MP Mark Menzies will stand down at the next election and has resigned from the Conservative Party, after he was found to have displayed a “pattern of behaviour” that fell below the standards of MPs.
The Fylde MP had been accused of using party funds to pay the salaries of “bad guys”.
The party said it “could not conclude” whether party funds had been misused because the money came from a body outside its jurisdiction.
Mr Menzies has previously strongly denied the allegations.
The MP was suspended from the Conservative Party earlier this week after allegations emerged in times He called a party activist in the early hours of last December to ask for £5,000.
Mr Menzies was also accused of using £14,000 of party funds to pay medical bills.
Menzies said in a statement on Sunday that he resigned “due to the pressures on me and my elderly mother.”
He continued: “This has been an extremely difficult week for me and I ask that my family's privacy be respected.”
The Conservative Party said it had completed an internal investigation, which concluded that the money sent to Mr Menzies “was signed by the signatories of the Westminster Field Group”.
The party said the group was “beyond the remit” of both the Conservative Party and the Fylde Local Conservative Association, adding: “We cannot therefore conclude that there has been a misuse of Conservative Party funds.”
“However, we believe there is a pattern of behavior below the standards expected of MPs and individuals looking to make donations to local campaign funds that fall outside the Tories’ direct authority.”
Its investigation also found that Mr Menzies may have violated the Nolan Principles, which are supposed to guide those holding public office. They are selfless, integrity, objectivity, accountability, openness, honesty and leadership.
His statement continued: “This is due to the nature of the allegations made, but also to the recurring nature of these separate allegations. They will be reviewed by the Conservative Members' Management Team.”
On Friday, Labor Party leader Anneliese Dodds wrote to Lancashire Police urging an investigation.
The force said it had “received a letter detailing concerns about this matter, and we are reviewing the available information in more detail.”
Ms Dodds said on Sunday that the Conservative Party – which first learned of the allegations regarding Mr Menzies in January – needed to “come out of hiding and explain the action it has taken to deal with these appalling allegations”.
After announcing the results of the investigation, the governors promised to “share any information with the police if they believe it will be useful to any investigation they decide to conduct.”
She also said that “suggestions that the party has not seriously considered this issue are clearly false.”
The party announced it would retrain individuals in the party on how to manage “accounts that fall outside the Conservative Party's remit” and set up a whistleblowing helpline.
Mr Menzies will sit as an independent MP until the next election, meaning there will be no by-elections in the constituency.
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