Washington auditor to face another fraud trial

FILE - In this April 26, 2016 file photo, Washington State Auditor Troy Kelley leaves the federal courthouse in Tacoma, Wash. Federal prosecutors say they plan to try Kelley again on fraud charges after his five-week fraud trial ended with a hung jury in April, 2016. (AP Photo/Ted S. Warren, File)

TACOMA, Wash. (AP) — Federal prosecutors said Tuesday they will retry the elected Washington state auditor on charges he pocketed millions of dollars in needless fees while running a real estate services business a decade ago, after his five-week fraud trial ended in April with a hung jury.

The prosecution accused auditor Troy Kelley of pocketing $3 million in fees he should have refunded to homeowners. But after deliberating for several days, a federal jury failed to reach a verdict on 14 of 15 charges against Kelley, which included possession of stolen property and money laundering.

On the one count where the jury did agree, it acquitted him of lying to the IRS.

“After careful review we have decided to seek a new trial for Troy X. Kelley on the charges the jury could not reach a verdict on,” Seattle U.S. Attorney Annette Hayes said in a written statement. “We believe it is in the interest of justice to seek final judgment on all the counts in the indictment.”

Prosecutors said during a hearing Tuesday at U.S. District Court in Tacoma that they plan to try Kelley again. Judge Ronald Leighton set a trial date of March 13, 2017, by which time Kelley, who is not seeking re-election, will no longer remain in office.

Defense attorney Patty Eakes said she was surprised by the government’s decision, given that jurors in the first trial leaned toward acquittal on the key charge that Kelley possessed stolen property.

“He’s extremely disappointed,” Eakes said of Kelley. “This case has had a huge emotional burden on him and his family, not to mention a financial burden.”

The defense has asked the judge to acquit Kelley or dismiss the remaining charges, including on grounds of double jeopardy for some of the tax charges. If the judge declines, Eakes said the defense will appeal to the 9th U.S. Circuit Court of Appeals.

The charges against Kelley, elected in 2012, stemmed from his operation of a business called Post Closing Department, which tracked escrow paperwork for title companies. He ran the real estate services company in the mid-2000s.

Prosecutors said that to obtain business from the title companies — and get access to vast sums of money from homeowners — Kelley promised that Post Closing Department would collect $100 to $150 for each transaction it tracked; keep $15 or $20 for itself; use some of the money to pay county recording and other fees if necessary; and refund the customer any remaining money.

In tens of thousands of cases, the additional fees were not needed, but Kelley retained the money anyway, prosecutors alleged. He refunded the balance only in a few instances when title companies began asking uncomfortable questions or when homeowners were savvy enough to demand it, prosecutors said.

Kelley’s attorneys insisted that the homeowners were never promised refunds, and therefore no one was harmed by Kelley’s actions — even if they might have been unethical business practices.

Comments

comments



Advertiser Content



Get news and alerts Sign Up Get RSS Feeds Subscribe