Subpoena seeks info on part-time Washington auditor employee

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Posted: Mar 20, 2015 10:39 PM
Subpoena seeks info on part-time Washington auditor employee

OLYMPIA, Wash. (AP) — The office of Washington state auditor Troy Kelley released late Friday a Department of Justice subpoena that sought documents related to a part-time employee at the agency who was a longtime business associate of the elected official.

The federal grand jury subpoena, dated March 5, sought material related to 46-year-old Jason J. Jerue, who used to work for the auditor at a company that handled mortgage filings from escrow and other real-estate transactions that was previously owned by Kelley. Those documents were turned over to the Justice Department on Thursday.

Auditor spokesman Thomas Shapley said Jerue, who still works for the agency, is a technical writer in administrative management.

The subpoena request — which Shapley said was received by the agency March 6 — included information about his employment at the auditor's office and email discussions between Jerue and others relating to his prior employment at Post Closing Department, as well as those relating to lawsuits involving three companies, including one Kelley previously settled before the Democrat was elected in 2012.

The subpoena also seeks emails on the "commission of any criminal offense."

The auditor's office didn't release the documents that were turned over to the Justice Department, but released the original subpoena after requests from media, as well as some lawmakers.

A spokesman for Washington Gov. Jay Inslee, David Postman, said the release of the subpoena was "the right thing to do."

Earlier in the day, Postman said Inslee was very concerned about the federal investigation and encouraged Kelley to be open with the public about the situation as soon as possible.

"This is exactly the right step and exactly what the governor hoped to see," Postman said.

In another development late Friday, The Seattle Times reported the FBI sought records related to expense reimbursements Kelley received when he was a state lawmaker, according to a copy of the FBI request obtained by the newspaper.

Agents with the U.S. Department of Treasury spent about five hours searching Kelley's Tacoma home early this week. He is on vacation in California and said in his lone statement Wednesday night that he had no knowledge of an investigation. He has not responded to numerous requests for interviews.

The U.S. attorney's office in Seattle has declined to confirm or deny an investigation. No documents had been publicly filed in federal court by Friday related to an investigation involving Kelley or his address.

Shapley has said Kelley's schedule has him back in the office Monday. He said the auditor had already removed himself from any action related to the investigation.

"Auditor Kelley was not involved in fulfilling the U.S. Department of Justice subpoena. Auditor Kelley was removed from the process and that situation has not changed," Shapley said in an emailed statement.

The Associated Press requested an interview with Jerue through the auditor's office, which Shapley said late Friday he would relay. Three phone numbers believed to be connected with Jerue were disconnected.

During a contentious campaign, details emerged about lawsuits involving Kelley, including a federal case brought by Old Republic Title, a former business customer of an escrow-services company owned by Kelley. The title company claimed Kelley fraudulently transferred funds, evading taxes and hiding millions from creditors. The case was ultimately settled.

In 2012, the state Public Disclosure Commission fined Kelley $200 for not being fully forthcoming about his financial dealings. The PDC's investigation, conducted in response to a Republican complaint, found Kelley had not disclosed his ownership of a company called United National in 2008, the year that company was dissolved.

Kelley later filed disclosure forms that said United National did business as Post Closing, which employed both Jason Jerue and his then-wife, according to court filings.

Scott A. Smith, an attorney who handled a lawsuit against Kelley, said Jerue and Kelley worked together at a series of real-estate companies, stretching back to a California business called American Title before Kelley moved north in the early 2000s.

"He was Kelley's right-hand person, so we were very interested in talking to him," Smith said. "And we hit a real roadblock. Kelley would not give us information" to find Jerue.

The lawsuit Smith handled against Kelley was settled a month before it was to go to trial in 2011.

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Associated Press writers Derrick Nunnally in Olympia and Gene Johnson in Seattle and contributed to this report.