Sheffield Hallam MP Jared O’Mara has been arrested on suspicion of fraud, the Mirror understands.
Police arrested the MP a week ago, at the same time as office manager Gareth Arnold, who was arrested on suspicion of conspiracy to commit fraud.
Officers raided the MP’s constituency office, removing documents and computers for investigation on Friday last week.
The two men were released on Saturday evening pending further investigation.
It’s understood Mr Arnold had contacted police in early July to express concerns about Parliamentary expense claims made by Mr O’Mara.
The Mirror can also reveal Mr O’Mara has submitted paperwork for his resignation as an MP, dated for when Parliament returns in September.
South Yorkshire Police declined to comment.
Mr O’Mara won his seat in the 2017 election as a Labour MP, beating former Deputy Prime Minister Nick Clegg.
He was suspended by Labour in October 2017, after a string of historic online comments came to light which were accused of sexism and homophobia.
He later apologised saying: “I was in a bad place back then, and after being bullied and called many of those abusive slurs myself, I repeated them as a way of deflecting from my own low self-esteem and depression. But this is not an excuse and I take full responsibility for the unacceptable language I used.”
He was reinstated by Labour in July 2018, but resigned from the party nine days later to sit as an independent MP.
The same month, Mr O’Mara announced he would step back from his parliamentary duties for a period on the advice of his GP.
But he’s faced heavy criticism for frequent absences – including failure to attend several key Brexit votes.
In April, he announced he was suspending constituents’ casework for a month while he recruited new staff and moved to a new office.
The Mirror visited his new office today, but were told he had vacated the premises and left no forwarding address.
Staff at a nearby pub, where Mr O’Mara’s office staff were regular visitors, said they hadn’t been seen in several weeks.
A spokesman for Sheffield Hallam Lib Dems said: “We have been calling for the resignation of Jared O’Mara for a long time. With crucial votes coming up in Westminster, the people of Sheffield Hallam need an MP they can count on to fight Boris Johnson’s Brexit plans and to stand up for local communities.”