WASHINGTON – The House Ethics Committee is investigating whether U.S. Rep. Troy Nehls improperly directed campaign money to himself under the guise of rent payments to a company he owned, according to details released Friday.
The Republican from Richmond, Texas, has denied wrongdoing and pledged to cooperate with the committee.
“The Office of Congressional Ethics (OCE) was created under Nancy Pelosi, which is why I refused to cooperate with the office,” Nehls said in a statement. “My books remain open, and I am cooperating with the legitimate House Committee on Ethics.”
The Office of Congressional Ethics is responsible for reviewing allegations of misconduct against House members. It referred the Nehls matter to the committee in December.
The referral, released by the committee Friday under House disclosure rules, chiefly revolves around seven payments totaling a little more than $25,000 made by the Nehls campaign to Liberty 1776 LLC, which was owned and operated by Nehls. The payments, labeled as rent, were made from 2019 to 2022.
“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 referral says.
OCE said the company’s right to do business in Texas was terminated for failure to pay franchise taxes in 2022, but the campaign committee made at least one reported payment after that termination.
Nehls, his aides and all third parties contacted refused to cooperate, according to OCE, which meant no witness could confirm the payments were for bona fide campaign purposes.
The report said Nehls did not disclose his role with Liberty 1776 on his annual financial disclosure statements.
“Without cooperation from Rep. Nehls, it is not possible to confirm that the failure to report his position, or any income derived from Liberty 1776, was a result of carelessness or, given the information discussed above, a deliberate act to conceal the misuse of campaign funds,” the report says.
The OCE recommended the committee investigate further.
Along with the referral, the committee on Friday released a written response from Nehls’ attorney Jerad Najvar, who said he provided timely written responses to OCE staff objecting to “ambiguously worded requests.”
He said OCE never responded to clarify the scope of its requests.
The payments to Liberty 1776 were legitimate campaign expenses for use of the Richmond property, which was once a tavern called Z-Bar but had been sitting unused for years after losing its liquor license, Najvar said.
The convenient location and large outdoor space made it appealing for public gatherings, Najvar said, so Nehls and several other local candidates rented the space for campaign activities.
Nehls was serving as Fort Bend County sheriff when he announced his campaign for Congress in late 2019. He was elected in 2020 and re-elected in 2022.
Nehls established Liberty 1776 to enter into a lease agreement with the landlord, Najvar said.
“This was an oral contract by which Liberty 1776 agreed to both pay rent periodically and to make certain improvements to the property and maintain it during the lease as necessary,” Najvar said.
The Nehls campaign used the former bar as office space and for events, and other political campaigns also made payments to Liberty 1776 for rent, improvements and maintenance, he said.
“While OCE is correct to observe that the rent payments by Nehls for Congress were not in uniform intervals or amounts, this is because Liberty 1776′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,” Najvar said.
Maintenance and improvement costs were higher than expected, and the landlord accepted those expenses as part of the rent due under the lease, Najvar said.
Nehls collected no salary from the company and “did not otherwise receive any profits from its operation,” Najvar said.
“From the time it was established in December 2019 through its termination in May 2022, Liberty 1776 took in approximately $52,872 and expended $52,872 for the purposes related above,” he said.
Najvar said the omission of Liberty 1776 on Nehls’ financial disclosures was an oversight and the reports will be amended.
