Mississippi Rep. Palazzo investigated over campaign funds misuse claims

The House Committee on Ethics is conducting a review after an independent watchdog unanimously recommended an investigation into allegations that Rep. Steven Palazzo (R-Miss.) has abused his office.

Why it matters: The Board of the Office of Congressional Ethics found there's "substantial reason to believe" that Palazzo "converted funds to personal use to pay expenses that were not legitimate" — allegations the congressman denies.

• If proven, the actions alleged to have taken place would violate not only House ethics rules but also federal law.

Driving the news: The board's 47-page report, published Monday, outlines what it calls a "concerning pattern of campaign expenditures on a large riverfront home which Rep. Palazzo owned and rented to Palazzo for Congress as an ostensible campaign headquarters," allegedly billing his campaign account $60,000 in rent.

• The report alleges Palazzo was facing financial pressure in 2018 and 2019 when he spent more than $20,000 in improvements to the four-bedroom family property in D’Iberville, Mississippi, which featured a boat dock and guest cottage.
• The former accountant wrote in one email that he wanted "to sell it or find some contractors to fix it without costing an arm and a leg and sell it for a little more," the report states. "I can't afford to take a huge loss," Palazzo allegedly wrote.
• The report also alleges the congressman gave "special favors" to his brother Kyle Palazzo and said his brother's work for his campaign "may not have justified the salary he received."

Of note: Palazzo "declined to fully participate in the OCE investigation," AP reports.

What they're saying: Palazzo's spokesperson Colleen Kennedy said in an emailed statement that the congressman "welcomes the opportunity to work through this process with the House Committee on Ethics and will fully cooperate with the Committee to show that he has complied with all relevant rules and standards."

• She added that the investigation was "the direct result of false allegations made by a primary opponent."