Feds subpoena documents from Washington auditor's office

AP News
Posted: Mar 20, 2015 4:50 AM
Feds subpoena documents from Washington auditor's office

OLYMPIA, Wash. (AP) — Documents from the office of the Washington state auditor were turned over to the U.S. Department of Justice just days after federal Treasury agents searched his home, but what officials are looking for isn't yet known.

The documents handed over Thursday were in response to a March 6 subpoena of Auditor Troy Kelley's office, said spokesman Thomas Shapley, who added that he hadn't seen either the subpoena or the documents.

That action came after agents with the U.S. Department of Treasury spent about five hours searching Kelley's Tacoma home early this week. He is out of state on vacation and issued a statement saying he had no knowledge of any investigation.

Shapley said that Kelley's vacation plans were in California, and that he is not aware of any plans for him to return to the state early. His schedule indicates he'll be back in the office on Monday, Shapley said.

Kelley, a Democrat, was elected auditor in 2012. He previously served in the state Legislature.

The U.S. attorney's office in Seattle has declined to confirm or deny any investigation, and IRS officials declined to comment. By Thursday evening, no documents had been publicly filed in federal court related to any investigation involving Kelley or his address.

The auditor's office wouldn't release the agency subpoena Thursday, and a spokesman for the state attorney general's office, which represents state agencies, said that their attorneys were looking into the details of releasing it.

Gov. Jay Inslee hasn't spoken to Kelley, and he only learned of the recent events through news reports, spokesman David Postman said Thursday. "We are certainly going to be monitoring this," Postman said.

Beyond a three-sentence written statement issued Wednesday night, Kelley has not responded to requests for interviews. In that statement, Kelley said: "I have not been served a search warrant and have not been informed of any reasons for a search."

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

The state Republican Party on Thursday called on Kelley to step down until cleared of any potential allegations.

Republican Senate Majority Leader Mark Schoesler stopped short of saying that Kelley needed to resign, but he said that Kelley needs to explain why his personal files are being reviewed and also should disclose the terms of the settlement agreement with Old Republic.

"The auditor is supposed to be our statewide official fighting against fraud, waste and abuse," Schoesler said. "The most important thing is for him to come clean for the public trust. Let's see what the facts are and what his future should be."

Former auditor Brian Sonntag, who served as auditor for two decades before retiring in 2012, said that for an office like the auditor — tasked with rooting out fraud and misuse of public funds — the news of the search "does create a cloud."

"The whole thing is going to hinge on that public trust and confidence," he said. "That public trust is pretty fragile sometimes."


Associated Press writer Gene Johnson in Seattle contributed to this report.