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Tuesday, March 19, 2024
March 19, 2024

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Washington auditor to face another fraud trial

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TACOMA — Federal prosecutors plan to retry the Washington State Auditor on charges he pocketed millions of dollars in needless fees while running a real estate services business a decade ago, after his five-week fraud trial ended with a hung jury in April, the U.S. Attorney’s Office said Tuesday.

The prosecution accused auditor Troy Kelley of pocketing $3 million in fees he should have refunded to homeowners. But after deliberating for several days, a federal jury failed to reach a verdict on 14 of 15 charges against Kelley, which included possession of stolen property and money laundering.

And on the one count where the jury did agree, it acquitted him of lying to the IRS.

Prosecutors said during a hearing Tuesday at U.S. District Court in Tacoma that they plan to try Kelley again. Judge Ronald Leighton set a trial date of March 13, 2017.

Defense attorney Patty Eakes said she’s disappointed with the government’s decision, adding she was surprised because jurors in the first trial leaned toward acquittal on the key charge that Kelley possessed stolen property.

“He’s extremely disappointed,” Eakes said of Kelley. “This case has had a huge emotional burden on him and his family, not to mention a financial burden.”

She said the defense has asked the judge to acquit Kelley or dismiss the charges, including on grounds of double jeopardy for some of the tax charges. If the judge declines Eakes said the defense will appeal to the 9th U.S. Circuit Court of Appeals.

The charges against Kelley, elected in 2012, stemmed from his operation of a business called Post Closing Department, which tracked escrow paperwork for title companies. He ran the real estate services company in the early 2000s.

Prosecutors said that to obtain business from the title companies — and get access to vast sums of money from homeowners — Kelley promised that Post Closing Department would collect $100 to $150 for each transaction it tracked; keep $15 or $20 for itself; use some of the money to pay county recording and other fees if necessary; and refund the customer any remaining money.

In tens of thousands of cases, the additional fees were not needed, but Kelley retained the money anyway. He refunded the balance only in a few instances when title companies began asking uncomfortable questions or when homeowners were savvy enough to demand it, prosecutors said.

Kelley’s attorneys insisted that the homeowners were never promised refunds, and therefore no one was harmed by Kelley’s actions — even if they might have been unethical business practices.

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