Politics & Government

Troy Kelley faces second criminal investigation

State Auditor Troy Kelley faces a second criminal investigation, this one targeting his actions as an elected official.

Gov. Jay Inslee requested an investigation Monday tied to Jason JeRue, whom Kelley hired in his real-estate document business and then in the Auditor’s Office. While Kelley already faces federal charges related to his business practices, Inslee said, he’s “concerned about the potential of misconduct relating to his operation of the Auditor’s Office.”

Attorney General Bob Ferguson is overseeing the new probe. He and Inslee didn’t say what laws they suspect might have been violated, but Kelley “hired a close business associate for an unusual official state job with very little work product to show for it,” said Inslee’s spokesman, David Postman.

JeRue worked part-time and was considered a technical writer, doing clerical work, such as compiling lists of audits put out by other states and proposals in the Legislature affecting the Auditor’s Office. The office let JeRue work from his home in California.

Acting Auditor Jan Jutte fired JeRue last month on her first day filling in for Kelley, who is on an indefinite leave of absence without pay to fight the federal indictment.

“Our investigation will cover JeRue’s hiring and employment through the Auditor’s Office and any related matters that the evidence might lead us to,” Ferguson told reporters.

Inslee’s spokesman said the governor and attorney general and their staffs have talked regularly about Kelley while waiting for Jutte to adjust to her new job. “We are all now in agreement to move forward with this investigation,” Postman said.

Inslee, Ferguson and Kelley are all Democrats.

Kelley’s personal spokesman had no immediate comment. But last month, a lawyer for Kelley told a Pierce County judge considering a citizen recall effort against the auditor that JeRue’s hiring didn’t violate state law.

“Mr. JeRue was exempt from the state civil service laws. Mr. Kelley had the absolute discretion to hire him,” Jeffrey Paul Helsdon wrote in a legal brief.

Superior Court Judge Frank Cuthbertson agreed when he ruled the recall allegations didn’t meet the legal standard to move forward.

In the recall, Ferguson’s office represented Kelley. But while state lawyers defended him in part of the proceedings, they left it to private lawyer Helsdon to defend him on the accusation that he pressured staff to hire JeRue. The Attorney General’s Office said that charge and one other “do not arise from Kelley’s official acts.”

That distinction could come up again if Ferguson’s office finds a basis to prosecute Kelley and has to decide whether to simultaneously defend him. Lawyers in the office who could be on conflicting cases or sides of cases are “screened” from each other, Ferguson said.

Whatever investigators find could have implications for state lawmakers, who would like Kelley gone. The Legislature has the authority to remove elected officials for either crimes or “malfeasance in office.”

Kelley, elected auditor in 2012, hasn’t been convicted of any crime, and his criminal charges to date don’t involve misconduct in office. Instead they involve the business Kelley ran tracking property records during the time he was a state House member representing the Tacoma area.

Federal prosecutors accuse him of keeping more than $1.4 million he should have refunded to customers and of evading paying taxes on the money.

JeRue worked as vice president and operations manager of Kelley’s company, according to court records. Another former employee said in a declaration that after Kelley’s business practices came under scrutiny in a lawsuit, JeRue and Kelley removed files from her house and JeRue deleted files from her computer.

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