TACOMA — Washington state Auditor Troy Kelley, who has been on unpaid leave while fighting allegations that he stole millions from clients of his former business, pleaded not guilty Friday to additional charges of money laundering and tax evasion.
Kelley entered his plea in U.S. District Court in Tacoma before Judge David Christel a week after a new indictment from a federal grand jury added the counts to a long list of charges that he previously pleaded not guilty to earlier this year. At a separate status hearing following the arraignment, U.S. District Judge Ronald Leighton set Kelley’s trial date for March 14, after agreeing to his lawyer’s request to move it from January.
The new charges cover actions that allegedly took place from 2011 to this year, while Kelley was in office, and say that he laundered money by withdrawing $245,000 annually from a pool of ill-gotten gains. Kelley, a 50-year-old Democrat from Tacoma, is a former state representative who was elected in 2012 to be Washington’s auditor — the state official charged with rooting out waste and fraud in government operations. He previously ran a company called Post Closing Department, which worked with escrow and mortgage title companies to track real estate transactions. According to investigators, the company kept fees that it was supposed to refund to customers — an amount they say totaled at least $3 million from 2006 to 2008.
One of the escrow companies Kelley worked with, Old Republic Title, sued him in 2009. He eventually paid more than $1 million to settle the case. Four of the charges against Kelley allege he lied in sworn declarations in that case to avoid blame.
Kelley, who appeared in court, did not speak to reporters after the hearing. But his attorney, Angelo Calfo, said that his client hasn’t done anything wrong.
“There’s no theft, there’s no concealment, there’s no misreporting of income,” said Calfo, who took over as Kelley’s lawyer last week. “That’s all the government going after someone because he’s a high-profile target.”
Early this year, federal agents searched Kelley’s home and subpoenaed the auditor’s office for records. Days later, Kelley wrote a $447,000 check to the U.S. Treasury Department, noting in the subject line that it would cover future tax debts, investigators said.
He was first indicted in April and charged with 10 felony counts, including possession of $1.4 million in stolen property related to his former business. The new indictment charges him with 17 counts, including five counts of the most serious charge, money laundering, which carries up to 20 years in prison. The other charges include possession of stolen property and filing false income tax returns. In the new indictment prosecutors also dropped one charge — an allegation that Kelley attempted to obstruct a civil lawsuit.
On Tuesday, authorities seized $908,397 in what it described as stolen money that Kelley paid to the Seattle law firm Davis Wright Tremaine on March 26 as a retainer, the same day he was first informed he was likely to be indicted.
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