Indicted state Auditor Troy Kelley has agreed not to move or spend $908,000 that he gave his attorney as a retainer, unless he gives advance notice to federal prosecutors.
Prosecutors told Kelley’s attorney, Mark Bartlett, they were likely to try to seize that money, which they say Kelley stole from title companies and their customers when he ran a real estate document business.
Kelley, who disputes that the money was stolen, nevertheless signed a May 13 agreement with prosecutors promising to give three weeks’ notice before moving the money. The agreement is temporary, but Bartlett said in a sworn statement his law firm plans to continue holding the money in trust until the case against Kelley is resolved.
The details emerged in court filings Friday by Kelley’s legal team, which also denied prosecutors’ suggestion that Bartlett might have a conflict of interest in representing Kelley due to the retainer payment.
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The filings also show prosecutors laid out the potential charges against Kelley to Bartlett on March 26. That’s the same day prosecutors say Kelley emptied the bank account under scrutiny, keeping $908,000 for his lawyers and paying $447,000 to the U.S. Treasury.
The court filings say the payment to the Treasury was intended to cover potential taxes on the retainer payment.
The filings also say prosecutors threatened to indict Kelley 10 months before it actually happened, but backed off that threat.
“In the first part of June 2014 the United States Attorney’s Office informed Mr. Kelley they planned to seek an indictment related to the ongoing federal tax investigation. I understood that the government planned to seek the indictment on or before June 15, 2014,” Bartlett wrote in his statement. But prosecutors on June 12 “notified the defense that the threatened indictment would not be sought.”
Kelley had sought legal representation at least as early as June 2013, after being interviewed by prosecutors in April 2013, according to the filings.
Kelley, a Democrat who once represented part of Pierce County in the state House, is on a leave of absence that began last month. He was indicted April 15 on charges of keeping stolen money and tax evasion.