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Wash. State Auditor Candidate Denies Previous Allegations Of Misdeeds, Theft

Austin Jenkins


OLYMPIA, Wash. – “Untrue” and “unfounded.” Those are the words the Democratic candidate for Washington state auditor is using to describe past allegation of fraud and theft. Troy Kelley Thursday was forced to address a long list of allegations contained in lawsuits relating to his work in the real estate title and escrow business.

It was Kelley’s Republican opponent, James Watkins, who brought the allegations to light. Watkins has launched a new campaign website -- -- that provides links to hundreds of pages of court documents involving Kelley and his businesses.

“As soon as Mr. Kelley entered the race, my campaign got a series of tips about Mr. Kelley talking about misappropriation of funds, off-shore accounts in Belize, even theft, suspicious fires. All sorts of weird stuff,” Watkins said on TVW’s “Inside Olympia” program.

Watkins says he deployed a team of volunteers to dig up court records dating to 2001 in California. That’s the year Kelley sued his former employer, First American Title, for wrongful termination. The company in turn accused Kelly of breaking into its offices and stealing artwork. It even produced grainy still images from a video surveillance camera. Kelley maintained he was in Washington state at the time of the break-in. At a hastily called press conference in Olympia, Kelley was asked directly about the art theft.

“I don’t think that’s me in the photo," he said. "I’ll take a look at it. I’ve not seen it in 13 years. But I will look at it. My recollection at the time is they thought it was someone who looked very different from me.”

Kelley says his lawsuit against First American was ultimately settled. Then in 2010, Kelley was sued by one of his clients, Old Republic Title. The company levied several allegations against Kelley. Chief among them that he misappropriated more than $3.8 million in fees that should have been refunded to title company customers. The lawsuit also accused Kelley of setting up an off-shore account in Belize.

“That was set up with a minimum balance by an outside attorney," Kelley says. "When I found out about it it was closed.”

Kelley notes the Old Republic lawsuit against him was ultimately settled with no admission of wrongdoing on his part. Kelley calls the allegations contained in the lawsuit “absurd” and suggests it was politically motivated since he was a sitting state lawmaker at the time.

“This was done to embarrass me and now it’s coming to fruit," he says. "This is the exact reason it was done.”

Last May, Kelley tried unsuccessfully to get key documents in the Old Republic Title lawsuit sealed. In court filings he expressed concern they would be used against him by future political opponents. The federal judge in the case denied that request. Kelley says many of the documents relating to his business in Washington were destroyed in a 2008 fire.

In addition to his role as a state lawmaker and candidate for state auditor, Kelley’s a judge advocate general and Lt. Col in the Army National Guard.

On the Web:

Inside Olympia - Troy Kelley and James Watkins:

Fact Check Troy Kelley:

Troy Kelley campaign site:

James Watkins campaign site:

Copyright 2012 Northwest News Network