R£MCHO, JOHANSEN & PURCELL, LLP ATTdRNEVSATLAW

201 DOLORES AV EN UE Joseph Remcho (1944,2003) SAN LEANDRO, GA 94577 Robin B! Johanseri PHONE: (510) 346-6200 Kathleen J. jPurceli (Ret;) FAX: (510) 346-6201 jHmesG,Haff^ E-MAIL: harrison@rjp.com liidmas. A. ^ •WEBSITE: www.rjp.com . 'Kar^ Qi^^

.M SACRAMENTO PHONE: (916) 264-1818 Kari Krbgseng

April 4,2012: :

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ST VIA FEDERAL EXPRESS & E-MAIL '.li J:; Nl- ....O ^^^r,. r.~"''\

JeffJordan Office of General Counsel 'V '

O: Federal Election Commission 999 "E" Street, NW Washington, DC 20463

Re: MUR 6529

Dear Mr. Jordan:

We represent Califomia ;State Senator Gloria Negre ^ ^ treasurer Gilbieit MCLeod, Gloria Negrete N cL>eod;;lQfr Congressji C loriaiNegrete M^ fpr Senate 2010, and Gloria McLeod for Supervisor:;2,014 (togethief- ^ ^ withthecomplaint.filedby Steven A.. Figueroa; / Respondents received notiificia ^ ^ complaint on February 17,2012, and your office granted respondents a ^ ihe complaint by or on April 4,2012. Respondents request tiiat this matter remain confidential in accordance with 2 U.S.C. section 437g(a)(4)(B).

llie complaint alleges that respondents have cireumyented; the Federal E Campaign Act and the Bipartisan Campaign Reform Act of 2()02 Sj -the: Ael"); itiifive; seps ^ ways. These allegiations are refuted below. At best, the cpmplaiht np ^ deficienGies in respdhdents' disciaimers and miiipr errors: iii repcirting knd aUociating expenditures. The cpibplaint shpuld be dismisjsed because it: fails t ^ significant violation of federail campaign finance laws warranting the furtfaer usii bf FEC resources. See Hecklir v. ChaHeyZmV.&-m,m-310 (D.C. Cir. 2007).

1 •• : Respondents ' updated statements of designation of counsel were submitted on March 6,2012.

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Jeff Jordan Federal Electibn (Commission April 4,2012 Page2

1. Alleged .Reieciot of Goiitribution Over Limit

First, the complaint alleges that Gloria Negrete McLeod for Congress iaccepted a $8,Q00 contribution from Lang, Hahsenj O'Malley & Millier,: a Califoinia partkership,;:Wh ^ exceeded the $2,500 per election limit, 11 C.F.R. §1104(15)5 iiiitially receiyed and deposited a $8,00.0 check Jcom Laiigi ;Han^ & Miller on lieeember 23,2&l lv and reported that cheokM FECj^ committee mistakenly believed that the epntribu pn bbuld;^^^ the fimi'sfour

Q partiiers d that the contribution so attiil ^ *H recognizing its error hbwever, the committee cbmbiunitated With the finhVand dl a ^ tiie committee would retiim $6,000 to the firm on Febriiary 21,2012, leaviilg a-fe ^ • 1 contribution from the firm. Copies of the reimb\u:semenf check sentf ^ H\ - firm, as. well as the Certified mail receipt, are attached in E>ibi^^ 111$: Commitee ^ . amendment to refiect these, facts. ST •

® The comniittee reimbursed the film $6;OO0 v^ coritribution,. emdw imperinissible. It therefore complied with the i)rpciBSS setfbrth :H gectiph lG3;.3(b), which allows committees to refund excessive contriteiohs. the ainount lem^ within 1^^ contribution limit, the comrriittee's corrective actions cbmj iied with se i ljC l-sij 10 The committee made an honest mistakeJregarding cpntributions froth r ^ and it coitected its error as soon as it discovered it.

2, Alleieed'Non-fCoiripIiance with Fedci'

The cpniplaint next alleges tto G coniply with the disciauiier lequiteniehts iti Septioii 1 iO. l i .ivi^ tp a;f pmii r 1 that was attached to ah:, email sent to approxiihately 2 ibO :rc Tiie cbm iaint is'flaitiy vyrong in claiming that the hivitatioit attached ais E>diiibit;i2:tp ffi^^ :. indicate who paid for. the cQmmunication.' ' To the contrary, the invitati ^ ^ tfaatit was "paid for aiid Authorized by Gloria Negrete: McLeod for Congjiess.V It is truiei thdt the disclaimer, w^ riot set fbrtii in a box, but given the nature of the ohe-sided inyitatibn^^ its' • content, the absence ofthe box is iiot a iiiaterial bmisiisibn.: inyitatioh 1^ complied with the disclaimer requirement, and any techiiiibki violation of i ectibn l l 0,:11 is insignificant.

The Cougressidnai committee also substantially c0mplied:With the "best.efforts'' notification required by section 104.7(b). Theinvitatibri sdliGits -a cQ occupation, employer, address, and other contact infoimatibii with the phrase '*F^^ finance laws require that we obtain the following informatibn.'' At the end bf :the sblicitatibnl the invitation reiterates tliat "ALL THE ABOVE INFORMATI.GN IS I<E(jmi D BY LAW;" This language constitutes a "clear request" for the contributors' required infoniiatio and also constitutes "an. accurate statement of Fe'deral law regarding tiie cQllectioh arid reporting of individual contributpr ideritifieatibns." 11 C.F.R. § 104.7(b)(l)(i).: Sectibri 104.7 provides

Jeff Jordan Federal Election Cbmmission April 4,2012

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examples of the types of statements that are accjeptable to cohyey tMs inforiiaatipn, bu^^ not tiie only allbwabie: staternents." A/. § 1047(b)(l)(i){p). TO fact tiia^^^^^ invitation is more sirhple and direct than the suggested examples: does: n ^ : did not substantially comply with .section 104.7. Any technical deviatipii'i oi ^ ^ example language in section 104.7(b) is insignificant and unwbrthy of fiirther expenditure of Commissiori resources.

3. Alleged Non-!Compliance with Prohibitioh AgainstiDisbursihg NonrFederal Furids.

Third, the coniLplamt alleges that ^^ contributiojHis to ::Qther state catididiates and: committees in y ^ which

tt\ : prohibits federal Candid ^ Nl : campaign fuiids to make cbntributions tb other state of local-candidates:or domniiitteesi ^ . .

^ Respondents did not violate section 300.62 because all contributions made to state jl and local candidates and conimittees by the state senate Gommittee afier Senator McLeod «-i became a federal candidate were :from federally permissible; sources, within he federal ^ ^ .

Section 300.62 allows federail candidates to disburse fundsiri coimection With any non-Federal electidn "that do ndt exceed the Act's cdntribution limits or come from prbhibited sdurces under the Act." A state :candidate whp is alsp a candidate for Coiigress niay th money iri her state campaign account tb cdni ibiite 'to dther stote candidates cr a politii ^ ifaat' the state account ihcludes sufficient ccntributiohs fix)m federally permissible: spurces: and within the federal limits. Advisory Opinion 2007-26 (Schock); Advisory Opinion 2()0^^ The Cbmmission: has determined that a candidate may use either the **firstin; first transferred"/"first in, first but" ("FIFO") aceountiiig itnethbdor the "last iri,-first tr^ in, first out" ("LIFO") accounting method to. identify fedeiiafliypermissible funds she has i state accdunt. Advisdry Opinidn 2007-26; Advisdry Opinidn 2006T38 (citing AO 2006-6 (Busby)& AO 2004-45 (Salazar)).

We have ideiitified a number pf cdntributibns tp: the Gloria hiegrete McLeod Senate 2010 edmmittee that: cbmprise federaily permissib:ie;:fUi ^ ^ ^ cpmmittee's filirigs with: the CaUfdmia Secreta federally permissibie arid within the federal limits, we iricluded ebntribiutidhs :fipni'' individuals small cdntributdr ccmmittees (pdlitical ccmmittees that receive contributions sdlely frdm individuals that dd ridt exceed $200), and dther federal and state pdlitical ccmiiiittees: that receiyed cdntributidns sdlely frdm indiyiduals. We reviewed each df the pdlitical cdmmittees'

3 : '"• -Under Califdmia campaign law, a pdlitical cornmittee qualifies as a "sriiall cdiitributdr

cpmnuttee!'.(SQC;) When it^ existence ibr at leaist six mdnths; (b);the cdmmii eerreic iye&cdntiib ^ pCTSdns; (c) ilp one ($200) per calendar year; and (d) the cdnimittee r akes cohtributidhs W fi every 36 mbnths. Cial. Gdv. Cdde § 85203; 2 Cal:CddeReg. J^

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Jeff Jdrdaii Federal Electidn Cdmmissidn April 4,2012 Page 4

ddudr lists td ensure that they received nc ccrpdrate or labor drgariizationicdntributidns. A dpnpr that is a recipient ccmmittee (a federal npn-cpiinected: committee, a CalifomiaLPACi or :;: • Califdmia small Gbiitributpr cbmmittee (SCC)) was included as a :permissible:s ^ Sdurces bf its fuhdib were individuals - le., nbhe df the cbmrnittee's funds Were :feceiv :fit>m cbrpdratidnsdr labor orgaiiizatidns. .

We then used LIFO and FIFO to cpnfinn thait the GI Negyete McLedd for Senate 2010 cdmmittee had sufficietit federtilly pdrtiiissiblyi! ^ made td state and local candidates after Seiiatct McLepcivdeplarbd. hpr carididacy f ^ ObiigiceSsi bn

Q September 6,2011. Senator McLeod made cbrii biitibns tb C ^ candidates ^ and pdlitical cdmmittees tdtaling $15,800. See Exhibit B; Under ' e F ^ accdimtihg met ^ ^ ^ the state senate ccmmittee had at least $19,300 avdlable.in; federal ^ those Gontributidiis. Under the LIFO accdunting rnetho-l ^ ^^ ST- ••: available; Q :•:• :•" ^ A list of federally permissible funds avulable under each accp

prdvided in Exhibit B. Exhibit B debionstrates that there iai fedeiMiy i ^ funds td cdver the ambunt the cdmmittee has Cbntiiibuted to state jdnid: Ideal candidte^^ Cdmmittees under either accounting methdd. Accdi'dihgl>f, the ccmmittee had: sufficiehifim cdmply with sectidn 300.62 when it made the cdntributidns to state and local Gandidates and; Cdmmittees.

4. Aiifegcd Nbn-Gompliance with Prohibition Aigainst (Sbliigidng• ii>lbrirFj

The complaint alleges that the Congressional commitiee; inay have y sectidn 300.61, which prdMbits federal candidates jf^

The Cdmplaint alleges that the committee made state cdntributidns exceeding $ 18,000, but appears td cdunt Cdntributidns made befdre Senator McLeod declared her federal candidacy. We have thus disregarded tl t eunpimt and considefed diiiy the state cpntributibiis m afier Senatdr McLecd decided her intentibn td become :a ifed ^ Senatdr McLcdd declared her candidacy fcr the Cbhgriessibi l seat she did ndt receiye sufficient cdntributidns under 11 C-F iR. sectibn:! candidate until iSeptember 22j 201 i.

^ The Senate ccnnmittee tiansfbrred $652,3160.41 in campmg the Sui)ervispt:CK}nunit ^ dn Ndvember 9,2010 and Npvember 10,2P1and attributed these; & its campaign repdit. This attributibn was not required: under: state law ahd has' id :bearing'd accduntihg methdds applicable tc determinirig federally permissible funds, sb we have disregard the attribution to specific ddndrs.

^ Exhibit B does ndt ccntain a cdmprehensive list df all permissible contributidns to the Senate :: Cdmmittee, as we stdpped identifying permissible sources of funds once ample cdntributidns were identified.

JeffJdrdan Federal Electidn Cdmmissidn April 4.2012 Pages

by Cdrpbiatidiis and labdr drganizatidns unless the PAC is rc edlegatidnisbasedsolelydn language ^^ v abbye and atiacli ^ as Exhibit 2 tb the cdmplaint.:: That lianguage is: "Ststtje ahdilcca ^^ ccntribute miaximum $1 000/ Cdrpdrate cbntribMpns andMsh 0

Respondents are ndt aware bf any FEC regiilatibn that requires thein td explain td pdtential ddUdrs the laW itgarding dbndrs' cbihpliahce With fed rules. Respdndents were and are aware thai s ^

Nl Cdntributidns to federal candidate Cdmmittees Tc this end, the: •[J. cdmmittee's FEC filings .demonstrate that Gipria Negretie MGLedd ^ ^ neither . . 1 . sdlicited ndr accepted cdntributidns fi'dm dohdrs whdse Qpntribiiti ft) under federal law. Therefdte, respdhdents have committed: ho yiblatibaof sectidn 30Q;61. Nl ... ^. 5. Alleged.Impermissible Transfer of Eundi::from Nbrir,iFederaT;€ampaign .Gommittee • XJ. .-. ' --.-.f •:•,.••-:,•.•:•:: . . • . . ...=.v.f-.v-• • ::r-. •:";^J-.-'':V-

Q-••• ••;:•;:•• •• i7l Lastiy, the cdiiiplaint alleges that: Gloria Ne r-i Gloria Negrete McLeod fdr Supervisdf 2014 made imper Gldria

Negrete McLcdd fcr Cdngress iii vidlatidii bf sectidn 110.3(d) wheii:ihey :.isplit the cdsts of pdlling and survey research cdnducted in summer 2011, which totaled $30,120.

The purpdse df the pdll was twd-fdld: td assist Senatdr McLepd in identifying: issues df impdrtance td her Senate district cdiistituents, anditbi help hermake. the important ' decisidii abdut whether td seek the office df Cbimti Supervisor: br memHduseidf: Representaitiyes. The Senate district is quiteiiarge; and ehcdmpasses much ofthe supetvisbr:;; district as well as the Cpngressipnal district; Ideated, in soiithem Cieilifbriiia, and contains a small part of Chindj as well as cities of ( pltdny Montclair, Ontaridj Pdiiipna, Riallb, San Bertiardiiip, mid uhincotpbr ^ The :Supervisdr district •cdritains the cities df ChinO, Chind Hills, Mdhtclair and OhtaridVand, a pdilidU pf Uplandi time the poll was drafted and ccnducted in late July and early August 201 l,.the state redistrictinig Cdmmissidn had not yet firialized the boundaries pf the Cdngressidnal district, sc its cpntdurs were ndt knoWn, aiid were subject to change: As it turns dut, the 35th Cbngtesisidnal District is largely within the Senate district, and enccmpasses the cities df Chino, Ontario, and Pomona, and parts of Fbntana, Rialto and unincorpdrated Blddmingtdn. Thus the pdlling directed tdwards the Senate district Cdnstituents largely dverlapped witfa the pdlling regarding the pdtential bppdrtunities df mrmiiig in the Supervisbr district br a newy ildt-yet-drawn Cdngressidnal: race.

Respdndents had the poll questiuns reviewed by ccunsel pridr td cpnducting. it. Cdunsel advised the Cdmmittee td alldciate the cbsts df the pdllin|;;betWee ^ ^ • :: Supervisor committees, aiid did not fiag the/question of whether the poll iedso bene ^ the then- : ncnexisteht Cdngressidiial cbmmittee. Respchdeiits tiierefdre relieddn the advice bf ccunsel in prdceeding with the pdlling and the attributidii bf the cdsts of the pdlling td the Senate and Supervisdt Cdmmittees.

Jeff Jordan Federal Election, .Commission April 4,2012 Page 6

The complaint is incblreet iii alleging that the non-existeiit federal ediiimittee receivedlnrkind ebiitributions fiom the Senate aiid Supeivisbr committees. A federal candidate cbmmittee may iibt accept a ccntribution from a iidn-federal QQmmitteecpntrplled by thei candidate j and it was not the intenticn of either non-federal cpninii Kee to make a prohibited Cdntribution. Rather, tiiere vyas a misiinderstandihg on the part of responderits about how the costs should be paid ih relianc^e on the advice of counsel.

Respondents now realize thatthe pprtion bf the pollihg devoted to testmg the «T waters for the Cbngressionail race shdUld ndt have been paid by the Senate smd the s^ <H committees, and instead should' have been paid by spuripes. peimissible under the testing-ther O waters prpvision and later <attributed to the Corigressioiial. cdmmittee if iand when it was created. ^ Accordingly, respondents faave reviewed the cdntent and scope of the poll and ideritified the Kl portion (six-elevenths) that is reasenably related to the Cbiigfcssibnal district. The

Congressioiial cdmmittee has reimbitirsed the Senate committee and the Supervisor comiiiittee ^ $8,214.55 and $8 214.54, respectively, fdr the pprtidn pf the pblliiig that y/as\ direPted tp>yards ^ the pdtential Cdngressidnal race, and .tiiese payments; will be reidecfed in its next FEC filing.

Copies of the reinibursem t checks are attached :at Exhibit C, Respondents believe this remedial action rectifies the mistake, and dd iidt believe that fuitherexpefiditure bf FEC resdurces dn the matter is necessary.

In siun, respondents' cdiiduct has been substantially cdnsistent with the requiremeiits ofthe Federal Election Campaign Actand tiie FEC's regulations. Any violatibns df the Act were relatively miner and insignificant, and have been cdrrected. Respondent Gldria Negrete McLeod is a first-time federal candidate, and she, her treasurer and other staff are still leariiing the complex federal campaigh firiarice laws.gcverning her candidacy, They made fheir best efforts to dd sd in the first mdiiths ofher candidacy, arid will redouble their effprts tb cdmpIy with federal law gding forward. The complaint:shdiild therefbre be disriiissed without further actien.

If you Would like additional informatibn, please dd riot hesitate td contact usi

Sincerely,

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R^^HQ, JOHANSEN & PURCELL, LLP \, ^ n|es :C.. Harriscn

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