Candidate for state auditor once accused of theft

OLYMPIA — The Democratic candidate for state auditor was once accused of stealing artwork from the offices of a company where he previously worked, according to court documents publicized by his opponent Thursday.

That allegation was one of several questionable details raised about state Rep. Troy Kelley in three civil lawsuits over the past 11 years. Campaign workers for his Republican rival, James Watkins, uncovered many of the court documents and posted them online.

In the 2001 court case from Los Angeles County, Calif., Kelley sued The First American Corporation for wrongful termination and defamation. He complained that one company official had told other managers that he was stealing and embezzling from the company.

The company later submitted surveillance footage of a man taking a painting from the company’s offices. First American lawyers claimed it was Kelley, though Kelley said he wasn’t in the area that day. Shortly after the submission of footage, Kelley dismissed his lawsuit.

Kelley, a Tacoma lawmaker first elected in 2006, did not return a call to discuss the matters Thursday. He issued a statement through a spokeswoman, saying the allegations against him were false.

Kelley said he moved to dismiss his lawsuit because he received a financial settlement from the company.

“The over-the-top allegations put forward by my opponent are just that — baseless claims,” Kelley said.

In another case from 2009, Kelley was sued by one of his clients, Old Republic Title, over how the two worked together. A judge later summarized the case as involving accusations of “misappropriation of customer funds, lying, fraudulently transferring funds, intentional spoliation of evidence, shady business schemes, tax evasion, and hiding from creditors.”

In 2011, the two sides agreed to settle the dispute, and Old Republic said it “received payment” to conclude the case, according to court documents.

Kelley later moved to seal the court records, saying there was reason they’d be used against him in his next political race. He said they could harm his political future.

U.S. District Judge James Robart denied that request.

“As to Mr. Kelley’s request to seal documents that may subject him to annoyance, embarrassment or harm to his political career, the court finds that these bases do not overcome the strong presumption of public access to the court’s files,” Robart wrote.

Kelley emerged from last month’s primary along with Watkins, and he narrowly beat a fellow Democrat, state Sen. Craig Pridemore.

Kelley got a boost in his primary campaign by running an ad in which he quoted retiring state Auditor Brian Sonntag as saying that Kelley was “the independent voice we need.” Rivals complained about that usage because the quote was from October 2010 — when Kelley was running for re-election in the state House.

Sonntag has not endorsed any of the candidates looking to succeed him.

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