State Auditor 'puzzled' by federal probe

By John Stang
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Washington State Auditor Troy Kelley

By John Stang

Democratic State Auditor Troy Kelley refused to meet with several reporters in his office Monday morning who wanted to discuss a federal investigation that included a March 16 U.S. Treasury-agent search of his Tacoma home and a subpoena of state records.

Instead, Kelley, 50, sent out spokesman Thomas Shapley to tell reporters that Kelley would not meet with them, to answer questions, and to pass out a written statement by Kelley. Shapley said Kelley did not want to run the risk of being charged with obstruction of justice for talking about the federal investigation.

"I have fully cooperated with their investigation and remain puzzled by their interest. I do not know any specifics about their inquiry, despite repeated requests for information, and cannot comment further. ... I can assure you that all my actions over the years have been lawful and appropriate," Kelley's statement said.

According to Shapley, Kelley has no intention of resigning nor of stepping down for the duration of the federal investigation. Kelley was on vacation in California last weekend and was not reachable for comment beyond a brief email. Monday is his first day back on the job in Olympia.

Shapley also told reporters that employee Jason Jerue, a part-time technical writer at the auditor's office whose records were subpoenaed by federal agents, lives in California and telecommutes from that state for his Washington state government job. The auditor's office declined to say which California city Jerue lives in, citing state privacy provisions for personnel records. Jerue's wage is $22.68 an hour. He earned $15,286 in 2013 and $22,884 in 2014.

Prior to become state auditor, Kelley owned a real estate document business, Post Closing Department, which tracked title documents. In a 2010 lawsuit a former client, Old Republic Title, a title-insurance firm, alleged breach of contract and the misappropriation of $1.2 million against Kelley and Post Closing Department. Kelley denied the allegations. The case ended in 2011 with a closed settlement.

The News Tribune of Tacoma reported that Jerue was vice president of Post Closing Department. Citing court records, the TNT reported that another former Post Closing Department employee said that Jerue destroyed documents associated with the business shortly after legal troubles surfaced.

In his Monday statement, Kelley said Post Closing Department closed in August 2008.

Washington Senate Majority Leader Mark Schoesler, R-Ritzville, has called for Kelley to take a leave of absence. Shapley contended Schoesler's call is purely political, and declined to comment on it.

On Friday, Gov. Jay Inslee's spokesman David Postman issued a statement that said: “The governor is very concerned about the apparent federal investigation involving the state auditor. We hope that the auditor will work with authorities and to the greatest extent possible — and as soon as possible — be open with the public." Since Kelley is a statewide elected official, he does not work directly for Inslee.

The U.S. Attorney’s office in Seattle has a policy of neither confirming nor denying the existence of an investigation until any charges are filed. That includes discussing whether Kelley has communicated with any federal investigators, said U.S. Attorney office spokeswoman Emily Langlie.

Shapley noted that the ongoing investigation could affect the auditor's office's 360 employees, whose jobs are to scrutinize financial and accountability records of state and local governments and their agencies across Washington. Kelley, Shapley said, "is very concerned about the impact of the news coverage on them."

Shapley could not say why Kelley did not return to Washington after the March 16 federal search of his house. Shapley speculated that the fact that Kelley's wife was at a conference in California and his children were with them might have been a factor. "That's his choice. That's a value judgment you can make," Shapley said.

Kelley represented southern Pierce County’s 28th District as a state representative for three terms before being elected state auditor by a 53 percent-to-47-percent margin in 2012. He is a lieutenant colonel in the Washington National Guard’s Judge Advocate General’s office and a former federal prosecutor.

This story has been corrected since it was first published to clarify that the Senate Majority Leader has called for Kelley to take a leave of absence, not to resign.

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About the Authors & Contributors

John Stang

John Stang

John Stang is a freelance writer who often covers state government and the environment. He can be reached on email at and on Twitter at @johnstang_8