Nathan Deal and Karen Handel are locked in a nasty runoff fight for Governor in Georgia. Today comes word from the Atlanta Journal that a federal grand jury is investigating Nathan Deal.

It doesn’t sound good.

The AJC reported in August 2009 that Deal personally intervened with [Georgia Revenue Commissioner Bart] Graham and other state leaders to protect an obscure state program that earned his company nearly $300,000 a year. The newspaper’s report led to a congressional ethics investigation that determined Deal possibly violated U.S. House rules. But Deal resigned from the U.S. House before any formal accusation against him was made.

Following the release of the report by the Office of Congressional Ethics in late March, a Washington-based watchdog group asked the U.S. Justice Department to launch a criminal investigation. It is unclear if the request by Citizens for Responsibility and Ethics in Washington led to the current inquiry.

Bart Graham has now been subpoenaed to testify before the grand jury.

Nathan Deal’s attorney says the congressman has no knowledge of the grand jury, which is not unusual. This is not a good thing. The Democrats will use this story to hound Deal across the state on the campaign trail should Deal win the runoff.

More details from the AJC:

The AJC reported last year that Deal on three occasions met with Graham to discuss the way Georgia inspects rebuilt salvaged vehicles. Deal’s chief of staff, Chris Riley, who is now working on his gubernatorial campaign, used his congressional e-mail account to contact Georgia Senate and Revenue Department staff to discuss the plans and to set up appointments for Deal with officials, including Lt. Gov. Casey Cagle.

Deal and Ken Cronan own and operate Recovery Services Inc., also known as Gainesville Salvage & Disposal, which for nearly 20 years enjoyed a lucrative agreement with the state. From 2004 through 2008, the agreement earned the company $1.5 million, according to state records. Deal personally earned up to $150,000 a year from the enterprise, according to reports he filed with the U.S. House.

Of note, an ethics complaint was filed in the House of Representatives against Nathan Deal, but before the House Ethics Committee released its conclusions, Deal resigned. Doing so avoided formal action by the House. Nonetheless, the House Ethics Committee found Deal had six ethical violations relating to the same situation now being investigated by the federal grand jury.