OLYMPIA — The U.S. Justice Department has subpoenaed records from the office of state Auditor Troy Kelley, whose home was searched by federal agents this week, an auditor’s office spokesman confirmed Thursday.
The subpoena for auditor’s office records was received March 6, said Thomas Shapley, the auditor’s spokesman. Shapley said the records were being gathered and would be turned over Thursday afternoon.
Agents of the U.S. Treasury Department on Monday served a search warrant at Kelley’s Tacoma home, according to the Tacoma Police Department.
Loretta Cool, spokeswoman for the department, said agents spent about five hours at the home on Monday. “As far as I know they were there only one time,” said Cool.
The news of the search of Kelley’s home was first reported Wednesday by The News Tribune of Tacoma.
The reason for the search was not immediately apparent.
Before being elected auditor in 2012, Kelley, a Democrat, had been accused in a lawsuit of shady business dealings and tax evasion.
Kelley on Wednesday said he has been out of town on a family vacation since Friday night and didn’t know why his home was searched.
“We were not there when our home was reportedly searched and have not yet returned,” Kelley wrote in an emailed statement to The Seattle Times. “I have not been served a search warrant and have not been informed of any reasons for a search.”
Federal court records turned up no criminal charges or other explanations for the search. An IRS spokesman declined to comment.
Despite the developments, Kelley apparently has no plans to return early from his vacation.
As of Thursday morning, Kelley remained out of town. Shapley said he believes Kelley has been in California. He’s scheduled to return to work Monday.
He has not responded to emails and a phone message requesting an interview.
Before Kelley was elected auditor, he served as a state representative.
In 2010, a federal lawsuit accused an escrow-services business owned by Kelley of “fraudulently transferring funds, intentional spoliation of evidence, shady business schemes, tax evasion, and hiding from creditors” nearly $3.8 million.
The lawsuit was brought by Old Republic National Title, a business customer of Kelley’s firm, United National, which tracked loan and real-estate documents for large title and escrow companies.
Kelley called the matter a simple business dispute and said he had done nothing improper.
Court records said Kelley had opened bank accounts in Nevada and elsewhere and moved money from one bank to the next. The money ended up in accounts that would have allowed him to wire the money to a trust set up in Belize, an offshore haven for shielding assets.
Kelley acknowledged in a deposition that the move allowed him to defer paying taxes on the income. He said only a small amount of money ended up in Belize.
“There’s been no IRS action, civil or criminal,” Kelley said in September 2012, when the lawsuit became an issue in his campaign. He said he was current on all taxes owed.
Kelley and Old Republic National Title settled the case out of court with a confidential agreement.
The state Auditor’s Office is tasked with auditing local, county and state government entities.
As for the search, Jim Mrowca, who lives next to Kelley home, described Kelley as a friendly guy who Mrowca voted for in 2012.
“He’s innocent until proven guilty, that’s my opinion,” said Mrowca, a 52-year-old Boeing worker who moved onto the block in 2014.
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