The Federal Election Commission logo. To launch an audit, four...

The Federal Election Commission logo. To launch an audit, four of the six FEC commissioners must vote to recommend one, according to an FEC handbook. Credit: SOPA Images/LightRocket via Getty

Over a two-year period, as George Santos raised funds to run for Congress in the 3rd District, the Federal Election Commission sent his campaign 20 notices alerting him to possible campaign finance violations that needed to be addressed.

Each time the campaign was warned about the prospect of an audit, but the FEC never conducted one.

Campaign finance experts say the lack of any audits, given the unusually high number of notices to Santos' campaign, highlights one of the many flaws in the FEC’s oversight system and underscores the need for reforms as investigators probe Santos' financial records.

“Where the FEC failed in regard to the Santos campaign was the letters were being sent, these issues were being flagged, but there was no follow-up,” said Saurav Ghosh, director of federal campaign finance reform for the nonpartisan Campaign Legal Center.

“The FEC was flagging all these issues, but no audit was conducted," Ghosh told Newsday. "No answers were provided to the public before they were asked to cast their ballot.”

The issues flagged by the agency, according to the letters dating to August 2021, included questions about donations that exceeded federal campaign contribution limits, the source of hundreds of thousands of dollars of loans by Santos to his campaign, and omission of information about political action committees the campaign said were donors.

During Santos' 2022 campaign, his treasurer, Nancy Marks, responded to the FEC notices by amending filings by the deadline established by the agency, avoiding one of the potential triggers for an audit, according to the notices sent to Santos' campaign.

A review by the Campaign Legal Center found the revised filings didn't always address all the issues raised in the FEC notices.

The center, which filed a complaint with the FEC in January calling for an investigation into Santos and Marks, found the campaign provided amended reports but did not appear to issue refunds to donors cited for excessive contributions.

The review said Santos' campaign has not adequately responded to questions raised by the FEC in a letter in December asking for details about the source of a $125,000 loan to his campaign.

Santos initially said he made that loan and another $500,000 loan from personal funds.

In January, the campaign amended the filings to indicate the loans were not from Santos' personal funds.

Since the funds were no longer listed as personal, Santos would have had to provide details about the bank or entity that provided the loan, according to FEC rules.

To date, the Santos committee has not provided such information to the FEC.

In an interview with Fox 5 NY on Thursday, Santos contradicted the amended filings, saying he was the sole source of the loans.

It was "100% legitimately my money," Santos said.

FEC spokesman Christian Hilland, in an email to Newsday, said the commission declined to comment specifically on the questions surrounding Santos' campaign finances.

Generally, Hilland said, audits are conducted at "the end of a two-year election cycle."

But he cautioned that the number of notices "a committee receives may not be the best predictor of a financial audit by the Commission."

Santos’ attorney Joseph Murray told Newsday Saturday he would not comment on Santos’ campaign finances.

The issues flagged by the FEC, coupled with other examples of misreported campaign contributions and expenses found in many of Santos’ FEC filings, highlight deficiencies in the federal reporting system that campaign finance experts say allowed Santos (R-Nassau/Queens) to operate his campaign without any penalties or sanctions.

Newsday and other news outlets have found that in the 2022 election cycle, the Devolder-Santos for Congress committee, Santos' primary campaign committee, reported donor addresses that don’t exist and listed donors who told reporters they never contributed to his campaign.

The committee reported itemized expenses that reporters found didn’t match the actual cost of the services.

The Devolder-Santos committee also frequently amended its filings to list the cost of expenses that lacked receipts at $199.99, a penny below the threshold for having to provide receipts.

Lorenzo Holloway, a former managing attorney at the FEC, told Newsday auditors potentially could have caught many of the issues disclosed in reporters' stories.

But he said the agency’s audit division gets involved only when a formal audit is launched.

The Reports Analysis Division, the FEC arm that first reviews candidate campaign finance forms, only has “the capacity to question apparent discrepancies or problems that can be detected from the face of the report,” Holloway said.

Such issues can include campaign contributions that exceed the federal limit of $2,900 per election for individuals, and $5,000 for multicandidate committees, said Holloway, who works as a private campaign finance attorney in Maryland.

“The FEC does not have the capacity to audit all [political action committees] and campaign committees, and committees do not fear a random FEC audit because the FEC does not have random audit authority,” Holloway said.

To launch an audit, four of the six FEC commissioners must vote to recommend one, according to an FEC handbook on audits.

Typically, the FEC conducts 30 to 40 audits in every two-year election cycle, the handbook says.

Paul S. Ryan, a prominent election law attorney, said the agency previously had the ability to randomly audit lawmakers, but Congress changed the law in the late 1970s.

To boost transparency, the FEC should consider lowering the $200 threshold for requiring expenditure receipts, said Ryan, who is based in Washington, D.C.

He said most financial transactions are captured in online bank statements or in receipts cataloged in phone apps that can be forwarded easily to the FEC.

“These reporting and disclosure laws have been on the books mostly unchanged for decades and decades,” Ryan told Newsday.

“They predate the existence of sophisticated electronic systems for credit card usage and other financial transactions," he said.

"There is a digital paper trail for all these transactions presumably in this day and age so we could get the enforcement.”

Campaign finance experts and others have expressed similar concerns about the transparency of campaign filings in New York State.

State and local campaigns in New York can amend required financial disclosures at any time, even years after the election has passed.

Since 2021, those filings and amendments have been done through the state Board of Elections electronic filing program, aimed at getting more committees to file disclosures that are accurate and on time.

“Since the goal is for the filer to be as accurate as possible, an amendment can be submitted by the filer at any time for any reason … without prior board staff approval,” said John Conklin, a spokesman for the state BOE.

While the system notes when a periodic report was amended, it doesn’t flag what was changed.

That could hinder independent analysis of campaign finance records, according to Common Cause New York.

The state doesn’t track how often amendments are made, Conklin said.

The New York State system requires political contributors to be identified.

Unlike at the federal level, however, contributors don’t have to list their employers.

Such information could help identify contributions from workers at companies that have state contracts or are seeking them, experts said.

Also, the fact that contributors need only give their home addresses could allow employers to "bundle" contributions to political candidates using individual employee donations, the Moreland Commission on Public Corruption warned in a 2016 report.

“It’s almost like they were destined that it be the craziest system they could make, and they succeeded,” said Blair Horner of the nonprofit New York Public Interest Research Group.

Susan Lerner, executive director of Common Cause New York, expressed concern that control of some election boards, including New York's, is split evenly between Democrats and Republicans.

“This is a deliberate measure,” Lerner said. “They make it very difficult for the agency to take action.”

Overall, Lerner said, “there are an infinite number of ways to game the system because there is not uniform, well-financed enforcement.”

State Assemb. Charles Lavine (D-Glen Cove), the former chairman of the Assembly Elections Committee, said candidates who are willing to exploit loopholes at the state and federal levels, as Democrats and some Republicans have accused Santos of doing, are hard to stop.

“It’s almost impossible to write legislation that will protect the public from what is beyond bizarre,” Lavine said, referring to Santos.

Over a two-year period, as George Santos raised funds to run for Congress in the 3rd District, the Federal Election Commission sent his campaign 20 notices alerting him to possible campaign finance violations that needed to be addressed.

Each time the campaign was warned about the prospect of an audit, but the FEC never conducted one.

Campaign finance experts say the lack of any audits, given the unusually high number of notices to Santos' campaign, highlights one of the many flaws in the FEC’s oversight system and underscores the need for reforms as investigators probe Santos' financial records.

“Where the FEC failed in regard to the Santos campaign was the letters were being sent, these issues were being flagged, but there was no follow-up,” said Saurav Ghosh, director of federal campaign finance reform for the nonpartisan Campaign Legal Center.

WHAT TO KNOW

  • As George Santos raised money to run for Congress, the Federal Election Commission sent his campaign 20 notices alerting him to possible campaign finance violations that needed to be addressed.
  • Each time, the FEC warned about the prospect of an audit, but the agency never conducted one.
  • The absence of audits, given the high number of notices to Santos' campaign, highlights one of many flaws in the FEC’s oversight system, campaign finance experts said.

“The FEC was flagging all these issues, but no audit was conducted," Ghosh told Newsday. "No answers were provided to the public before they were asked to cast their ballot.”

The issues flagged by the agency, according to the letters dating to August 2021, included questions about donations that exceeded federal campaign contribution limits, the source of hundreds of thousands of dollars of loans by Santos to his campaign, and omission of information about political action committees the campaign said were donors.

Numerous amended filings

During Santos' 2022 campaign, his treasurer, Nancy Marks, responded to the FEC notices by amending filings by the deadline established by the agency, avoiding one of the potential triggers for an audit, according to the notices sent to Santos' campaign.

A review by the Campaign Legal Center found the revised filings didn't always address all the issues raised in the FEC notices.

The center, which filed a complaint with the FEC in January calling for an investigation into Santos and Marks, found the campaign provided amended reports but did not appear to issue refunds to donors cited for excessive contributions.

The review said Santos' campaign has not adequately responded to questions raised by the FEC in a letter in December asking for details about the source of a $125,000 loan to his campaign.

Santos initially said he made that loan and another $500,000 loan from personal funds.

In January, the campaign amended the filings to indicate the loans were not from Santos' personal funds.

Since the funds were no longer listed as personal, Santos would have had to provide details about the bank or entity that provided the loan, according to FEC rules.

To date, the Santos committee has not provided such information to the FEC.

In an interview with Fox 5 NY on Thursday, Santos contradicted the amended filings, saying he was the sole source of the loans.

It was "100% legitimately my money," Santos said.

FEC spokesman Christian Hilland, in an email to Newsday, said the commission declined to comment specifically on the questions surrounding Santos' campaign finances.

Generally, Hilland said, audits are conducted at "the end of a two-year election cycle."

But he cautioned that the number of notices "a committee receives may not be the best predictor of a financial audit by the Commission."

Santos’ attorney Joseph Murray told Newsday Saturday he would not comment on Santos’ campaign finances.

Holes in the system?

The issues flagged by the FEC, coupled with other examples of misreported campaign contributions and expenses found in many of Santos’ FEC filings, highlight deficiencies in the federal reporting system that campaign finance experts say allowed Santos (R-Nassau/Queens) to operate his campaign without any penalties or sanctions.

Newsday and other news outlets have found that in the 2022 election cycle, the Devolder-Santos for Congress committee, Santos' primary campaign committee, reported donor addresses that don’t exist and listed donors who told reporters they never contributed to his campaign.

The committee reported itemized expenses that reporters found didn’t match the actual cost of the services.

The Devolder-Santos committee also frequently amended its filings to list the cost of expenses that lacked receipts at $199.99, a penny below the threshold for having to provide receipts.

A screenshot from the Federal Election Commission website with receipts...

A screenshot from the Federal Election Commission website with receipts from Rep. George Santos' main campaign committee, Devolder-Santos for Congress, for Il Bacco restaurant at $199.99, a penny below the threshold for having to provide the actual receipts. 

Lorenzo Holloway, a former managing attorney at the FEC, told Newsday auditors potentially could have caught many of the issues disclosed in reporters' stories.

But he said the agency’s audit division gets involved only when a formal audit is launched.

The Reports Analysis Division, the FEC arm that first reviews candidate campaign finance forms, only has “the capacity to question apparent discrepancies or problems that can be detected from the face of the report,” Holloway said.

Such issues can include campaign contributions that exceed the federal limit of $2,900 per election for individuals, and $5,000 for multicandidate committees, said Holloway, who works as a private campaign finance attorney in Maryland.

“The FEC does not have the capacity to audit all [political action committees] and campaign committees, and committees do not fear a random FEC audit because the FEC does not have random audit authority,” Holloway said.

To launch an audit, four of the six FEC commissioners must vote to recommend one, according to an FEC handbook on audits.

Typically, the FEC conducts 30 to 40 audits in every two-year election cycle, the handbook says.

Paul S. Ryan, a prominent election law attorney, said the agency previously had the ability to randomly audit lawmakers, but Congress changed the law in the late 1970s.

To boost transparency, the FEC should consider lowering the $200 threshold for requiring expenditure receipts, said Ryan, who is based in Washington, D.C.

He said most financial transactions are captured in online bank statements or in receipts cataloged in phone apps that can be forwarded easily to the FEC.

“These reporting and disclosure laws have been on the books mostly unchanged for decades and decades,” Ryan told Newsday.

“They predate the existence of sophisticated electronic systems for credit card usage and other financial transactions," he said.

"There is a digital paper trail for all these transactions presumably in this day and age so we could get the enforcement.”

Concern in New York

Campaign finance experts and others have expressed similar concerns about the transparency of campaign filings in New York State.

State and local campaigns in New York can amend required financial disclosures at any time, even years after the election has passed.

Since 2021, those filings and amendments have been done through the state Board of Elections electronic filing program, aimed at getting more committees to file disclosures that are accurate and on time.

“Since the goal is for the filer to be as accurate as possible, an amendment can be submitted by the filer at any time for any reason … without prior board staff approval,” said John Conklin, a spokesman for the state BOE.

While the system notes when a periodic report was amended, it doesn’t flag what was changed.

That could hinder independent analysis of campaign finance records, according to Common Cause New York.

The state doesn’t track how often amendments are made, Conklin said.

The New York State system requires political contributors to be identified.

Unlike at the federal level, however, contributors don’t have to list their employers.

Such information could help identify contributions from workers at companies that have state contracts or are seeking them, experts said.

Also, the fact that contributors need only give their home addresses could allow employers to "bundle" contributions to political candidates using individual employee donations, the Moreland Commission on Public Corruption warned in a 2016 report.

“It’s almost like they were destined that it be the craziest system they could make, and they succeeded,” said Blair Horner of the nonprofit New York Public Interest Research Group.

Susan Lerner, executive director of Common Cause New York, expressed concern that control of some election boards, including New York's, is split evenly between Democrats and Republicans.

“This is a deliberate measure,” Lerner said. “They make it very difficult for the agency to take action.”

Overall, Lerner said, “there are an infinite number of ways to game the system because there is not uniform, well-financed enforcement.”

State Assemb. Charles Lavine (D-Glen Cove), the former chairman of the Assembly Elections Committee, said candidates who are willing to exploit loopholes at the state and federal levels, as Democrats and some Republicans have accused Santos of doing, are hard to stop.

“It’s almost impossible to write legislation that will protect the public from what is beyond bizarre,” Lavine said, referring to Santos.

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