All has been relatively quiet on the disgraced State Auditor Troy Kelley front recently. Of course, for Democrats, the more we don’t hear about the corruption scandal that has entangled a member of their party – and their role in keeping him in office the better.
The disgraced Democrat is currently under federal indictment. Kelley has pleaded not guilty to 10-counts of criminal activity, the most serious of which carries a 20-year prison sentence. He is scheduled to stand trial in January.
Kelley continues to expect the public to believe that he is “puzzled” over the federal investigation. However, as Shift reported, his claim is more than a little difficult to believe based on the timeline of the investigation. The facts reveal Kelley knew of the federal investigation for at least two years before he became “puzzled” about it. Kelley also hired his former business associate and a man at the center of the federal investigation, Jason JeRue, mere months after he assumed office as State Auditor. Concrete evidence exists that he created the position for JeRue.
Though he has lost the public’s trust, Kelley also continues to refuse to resign so the clean up of the Auditor’s office can begin. Though elected officials and editorial pages across the state have called for his resignation, the power structure of the Democrat Party (from Jay Inslee on down) are content to let this scandal—like the one that eventually brought down former rising star Snohomish County Executive Aaron Reardon—slide from public attention.
It’s better for their party, after all, if no one starts asking why so many prominent Democrats seem to have serious ethical problems.
Our state ended up getting entangled in Democrat Kelley’s corruption mess in large part due to the fact that media outlets across the state—including the Seattle Times—refused to take character concerns brought up during his 2012 election campaign – by his opponent James Watkins – seriously. On October 14, 2012, the Seattle Times editorial board wrote that Kelley was its “disappointing choice between two flawed candidates.” The factor that “tipped the scale” in favor of Kelley was Watkins’ aggressive attempts to expose corruption in the now scandal tainted State Auditor’s past.
Turns out, Watkins was right and media outlets like the Seattle Times failed to do their jobs. Reporters allowed Democrat Kelley to waltz in to office without investigating a plethora of corruption allegations. If they had bothered to investigate, evidence based on lawsuits over the past decade involving Kelley and business associates—linking him to misappropriation of millions from mortgage borrowers, money laundering, tax evasion, and even burglary—may have been a great place to start.
That’s exactly where the Tacoma News Tribune (TNT) decided to start in a recent article examining the lawsuits that ultimately uncovered Democrat Kelley’s corrupt business practices, four years prior to him being elected our state’s financial watchdog in 2012. According to the TNT, it’s homeowners like Paige Perisich who first raised the red flag on Kelley when she and several other plaintiffs filed a lawsuit against him. Their lawsuit was unsuccessful, but “uncovered what federal prosecutors now allege was theft of a tiny portion of real-estate closing costs.” That theft, according to prosecutors, led to Kelley stealing millions of dollars and hiding it from tax collectors. TNT reports,
“It was Jan. 31, 2006, near the peak of the overheated housing market, when she signed closing paperwork at the Kent office of the Talon Group.
“A form headlined ‘U.S. Department of Housing and Urban Development Settlement Statement’ explained the charges by escrow company Talon: $516.80 for ‘Settlement or closing fee.’ $521.15 for ‘Title insurance.’ $45 for ‘Wire/Express.’ $230 for ‘Reconveyance Fee.’
“That last one caught the seller’s eye. The eyes of most homeowners might have glazed over by that point, but Perisich was a former mortgage loan officer. She had worked for the bank that had loaned her the money for the condo. She knew what a reconveyance was: the paperwork necessary to record that an old loan has been paid off.”
Perisich informed Kelley’s company that her bank had already charged her the fee to no avail. She ended up paying the “reconveyance fee” under protest. Later, Seattle-based law firm Hagens Berman—which was recruiting plaintiffs for a class-action lawsuit—contacted Perisich with an offer to pursue Talon Group’s parent company, First American Title Insurance.” TNT reports,
“The Hagens Berman lawyers didn’t get what they were after, but the net they cast eventually ensnared Kelley, who made a living tracking reconveyances for Old Republic and Fidelity from 2003 to 2008.
“Tens of thousands of Washington residents who sold or refinanced a home during last decade’s housing boom paid reconveyance fees at closing, often for between $100 and $150.”
Media outlets failed to do their due diligence in vetting Kelley, including—apparently—speaking to the plaintiffs and lawyers who alleged he committed serious crimes. The Seattle Times must be particularly regretting its words. In 2012, the paper wrote,
“Watkins created the website factchecktroykelley.com, in which he posts court documents that accuse Kelley of misappropriating funds, evading taxes, laundering money, and even stealing. None of these claims are substantiated…
“Voters should be cautious about the files posted on the website. Legal documents are rife with hyperbole…
Perhaps if the Times, and other media outlets, had demanded answers as to why multiple lawsuits were filed against Democrat Kelley and his private business dealings our state wouldn’t be in the embarrassing corruption mess we are now in. And, the integrity of the Office of State Auditor—an office that demands the public’s trust—may have been maintained.