Independent MP Bill Casey, seen in Halifax in 2007, says allegations that he stole money from the Conservative party are false. (Andrew Vaughan/Canadian Press)

Nova Scotia's Independent MP Bill Casey is lashing out at federal Conservatives, saying allegations that he stole from the party amount to character assassination.

Casey, a former Tory who was kicked out of the party in June 2007, spoke out in the House of Commons on Tuesday.

"They put a cloud over my head and have hurt my ability to do my job as a member of Parliament because they've hurt my credibility," he said.

"Who's going to feel comfortable coming into my office knowing that the Conservative Party of Canada, the governing party has had the RCMP investigate me for theft and embezzlement?"

Casey, MP for Cumberland-Colchester-Musquodoboit Valley, received a copy of an RCMP memo that describes how Conservative party members wanted the Mounties to investigate allegations he embezzled funds.

The document is a briefing note to the RCMP commissioner. It describes how a member of the Conservative party contacted Bible Hill RCMP on Sept. 19, 2008, accusing him of stealing.

At issue was a $30,000 cheque from May 2007 from the party.

The note states the full amount was returned to the Conservative party and there were not sufficient grounds to warrant an investigation.

The Conservative party does not believe Casey did anything wrong, said Ryan Sparrow, party spokesman.

"We do not believe that Bill Casey, his former riding association or his re-election campaign made any financial improprieties," Sparrow said.

The briefing note was obtained through access to information legislation. The names have been concealed, but Casey said his name was written on the back.

Casey said money was transferred back and forth between two accounts, but insists it all ended up in the hands of Conservatives.

"There are no grounds for these allegations," he told CBC News earlier Tuesday.

Casey transferred $30,000 from his riding association to a bank account established for his campaign fund in late May 2007.

Only weeks later, he was ejected from the Conservative caucus when he voted against the government over the Atlantic Accord. But he was still the Conservative nominee in his riding until Prime Minister Stephen Harper announced in October that he would not be the party's candidate.

Casey's official campaign agent returned the money to the Conservative party within 10 days.

"This is just total character assassination. There's no grounds for these charges, and the people who made them know there's no grounds because they have all the records, they have all the details, and they know exactly what's going on."

Scott Armstrong, who was riding president at the time and later helped run Casey's fall re-election campaign, said any money was returned to the party.

Casey questioned why this is coming up now, a month after he announced he won't run again in the next federal election.

During the fall election campaign, Conservatives tried to convince journalists that he was tied to a questionable $30,000 cheque, he said.

"I didn't do anything with it at the time because I just thought it was dirty politics," Casey said. "The first time I saw the word 'theft' attached to my name or 'embezzlement' attached to my name was on Thursday."

Casey wants an RCMP investigation now to find out who went to the Mounties in the first place.

Diana Read-Miedema, the official agent for Joel Bernard — the Conservative candidate parachuted into the riding to run against Casey, went to the RCMP about the cheque, CBC News has learned.

Sparrow said the Conservative member filed the complaint on her own, not as a representative of the party.

"No one that was legitimately representing the Conservative Party of Canada made those allegations," he said.

Casey, a longtime Tory, made headlines around the country in June 2007 when he was kicked out of the party after voting against the government's budget bill.

He argued the bill denied Nova Scotia benefits promised in the 2005 offshore resource revenue deal, which was signed by the Liberal government of the day.

Casey won a landslide victory as an Independent in the October election. He defeated his closest competitor by more than 20,000 votes. The Conservative candidate placed third.