State Auditor Troy Kelley faces new federal charges

Federal prosecutors just added new charges to the case against Washington State Auditor Troy Kelley.

And for the first time he's being accused of committing crimes while in office.

The new indictment adds money laundering and tax evasion to the charges announced this past April.

“(This) superseding indictment alleges that Mr. Kelley’s scheme continued even after his election to statewide office,” said U.S. Attorney Annette L. Hayes in a statement released late this afternoon. “As set out in the new charges, he is alleged to have laundered money as recently as February of this year.”

Money laundering can draw a sentence of up to 20 years in prison.

Kelley, a Democrat, was elected auditor in 2012 and before that had a real estate document company.

The earlier indictment involved a dispute over $2 million in fees that were supposed to be refunded to home buyers.

The earlier indictment also alleges that Kelley hatched a scheme to keep that money hidden from the IRS.

This new indictment accuses Kelley of laundering that money by passing it through multiple accounts -- even during the time he was serving in the auditor’s office.

It also charges him with tax evasion for filing false tax returns involving the money.

When he was first indicted, Kelley proclaimed his innocence.

“I did not break the law, and I want to be extremely clear here, I never ever thought I was breaking the law,” Kelley said in April.

Under heavy pressure from the Democratic governor and state attorney general to resign, Kelley instead decided to take unpaid leave from his office.

He has also beaten back an attempt to put a recall measure on the ballot.

KIRO