The Latest: Governor awaiting next move in auditor case

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Posted: Apr 26, 2016 7:41 PM
The Latest: Governor awaiting next move in auditor case

TACOMA, Wash. (AP) — The Latest on the federal fraud trial of Washington State Auditor Troy Kelley (all times local):

4:35 p.m.

Democratic Gov. Jay Inslee says he is waiting to see what prosecutors do now that a federal jury has failed to reach a verdict on key charges in the federal fraud trial of Washington State Auditor Troy Kelley.

Inslee said in a statement Tuesday that the state does not have much-needed closure to the case.

"Regardless of the outcome in court today, serious questions remain about Troy Kelley's ability to successfully fulfill his role as state auditor," Inslee wrote.

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3:40 p.m.

The foreman of the jury in the federal fraud trial of Washington State Auditor Troy Kelley says jurors were never close to agreeing on the key charges against him.

Kelley was accused of pocketing $3 million in fees that should have been refunded to homeowners when he ran a real-estate services business before becoming auditor.

Jury foreman Mike Lowey of Roy says he didn't think Kelley believed he had stolen the money. That was one element prosecutors had to prove to convict Kelley of possession and concealment of stolen property.

Kelley's lawyers say the jury's inability to reach a verdict "shows to us Troy is on the right path to vindication."

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3:15 p.m.

Republican Senate Majority Leader Mark Schoesler called on Washington State Auditor Troy Kelley to resign.

"The jury has made its decision, but the public trust has been violated," Schoesler said in a written statement issued after the verdict. "The elected office of state auditor has been sullied by Mr. Kelley's trial. He should do the right thing and resign and give the electorate and the state auditor's office a chance to heal and move forward. There's a lot of work to do on government accountability and the entire ordeal has left the public unable to trust him as Washington's watchdog."

Rep. Drew Stokesbary, a Republican from Auburn who had co-sponsored an impeachment resolution that the Legislature never took action on, said that he was "glad the justice system was given a chance to work."

"But my position has never been that Troy Kelley was guilty (or innocent)," Stokesbary wrote in a direct message on Twitter. "What I have said, and still believe, is that public servants — especially one tasked with rooting out fraud and corruption in state government — should hold themselves to a higher standard than merely 'not guilty.' "

Stokesbary also said that he hopes Kelley follows through on earlier statements that he would not seek re-election.

"The people of Washington deserve the chance to elect a new auditor, untainted by allegations of fraud and obstruction," Stokesbary wrote in a message to The Associated Press. "Troy's selfishness has made the office a running joke on both sides of the aisle in Olympia, so our next State Auditor needs to be effective on day 1."

Three people have already announced for the seat: Pierce County Executive Pat McCarthy and Seattle attorney Jeff Sprung, both Democrats, and Mark Miloscia, a Republican senator from Federal Way.

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2:30 p.m.

A jury has failed to reach a verdict on key charges in the federal fraud trial of Washington State Auditor Troy Kelley and acquitted him on the single count where they could agree.

Kelley was accused of pocketing $3 million in fees that should have been refunded to homeowners when he ran a real-estate services business before becoming auditor.

The jury found Kelley not guilty of one count of making a false statement in their fourth day of deliberations on Tuesday, following a trial that spanned more than five weeks.

The trial featured testimony from a former employee who told jurors that Kelley ordered him to falsify documents to hide that the company wasn't paying the refunds.

The charges stem from Kelley's operation of a business called Post Closing Department during the height of the housing boom.

Kelley, a lawyer himself who has taught tax law courses, faced 15 counts, including money laundering and tax evasion.

His 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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1:10 p.m.

A jury says a radio news story may have affected one of its members in the federal fraud trial of Washington State Auditor Troy Kelley.

After telling U.S. District Judge Ronald Leighton that it had been able to agree on just one of the 15 counts, the jury sent out another note — this time saying a juror had "heard something on the radio that may have affected things."

The court subsequently sent the jurors to get lunch.

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12:45 p.m.

A jury deliberating in the federal fraud trial of Washington State Auditor Troy Kelley says it's been able to reach agreement on just one of the 15 counts against him.

Most of the jurors told U.S. District Judge Ronald Leighton that in their fourth day of deliberation Wednesday, there was little to no chance of reaching agreement on the other charges.

It wasn't immediately clear which count they agreed on.

Kelley is the first Washington state official indicted in 35 years. He is accused of illegally pocketing $3 million in fees that prosecutors say he should have refunded to homeowners when he ran a real-estate services business.

They say it happened during the height of the housing boom, before Kelley was elected state auditor.

He faces charges that include possession of stolen property, money laundering and tax evasion.

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11:28 a.m.

Questions from a federal jury deliberating the fate of Washington State Auditor Troy Kelley suggest a struggle to decide at least some of the counts against him.

In their fourth day of deliberations Tuesday, the jury asked U.S. District Judge Ronald Leighton whether it's OK to change a verdict on a certain charge after they've entered it on the verdict form.

The judge responded that it is. He sent them a clean form to start filling in.

The question came a day after the jurors asked what they should do if they can't agree on certain counts. The judge told them that if they believe more time would help them, they should take it.

Kelley is the first Washington state official indicted in 35 years. He is accused of illegally pocketing $3 million in fees that prosecutors say he should have refunded to homeowners when he ran a real-estate services business. They say it happened during the height of the housing boom, before Kelley was elected state auditor.