AfD candidate Kay Nerstheimer was elected on Sunday to Berlin's state parliament, but quickly came under pressure over controversial posts he made on Facebook as well as his background as a former member of the far-right German Defence League.
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After labelling Syrian refugees "disgusting worms" last year, he this year said asylum seekers were "parasites which are feeding off the German people", national media reported.
Public outrage over the offensive statements forced the Berlin chapter of the AfD to distance itself Thursday from Nerstheimer, who had garnered one in four votes in the capital's suburban electoral district of Lichtenberg 1.
The party decided to drop Nerstheimer from its parliamentary group, but he would still be able to keep his seat in Berlin's parliament as an independent deputy, said Ronald Glaeser, spokesman for AfD's Berlin chapter.
The AfD, however, has not launched any proceedings to kick Nerstheimer out of the party altogether, he added.
Meanwhile in western Germany, the party is battling another controversy after Stern weekly and broadcaster ARD published reports accusing AfD member Rudolf Mueller of selling Nazi paraphernalia.
Mueller, who is the AfD's lead candidate for next year's state elections in the western state of Saarland, was selling money from Nazi concentration camps and swastika medals at his antiquities shop, the reports said.
An undercover buyer for Stern was able to buy both items at the shop while another posing for ARD did so a few days alter.
Under German law, it is illegal to trade in Nazi paraphernalia.
Reacting to the accusations, Mueller told ARD that he did not know that trade in swastika medals was against the law, although he acknowledged that it was "not befitting" for a leading candidate of the AfD to be making such sales.
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He however defended the sale of money from concentration camps, saying it only "generated small amounts that adds to sales of other regular items."
The AfD was founded than three years ago as a anti-euro party but has since campaigned on an anti-migrant and anti-Islam stance, capitalising on public anger over the million migrants and refugees who arrived in Germany last year.
It rejects being labelled as an extremist or neo-Nazi party, but its members have been caught out for offensive speech on several occasions.
The controversies have not halted a surge in support for the party.
It is now represented on the opposition benches of 10 of Germany's 16 state assemblies, and is eyeing seats in national parliament when the country holds general elections next year.
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