Embattled state auditor’s hiring of associate triggers state investigation

OLYMPIA – The attorney general’s office will investigate embattled State Auditor Troy Kelley’s hiring of a longtime business associate to see if any Washington laws were broken.

Attorney General Bob Ferguson said Tuesday he was acting on a request from Gov. Jay Inslee to look into “potential criminal activity” in Jason JeRue’s hiring, and all evidence related to his employment with the auditor’s office.

JeRue was a business associate of Kelley’s in a company that administered millions of dollars in escrow money for real estate purchases. Federal investigators contend the company did not return all money required to borrowers.

After Kelley was elected state auditor in 2012 he hired JeRue as a part-time technical writer who worked out of his home in California.

Kelley is on a self-imposed indefinite unpaid leave while federal prosecutors investigate the business activity, which predated his 2012 election as state auditor. In April, a federal grand jury indicted him on 10 counts that included fraud, lying to federal investigators and filing false tax returns.

Any prosecution from the investigation of JeRue’s hiring would be separate from the ongoing federal case. 

The request from Inslee was necessary for Ferguson’s office to have the authority to get involved because criminal prosecutions typically are handled by county prosecutors. As far as the attorneys working on the investigation could determine, it was the first time a governor has asked the attorney general to investigate a statewide elected official since the law was passed in the 1970s.

Ferguson declined to offer specifics about the scope of the new investigation and dodged a question about whether he personally had concerns about JeRue’s hiring before Inslee made the request.

“The letter from the governor did not come as a surprise,” he said.

JeRue was fired by acting state auditor Jan Jutte shortly after Kelley began his leave of absence.