Detectives are investigating bogus expense claim allegations which led to the suspension of a UKIP MEP and General Election candidate.
Party leader Nigel Farage said he was "deeply shocked" over the allegations a member of Janice Atkinson's staff attempted to defraud EU expenses.
He said a full disciplinary hearing would be held on Monday into the accusations and to establish whether Ms Atkinson had been aware of her staff member's alleged behaviour.
Meanwhile, a Kent Police spokesman said: "The Kent and Essex serious crime directorate has received a report of fraud. The allegation is being reviewed and the investigation is ongoing.
"You'll appreciate this investigation is at a very early stage. Kent Police will not be releasing further details at this time."
Ms Atkinson was due to stand at the General Election in the Folkestone and Hythe seat - one of UKIP's top election targets.
But she has now been stripped of the party whip and removed as a candidate while a UKIP panel investigates the allegations.
Mr Farage said he had spoken to Ms Atkinson late on Thursday night but "did not get a clear answer".
He was speaking after The Sun newspaper claimed it had filmed a member of Ms Atkinson's staff "apparently plotting to make a substantial bogus expenses claim" in relation to a UKIP party in Margate.
The newspaper said the person told the manager of the restaurant: "The idea is we overcharge them slightly because that's the way of repatriating (the money)."
Speaking on his LBC radio phone-in show, Mr Farage said: "I was deeply shocked when I saw it (the film footage).
"It was one of the most incredibly stupid and dishonest things I have ever seen in my life.
"This was a member of staff. Exactly what the relationship between that member of staff asking for a false bill and Janice Atkinson is, I don't know.
"On the evidence of what that member of staff did, it doesn't look very good."
He added: "I am not going to prejudge this.
"But certainly as far as the member of staff is concerned, they have asked a commercial enterprise to do something that as I understand it is against the law."
Mr Farage went on: "I actually wasn't angry, I was just shocked.
"I just couldn't believe we could find ourselves potentially in this position."
In a statement announcing the MEP's suspension, a UKIP spokesman said: "The party is incredibly disappointed with Ms Atkinson, who appears to have exercised extremely poor judgment in acting in a way that the party has never, and would never condone.
"The party has acted swiftly and immediately. We always maintain a zero-tolerance attitude towards acts of this nature."
Ms Atkinson caused controversy last year after being caught on camera referring to a Thai constituent as a "ting tong from somewhere".
The 52-year-old - elected to the European Parliament last year - said she was "incredibly sorry" and had not intended any malice.
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