Plot Thickens In Federal Probe Involving Washington State Auditor
Federal agents searched the home of Washington State Auditor Troy Kelley on Monday. Now, the Democrat’s office confirms it turned over documents to the U.S. Department of Justice Thursday in response to a subpoena.
Meanwhile, Kelley isn’t saying much. In an emailed statement, Kelley said he’s out of state on vacation with his family.
The story took another twist Thursday when the state auditor’s office confirmed it had received a federal subpoena earlier this month.
“I believe it was two agents, they asked for certain documents and requested that we provide them in a certain timeframe which we have done,” auditor’s office spokesman Thomas Shapley said.
Shapley said he hadn’t seen the subpoena and didn’t know what kind of documents were turned over. The U.S. Attorney’s office in Seattle won’t confirm or deny an investigation until and unless charges are filed.
‘It definitely raises some eyebrows’
Kelley’s next-door neighbor Cassandra Hafen described what happened in the quiet Northwest Tacoma neighborhood on Monday.
“There was like 10 undercover cop cars,” she said. “And you could just hear banging on [Kelley’s] door, ‘Police open up.’”
Hafen said no one answered. “So they breeched the door and everyone went in and they blacked out all their windows with like black tarp so you couldn’t see inside.”
Hafen watched as agents from the U.S. Department of Treasury spent the next several hours searching inside and removing items. She’s still kind of stunned – a federal search warrant being executed on the private home of the elected state auditor.
“I mean it definitely raises some eyebrows,” Hafen said. “My assumption is it has to do with a lot of money.”
Wayne Fricke, a criminal defense attorney in Tacoma with experience handing federal cases, said the fact Treasury agents are involved does suggest that whatever they’re investigating involves something financial.
“It could be tax evasion, it could be money-laundering, a whole number of things,” Fricke said. “You just know it’s going to involve money.”
But Fricke cautioned it’s early yet.
“They’re looking for information obviously,” he said. “That doesn’t mean they found information.”
Kelley has maintained a fairly low-profile as state auditor since taking office in 2013. He was elected after a campaign during which his opponent dredged up past lawsuits and allegations of misappropriated funds. It all related to Kelley’s work in the real estate title and escrow business.
In a videotaped deposition in 2010 Kelley was asked by attorney Scott Smith about a series of unusual bank transfers involving nearly $4 million.
The money was swept from three business accounts and then moved from bank to bank.
Eventually records showed the money ended up in an account linked to an offshore bank in Belize -- a known tax haven. Asked in the deposition if he intended to pay taxes on the money, Kelley said he would “On advice of counsel, when he tells me to.”
Calls to step down
Whether this has anything to do with the current federal probe is unknown. Kelley has always maintained he did nothing wrong.
The specter of a federal investigation involving the state auditor is the talk of the capitol. Already the Washington State Republican Party has called on Kelley to step down.
“Obviously it looks horrible to have federal officials issuing subpoenas and raiding your home,” said Paul Berendt, a former state Democratic Party chairman.
But he added that any calls for Kelley to step down are premature.
“I think the most important thing is that he needs to have the opportunity to defend himself and make a statement before people rush to judgment,” Berendt said.
Kelley is scheduled to return to the office on Monday. First, his office said, the auditor plans to finish his family vacation in California.
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