The focus is an allegation that the Brighton Republican used a specialty auto conversion company he owns to pay the salary of a campaign staffer for two months, said John Russell, a spokesperson for the U.S. Justice Department in Washington.
Federal law prohibits corporation donations of funds or resources to a campaign.
Scott Gast, who managed Chrysler's narrowly successful 1994 campaign, allegedly was on the payroll of Chrysler's RCI company but primarily doing campaign work instead, Russell said.
Gast later became chief of staff for Chrysler's Washington office and is now communications director for the congressman's re-election campaign.
The investigation first was conducted by the FBI, the U.S. attorney's office in Detroit and the U.S. Justice Department in Washington. The department recently closed its case without pursuing criminal charges and forwarded the results to the FEC, Russell said.
Gast said he worked as Chrysler's assistant at RCI from May 2 to July 1, 1994, and began working for the campaign on July 6. He said he did some volunteer work in the evenings for the campaign while on the RCI payroll, but nothing else.
"When I was on company time, I was doing company business," Gast said. "We were very careful to make that distinction."
Gast said he told the FBI that when he was interviewed by that agency last year.
Reports that Chrysler's campaign filed with the FEC show that Gast was reimbursed twice for campaign expenditures in 1994 - for $447.90 on April 19 and for 87 cents on May 10. He began appearing on the campaign payroll on July 15 of that year.
But witnesses told the FBI that Gast spent much of his time at RCI in May and June writing campaign fund-raising letters and making other campaign arrangements, a source close to the investigation said.
Chrysler said he was unaware he had been investigated by the Justice Department, or that the investigation had been passed on to the FEC.
"It doesn't concern me," he said.
He said no RCI assets or funds were used to supplement his campaign.
This year's contest between Chrysler and Democrat Debbie Stabenow in mid-Michigan's 8th District is among the most contested races in the country. Democrats nationally believe it offers one of their best opportunities to gain a seat in their effort to retake control of the U.S. House.
FEC spokesperson Kelly Huff said she could not discuss an ongoing investigation. It could take the commission months to decide what, if any, action to take.
The FEC has the power to bring civil charges and penalties in campaign fraud cases.
Russell said Justice Department did not necessarily conclude there was no wrongdoing, only that the FEC perhaps was the more appropriate agency to pursue the matter.
Over the years, Chrysler has been the subject of other investigations, but no charges have been filed.
In 1994, the Detroit Free Press disclosed that Chrysler failed to list in FEC reports as required his financial and administrative role in a Florida boat company. Chrysler said at the time he regretted identifying himself as an officer of the company on checks he signed, but did it only to help out briefly.
Late in his failed 1986 campaign for the Republican gubernatorial nomination, The Detroit News quoted employees of another company Chrysler owned, Cars & Concepts Inc., as saying he asked them to work for him in 1978 while collecting unemployment from the state. Chrysler maintained the employees volunteered to work while on layoff.