The Associated Press, quoting a "person with knowledge of investigation," reports from Baltimore that federal authorities are probing the finances of failed Senate Republican candidate Christine O'Donnell of Delaware to determine if she broke the law by using campaign money to pay personal expenses.

Update at 6:18 p.m. ET: The (Wilmington) News Journalconfirms the criminal probe, citing "a federal source in a position to know."

The paper also writes that the Federal Elections Commission "confirmed that complaints had been received but declined to elaborate."

Update at 5:42 p.m. ET: O'Donnell has issued a statement, calling the investigation "phony" and based on "unsubstantiated allegations and rumors."

Our colleagues at On Politics have more.

Update at 2:37 p.m. ET: Citizens for Responsibility and Ethics in Washington (CREW), the national ethics group, previously called O'Donnell's use of more than $7 million in donated funds "Magic Money," and repeated a claim that she had misused campaign resources for personal expenses, including household rent, The News Journal reports from Wilmington.

"Delaware Republican Senate candidate Christine O'Donnell spent the 2010 campaign responding to nearly endless questions about her integrity, including allegations she had treated her campaign account like her personal piggy bank," CREW said in summarizing its questions about O'Donnell's record.

The group earlier this year asked the FEC to investigate, and called for the U.S. Attorney in Delaware to examine the possibility of criminal campaign law violations, the News Journal reports.

Party leaders also accused O'Donnell's committee of illegally coordinating paid advertisements and communications with the Tea Party Express.

Update at 1:58 p.m. ET: The AP says the source spoke on condition of anonymity to protect the identity of a client who has been questioned in the probe.

The case, which has been assigned to two federal prosecutors and two FBI agents in Delaware, has not been sent to a grand jury, the AP says.

O'Donnell raised more than $7.3 million in her run for the Senate.

The AP says the former campaign manager for the Delaware Republican did not immediately respond Wednesday to questions. O'Donnell lost to Democrat Chris Coons in November.

(Posted by Doug Stanglin)