Washington State Auditor|Accused of Tax Fraud

     SEATTLE (CN) – Washington’s state auditor has been indicted on charges of tax fraud, attempted obstruction and possession of stolen property.
     A federal jury returned a 10-count indictment against Troy X. Kelly, alleging he stole more than $1 million when he was operating a mortgage services company from 2003 to 2008.
     Kelly, a Democrat, was elected in 2012.
     The 41-page indictment says Kelly’s business accepted payments from real estate title companies for document tracking work. The title companies withheld $100-$150 on each loan to pay the fee, with Kelly’s company keeping $15-$20 as a fee. The rest of the money was supposed to be returned to homeowners.
     According to the indictment, Kelly kept all of the money for himself and hid it from the title companies and the Internal Revenue Service.
     “Mr. Kelley spun a web of lies in an effort to avoid paying his taxes and keep more than $1 million that he knew did not belong to him, but instead should have been returned to thousands of homeowners across this state,” acting U.S. Attorney Annette L. Hayes said Thursday in a statement.
     Governor Jay Inslee called for Kelly to resign immediately.
     Kelly said he would take leave while the case progresses, but said the charges have “no merit.”
     “For the past few years, I have been the subject of an intense investigation by the federal government about my private business practices going back more than 10 years. While never confronting me with specific allegations – or the basis for those allegations – they have probed and prodded, seemingly moving from one aspect of my former career to another,” Kelly said.
     “Presumably they have used the secret grand jury process to construct a case against me, questioning dozens of witnesses and examining every aspect of my professional life until they could weave together an ill-conceived narrative from which to base the charges.”
     The stolen property charge is punishable by up to 10 years in prison, attempted obstruction by up to 20 years, and false declarations by 5 years. The other charges carry maximum terms of 3 years each.
     Kelly was due to appear in Tacoma Federal Court at 2:30 p.m. Thursday.

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