State auditor found not guilty of giving false statement; jurors deadlocked on 14 other counts

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TACOMA, Wash. -- A jury has failed to reach a verdict on key charges in the federal fraud trial of Washington State Auditor Troy Kelley and acquitted him on the single count where they could agree.

Kelley was accused of pocketing $3 million in fees that should have been refunded to homeowners when he ran a real-estate services business before becoming auditor.

The jury found Kelley not guilty of one count of making a false statement in their fourth day of deliberations on Tuesday, following a trial that spanned more than five weeks.

The trial featured testimony from a former employee who told jurors that Kelley ordered him to falsify documents to hide that the company wasn't paying the refunds.

The charges stem from Kelley's operation of a business called Post Closing Department during the height of the housing boom.

Kelley, a lawyer himself who has taught tax law courses, faced 15 counts, including money laundering and tax evasion.

His attorneys insisted that the homeowners were never promised refunds, and therefore no one was harmed by Kelley's actions — even if they might have been unethical business practices.

Reaction after jury deadlocks on key charges against auditor:

"My office will thoroughly review the counts that the jury deadlocked on before making a decision about our next steps in this case." — Seattle U.S. Attorney Annette Hayes.

"The jury has made its decision, but the public trust has been violated. The elected office of state auditor has been sullied by Mr. Kelley's trial. He should do the right thing and resign and give the electorate and the state auditor's office a chance to heal and move forward." — Republican Senate Majority Leader Mark Schoesler, R-Ritzville.

"The people of Washington deserve the chance to elect a new auditor, untainted by allegations of fraud and obstruction. Troy's selfishness has made the office a running joke on both sides of the aisle in Olympia, so our next State Auditor needs to be effective on day 1." — Rep. Drew Stokesbary, a Republican from Auburn who had co-sponsored an impeachment resolution that the Legislature never took action on.

"The evidence in the case we think showed that Troy never stole any money. And the fact of the matter is an overwhelming number of jurors came out the same way from our discussion with them. We’re hopefully now that the government’s prepared to acknowledge this is a case that shouldn’t have been brought so Troy can move on with his life.” -- Angelo Calfo/Defense Attorney

“It was stressful, it was hard to come to a decision for any of us. There were 12 different minds working in there at one time and just being able to come to a complete decision on them was really impossible.” -- Mike Lowey/Juror

"I've been very clear that he should have resigned a long time ago, given the stain" on the office.  "It's clear that there's significant disappointment in his behavior, regardless of this verdict ... (don't believe he) can successfully continue in office." -- Gov. Jay Inslee



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