updated 1/11/2007 9:08:51 AM ET 2007-01-11T14:08:51

Rep. Alan Mollohan, under Justice Department investigation about whether he has benefited from directing federal funds to nonprofit groups he helped start, stepped aside Wednesday from working on key elements of the department's budget.

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The move came on the day Mollohan, D-W.Va., was named chairman of an Appropriations subcommittee responsible for the department's budget.

Mollohan will not have anything to do with setting the budgets for the attorney general's office, the FBI or the Justice Department's criminal division and prosecuting attorneys, he said in a letter to Appropriations Committee Chairman David Obey, D-Wis. That way, he can't be accused of using his power as payback for the ongoing investigation or to influence it.

However, Mollohan will still have a big say in other elements of the agency's budget, including allocation of lawmakers' pet projects such as grants to state and local law enforcement agencies.

At issue is at least $202 million of federal funding that Mollohan has steered to five nonprofit groups in his district - with much of the money going to organizations run by people who contribute to the lawmaker's campaigns.

Last year, Mollohan stepped down from the House ethics committee after media reports into his activities, and the FBI soon launched an investigation. A conservative group, the National Legal and Policy Center, has alleged that the 12-term congressman has undervalued his assets in annual financial disclosure reports.

Wrongdoing denied
Mollohan and a political action committee he controls have received more than $146,000 in the past 10 years from donors affiliated with these nonprofits.

Earlier this year, the FBI subpoenaed financial records from the nonprofits, though no charges have been filed.

Mollohan has denied any wrongdoing and made the decision to step aside from the Justice Department budget on his own, said his spokesman, Gerry Griffith.

"These charges are rubbish, and whatever financial success my wife and I have had is a result of my wife's expertise and her years of experience in real estate," Mollohan told his Democratic colleagues at a private meeting.

Mollohan nonetheless opted to take himself out of position to consider "any related Justice Department accounts."

"I have never received word from the Justice Department about the scope, nature or state of these inquiries," he said.

Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington, praised Mollohan and House Speaker Nancy Pelosi, D-Calif., "for recognizing that recusal is the appropriate course of action."

Sloan criticized Republicans for not requiring Appropriations Committee members Jerry Lewis, R-Calif., and John Doolittle, R-Calif., also under Justice Department scrutiny, for not making similar moves.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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