5 Things You Should Know About The State Auditor Scandal

If you're confused by the headlines about the investigation into Troy Kelley, Washington state's auditor, you're not alone. Below, we unpack the news and put it in context.

Who Is Troy Kelley?

Troy Kelley, a Democrat, took office as state auditor in 2013. Previously he worked in the real estate title and escrow business. As auditor, he monitors state finances. His office also investigates possible fraud against the state. He is the fourth in line to succeed the governor (which makes him the Prince Harry of Washington state).

Why Is He Being Investigated?

Agents from the Department of Treasury are investigating, so it likely has to do with money.

“It could be tax evasion, it could be money-laundering, a whole number of things,” said Wayne Fricke, a criminal defense attorney in Tacoma with experience handling federal cases.

hat Has Happened So Far?

The feds delivered a subpoena earlier this month to the auditor’s office. That subpoena related to a part-time employee in the auditor’s office who previously worked in private business with Kelley.

Records have also been sought from the state Public Disclosure Commission and the Department of Revenue.

And Kelley's home has been searched.

Kelley’s next-door neighbor, Cassandra Hafen, described what happened last week in the quiet Northwest Tacoma neighborhood.

“There was like 10 undercover cop cars,” she said. “And you could just hear banging on the door, ‘Police open up.’”

No one answered; Kelley was on vacation.

"So they breached the door and everyone went in and they blacked out all their windows with like black tarp so you couldn’t see inside."

Kelley was back at work on Monday. He didn’t address reporters outside his office but issued a statement, saying he knew the U.S. attorney has questions about “financial activities related to my prior business.”

“I have fully cooperated with their investigation and remain puzzled by their interest,” he said. He did not say whether that was long in the past, or in the past few weeks.

What Happens Next?

In his statement, Kelley said he won’t resign. But if he does, Gov. Jay Inslee would appoint a successor.

Kelley could also be recalled. A recall petition would need more than 700,000 signatures to go through.

The secretary of state’s office researched past resignations and found no recalls involving holders of statewide office.

Putting This In Context

Washington’s politics tend toward squeaky clean. The Center for Public Integrity, a national watchdog group, ranked the state third for integrity.

“We don’t tend to go in for spectacular or even titillating scandals and gossip,” said Bill Virgin, a longtime business journalist. “It tends to be much more dull, with fights over policy.”

Virgin called Kelley’s predecessor, Brian Sonntag, an “activist auditor.” He said Sonntag launched several initiatives that generated publicity. But Kelley has remained relatively quiet.

“He’s had two-plus years to make a name for himself,” Virgin said. “And now he has.”

Correction: In an earlier version of this story, a photo misidentified the subject as Troy Kelley.