Embattled Auditor Troy Kelley pleaded not guilty to an expanded set of charges related to business dealings and tax filings. In a separate hearing Friday morning, a judge pushed back Kelley’s trial date to March 14, 2016.
TACOMA — Indicted State Auditor Troy Kelley on Friday morning pleaded not guilty to an updated and expanded set of charges related to business dealings and tax filings.
Kelley made the plea in a federal courtroom in Tacoma, and in a separate hearing a judge pushed back Kelley’s trial date to March 14.
The new charges, filed earlier this month, allege that while in office Kelley laundered money and evaded the Internal Revenue Service.
In April, a federal grand jury in Seattle handed down a 10-count indictment against Kelley that accused him of theft for keeping millions in fees paid by clients of Post Closing Department, a business Kelley owned before being elected auditor.
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Federal prosecutors recently seized $908,000 that Kelley had paid to a Seattle law firm as a retainer for his former lawyer, alleging that money is illegal proceeds from the now-defunct real estate reconveyance company.
Angelo Calfo, the Seattle-based attorney representing Kelley, told a judge during Friday’s second hearing that he believes the government needs to conduct an evidentiary hearing in order to justify the seizing of those funds.
Calfo also said during that hearing that he would seek to separate some of the charges that prosecutors have filed.
For example, one category of charges should be separated out, Calfo told the judge, because the counts alleging Kelley filed false tax returns have “no logical connection … to the earlier counts that relate to the conduct of Mr. Kelley’s business, Post Closing Department, in 2007 and 2008.”
After the hearing, the attorney said federal prosecutors are taking aim at Kelley because he is a “high-profile target.”
“They lock onto somebody, and it’s like a dog on a leg,” Calfo said after the hearings, adding later: “Money launderers take drug money and put it into restaurants, that’s money laundering.”
The U.S. Attorney’s Office has asked U.S. District Judge Ronald Leighton to conduct an inquiry into whether Calfo has a conflict of interest in the case, but Leighton said Friday that it was premature to make a decision on that yet.
Calfo briefly represented Sandy Evans, the mother of Jason JeRue, who worked for Kelley at Post Closing Department and later at the Auditor’s Office. The government has said Evans may be called as a witness in its case.
Prosecutors are also seeking forfeiture of more than $1.4 million in cash. Kelley, a Democrat elected auditor in 2012, has taken a leave of absence, with a longtime employee there serving as acting auditor.
Gov. Jay Inslee, state Attorney General Bob Ferguson, state Treasurer Jim McIntire, Public Lands Commissioner Peter Goldmark, Secretary of State Kim Wyman, several state lawmakers and both the state Democratic and state Republican parties have all called for Kelley to step down from office.