Judge tosses one count in Troy Kelley trial

A federal judge said Tuesday he will dismiss one criminal count against State Auditor Troy Kelley while letting the rest of the case stand.

That would leave a jury to consider 15 felony charges against Kelley after hearing closing arguments that are expected to start and finish Wednesday.

Federal prosecutors allege Kelley stole money by failing to refund fees while working in the real-estate services industry before voters elected the Democrat as auditor in 2012.

They contend he concealed the money, avoided taxes on it and lied during a lawsuit and an investigation.

Kelley’s attorneys say homeowners signed over their money voluntarily and escrow companies — which prosecutors say Kelley defrauded to get his hands on the money — never owned it.

The focus on complicated legal questions of ownership vexed U.S. District Judge Ronald Leighton, who mused Tuesday after sending the jury home: “‘How do we get so far away from right and wrong in our criminal code?”

“It’s not $5 lying on the sidewalk that you picked up,” Leighton added.

Kelley’s attorney, Angelo Calfo, replied that prosecutors don’t have authority to be “roving honesty police.”

“They don’t like some of the things they believe Mr. Kelley said in order to get the business,” Calfo said of prosecutors. But to prove a crime, “it’s not just that someone is alleged to be dishonest. It’s that they are trying to steal something from somebody and harm somebody’s property rights.”

Leighton was to decide late Tuesday or early Wednesday what the jury will be told that prosecutors must prove for Kelley to be found guilty.

The defense notched one victory after contending that testimony from a prosecution witness undermined one of the charges.

It said a retired escrow company executive contradicted the allegation that Kelley lied when he said he never discussed or negotiated extra fees above his base fee with that executive.

Leighton said he had decided to throw out the count, one of several alleging false statements.

“I didn’t think a reasonable jury could find guilt beyond a reasonable doubt,” the judge told lawyers.

For at least the third time, Leighton refused a request from Calfo to throw out the bulk of the case.

“I don’t know what they will do,” the judge said, “but there is ample evidence that a jury, a reasonable jury, could convict on any and all remaining counts.”

This story was originally published April 19, 2016 at 5:49 PM with the headline "Judge tosses one count in Troy Kelley trial."