fimds under15 the Presidential Primary Matching Payment Account Act is not yet appropriate for the16 Commission to determine. The Commission also concludes that M r. Hassan will not be17 in violation of 2 U.S.C. 441h(b) if he solicits and receives contributions. Finally, M r.18 Hassan will be required to comply with the Act's provisions regardingexpenditures,19 contributions, recordkeeping, and reporting.20 Background21 The facts presented in this advisory opinion are based on M r. Hassan's letter22 received on July 7,2011, as supplemented by emails received on July 19 and 20,2011.23 M r. Hassan is a naturalized U.S. citizen who announced his candidacy for24 President in March 2008 on his website. Subsequently, he made statements related to his25 candidacy andused his website to communicate to voters. In order to further



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AO 2011-15Draft BPage 21 communicate his message and platform to the public, Mr. Hassan also purchased2 campaign advertisements througha contract withGoogle.3 Mr. Hassan indicates that he satisfies all of the constitutional requirements for4 serving as President, except the national bom citizen requirement in Article II, Section 1,5 Clause 5 of the Constitution.6 Questions Presented7 I. Asa naturalized American citizen, will Mr. Hassan be considered a8 "candidate " or "person " running or President under the Act?9 2. As a naturalized American citizen, is Mr. Hassan eligible to receive

10 presidential matching funds under the Presidential Primary Matching Payment Account11 Act?12 3. Asa naturalized American citizen, will Mr. Hassan violate 2 U.S.C.13 44Ih(b) if he solicits and receives contributionsfor his presidential campaign?14 4. Is Mr. Hassan required to comply with the Act's provisions regarding15 expenditures, contributions, recordkeeping, and reporting?1 6 Legal Analysis and Conclusions17 I. As a naturalized American citizen, will Mr. Hassan be considereda18 "candidate " or "person " runningfor President under the Act?19 As a naturalized American citizen, Mr. Hassan may be a "candidate" and is a20 "person" as those terms are defined in the Act, and he states that he is running for21 President.



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AO 2011-15Draft BPage 31 The Actdefines "candidate"as"an mdividual who seeks nomination for election,2 or election, to Federal office."2U.S.C.431(2); seealso11 CFR 100.3. An individual3 becomes a candidate when he or she "has received contributions aggregating inexcessof4 $5000 or has made expenditures aggregating in excess of $5000." 2 U.S.C. 431(2); see5 fl/jo 11 CFR 100.3.6 The Act and the Commission's regulations do not address a candidate's7 citizenship or any other qualifications for office. Indeed, the Act's definition of8 "candidate" applies to those who seeknomination for election or election to Federal9 office rather than those eligible to be nominated or elected to, or to serve in Federal

10 office. Thus, the Act's definition of"candidate" is equally applicable to an individual11 who is a natural bom citizen and to one who is a naturalized citizen, so longas that12 person meets the other criteria that define a "candidate."'13 Mr. Hassan states thathe seeks election to Federal office. Mr. Hassan has not yet14 fulfilled the statutorydefinition ofcandidate, by either receiving more than $5000 in15 contributionsor making more than $5000 in expenditures, and therefore he is not a16 candidate at this time. Ifhe either raises more than $5000 in contributionsor makes more17 than $5000 in expenditures,he will satisfy the definition and will become a candidate18 under the Act. Although Mr. Hassan stateshe is not eligible to be seated for the office19 because he is a naturalized citizen, the Actdoes not preclude himfiomholding himself20 outasa candidate ashe meets the statutorydefinition.21 The Actdefines "person" to include "an individual,partnership, committee.

' The Actdoes notcontain separate definitions for candidates for differentFederal offices. TheConstitution's "natural bom Citizen"provision only pertains to "the Office ofPresident." U.S.Const., art.II, sec.1, cl. 5.



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AO 2011-15Draft BPage 41 association, corporation, labor organization, or any other organization or group of2 persons, but suchtermdoes not include the Federal Govemment or any authorityofthe3 Federal Govemment."2 U.S.C.431(11); 5ee a/jo 11 CFR 100.10. Like the definition of4 "candidate," the definition of "person"makes no reference to natural bom or naturalized5 citizens. Thus, as an individual, Mr. Hassan qualifies as a "person"under the Act. ^6 2. As a naturalized American citizen, is Mr. Hassan eligible to receive7 presidential matchingfiendsunder the Presidential Primary Matching Payment Account8 Act?9 The Commission concludes that this question is speculative, because it depends

10 on a number of contingencies that may or may not occur. The Matching PaymentAct11 and its implementingregulations set fortha series of qualifications and procedural1 2 requirements that a candidate must satisfy in order to receive public matching funds. See13 2 U.S.C.9033; 11 CFR 9033.1 and 9033.2. The Commission'sprocedures for certifying14 candidates to receive matching fimds contemplate a process whereby the Commission15 willevaluate a candidate's eligibilitywhen the candidate submits the required documents.16 Therefore this question is, at this time, hypothetical. Commissionregulations17 explain thatrequests posing hypothetical situations, presenting a general question of18 interpretation, or regarding the activities of third parties, do not qualify as advisory19 opinion requests. 11 CFR 112.1(b). On this basis, the Commissionexpresses no opinion20 regarding this question. If Mr. Hassan satisfies the other criteria to qualify to receive

^ Mr. Hassan also asks whether he qualifies as an "individual" under the Act. Neither the Act nor theCommission's regulations define "individual." The term "individual" is used throughout the text of theAct, without any reference to eithernatural bom or naturalized citizens. Mr. Hassan is an individual underthe common usage of the term.



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AO 2011-15Draft BPage 51 matching funds, he may at that time submit the appropriate materials to seekcertification2 for matching funds.3 3. Asa naturalized American citizen, will Mr. Hassan violate 2 U.S.C.4 44Ih(b) ifhe solicits and receives contributions for his presidential campaign?5 No, Mr. Hassan will not violate 2 U.S.C.441h(b) if he solicits and receives6 contributions for his presidential campaign.7 Section 441h(b) states that "no person shall...fraudulentlymisrepresent the8 person as speaking, writing, or otherwise acting for or on behalfof any candidate or9 political party or employee or agent thereoffor the purpose of soliciting contributions or

10 donations." 2 U.S.C.441h(b)(l); see also 11 CFR 110.16(b). Additionally, "no person11 shall... willfiilly and knowingly participate in or conspire to participate in any plan,12 scheme, or design" to partake in suchfraudulentmisrepresentation. 2 U.S.C. 441h(b)(2);13 see also 11 CFR 110.16(b).14 Senator BillNelson of Florida introduced the amendment that led to this provision15 in the debate over the Bipartisan Campaign Reform Act of 2002. Senator Nelson stated16 that the need for such a provision arosefromthe Commission "receiving a number of17 complaints thatpeople havefraudulentlyraised donations by posing as political18 committees or candidates." 147 Cong. Rec. S3122 (daily ed. Mar. 29,2001) (statement19 of Sen. BillNelson). He described the types of situations the amendment aimed to20 prevent, including "phony fimdraising letters" sentfromsupposed lawyers for21 presidential candidates that "urged $ 1,000 contributions to seemingly prestigious22 Pennsylvania Avenue addresses." Id .



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AO 2011-15DraftBPage 61 Although Mr. Hassan is a naturalized citizen running forPresident, he would not2 be engaging infraudulentmisrepresentation asdescribed insection 441h(b)by soliciting3 or receiving contributions for his presidential campaigncommittee. Mr. Hassan does not4 intend to falsely representorsolicit funds fora campaign that is not his own, as was5 contemplatedbyCongresswhen itenacted this provision. Thus, Mr. Hassan would not6 be inviolation of section441h(b)when soliciting andreceiving contributions for his7 presidential campaigncommittee.8 4. Is Mr. Hassan required to comply with the Act's provisions regarding9 expenditures, contributions, recordkeeping, and reporting?

10 Yes, Mr. Hassan mustcomply withthe Act'sprovisions regarding expenditures,11 contributions, recordkeeping, and reporting.12 Once an individual seeking election to Federal office has either made more than13 $5000 inexpenditures or received more than $5000 incontributions, that individual14 becomes a candidate for the purposes ofthe Act. 2U.S.C.431(2); 11 CFR 100.3.15 Candidatesmust comply withseveral requirements under the Act.16 No later than 15days after becoming a candidate, an individual mustfilea17 Statement of Candidacy withthe Commission in whichhe or she designates a principal18 campaign committee with a treasurer who willacceptcontributionsand make19 expenditures. See 2U.S.C.432(e); 11 CFR 101.1. Within10days ofbeing designated as20 a candidate's principal campaigncommittee, the campaign committee mustfilea21 Statement of Organization. The committee mustalsofilea report detailing the22 contributions received and the expenditures made before the individual became a



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AO 2011-15Draft BPage 71 candidate. Specifically, these reporting requirements mandate that the treasurer "shall2 keep records of the name ofeachcontributor, the date ofreceiptandamountof all3 contributions received, and all expenditures made inconnectionwith ... the individual's4 campaign prior to becoming a candidate." 11CFR 101.3; see also 2 U.S.C. 432(e)(2).5 Following this initial report, the committee must continue tofilequarterlyreports of6 contributions andexpenditures. 2 U.S.C.434(a)(2); 11CFR 104.5. These reports must7 detail the total amounts ofreceipts anddisbursements for the reporting period and for the8 calendar year. See 2 U.S.C. 434; 11CFR 104.3. The principal campaign committee9 mustalso comply withrecordkeeping requirements related to contributions itreceives

10 andexpenditures itmakes. 11CFR 102.9. All records required to be keptpursuantto11 these provisions must be retained for three years. Id.12 Candidatesmust also comply withthe Act's contribution limits {see 2 U.S.C.13 441a(a); see also11CFR 110.1,110.2, and 110.5) and source prohibitions {see 2U.S.C14 441b, 441c, 441e, 441f, and 441k; see also 11CFR 110.4,110.20,114.2, and 115.2).15 Once Mr. Hassan has received more than $5000 incontributions or made more16 than $5000 inexpenditures for his campaign, he will become a candidate under the Act.17 Asa candidate, Mr. Hassan will be subjectto the statutes andregulations applicable to all18 candidates. Upon obtaining candidate status, he therefore will need to take the steps19 outlinedabove to register his principal campaign committee withthe Commission and20 comply withthe provisions of the Actregarding expenditures, contributions,21 recordkeeping, andreporting. Inorder to comply withthese requirements, prior to22 becoming a candidate, in the testing-the-waters phase, Mr. Hassan willneed to maintain



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AO 2011-15Draft BPage 81 records ofall funds received andpayments made in connectionwithhis campaign, and he2 willneed to comply withall contribution limitations and source prohibitions set forth in3 the Act and Commission regulations.4 This response constitutes an advisory opinion conceming the application ofthe5 Actand Commission regulations to the specific transaction or activity set forth inyour6 request. See 2 U.S.C.437f. The Commission emphasizes that, ifthere is a change in any7 ofthe facts or assumptions presented, and suchfacts or assumptions are material to a8 conclusion presented in this advisory opinion, then the requestor may not rely on that9 conclusion as support for its proposed activity. Any person involved in any specific

10 transactionor activity whichis indistinguishable in all its material aspectsfromthe11 transaction or activity withrespectto whichthis advisory opinion is rendered may rely on12 this advisory opinion. See 2U.S.C.437f(c)(l)(B). Please note the analysis or13 conclusions in this advisory opinion maybe affected by subsequent developments in the14 lawincluding, butnot limited to, statutes, regulations, advisory opinions, and case law.1516 Onbehalfofthe Commission,17181920 Cynthia L. Bauerly21 Chair22



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CES Response to Defendant Peterson MTD w Exhibits NYSSC Kings 6500-2011

Documents

Transcript of CES Response to Defendant Peterson MTD w Exhibits NYSSC Kings 6500-2011