A U.S. Grand Jury in Seattle has returned a ten 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 Acting U.S. Attorney Annette L. Hayes. KELLEY currently serves as the elected Washington State Auditor. The majority of the criminal conduct detailed in the indictment spans years prior to KELLEY’s election to statewide office. However, some of the criminal conduct detailed in the indictment occurred following his election. KELLEY is scheduled to appear in U.S. District Court in Tacoma at 2:30 today.
“Mr. Kelley spun a web of lies in an effort to avoid paying his taxes and keep more than a million dollars that he knew did not belong to him, but instead should have been returned to thousands of homeowners across this state,” said Acting U.S. Attorney Annette L. Hayes. “I commend the FBI and the Internal Revenue Service Criminal Investigation for their diligent work to piece together the voluminous records that form the basis for the charges in this case.”
According to the 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 $15- $20 per transaction. However, the indictment alleges, in most cases, KELLEY kept the entire amount withheld on each loan resulting in more than $2 million in stolen money. This conduct is the basis for count one of the indictment: Possession and concealment of stolen property. When the amount withheld by title companies became the subject of civil litigation, the indictment alleges KELLEY obstructed the litigation, repeatedly lying in a declaration and in depositions while under oath. For this conduct KELLEY is charged with four counts of false declarations and one count of attempted obstruction of a civil lawsuit. Further, the indictment alleges KELLEY failed to pay federal taxes and obstructed the IRS in its efforts to collect taxes from him. He is charged with corrupt interference with Internal Revenue laws and two counts of filing false income tax returns. Finally, KELLEY is charged with making false statements to Internal Revenue Service agents who questioned him about his scheme in April 2013.
“Today’s action demonstrates our collective efforts to enforce the law,” stated Special Agent in Charge Teri Alexander of IRS Criminal Investigation. “IRS CI is committed to unraveling the complex financial transactions individuals might use to attempt to conceal their taxable income. To build faith in our tax system, honest taxpayers must be confident that everyone is paying their fair share.”
“The public deserves integrity and honesty from elected officials,” said Special Agent in Charge Frank Montoya, Jr., of the FBI’s Seattle Division. “For that reason, identifying and investigating public corruption is a top priority for the FBI.”
The charges contained in the 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. Attempted obstruction of civil litigation is punishable by up to twenty years in prison. False declarations and false statements are punishable by up to five 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.