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Ethics report details questionable spending, decisions by Rep. Palazzo

Mississippi Republican’s campaign rent payments to him raised flags

Rep. Steven Palazzo, R-Miss., is being investigated by the House Ethics Committee.
Rep. Steven Palazzo, R-Miss., is being investigated by the House Ethics Committee. (Photo By Bill Clark/CQ Roll Call)

An Office of Congressional Ethics report released Monday outlines questionable campaign spending by Rep. Steven M. Palazzo to repair an investment property he wanted to sell and his attempts to use his position of power to help his brother get back into the Navy, and details instances in which the Mississippi Republican had his congressional staff run personal errands.

The House Ethics Committee is continuing to investigate the allegations raised by the independent Office of Congressional Ethics. The OCE report was published by the House Ethics panel due to a disclosure requirement timeline.

Palazzo acquired a four-bedroom house in D’Iberville, Miss., known as the “River House,” from his parents in 2017. An email from a real estate agent involved in the process describes the property transfer to the congressman: “[Rep. Palazzo] is closing on the house (purchase from parents) this Friday … allegedly his plan [is] to make the currently required repairs and then put it back on the market and get it off his hands.”

After Palazzo obtained the River House, he spent more than $82,000 in campaign funds on it, the OCE report shows. Expenses included utilities, plumbing, landscaping, house cleaning, heating and air conditioning, pest control and a security system. Of the total, $60,000 went to rent paid to Greene Acres of MS, LLC, of which Palazzo is the sole owner. In effect, the Palazzo campaign was paying rent to Palazzo himself.

In February 2018, after Palazzo had expressed to his real estate agent that he was having difficulty selling the River House property and that it was a potential financial burden, Palazzo’s campaign committee agreed to rent the River House for $3,000 a month from Palazzo to serve as its campaign headquarters.

The OCE report notes that the evidence reviewed “casts doubt on the extent to which the River House actually was used as a campaign headquarters.” The OCE also detailed that the campaign provided improvements to the River House, at least in part, for its sale.

An April 2018 email to the real estate agent shows Palazzo saying, “I’m trying to get
the basic renovations done and things spruced up.”

Palazzo’s 2019 financial disclosure shows he sold a property in Perkinston, Miss., on Aug. 30 of that year. Just days later — on Sept. 4 — he sold another property of his: the River House.

Separately, a CQ Roll Call review from December found that Palazzo had spent about $230,000 from his campaign fund since 2010 on car expenses, purchases associated with home upkeep, reimbursements to himself, payments to his brother, Kyle, and other questionable costs.

Colleen Kennedy, a spokesperson for Palazzo’s congressional office, issued the following statement: “This matter is the direct result of false allegations made by a primary opponent and the Campaign Legal Center claiming that the Congressman’s campaign paid him for rent of a farm in Perkinston, Mississippi. Simple investigation shows that the payments were actually made for a property in D’Iberville, Mississippi, owned by the Congressman, appropriately and legally used for a campaign office and rented at fair market value.”

The complaint by the Campaign Legal Center, a nonpartisan watchdog group, was filed in March 2020 with the OCE. The complaint centered on the $60,000 the campaign spent to rent a farm, identified as Greene Acres LLC, and $127,000 to pay an accounting firm Palazzo founded that is now run by his former wife.

Because of the way Palazzo’s congressional financial disclosures read, it is unclear if the center was singling out payments to the Perkinston or D’Iberville properties in its complaint. Nevertheless, the probe is still ongoing at the House Ethics Committee.

Unlike the OCE, the House Ethics panel can subpoena witnesses and sanction members. It is unclear what the committee plans to do.

Former Rep. Gregg Harper, R-Miss., who is serving as counsel for Palazzo on the ethics inquiry, did not comment.

Personal assistants

Two former Palazzo staffers recounted to the OCE that his district office was one in which the staff did not separate their official duties from campaign work and personal endeavors on behalf of the congressman.

The former staffers suggested that Bridgette Jones, Leslie Churchwell and Michele Gargiulo were routinely absent from the district office during official hours to complete campaign work or personal errands for Palazzo. The former staffers described Jones, Churchwell and Gargiulo as “akin to Rep. Palazzo’s personal assistants, whose job included performing errands for Rep. Palazzo to ensure his personal and professional lives ran smoothly.”

The OCE noted that congressional staff spent official work hours at the River House overseeing maintenance or home improvement projects during the district work day. The former employees said staffers helped prepare Palazzo’s children to go away for summer camp, including shopping for supplies.

Staffers in the congressional office cannot undertake campaign work or run errands for the lawmaker for whom they work on official time.

In the Navy

The report also outlines how Palazzo might have also used his official resources to contact the assistant secretary of the Navy to get his brother Kyle reenlisted. A former staffer told the OCE that Palazzo asked her in October 2018 to help Kyle upgrade his reenlistment code to get back into the armed forces.

“Specifically, the OCE considered whether Rep. Palazzo improperly used his position as a Member of Congress, or MRA-funded congressional resources, to help his brother upgrade his Naval reenlistment code,” the OCE report reads. “The OCE found evidence suggesting that Rep. Palazzo may have contacted the Assistant Secretary of the Navy in order to assist in this effort.”

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