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Rep. Palazzo under investigation over campaign spending

Mississippi Republican being investigated by the Office of Congressional Ethics

Rep. Steven Palazzo, R-Miss., is being investigated by the Office of Congressional Ethics.
Rep. Steven Palazzo, R-Miss., is being investigated by the Office of Congressional Ethics. (Tom Williams/CQ Roll Call file photo)

Rep. Steven M. Palazzo, R-Miss., is being investigated by the Office of Congressional Ethics for allegedly using campaign funds to pay expenses associated with a farm he used to own, according to a campaign spokesperson.

“Well the answer is yes. They are investigating,” Paul Breazeale, Palazzo’s campaign treasurer, told CQ Roll Call. “But the footnote to that is there’s nothing there.”

Breazeale said he did not know whether the OCE had completed its inquiry or whether the House Ethics Committee is investigating Palazzo.

“I think in the final analysis, it’s going to be a disgruntled employee and a sore loser that is driving this thing,” he added.

The Biloxi Sun Herald first reported that the OCE was investigating Palazzo. Palazzo, who ran unopposed, recently won reelection to his sixth term in Mississippi’s 4th District.

Tom Rust, a spokesperson for the House Ethics Committee, had no comment on whether the panel was looking into the Palazzo matter. William Beaman, a spokesperson for the OCE, did not immediately respond to a request for comment.

In March, the Campaign Legal Center filed a complaint with OCE asking the office to investigate Palazzo’s campaign spending. It centered on campaign expenditures to rent a farm and to pay an accounting firm Palazzo founded and is now run by his former wife.

Palazzo’s campaign spent $60,000 to rent a farm he owned, Greene Acres LLC, from 2018 to 2019, the Campaign Legal Center’s complaint said. The farm is located in Perkinston, Miss., a rural area more than 30 miles from his campaign committee in Gulfport.

House rules allow members of Congress to lease property to their campaigns if there is a bona fide campaign need for the space and specify that the campaign cannot pay more than fair market value.

The complaint noted that Palazzo did not use the property for the 2020 primary campaign, despite Federal Election Commission records that started in December 2018, which described the rent as for the 2020 primary. In addition, the complaint said the monthly rent of $3,000 paid to Greene Acres LLC was more — over the same time frame — than the three other members of the state’s House delegation combined.

Republican Michael Guest of the 3rd District reported $13,100 in rent since 2017, Democrat Bennie Thompson of the 2nd District paid $37,500 in rent over the last two election cycles, and Republican Trent Kelly of the 1st District did not appear to have paid any rent this election cycle, according to the Campaign Legal Center.

In March, Palazzo’s campaign said the rent expenses were legitimate campaign expenses and called the nonpartisan watchdog organization “a biased, George Soros-supported, Washington, D.C. based group.”

Since 2011, Palazzo’s campaign paid two firms for accounting services, the complaint said. Over $127,000 in campaign cash was spent at Palazzo & Company LLC, which Palazzo founded in 2001.

When he began his tenure in Congress in 2011, Palazzo transferred ownership of the company to his then-wife, Lisa Palazzo, the current owner of the firm and who is not a certified public accountant. They are now divorced.

The other firm, Breazeale, Saunders & O’Neil, Ltd., was co-founded in 1981 by Breazeale, Palazzo’s campaign treasurer. The Jackson-based firm has received over $76,000 in accounting fees and services since 2010.

Brezeale said back in March that Palazzo simultaneously used two accounting firms for a decade — one for Federal Election Commission compliance and one for campaign operations and daily bookkeeping.

If a family member wants to sell services to a lawmaker’s campaign, there needs to be a bona fide campaign rationale for it and it cannot be more than fair market value, according to federal law and House rules.

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