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Lawmakers concerned about auditor probe


OLYMPIA, Wash. — A spokesman for Washington state Gov. Jay Inslee said Friday the governor is very concerned about an apparent federal investigation into the state auditor, and is encouraging him to work with authorities after federal Treasury agents searched his home and the Justice Department subpoenaed documents from his office.

Inslee spokesman David Postman said that the governor wants auditor Troy Kelley to be open with the public as soon as possible.

“The voters, local governments, lawmakers and our administration need to have complete confidence in Mr. Kelley’s ability to carry out the very important duties of state auditor,” Postman said in a written statement.

In a telephone interview, Postman said Kelley called the governor Friday morning, but Postman would not disclose what the conversation was about. Postman says that the governor is not asking for Kelley to resign.

The documents handed over Thursday were in response to a March 6 subpoena of the auditor’s office, spokesman Thomas Shapley said. Neither the auditor’s office nor the state attorney general’s office, which represents state agencies, had released the subpoena as of Friday.

On Friday, some lawmakers released statements calling for Kelley to provide more information about the subpoena and search, including Republican Sen. Mark Miloscia of Federal Way and Republican Rep. Drew Stokesbary of Auburn.

Stokesbary said that lawmakers need more details about the investigation before the chamber releases its budget proposal, which would include funding for the auditor’s office. He said that the Legislature “should know why his office is being investigated so we can account for any issues that may arise as the result of this investigation.”

“Even if the federal subpoena is not a public record under state law, nothing prevents the Auditor’s office from voluntarily releasing it immediately,” Stokesbary wrote.

Agents with the U.S. Department of Treasury spent about five hours searching Kelley’s Tacoma home early this week. He is on vacation in California and said in his lone statement Wednesday night that he had no knowledge of an investigation.

Shapley said Thursday that he was not aware of any plans for Kelley to return early and that his schedule indicates he will be back in the office Monday. He said that the auditor had already removed himself from any action related to the investigation, which is standard practice and was also requested by the governor’s office.

“Auditor Kelley was not involved in fulfilling the U.S. Department of Justice subpoena. Auditor Kelley was removed from the process and that situation has not changed, just as he is removed from the process of responding to public records requests from the news media on this topic,” Shapley said in an emailed statement.

The U.S. attorney’s office in Seattle has declined to confirm or deny an investigation, and Internal Revenue Service officials declined to comment. No documents had been publicly filed in federal court by Friday related to an investigation involving Kelley or his address.

The Democratic auditor was elected in 2012 after previously serving in the state Legislature.

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

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