Elijah Cummings of Maryland, the top Democrat on the House Oversight and Government Reform Committee, released an October 8, 2014, letter in which a Defense Department lawyer warned Flynn upon his retirement from military service that he was forbidden from receiving payments from foreign sources without receiving permission from the US government first.
Michael Flynn received $45,000 to appear in 2015 with Russian President Vladimir Putin at a gala dinner for RT, a Kremlin-controlled media organization.
The Pentagon's acting inspector general's office confirmed Thursday he has launched an inquiry into whether those payments qualify as coming from foreign governments and whether Flynn properly informed military authorities about them.
The news comes two days after Cummings and House oversight chairman Jason Chaffetz said Flynn may have broken the law by not disclosing payments he received from RT-TV, a station widely considered to be a propaganda arm of the Russian government.
Spicer said that the president was confident in his decision to fire Flynn in February on grounds that Flynn had misled the vice president about a conversation he had with the Russian ambassador to the US during the transition.
According to CNN, he was warned about accepting payments from foreign governments when he retired in 2014.
The Department of Defense said it was probing whether the retired lieutenant general failed to obtain required prior approval before accepting money from foreign governments.
Earlier this week, Cummings and House oversight committee chairman Rep. Jason Chaffetz (R-Utah) held a joint press conference, during which they revealed that Flynn may have broken the law by not disclosing the payment from RT when he reapplied for a security clearance a year ago.
"As has previously been reported, General Flynn briefed the Defense Intelligence Agency, a component agency of the Department of Defense, extensively regarding the RT speaking event trip both before and after the trip, and he answered any questions that were posed by DIA concerning the trip during those briefings".
"The White House had its own responsibility to fully vet General Flynn since new information became public during the transition - well after General Flynn's last background check - about his lobbying on behalf of foreign interests", said Rep. Elijah Cummings, D-Md.
The White House said it viewed the supposed isolation of Russian Federation at the United Nations as one of the achievements made by Donald Trump during the first 100 days of his presidency.
Chaffetz's office released a letter he sent on Thursday to the Army, asking the service's acting secretary to make a final determination as to whether Flynn violated federal law by accepting the payments, and if so, to start the process of recovering that money. That investigation is separate from the congressional probe.
"There is obviously a paper trail that the White House does not want our committee to follow", the Democrats wrote in the letter. Chaffetz spokeswoman MJ Henshaw said Thursday that the release of the Flynn documents constituted a violation of trust by Cummings because he never consulted with Chaffetz before releasing them. He forced him to step down in February, saying Flynn had misled senior administration officials, including the vice president, about his contacts with Russian officials.
The Democrats on the House Oversight Committee also sent a request to Chaffetz Thursday that they schedule a meeting with the White House to demand the release of the Flynn documents they have asked for.
The White House press secretary Sean Spicer sought to deflect criticism. White House officials argued they did not have all the documents and that those that they did have were too sensitive, and irrelevant to congressional investigators. He said the White House did not release a detailed list of Flynn's contacts with foreign officials, a request he dismissed as "outlandish". And Spicer indicated that beyond checking that Flynn had a security clearance, the Trump administration did not do much vetting of him - something that new administrations typically do.