Federal prosecutors plan to retry State Auditor Troy Kelley on fraud charges. A new trial date has been set for March 13, after Kelley is no longer in office.
TACOMA — Federal prosecutors said they plan to retry State Auditor Troy Kelley on theft, money laundering and other charges — but don’t expect to see the case back in front of a jury any time soon.
Prosecutors announced their decision during a hearing Tuesday morning before U.S. District Judge Ronald Leighton in Tacoma. At the defense’s request, Leighton set a new trial date for March 13, after Kelley is no longer in office.
All parties agreed that the trial date, while 10 months out, is a “placeholder” and that the court’s ruling on crucial defense motions asking Leighton to acquit Kelley or dismiss most of the remaining charges will likely impact any future trial date.
The defense is also waiting for Leighton to decide on a motion asking the court to bar any retrial of Kelley on six tax-related charges. The motion alleges those counts amount to double jeopardy, since the jury’s only unanimous verdict after four days of deliberations was to acquit of Kelley of lying to an IRS tax agent about his income.
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One of Kelley’s defense attorneys, Patty Eakes, said Kelley would appeal an adverse ruling by Leighton on the double-jeopardy ruling to the 9th Circuit Court of Appeals, where she said it could linger for 18 months or more.
Kelley was in court Tuesday but spoke only briefly to the judge about the retrial date. Eakes said he was “extremely disappointed” in the government’s decision to try him again.
Kelley also remains the target of a yearlong state attorney general-led investigation into his decision to hire a former business partner, Jason JeRue, as a long-distance Auditor’s Office employee living in California. The Attorney General’s Office said there were “no reportable developments” in that case.
JeRue was a key witness for the prosecution in Kelley’s criminal trial.
At Tuesday’s hearing, Eakes had argued against even setting a trial date, but Leighton insisted on putting the case on the calendar if only to set up a procedural framework for future continuances.
In the meantime, prosecutors will prepare and file responses to two motions filed by Kelley’s defense. Leighton promised an early decision on whether he will hear arguments, or will rule based on the filings. He expects to rule around June 20.
A federal jury in April acquitted Kelley of one charge and announced it was deadlocked on the 14 other federal felony counts alleging Kelley stole millions by keeping fees that should have been returned to the clients of his now-defunct real-estate reconveyance business.
The U.S. Attorney’s Office said Tuesday it intended to retry Kelley on the 14 charges that relate to possession of stolen property, false statements, tax crimes and money laundering.
Eakes said one bonus of a delayed trial is that her client will no longer be an elected official after he completes his term as auditor, and she expects some of the publicity to dissipate.
The downside is that Kelley remains under indictment and facing mounting legal costs. Eakes said she and her partner, Angelo Calfo, will ask Leighton to release some of the nearly $1 million of Kelley’s money, being held by the defense, to pay legal bills.
Kelley’s attorneys have filed motions asking Leighton to acquit their client on the charges remaining from the government’s so-far unsuccessful effort to convict him of theft, money laundering and tax evasion.
Defense attorney Angelo Calfo filed a pair of motions and supporting documents — mostly transcripts of testimony from the six-week trial — and urged Leighton to conclude that the government produced insufficient evidence to sustain any conviction.
“No rational juror could have concluded beyond a reasonable doubt that Mr. Kelley took any property over which anyone other than himself had established ownership interest,” Calfo wrote in asking the judge to dismiss the linchpin charge of possession of stolen property.
Kelley had faced up to 20 years in prison on the charges that alleged he stole upward of $3 million from homebuyers by failing to make refunds to clients of his company, Post Closing Department.
Interviews with jurors after the verdict indicated the panel was deeply divided, but with a majority — as one-sided as 10-to-2 at one point — leaning toward acquittal on the theft count.
Without a conviction on that charge, the government’s case alleging money laundering comes undone.
Calfo’s second motion seeks dismissal of the tax charges, based partly on the fact that the jury acquitted Kelley of making a false statement to the IRS about his income during the years his company was operating and right after it closed, about 2002 through 2012.
Kelley, a Democrat, is the first state official to face criminal indictment in nearly 40 years. Even before the verdict, he had said he would not seek re-election. His term expires in January.
He took a seven-month leave of absence after his indictment but returned to work amid the objections of Gov. Jay Inslee and other state officials who have called for his resignation.