Superseding Indictment Against Washington State Auditor Troy X. Kelley adds Money Laundering and Additional Tax Charges
Seventeen Count Indictment Details Scheme to Evade Taxes and Hide Millions of Dollars in Stolen Fees
A U.S. Grand Jury in Seattle has returned a superseding seventeen-count indictment against TROY X. KELLEY, 50, of Tacoma for his scheme to keep stolen money and hide it from both the IRS and those due a refund related to their purchase of a home or refinance of a home mortgage, announced U.S. Attorney Annette L. Hayes. KELLEY was indicted in April. The superseding indictment adds money laundering and tax evasion charges for conduct between 2011 and 2015, including conduct after KELLEY was elected Washington State Auditor. KELLEY will be scheduled for arraignment on the superseding indictment next week in U.S. District Court in Tacoma.
“The superseding indictment alleges that Mr. Kelley’s scheme continued even after his election to statewide office,” said U.S. Attorney Annette L. Hayes. “As set out in the new charges, he is alleged to have laundered money as recently as February of this year.”
According to the counts in the original indictment, between 2003 and 2008, KELLEY operated a business that was paid by real estate title companies to track documents related to real estate sales and refinancings. KELLEY had agreements with those companies for the fees he could charge in connection with the document-tracking work. While the title companies withheld $100-$150 on each loan to pay the fee, the bulk of the money was to be returned to the borrower with KELLEY’s company being paid approximately $15- $20 per transaction. In most cases, KELLEY kept the entire amount withheld on each loan resulting in more than $2 million in stolen money. When the amount withheld by title companies became the subject of civil litigation, KELLEY obstructed the litigation, repeatedly lying in a declaration and in depositions while under oath. The original indictment also charges KELLEY with making false statements to Internal Revenue Service agents who questioned him about his scheme in April 2013, and with corruptly interfering with Internal Revenue law and filing false income tax returns in 2008.
The superseding indictment adds five counts of money laundering for KELLEY’s scheme to transfer and use the stolen funds for his own benefit. The money laundering counts are for conduct in 2011, 2012, 2013, 2014, and 2015. The superseding indictment also adds three additional tax evasion counts alleging KELLEY filed false tax returns for 2011, 2012 and 2013.
One count from the original indictment has been dropped in the superseding indictment. KELLEY is no longer charged with Attempted Obstruction of Civil Lawsuit due to changes in case law.
The charges contained in the superseding indictment are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.
Possession and concealment of stolen property is punishable by up to ten years in prison. Money Laundering is punishable by up to twenty years in prison. False declarations and false statements are punishable by up to 5 years in prison. The remaining charges are punishable by up to three years in prison.
The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI) and the FBI.
The case is being prosecuted by Assistant United States Attorneys Arlen Storm, Kathryn Frierson and Andrew Friedman.
kelley_superseding_indictment.pdf (2.6 MB)