Jurors have begun deliberations in the trial of State Auditor Troy Kelley, who is accused of the theft of millions through his real-estate reconveyance fee company.

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TACOMA — Attorneys for indicted State Auditor Troy Kelley said the government’s fraud, tax evasion and money-laundering case is a “rotten onion” driven by a top-down investigation that ignored or explained away evidence of his innocence.

A 12-member jury began deliberations late Wednesday on charges contained in a federal indictment alleging Kelley pocketed $3 million through his real-estate reconveyance fee company between 2006 and 2008 and then devised a scheme to launder and evade paying taxes on it.

Defense attorney Angelo Calfo, in closing arguments following the six-week trial, said FBI and Internal Revenue Service (IRS) agents were pressured by prosecutors to file charges against Kelley, a “high-profile target” who Calfo said was the victim of political attacks and a cynical investigation.

Federal prosecutors told the five-woman, seven-man jury that evidence has proved Kelley a fraud and a liar.

“Troy Kelley stole millions of dollars … $100 at a time,” said Assistant U.S. Attorney Katheryn Frierson in a closing argument in which she meticulously laid out the government’s case, depicting Kelley as a thief guilty of fraud and a cover-up.

Calfo attacked key evidence and witnesses as unreliable, and pointed to instances in which investigators — who he said had donned “guilt glasses” — failed to uncover or consider evidence that showed Kelley’s business dealings were aboveboard.

“How did we get here?” Calfo asked the jury. “Investigators looked at this case with an eye toward obtaining a conviction, not finding the truth.”

As a result, he said, agents failed to uncover how data in a key spreadsheet had been altered, and relied heavily on Jason JeRue, the No. 2 man at Kelley’s now-defunct firm, Post Closing Department, who was offered immunity for his testimony. JeRue testified that he had altered documents at Kelley’s request, but Calfo said those statements were worthless and the jury should “throw [them] out.”

Kelly, a Democrat elected auditor in 2012, has insisted he has done nothing wrong and that he will be vindicated. He has said he does not plan to seek re-election.

Questions were first raised about his firm when he ran for office, and his real-estate reconveyance firm between 2006 and 2008 — when Kelley collected nearly $3 million in fees — became fodder for his opponent and publicity about the controversy attracted the attention of the IRS and federal prosecutors.

Those fees were paid to Post Closing Department primarily by two escrow companies, Old Republic Title and Fidelity National Title, whose officials have testified that Kelley agreed to track real-estate reconveyances for between $15 and $20 each.

Those companies provided Kelley with upward of $140 for each transaction, with the extra money available to pay third-party expenses, such as recording fees. The government alleges the remaining money was supposed to be refunded. Instead, prosecutors allege, he kept it.

Frierson, the assistant U.S. attorney, disputed the defense’s contention that federal agents were pressured to turn what amounted to a contract dispute into a criminal case. She said there is ample evidence that Kelley lied during sworn depositions and declarations in a 2008 civil lawsuit over the unpaid fees filed against him in 2008 by Old Republic. Kelley paid $1.1 million to settle that claim.

The defense has made much of the fact that Old Republic ended up keeping most of that money, refunding just a fraction to customers it claimed were owed. Frierson dismissed those criticisms.

“What Old Republic did does nothing to change the fact that Mr. Kelley stole that money” in the first place, Frierson said.

In his closing, Calfo pointed out that Fidelity never sued, and argued that the government had a “fundamental misconception” that Kelley stole the money in the first place. The defense has said it was a “fee for service.”

The money, he said, was paid to the escrow company willingly, and passed through to Kelley, who had a contract with both Fidelity and Old Republic. Both of those contracts were ambiguous, he argued.

Calfo emphasized repeatedly that the jury must find Kelley guilty beyond a reasonable doubt. Proof offered by the government in this case, he said, only “raises doubts.”

“You want proof that makes you feel good about the decision you have to make,” Calfo said. “You can’t make it on this kind of evidence.”

During the government rebuttal, Assistant U.S. Attorney Andrew Friedman assured the jury that there was no misconduct by the government.

Frierson acknowledged that other companies may not have refunded some fees — a business practice the defense has said was common in the superheated real estate market in those years — but said “that does nothing to change the fact that Mr. Kelley stole this money.”

Not long after the Old Republic lawsuit threatened to expose him, she said, Kelley “obstructed, lied and covered up” his dealings. He “dumped records, closed the business, drained the accounts and spirited the proceeds away into a shell company,” she said.

“Someone who has done nothing wrong does not need an elaborate cover-up,” she said.