Former Washington state auditor sentenced to year in prison
OLYMPIA – Former Washington state Auditor Troy Kelley was sentenced Friday to a year in prison following his December conviction on fraud and other charges related to when he ran a real-estate escrow services business during the height of last decade’s housing boom.
The sentencing comes after Kelley’s second trial, when he was found guilty of eight felonies, including possession of stolen property, making false declarations under oath, and tax fraud. The sentence of 12 months and one day, followed by a year of supervised release, was issued by U.S. District Judge Ronald Leighton.
His first federal fraud trial last year ended with an acquittal on one count and a deadlocked jury on more than a dozen others. The charges stemmed from Kelley’s operation of a business that tracked escrow paperwork for title companies.
Before sentencing, Kelley told the judge his “life has been torn to pieces for everyone to see.”
“I want to go back to work. I want to try and provide for my family. I want to look to the future,” he said, adding that he will never “do anything to make myself vulnerable like this again.”
“I don’t believe I need jail to teach me that,” he said.
Leighton said it was a “tragic and sad day,” but he said Kelley “found a vehicle to acquire wealth and what he did was known by him to be wrong.”
“Somebody who has done nothing doesn’t bank in that way, doesn’t forge documents. And so he is guilty of this crime,” he said. “He also has and will continue to suffer mightily, and for that he has my sympathy.”
After the sentencing, Kelley’s attorney, Angelo Calfo, said Kelley would voluntarily surrender in the coming weeks.
Prosecutors had sought more than seven years, while Kelley’s attorneys had asked the court to sentence him to five years of probation and six months under house arrest. Prosecutors also had sought $1.4 million in forfeiture, which the judge denied. A separate restitution hearing has been scheduled for Sept. 21.
Calfo said while Kelley was spared a longer sentence, “there’s really little cause for celebration, but there is cause for relief.”
“He doesn’t believe he should have been pursued,” he said. “He doesn’t believe he stole any money.”
Kelley ran a business called Post Closing Department.
Prosecutors said to obtain business from the title companies – and access vast sums of money from homeowners – Kelley promised that Post Closing Department would collect $100 to $150 for each transaction it tracked; keep $15 or $20 for itself; use some of the money to pay county recording and other fees if necessary; and refund the customer any remaining money.
In tens of thousands of cases, the additional fees were not needed, but Kelley retained the money anyway, prosecutors said. He refunded the balance only in a few instances when title companies began asking uncomfortable questions or when homeowners were savvy enough to demand it, prosecutors said. Kelley insists he was entitled to keep the money.
One of the companies Kelley worked with, Old Republic Title, sued him for not paying refunds. Kelley settled the case for $1.1 million after making what prosecutors contend were false statements about his practices under oath.
“It’s important that people who steal money, even in small amounts, one consumer at a time but in large amounts in aggregate, be held accountable for that,” said Assistant U.S. Attorney Andrew Friedman after the sentencing. “It’s particularly important when they’re lawyers, when they’re people in positions of trust, when they’re public officials.”
The first Washington state official indicted in 35 years, Kelley took a seven-month leave of absence after he was charged. He returned to office after the trial, but decided not to seek re-election. The position, which is tasked with rooting out waste and fraud in state government, is now held by Democrat Pat McCarthy.