The financial conduct of the committee and Homer Smith's status on the RCAF reserve list caused major problems. Travel loans were not repaid by potential candidates, which meant they were technically gifts. "Providing funds for an American to join a foreign armed service was a violation of the law against recruiting U.S. nationals." Because Smith was on the RCAF reserve list, he was violating the law which required the registration of agents working for foreign governments. The State Department did not wish to prosecute or close down the committee. They only warned Knight and Smith to "slow down and pull in their horns."