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Key witness back on stand in trial of indicted state auditor Troy Kelley

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Troy Kelley

TACOMA, Wash. (AP) — The Latest on the federal criminal trial of Washington State Auditor Troy Kelley:

2:15 p.m.

A key witness in the federal government’s fraud case against Washington State Auditor Troy Kelley is being cross-examined by one of Kelley’s lawyers.

During testimony earlier in the day Thursday, Jason JeRue, a former employee of Kelley’s old real-estate-services business, said Kelley had asked him to doctor spreadsheets sent to clients. Under cross-examination, he acknowledged that he never made that claim during his initial interview with investigators. Instead, it was only a year later, in March 2015, after he had been granted immunity from prosecution, that he claimed Kelley had asked him to falsify the documents.

Kelley’s accused of pocketing millions of dollars in fees that prosecutors say he was obligated to refund to homeowners, while his lawyers say he was entitled to keep the money. The defense attorneys are trying to use the immunity deal to impeach JeRue’s credibility.

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10:35 a.m.

A man who worked for Washington State Auditor Troy Kelley’s former real-estate-services firm says Kelley asked him to doctor spreadsheets showing what the company did with fees it received from homeowners.

Jason JeRue took the witness stand for a second day Thursday in Kelley’s federal criminal trial on allegations that he pocketed millions of dollars in fees that he should have refunded.

JeRue, who has been granted immunity for his testimony, told jurors that Kelley asked him to change the spreadsheets because an employee at one of the title companies they worked with had been “haranguing” them about whether the refunds were being paid. JeRue said Kelley asked him to make it appear that the money had been used for legitimate services.

Kelley’s attorneys tried to keep the altered spreadsheet from being admitted as evidence, saying the government can’t prove that Kelley’s company actually sent the document to the title company. But the judge allowed it after JeRue testified that he had personally created it.

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9:57 a.m.

A key witness is back on the stand for a second day of testimony in the trial of Washington State Auditor Troy Kelley.

Jason JeRue worked for Kelley at the real-estate-services firm he ran before being elected state auditor in 2012. Kelley’s accused of pocketing millions of dollars in fees that prosecutors say he was obligated to refund to homeowners, while his lawyers say he was entitled to keep the money.

JeRue has been granted immunity in exchange for his testimony. On Wednesday he described how a distressed Kelley called him in 2007 and ask him to randomly issue a small batch of refunds to borrowers. Prosecutors say that was in response to questions Kelley got from a title company he worked with, which wanted to know whether the refunds were being paid.

Testimony in the trial is expected to last at least another week. The most serious charge, money laundering, carries up to 20 years in prison.