For about 20 minutes just after midnight on Sunday morning, The Charlotte Observer published a story detailing the apparent conflict of interest which could represent a violation of ethics by embattled Sen. Kay Hagan (D-NC).

The story revealed the details of an investigation into Hagan’s family, which received hundreds of thousands of dollars in stimulus grants – grants which Hagan voted for as a member of the U.S. Senate. The story was the first time that the state’s largest paper, The Observer, had informed their readers of the nascent controversy, but Tar Heel residents had to read it fast. The story was quickly pulled by The Observer. An editor with that publication insisted that their story was based on a memo obtained by the CBS affiliate WBTV which had pulled their bombshell dispatch, forcing The Observer to do the same.

The state’s papers may not be able to ignore the story involving the Hagan family’s alleged ethics violations for much longer. According to a report via a local Fox affiliate, the state of North Carolina is going to launch an investigation into Hagan’s family to determine if they benefited from the senator’s conflict of interest.

A summary of the scandal rocking the North Carolina Senate race provided below via Reason Magazine:

Kay Hagan’s family—her husband, son, and son-in-law—is accused of receiving more than $250,000 in stimulus funds from 2009 to renovate buildings owned by their companies. This would present a potential conflict of interest and could potentially be a violation of state and federal law. Carolina Journal has a story here stating that North Carolina’s Department of Environment and Natural Resources has recommended that an auditor review the grant (solar company subsidies are the source of the grant, for anybody wondering why that particular agency is involved). The Carolina Journal has embedded PDFs of the reports for review.

Late on Election Day eve, however, The Observer posted a new story independent of WBTV which detailed the scope of the investigation into Hagan.

N.C. Secretary of Energy and Natural Resources John Skvarla on Monday asked his staff to seek more information about a 2010 energy grant from the company co-owned by the husband of Democratic U.S. Sen. Kay Hagan.

Skvarla’s request came in response to a memo from his staff. It involved a $250,644 grant to JDC Manufacturing, which is co-owned by Charles “Chip” Hagan III, and also involves work that Hagan’s son, Tilden, did installing solar panels for JDC under the grant.

The unsigned memo questioned whether the grant involved “self-dealing,” according to DENR spokesman Drew Elliot, who drafted the Oct. 27 document with the department’s legal staff.

Whether this will impact the race is unclear. Early voting in North Carolina is now over, and the results look promising for Republicans. Kay Hagan has, however, consistently led her opponent in virtually every poll of the race released since October.