Ethics office finds ‘probable cause’ Texas Republican misused campaign funds

A new report from the Office of Congressional Ethics (OCE) says there is “probable cause” that Rep. Troy Nehls (R-Texas) used campaign funds for personal costs, an allegation he denies.

The OCE — an independent, nonpartisan entity that reviews allegations of misconduct regarding lawmakers and staff members — released its report Friday, after the Ethics Committee announced in March that it had opened an investigation into the congressman.

The OCE said Nehls refused to cooperate with the entity’s investigation, though the lawmaker’s attorney, Jerad Najvar, provided a letter responding to the allegations. The OCE recommended that the Ethics Committee “further review” the allegations laid out in its report.

“Rep. Nehls’s campaign committee, Nehls for Congress, reported campaign disbursements that may not be legitimate and verifiable campaign expenditures attributable to bona fide campaign or political purposes,” the report reads.

“The Board recommends that the Committee further review the above allegation concerning Rep. Nehls because there is probable cause to believe that Rep. Nehls may have converted campaign committee funds to personal use,” it adds, referring to the OCE board.

Nehls had denied any wrongdoing in March, after the Ethics Committee said it launched an investigation, writing in a statement, “My campaign has complied with every Federal Election Commission (FEC) law, and my books are open.”

The 14-page report zeroes in on payments purportedly made for rent. The OCE said Nehls’s campaign operating location is known as “Freedom Hall” — which in March 2023 was a bar or tavern, operated by “Z-Bar, LP,” and sometime between then and October 2023 was converted into an Islamic center and boarding school.

The Ethics office, however, determined that the campaign did not pay any rent to Freedom Hall or Z-Bar.

Instead, Nehls’s campaign committee made purported rent payments to an entity called “Liberty 1776 LLC,” of which Nehls is primary beneficiary, as well as the owner and operator, the report said.

Between 2019 and 2022, the campaign funneled Liberty 1776 LLC more than $25,000 for “rent expense,” “rent,” “office rent” and “purpose.”

“The sporadic nature of the payments, as well as the lack of publicly available information linking Liberty 1776 to the campaign headquarters, raises concerns regarding the personal use of campaign funds,” the report reads.

In a four-page statement responding to the allegations in the OCE’s report, Najvar said his client and other candidates opened up an LLC — Liberty 1776 — so they could lease out space at Freedom Hall, which was overseen by the landlord EBP Property Holdings Ltd, for office space and events. He noted that Nehls “took no salary and did not otherwise receive any profits from its operation.”

“The various rent payments by Nehls for Congress to Liberty 1776 from 2019 through 2022 were, therefore, legitimate rent payments for campaign office use,” Najvar said. “The other local campaigns were also making payments to Liberty 1776 for rent, improvements, and maintenance.”

Najvar also responded to the “sporadic nature of the payments,” as documented in the report, noting that it was because the LLC’s “use of the space varied based on election/off years (less activity in 2021), and also, as stated, Liberty 1776 was periodically making improvements and paying for maintenance.”

The OCE also documented purported “rent expense” payments that Nehls made to two other entities: $5,000 to Patriot Media LLC and $2,652.62 to Pogie USA LLC, noting that “A review of publicly available information did not reveal any ownership connection between” the congressman and those two entities.

“However, the multiple rent payments to different entities raise concerns about the legitimacy and purpose of these payments,” the report adds.

Najvar, Nehls’s attorney, said in his response that Patriot Media LLC was a campaign vendor that offered political consulting and media services for the congressman’s campaign, and that the group’s principal, Daniel Gribble, was embedded in the campaign and worked out of Freedom Hall.

When Liberty 1776 LLC closed in 2022 — the entity’s right to do business in Texas was terminated after it did not pay franchise taxes that year — Patriot Media LLC paid some rent to the landlord with funds that was given by Nehls’s campaign, Najvar said.

Najvar also said that Pogie USA LLC was the landlord for Nehls’s campaign office in Brazoria County, and was not related to Freedom Hall.

While denying the OCE’s allegations, Nehls’s attorney did recognize that his client did not properly disclose information regarding Liberty 1776 LLC, which was “an oversight.”

“OCE’s referral points out that Respondent’s affiliation with Liberty 1776 LLC should have been included as a position on Schedule E of Respondent’s financial disclosure form. This was an oversight that was just brought to Respondent’s attention with OCE’s referral. Respondent will amend the relevant reports,” Najvar wrote.