A nonpartisan watchdog group based in Washington, D.C. has asked the Office of Congressional Ethics to investigate nearly $200,000 worth of questionable campaign spending by the re-election campaign of U.S. Rep. Steven Palazzo.
The Campaign Legal Center alleges that Palazzo, a Republican who represents Mississippi’s fourth congressional district that includes all of Forrest and Lamar counties, converted campaign funds to personal use in violation of the rules of the U.S. House of Representatives and laws set by the Federal Election Campaign Act.
The center said those funds were used to pay rent for the congressman’s own farm and to his spouse’s accounting firm.
“Specifically, Representative Palazzo may have used campaign funds to pay himself and his spouse nearly $200,000,” said center staff in a March 26 letter to congressional ethics officials.
According to disclosure reports filed with the Federal Election Commission, Palazzo used campaign contributions to pay $60,000 in rent to Greene Acres of MS, LLC, located at 45 Hickman Tower Road in Perkinston.
In reports on file with the Mississippi Secretary of State’s office, Palazzo is listed as the only member of the limited liability company, which has been described as a farm and an asset in Palazzo’s personal financial disclosure reports filed with the U.S. House.
The rent payments were made in nearly monthly increments of $3,000 and started in May 2018. The payments ended in August 2019. According to the center, the farm was apparently sold that same month.
In their letter, center staff said “Palazzo’s use of campaign funds to pay rent to his own farm is only permitted if the property is used for campaign purposes.”
Center staff said that House rules also dictate that there must be a bona fide – or genuine – need for the space, and payments must not exceed fair market value.
“First, it appears that there was no bona fide campaign purpose for renting Representative Palazzo’s farm for more than a year,” said center staff. “The public record provides no evidence that the farm was used as a campaign office or similar space requiring monthly rent.”
The center said that the campaign’s official headquarters were in Gulfport, and that the Greene Acres farm is “located in an extraordinarily rural part of Mississippi … at least 30 miles from any of the densely populated areas within Representative Palazzo’s district.”
Center staff added that “…the public record establishes that Representative Palazzo did not use the property for the 2020 primary campaign even though FEC reports beginning in December 2018 described the rent as for ‘2020 primary’ use,” and “…FEC reports disclose that the campaign stopped paying rent for Greene Acres … from September 2019 to March 2020, the months leading up to the Mississippi primary.”
The center said the campaign also paid more than fair market value for rent at Greene Acres.
“The rental amount of $3,000 per month is unusually high for campaign office rent in Mississippi,” said center staff. “Palazzo for Congress has paid more for rent over the same period than the three other members of the Mississippi House delegation combined.”
The center’s second allegation involves $127,933 paid to Palazzo & Company, LLC, a Gulfport-based accounting firm. Palazzo founded the firm in 2001, and, upon joining the House in 2011, transferred ownership to his then-spouse. According to the center, the couple divorced in 2016, and Palazzo’s former spouse is still the owner and CEO of the firm.
Center staff said Palazzo’s campaign employed both Palazzo & Company and Breazeale Ltd., based in Jackson, as accounting firms. The Breazeale firm was founded in 1981 by Paul Breazeale, who also serves as Palazzo’s campaign treasurer.
“The disbursements for accounting fees have been paid in roughly monthly installments to both of the firms since early 2011,” said center staff. “The payments to both firms continued throughout August 2019 with various increases throughout the years.”
The center said there was no bona fide campaign need for monthly accounting services from two separate accounting firms, and FEC records “do not show that the accounting services provided by (Palazzo & Company) were distinct in nature or purpose” from those provided by Breazeale’s firm.
“The accounting requirements for Representative Palazzo’s campaign are unlikely to be sufficiently complex to require two accounting firms’ work,” said center staff.
The center also said the payments for accounting services “seem to far exceed fair market value,” and, since 2017, “Palazzo for Congress has paid nearly as much for accounting services as his three other Mississippi House members combined have paid for expenditures described as accounting-related.”
Palazzo defeated three Republican challengers in the primary election on March 10. He does not face a Democratic challenger in November.
As of press time Wednesday, Palazzo for Congress had not responded to a request for comment from The PineBelt NEWS.
