(Adds U.S. HUD Office of Inspector General confirms probe, details on new state investigation)
By Barbara Goldberg and Margaret Chadbourn
NEW YORK/WASHINGTON, Jan 13 (Reuters) - U.S. investigators are looking into whether embattled New Jersey Governor Chris Christie misused about $2 million in Superstorm Sandy relief funds for an ad campaign that put him in the spotlight in an election year, officials said on Monday.
Already enmeshed in a scandal over snarled traffic at the George Washington Bridge, Christie, a likely 2016 Republican presidential contender, is now being audited by the Inspector General at the U.S. Department of Housing and Urban Development, an agency spokesman said.
The probe began after HUD "received a request from Congress," the spokesman said.
The inspector is focusing on a federally financed $25 million Jersey Shore marketing campaign that included a television commercial featuring Christie and his family. The ad cost $2 million more than a competing bid without them.
"It is inappropriate for taxpayer-funded dollars that are critical to our state's recovery from this natural disaster to fund commercials that could potentially benefit a political campaign," said New Jersey Congressman Frank Pallone Jr., a Democrat, in an Aug. 8, 2013 letter requesting the investigation.
The winning ad, with the tag line that New Jersey was "Stronger than the Storm," aired in the spring as Christie headed into a re-election campaign to win a second term.
Sandy devastated New York, New Jersey and other parts of the East Coast on Oct. 29, 2012. The storm killed at least 159 people and damaged or destroyed more than 650,000 homes, many in Pallone's district on the Jersey Shore, where the storm made landfall.
"Had Governor Christie chosen the less-expensive firm, $2.2 million in federal disaster aid could have potentially been directed elsewhere, for example, to provide 44 Sandy-impacted homeowners $50,000 grants to raise their homes," Pallone said in a press release.
There was no immediate response to calls and e-mails to Christie's office for comment.
NEW STATE PROBE
The Democratically controlled state Assembly on Monday said it had formed a new special investigatory committee with subpoena power to probe the bridge incident, nicknamed "Bridgegate" by local newspapers.
"The evidence that has come out in recent weeks makes clear that this now goes above and beyond a transportation issue and goes into the highest ranks of the executive branch," said Assemblyman John Wisniewski. "A concerted and focused investigation with increased resources is now needed."
E-mails released last week showed the massive September traffic jam was orchestrated by Christie's staff, apparently as political payback against the mayor of Fort Lee, New Jersey, who did not endorse Christie for re-election.
Other Democratic mayors of New Jersey municipalities who declined to endorse Christie said they believe they were punished too. Jersey City Mayor Steven Fulop said in a statement that Christie administration officials abruptly canceled several meetings with him the day after he said no. WNYC radio reported that Hoboken Mayor Dawn Zimmer said after her refusal, her city got only 1 percent of the disaster grants requested to rebuild after Sandy.
Christie last week fired a top aide who called for the closure of lanes to the George Washington Bridge. He has denied knowledge of the his aide's role in triggering the four-day incident, which paralyzed Fort Lee, on the New Jersey side of the Hudson River.
News of the audit arrives on the eve of Christie's annual State of the State address in Trenton on Tuesday, which kicks off a second term he won in a landslide.
U.S. Attorney for New Jersey Paul Fishman, whose job Christie held before being elected governor, has opened an investigation of the decision to close the lanes leading to the bridge, which paralyzed traffic.
The governor also faces a class-action lawsuit filed in federal court on Thursday by Rosemarie Arnold, a lawyer charging that area residents suffered financially from being trapped in traffic. (Additional reporting by Edith Honan in New York and Susan Heavey in Washington; Editing by Scott Malone, Bernadette Baum and Dan Grebler)