Politics & Government

State Auditor Troy Kelley paid more than $1 million to settle ‘nuisance’ lawsuit

The allegations that have now ensnared State Auditor Troy Kelley in a prosecution for federal felony crimes first came into public view Sept. 6, 2012.

On that day, James Watkins, Kelley’s opponent in a race for the open auditor’s post, posted documents online from past lawsuits in the real estate title industry involving Kelley.

Kelley’s response: Those records came from “nuisance lawsuits” that are a cost of doing business. The allegations in them “are not true, and the cases cited on the attack website were dismissed,” Kelley said.

An indictment made public Thursday revealed a key detail about why the central lawsuit against Kelley was dismissed. He paid his pursuer more than $1 million to go away.

The 2011 settlement resolved a lawsuit that a title company and former Kelley client, Old Republic, had filed against Kelley claiming he improperly kept borrowers’ fees that should have been refunded. The total he was accused of taking from Old Republic’s customers: $1.2 million.

Kelley has insisted there’s more to the settlement than just the amount he paid; that’s partly why he refused Old Republic’s 2012 offer to set aside a confidentiality agreement.

But if Kelley did nothing wrong, why pay such a large share of the disputed money? Kelley didn’t take questions, but his representatives did.

A spokesman suggested there might be more to the story than what’s included in the public record.

And an attorney for Kelley, Mark Bartlett, told reporters: “I think it’s pretty apparent that when people are involved in civil litigation there are a lot of factors that kind of weigh in to: Do you settle, or do you continue on to the end?”

Bartlett added that a reporter’s suggestion that Kelley paid “basically the full amount, I believe is incorrect.”

It’s true there might have been more money at stake. Old Republic accused Kelley of taking money from other title companies’ customers, too.

The indictment says Kelley failed to refund nearly $3 million in fees tied to two of the companies, Old Republic and Fidelity. It calls for him to forfeit just a bit more than $1.4 million if he’s convicted.