State Auditor Troy Kelley returned to the office Monday and issued a statement saying all his actions have been lawful.
OLYMPIA — State Auditor Troy Kelley returned from vacation Monday facing a darkening cloud over an ongoing U.S. Justice Department probe — including a search of his home and a grand-jury subpoena issued to his office.
But he did not emerge from his office to answer questions from reporters filling nearly every seat in the lobby.
Instead, Thomas Shapley, a spokesman for the office, handed out a written statement in which Kelley, a Democrat elected in 2012, acknowledged that “the U.S. Attorney has questions about some financial activities related to my prior business.”
“I can assure you that all of my actions over the years have been lawful and appropriate,” Kelley said in the statement, adding that he has “fully cooperated with their investigation” and remains “puzzled by their interest.”
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The statement came as more evidence of the wide net cast by federal investigators about Kelley continued to emerge.
In addition to the grand-jury subpoena and five-hour search of Kelly’s Tacoma house last week, the FBI has sought records of Kelley’s expense reimbursements when he was a state legislator.
In a letter marked “criminal investigation,” an IRS tax-fraud unit also asked the state Department of Revenue for tax returns and other records of Blackstone International Inc., a company to which Kelley transferred assets when shutting down a former escrow-services company mired in a lawsuit alleging shady business dealings and tax evasion, according to court filings.
Authorities also have asked for records of Kelley’s personal financial-disclosure statements filed with the state Public Disclosure Commission. Those, also known as F1s, list investments, income sources and business interests of state officials.
The U.S. Attorney’s Office in Seattle has declined to comment or to confirm or deny any investigation.
Kelley’s statement Monday made no reference to Jason Jerue, the auditor’s office employee named in the grand-jury subpoena. But Shapley confirmed that Jerue currently lives in California and works for the state remotely from there. A part-time technical writer, Jerue — alternately spelled Je Rue — was hired in March 2013, according to Shapley.
One of Jerue’s projects for the office was to help with a website redesign, according to Matt Miller, deputy director for external affairs at the office and Jerue’s supervisor. And Jerue, whom Miller says he speaks with by phone a few times a week, sends out emails compiling audits taking place around the country. Jerue also tracks media and does spreadsheet work, among other things, according to Miller, who also managed Kelley’s 2012 auditor campaign.
Kelley and Jerue are no strangers. Jerue used to work at Post Closing Department, also known as United National, a real-estate document business formerly owned by Kelley.
Post Closing Department and Kelley were accused in a 2010 lawsuit of fraudulent business dealings and tax evasion, allegations that arose publicly in 2012 when Kelley ran for auditor. The suit accused him of hiding $3.8 million from creditors, in part by shuffling funds through several bank accounts, including a trust in Belize.
Kelley previously has denied the allegations but has declined to reveal the terms of a confidential settlement in the lawsuit.
The subpoena, dated March 5, demanded any email discussions Jerue had involving the lawsuit. The subpoena also sought Jerue’s personnel file, details of his hiring and discussions related to “the commission of any criminal offense.”
Although the subpoena and federal questions about Kelley’s conduct have been swirling behind the scenes for weeks, he has publicly maintained he’s not sure what authorities are up to.
On vacation in California last week when news of the search of his house by U.S. Treasury Department agents broke, Kelley emailed a brief statement to news media saying, “I have not been served a search warrant and have not been informed of any reasons for a search.”
Kelley on Monday also canceled an appearance at a conference in Olympia, according to Shapley. He sent an aide instead.
Kelley — who makes a salary of $116,950 as auditor — spent $500,000 of his own money and won the 2012 race, defeating Republican James Watkins. Before that, he served in the state House.