Ex-Kelley employee says record was doctored

Troy Kelley told the No. 2 employee at the business he once owned to alter records to make it look as if payments were being made, the employee testified Thursday.

Kelley, now Washington’s state auditor, is on trial facing 16 felony counts stemming from federal prosecutors’ allegations that he stole money by not refunding real-estate services fees to homeowners.

Jason JeRue, 47, testified Wednesday and Thursday in the criminal trial under a grant of immunity.

He worked as operations manager for Post Closing Department, Kelley’s company that was paid by escrow companies such as Old Republic Title to track deeds showing home ownership.

JeRue said an Old Republic employee was asking a lot of questions about how the business was run and wanted records.

He said Kelley directed him to add check numbers to a spreadsheet — starting with check No. 1000, then 1001 and so on — to indicate payments had been made that would “zero out” the file, leaving no balance to be potentially refunded to a homeowner.

He had no reason to think the checks described by the spreadsheet were sent, he said.

“Its purpose was basically to put out a fire with a new customer,” he told the jury.

Defense attorney Patty Eakes sought to show JeRue’s account of events has changed.

She said he testified before a grand jury about the spreadsheet without mentioning pressure from Old Republic and that when asked if the spreadsheet “was going to Old Republic Title,” he said he didn’t know.

JeRue said he meant only that he didn’t know who sent the spreadsheet to Old Republic and that he didn’t recall being asked about pressure in front of the grand jury.

Eakes also showed JeRue has talked about two different Old Republic employees pressuring Kelley’s company. JeRue said Thursday that both did.

Trying to show JeRue is under pressure from the federal government to testify against Kelley, Eakes questioned JeRue about his private life, including what he told federal investigators about what his wife knew about an affair, to attack his credibility.

JeRue protested that the subjects had nothing to do with the case.

Eakes suggested JeRue might have committed a crime by picking up a prescription written by a doctor with whom he lived. The prescription was written in someone else’s name but was for the doctor’s own use, she said. JeRue said all he knew then was that he was picking up a prescription.

Old Republic sent Post Closing fees of $100 to $150 paid by people who sold or refinanced homes.

Prosecutors allege Kelley should have kept $20 as his fee and refunded the rest if it wasn’t needed to pay third parties.

Old Republic sued Kelley, making similar claims, and JeRue on Thursday was shown a document he signed in December 2010 as part of that civil case. His statement backed up Kelley’s claims that the company billed based on the tasks it performed and not just a flat fee.

JeRue said that while that was true of work in Oregon, it wasn’t true of work he did in Washington. He said Kelley’s attorney at the time gave him the letter to sign.

Eakes questioned JeRue about why he signed the statement under penalty of perjury if he now describes his work differently.

“I trusted Troy and the attorney that I wasn’t signing my soul over to Satan,” JeRue said.

After Kelley became auditor in 2013, JeRue went to work for the Auditor’s Office. He said Kelley offered him a part-time job working remotely from his home in California. Two employees at the Auditor’s Office interviewed him for the job.

The job is the subject of a separate state investigation.

JeRue said Kelley was kind to offer the job to him when he knew JeRue hadn’t been working and his family was struggling financially.

It wasn’t the first time Kelley helped him. Two payments from Kelley had made their way to JeRue.

JeRue said he had asked for the payments because Kelley had shut his companies down and left JeRue without a job and without a year’s severance pay he had promised.

At the Auditor’s Office, JeRue “walked into a very rocky reception” in his first role reporting to a performance auditor, he said. But he was moved under the supervision of an official who was also Kelley’s former campaign manager.

His duties including looking at the auditor’s website and the websites of auditors in other states and proposing improvements.

Did he do good work there? “I feel so, and I had some compliments from other workers,” JeRue said.

This story was originally published March 31, 2016 at 6:43 PM with the headline "Ex-Kelley employee says record was doctored."