State auditor pleads innocent, takes leave

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Troy Kelley, at a cybersecurity exercise in April

A federal grand jury has indicted embattled Washington State Auditor Troy Kelley on 10 charges, including stealing large sums of money while running a business, lying under oath during a civil suit about the business activities and engaging "in a long-running scheme to avoid and reduce his taxes."

In a U.S. District Court appearance this afternoon in Tacoma, Kelley pleaded innocent to all the charges. He was released on his own recognizance and ordered to stay within Washington state, except for an upcoming National Guard duty assignment to South Korea. That assignment begins April 26.

Earlier, the Democrat issued a statement through a private public relations firm — the firm advertises its "crisis communication" skills on its website — saying that he is confident he will be proven innocent. "I fully intend to resume my duties after I put these legal matters to rest,” he said.

Meantime, he'll be taking a leave of absence beginning May 1.

Jaxon Ravens, chair of the Washington State Democratic Party called on Kelley to resign, along with a host of Democratic state officials including Gov. Jay Inslee. After issuing a written statement, Inslee's office released this audio file. "He needs to resign," Inslee said in the audio, adding he had expressed that view to Kelley in a phone call earlier today. Inslee also emphasized that since the state auditor plays an important in ensuring the integrity of state government, someone should be appointed to fill that role "immediately."

Senate Republican leader Mark Schoesler, who had earlier called for Kelley to take a leave of absence, said it is now time for him to resign. Associated Press quoted Schoesler saying, "I'm out of patience, as I think most citizens would be, and I think he should do the honorable thing and step aside to restore trust in government."

The indictment includes allegations that, as the owner of a business serving the real-estate title industry, Kelley stole more than $1.4 million in fees that should have been returned to borrowers. He is scheduled to appear in U.S. District Court in Tacoma at 2:30 p.m.

The governor had resisted calling for Kelley to step aside, explaining in a press conference on Wednesday (see video below) that his office was monitoring the situation and awaiting the results of the investigation. Once the grand jury handed down its charges, the governor acted quickly.

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