Former Washington State Auditor’s appeal denied in fraud case. Prison sentence awaits
Former Washington State Auditor Troy Kelley has lost the appeal of his 2017 conviction for fraud, possession of stolen property and false declarations in court and now must serve his prison sentence, according to the U.S. Department of Justice.
The Ninth Circuit Court of Appeals upheld Kelley’s conviction without hearing oral arguments, according to a DOJ news release issued Wednesday. Kelley now faces the one year and one day sentence imposed by U.S. District Court Judge Ronald Leighton in 2018.
“We’re reviewing and analyzing the decision and what it did and did not decide,” Kelley’s attorney, Angelo Calfo, said in an email to The Associated Press. “We plan to explore the possibility of further appeals to the Ninth Circuit or the U.S. Supreme Court.”
From 2003 to 2008, Kelley had a business tracking real estate filings on county websites. According to the news release, Kelley’s business had an agreement with escrow companies in which his business would monitor real estate transactions for the escrow companies’ customers, charging $15 or $20 for each transaction as well as $100 to $150 for possible expenses and fees.
Although Kelley said the $100 to $150 would be refunded to the homeowners if there were no expenses, beginning in 2005, Kelley almost always kept the entire initial payments. Kelley stole almost $3 million during this time, later using some of the money for his campaign for State Auditor in 2011, according to the press release.
The news release says Kelley, a Democrat, also falsified a letter to the plaintiff in a 2008 class-action lawsuit against escrow companies to cover up his actions. The lawsuit alleged customers had been charged excessively for real estate transactions, and Kelley’s letter made it seem as if he had refunded one of the plaintiffs, even though he hadn’t.
To conceal the stolen money, Kelley moved it into multiple bank accounts and then into an investment account for a company that was controlled by a Central American trust that Kelley actually controlled, according to the DOJ.
Kelley was sued by an escrow company over the stolen money, and it was during that trial that Kelley provided false testimony under oath that the money was legitimately earned, according to the news release. That lawsuit is the source of one of Kelley’s convictions for making false declarations in a court.
Kelley’s tax fraud charges date from 2011 when he claimed on tax returns that he was making money through real estate services even though he had not operated that business since 2008. The claim was made in order to hide the stolen money, which he was using for State Auditor campaign and personal expenses, according to the news release. He also claimed business deductions on his taxes for expenses including spa treatments, a family vacation, toys and bed sheets.
In 2017, a jury unanimously found Kelley guilty of possessing stolen property, two counts of making false declarations under oath and six counts of tax fraud. A previous 2016 trial had acquitted him of the charge of lying to the Internal Revenue Service in 2013 about his taxes, according to the DOJ news release.
Kelley’s attorney told the Associated Press at the time of his conviction that Kelley did not feel he had done anything wrong. Despite calls for his resignation from both Democrats and Republicans, Kelley returned to his office for seven months after he was charged, though he did not run for re-election, according to the Associated Press.
“Through two trials and multiple appeals, the attorneys in this office have sought nothing but justice for those Kelley defrauded and the members of our community who expect law breakers to be held accountable regardless of their station or standing in society,” said U.S. Attorney Brian T. Moran in the press release. “The time has come for Troy Kelley to accept his punishment and report to custody and conclude this lengthy legal odyssey.”
This story was originally published July 29, 2020 at 1:12 PM.