The attorney for indicted State Auditor Troy Kelley continued his assault on the government’s theft and money-laundering case Wednesday, questioning a key investigator about his role in a Chicago tax-evasion investigation.
TACOMA — The attorney for embattled State Auditor Troy Kelley continued his assault on the government’s theft and money-laundering case Wednesday, questioning a key government investigator about his involvement in a Chicago tax-evasion case and the pressure he was feeling to complete the investigation.
Under questioning by federal prosecutors, FBI forensic accountant Gary Beisheim dryly detailed the finances of Kelley’s real-estate reconveyance firm, Post Closing Department, and concluded that the auditor stole $2.9 million in fees the government claims should have been returned to homebuyers but instead was kept by Kelley.
The tenor of his testimony changed quickly once Beisheim came under cross-examination by Kelley’s attorney, Angelo Calfo, himself a former federal prosecutor.
Kelley, a 50-year-old Democrat, is accused of theft, money-laundering and tax evasion in a 17-count indictment handed down by a Seattle grand jury earlier this year.
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Beisheim has been a controversial figure in the case because, during his investigation of Kelley, it was revealed he was a witness in a separate Chicago-based FBI investigation into alleged tax evasion.
Beisheim had issued a check to an unidentified Chicago lawyer while comptroller of the Seattle law firm Hagens Berman, the job he held before joining the FBI.
Beisheim testified he was concerned the payment bypassed the firm’s procedures and sidestepped an IRS tax order but issued a check anyway on the orders of his Hagens Berman bosses.
The Chicago FBI has since charged one individual, and the FBI told Beisheim he is a witness in that criminal case.
Beisheim also acknowledged he was being audited by the IRS over $22,000 in challenged businesses expenses from 2012, the year before he joined the FBI.
He said Wednesday that at least $1,200 in expenses he had claimed were inappropriate. An additional $13,000 believed by the IRS to be questionable is under appeal, he said.
These disclosures were made by federal prosecutors in previous filings since Beisheim is a key witness in their case against Kelley, and they provided fodder for Calfo in questions about the accountant’s integrity.
Beisheim was also grilled by Calfo about emails in which he acknowledged feeling “considerable pressure” from prosecutors in the months before Kelley was charged. Beisheim said then-U.S. Attorney Jenny Durkan had expressed personal interest in the prosecution — something he had never experienced before — and that as many as four assistant U.S. attorneys had been assigned to the case.
The case involves sorting through more than 27,000 checks and financial transactions, Beisheim said, and acknowledged an email he wrote in late 2015 seeking help from FBI colleagues in which he said he had “four federal prosecutors breathing down our necks on this one. It’s important.”
But Beisheim disputed Calfo’s implication that the pressure influenced his investigation.
“The pressure was to get it right,” he said.
Wednesday marked the second day of the hearing before U.S. District Judge Ronald Leighton, in which Kelley has challenged the government’s seizure of $908,000 from his previous attorneys. The government alleges the money was stolen from clients of Post Closing.
The hearing will continue Thursday, when Calfo is expected to argue motions seeking to dismiss several of the charges facing Kelley.