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BALTIMORE Gov. Robert Ehrlich returned more than $540,000 in political contributions to the Republican Party after state elections officials discovered that a federal account was used to funnel funds to his re-election campaign.

A letter from the State Board of Elections, obtained by The Sun newspaper, said use of the federal account to pay for the governor's re-election effort allowed Ehrlich to receive large sums of in-kind contributions from the state party by bypassing the $4,000 donation cap set by state law.

Final campaign finance statements filed before Tuesday's election showed Ehrlich had a significant financial advantage over his Democratic opponent, Baltimore Mayor Martin O'Malley.

Even without the half-million dollars, Ehrlich's campaign still had more than $2 million in the bank as of Oct. 22. The O'Malley campaign had about $600,000.

The federal account the Ehrlich campaign tapped into is allowed to accept $10,000 contributions, compared to the $4,000 limit that applies to state accounts.

The federal account, controlled by the state Republican Party, received hundreds of thousands of dollars in contributions in the days leading up to a $1 million fundraising event in May featuring President Bush.

The state party spent money from the account on behalf of its candidates, Ehrlich and U.S. Senate candidate Lt. Gov. Michael Steele, for salaries, cell phones, mailings, postage and other services, state election records show. The in-kind contributions allowed the Ehrlich campaign to direct its own vast resources elsewhere, such as toward television advertising.

Ehrlich spokeswoman Shareese DeLeaver said the campaign returned the money in response to the letter. State campaign finance records released Monday indicate the campaign transferred more than $540,000 to the party over several weeks from the end of September through mid-October.

"Upon receipt of the letter, we immediately began to address the concerns of the state Board of Elections as reflected in our most recent campaign finance report to the satisfaction of the state board," DeLeaver said.