A British National Party member could face police investigations after he distributed hundreds of leaflets across Preston which blame Muslims for the heroin trade in Britain.
Tony Bamber, who stood in local elections for the BNP in Tulketh ward in 2006, denied being solely responsible for the distribution of the leaflets but admitted he was involved.
Mr Bamber, 52, said: "The leaflets are not making a comment about the Islamic religion, they are making a statement about the activities of Muslims.
"The leaflets were made by Preston Pals, a group of concerned indigenous people in the city."
The question of whether the leaflets amount to incitement to religious hatred is now being considered by the Crown Prosecution Service.
Detective Sergeant Graham Gallagher, head of the Hate Crime Diversity unit at the Lancashire Constabulary, said: "This leaflet has been distributed around Preston, Burnley, and Pendle.
"We received a number of complaints after the leaflet was distributed to a number of addresses and we have now submitted a file to the Crown Prosecution Service to see if we have sufficient evidence to progress with our inquiry."
Another inquiry looks set to be launched by the Royal British Legion, as the leaflets claim to be a Preston Pals' publication.
The Pals represent a Lancashire regiment - the 5th Battalion - which endured heavy casualties in the First World War.
Mr Bamber, whose name appears on the leaflet, said he would continue distributing them.