Troy Kelley: From Washington State Auditor to Tax Fraud Conviction

Posted on July 01, 2021

Image source: https://www.seattletimes.com/seattle-news/crime/former-state-auditor-troy-kelley-convicted-of-9-felonies-in-federal-retrial-on-theft-ta x-fraud-charges/

A lieutenant colonel JAG officer in the Washington National Guard, member of the Democratic Party, and the Washington House of Representatives to become the 10th Auditor of Washington, all these are the achievements of Berkeley graduate Troy Kelley. Then allegations of suspicious business dealings and a payoff of $1.05 million in a settlement during his run for the state auditor started to change everything. What appeared at first to be a political attack burst into a high-profile corruption case.

Elected Auditor to Money Laundering Charges

In 2012 Troy Kelley was elected Washington State Auditor in the 2012 General Election with 1,512,620 votes. In the early to mid-2000s, his influence in the real estate industry would eventually catch up with him. Dealings he made during the pre-Great Recession were where most of his cases were built on, including accusations of pocketing around $3.8 million from refunds that should have been paid back to escrow company customers.

Prosecutors alleged that Kelley’s 2012 campaign funds came from the money stolen from the real estate deals, which later caught the IRS’s attention. Troy Kelley attempted to hide and move money through wire transfers and eventually established an offshore trust which he insisted was to protect his assets from lawsuits.

Indicted but Refusing to Resign

By 2015 the FBI had enough evidence to get a warrant to search his Tacoma home. Troy Kelley was indicted on multiple charges a month later, including obstruction, theft, filing false tax returns, and making false statements. This was the first time that a top elected official in the state of Washington faced charges in the last 35 years. He refused to resign and served the remainder of his term. In 2016 and 2017, he was acquitted of some of the charges, including money laundering.

Seeking for Appeals

Troy Kelley was sentenced to 366 days in prison and an additional one more year under probation, which was less than the almost 2,600 days that the prosecutors were seeking. Along with his lawyers, Kelley appealed to the 9th U.S. Circuit Court of Appeals and then to the U.S. Supreme Court.

Judge Rejects $1.4 Million Forfeiture

By 2018 the court conceded the count of conviction, and Kelley was sentenced. He was convicted of tax fraud, repeatedly making false statements under oath, obstruction of a civil lawsuit, and multiple possession and concealment of stolen property. The courts did not accept his request for forfeiture of $1.4 million. Almost a year after he was sentenced, a three-judge panel upheld Troy Kelley’s appeal, and this would be denied by the United States Supreme Court and then waived its right to file a response.

Had it not been for the FBI and IRS Criminal Investigation, the crimes of Troy Kelley would remain allegations and speculations. He would remain unaccountable and may have even run for re-election.

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