Judge dismisses 1 count against Washington state auditor

TACOMA — A federal judge dismissed one of the 16 charges against Washington State Auditor Troy Kelley on Tuesday after testimony concluded in the five-week fraud trial, but he refused a request from defense attorneys to acquit their client, saying there is “ample evidence” against him.

“This is a simple case from my perspective,” U.S. District Judge Ronald Leighton said, adding that while he didn’t know what jurors would decide, “There is ample evidence that a jury — that a reasonable jury — could convict on any and all of the remaining counts.”

The dismissed count alleged that Kelley, the first Washington official indicted in 35 years, lied under oath in a deposition in a lawsuit. The judge said he did not believe a jury could find Kelley guilty of that charge based on the evidence in the case, and therefore the jury shouldn’t consider it.

The remaining charges date to Kelley’s operation of a real-estate services business a decade ago, during the height of the housing boom, years before he was elected state auditor in 2012. Prosecutors say he pocketed about $3 million in fees that he told title companies he would refund to homeowners, while defense attorneys say the case boils down to a contract dispute, not a criminal matter.

With closing arguments set for Wednesday, the sides spent Tuesday afternoon arguing about jury instructions for the remaining counts, which include possession of stolen property, money laundering and tax evasion.

One of Kelley’s attorneys, Angelo Calfo, reiterated arguments he has long made: that neither the title companies nor the homeowners were entitled to the money Kelley kept, so no one was harmed by his actions, even if they might have been unethical.

“How did we get so far away from right and wrong?” the judge interjected at one point. “It’s not $5 lying on the sidewalk you picked up.”

Calfo responded that federal prosecutors aren’t supposed to be “roving honesty police.”

“That’s what this case is about,” he said. “They don’t like what he did.”

Kelley, a Democrat, could face up to 20 years if convicted. He has refused to resign his office, but his lawyers told the jury that he will not run for re-election.