Ethics watchdog: ‘Substantial’ evidence GOP lawmaker improperly spent funds, misused position to help brother

The Office of Congressional Ethics (OCE) concluded in a report made public on Monday that there is “substantial” evidence that Rep. Steven Palazzo (R-Miss.) misused campaign as well as official funds and used his office to help his brother in violation of House rules.

The OCE said that it found evidence indicating that Palazzo used campaign funds to maintain and improve a personal riverfront property in anticipation of a sale, asked his House office staffers to perform campaign work and personal errands, and used his position as a member of Congress to contact the assistant secretary of the Navy to help his brother reenlist.

According to the OCE report, Palazzo charged his campaign committee rent for ostensibly using a riverfront home that he owned as a headquarters, equal to the amount of his monthly mortgage, insurance and tax payments, “during a time of personal financial stress.”

OCE said that there was “limited evidence of campaign use of the property, especially to justify $60,000.00 in rent and thousands of dollars of additional charges to maintain the home and improve its marketability.” The campaign paid the rent to an limited liability company for which Palazzo is the only member; Palazzo’s counsel said in a statement to OCE that it was a “single owner, investment property management company.”

Palazzo bought the home in 2017 from his parents but then had difficulty selling it and lowered the originally anticipated sale price by more than $200,000 by the time it sold in September 2019.

Overall, the OCE found that the campaign-funded expenses on Palazzo’s riverfront home totaled about $82,363. That included the $60,000 on rent, $11,348 on utilities, $1,523 on plumbing, $6,325 on landscaping, $690 on cleaning, $1,301 on HVAC maintenance, $214 on pest control and $960 on a security camera system.

In addition, the OCE found that congressional office staff spent work hours at the riverfront home overseeing maintenance or sale-related matters during the work day and performed personal errands for Palazzo, such as preparing his children for summer camp and sending them care packages while they were away from home. Former Palazzo aides also told the OCE that official staffers would pick up Palazzo’s dry cleaning during work hours.

The third allegation in the OCE report cites a former veterans affairs caseworker in Palazzo’s district office who said that she was asked by the congressman to help his brother, Kyle Palazzo, upgrade his reenlistment code for the Navy. But according to the former staffer, Kyle Palazzo “was separated from the Navy for affecting a fraudulent enlistment” and therefore had not been recommended for enlistment.

The former caseworker said that Kyle Palazzo showed her an email chain in which the congressman’s deputy chief of staff was seeking a meeting with the secretary of the Navy. She then told Kyle Palazzo that “she did not think it was proper for Rep. Palazzo to assist him in this manner since she did not believe Rep. Palazzo would do so for other similarly situated constituents.”

OCE obtained an email to Palazzo’s deputy chief of staff from a Naval congressional affairs liaison who attached a letter dated Jan. 9, 2019, and signed by the assistant secretary of the Navy for manpower and reserve affairs that addressed the process for how someone could change a reenlistment code.

Colleen Kennedy, a spokeswoman for Palazzo, said that the investigation was the “direct result of false allegations made by a primary opponent and the Campaign Legal Center” and that the payments were “appropriately and legally” used for a campaign office. 

“Congressman Palazzo 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,” Kennedy said. 

Former Rep. Gregg Harper (R-Miss.), who previously chaired the House Administration Committee, is representing Palazzo before the Ethics Committee. 

Palazzo, the treasurer of his campaign committee and leadership PAC, and five current and former staffers all declined the OCE’s requests for interviews.

The OCE can only refer cases reviewing alleged lawmaker misconduct to the House Ethics Committee, which has the sole authority to punish lawmakers if it concludes that they violated the chamber’s rules.

The Ethics Committee received the referral from OCE regarding Palazzo in September recommending further investigation and is still reviewing the matter.

“The Committee notes that the mere fact of conducting further review of a referral, and any mandatory disclosure of such further review, does not itself indicate that any violation has occurred, or reflect any judgment on behalf of the Committee,” Ethics panel Chairman Ted Deutch (D-Fla.) and the ranking Republican, Rep. Jackie Walorski (Ind.), said in a joint statement.

Updated 9:58 p.m.