- Associated Press - Friday, June 5, 2015

OLYMPIA, Wash. (AP) - Attorneys for indicted Washington state Auditor Troy Kelley filed a motion Friday asking a federal judge to reject a request for an inquiry into a possible conflict of interest of a member of the law firm, saying none had provided any advice regarding $900,000 that the federal government says was stolen.

Attorney Jeffrey Coopersmith wrote that fellow attorney Mark Bartlett has no conflict of interest in the case, and said that the government’s motion was a “veiled request for disqualification.”

Kelley is on a leave of absence as he fights a criminal indictment alleging he stole money from clients of his former business, a real estate services firm, and evaded taxes.

The U.S. attorney’s office in Seattle says that in March, after Kelley was told he was likely to be indicted, he transferred $447,000 to the IRS and $908,000 to Davis Wright Tremaine for use as a retainer. Prosecutors allege the money came from an account in which Kelley pooled money he was supposed to refund to clients.

Coopersmith wrote that neither Bartlett nor any other lawyer from Davis Wright Tremaine provided any advice regarding those funds.

“On that basis alone, the government’s motion should be denied, and its requested “inquiry” should end here,” Coopersmith wrote.

The motion states that the question of whether the funds in question are stolen “is a question emphatically disputed by Mr. Kelley.”

“The government’s theory is that an alleged breach of contract, even if the contracting party does not complain, is equivalent to theft. But Mr. Kelley disagrees, and the fact that the government alleges funds are stolen does not make it so,” Coopersmith writes.

Under an agreement with prosecutors, Davis Wright Tremaine is not spending the contested money. But prosecutors say it could nevertheless create a conflict of interest if they have to call Bartlett or other lawyers at his firm as witnesses to confirm whether the money was spent for Kelley’s benefit, or if Bartlett has to cross-examine lawyers at his firm.

And if Kelley’s transfer of the money to the law firm itself constitutes evidence of a crime, he could claim in court that he did it on the advice of counsel. In that case, Bartlett might also have a conflict, the government said.

However, Coopersmith writes that Kelley “has no intention of calling, and no reason for calling, Mr. Bartlett as a witness in support of the advice-of-counsel defense that the government hypothesizes might exist.”

Kelley wrote a supporting declaration to the motion, confirming that he was not provided any advice by Bartlett on the funds.

“I do not want to be deprived of my choice of counsel,” Kelley wrote.

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