Report Based on CLC Complaint Finds Evidence That Palazzo Misused Funds

Steven Palazzo gesturing while speaking
Steven Palazzo speaking at an even at the Rayburn House Office Building in Washington, DC on October 22, 2015. Photo by Cotton Puryear, Virginia National Guard Public Affairs

Campaign Legal Center (CLC) asked the Office of Congressional Ethics (OCE) to investigate possible misuse of campaign funds by Rep. Steven Palazzo in March 2020.

Specifically, Palazzo made campaign expenditures that appear to be illegal payments for personal expenses, including $60,000 in rental payments to his second home and $127,933 to his spouse’s accounting firm. Now, an OCE investigation all but confirms the violations alleged in CLC’s complaint.

The report issued by the OCE shows a troubling pattern of Palazzo using campaign and member funds for his own personal use, violating the trust of his constituents and donors.

Palazzo did not cooperate with the OCE investigation, refusing to present any evidence to the public that he ran for office to serve the public and not himself.

Palazzo appears to have illegally spent $60,000 of campaign funds on what he claimed were rent payments to his own riverfront vacation property, plus thousands of dollars in additional payments to maintain the home and improve the home’s marketability, while he was facing financial hardship and trying to prepare the property for sale.

House rules and federal law require campaign funds to be used for legitimate and verifiable campaign purposes.

According to the OCE’s investigation, the property in question had been in Palazzo’s family for 20 years and was primarily used as a weekend home. In January 2018, Rep. Palazzo began working in earnest to sell the property, as it seemed to be becoming a financial burden on him to own and maintain a second home.

He told his real estate agent he wanted to cheaply repair the property and get “it sold within 6 months” or lease the property for rental income.

A month later, Palazzo’s campaign committee entered into a lease with Palazzo to rent the property as a campaign headquarters for $3,000 per month.

The OCE was unable to find meaningful evidence of the campaign’s bona fide need for Rep. Palazzo’s vacation home as a campaign headquarters, and Palazzo refused to provide any evidence to the OCE.

The OCE report also shows that Palazzo’s campaign improperly made regular payments to his brother for campaign work and to his spouse’s accounting firm.

The OCE found that the nature of his brother’s work may not have justified the salary he received and the campaign failed to make the required efforts to determine the fair market value of the services provided by his brother or his spouse’s accounting firm to the campaign.

Palazzo also seems to have misused member funds for campaign and personal uses, including having congressional staff performing personal errands for Palazzo during official work time and using official staff time and email addresses for campaign work.

He also performed a special favor for his brother: attempting to use the power of his office to upgrade his brother’s Navy reenlistment code.

Palazzo’s failure to be a good steward of his own campaign funds and taxpayer dollars is an abuse of the public’s trust. His constituents and donors expect him to use their money and the power of his office for the public’s benefit, not his own.

The Committee on Ethics must act in this matter to ensure future abuses do not occur.

Delaney is the Director, Ethics at CLC.
Stopping the Practice of Using Campaign Funds for Personal Expenses