- Associated Press - Tuesday, March 24, 2015

OLYMPIA, Wash. (AP) - A part-time employee of the Washington state auditor’s office is so little known to colleagues that some said they were hard-pressed to recall seeing him or even emailing with him. Nevertheless, he now finds himself a central figure in a scandal surrounding the agency.

Jason Jerue, 46, has long had business, legal and personal ties to his boss, the elected state auditor, Troy Kelley. Federal agents this month searched Kelley’s house in Tacoma and served a grand jury subpoena on the auditor’s office seeking Jerue’s personnel file, terms of employment and other records, including emails relating to his prior employment at one of Kelley’s companies.

Tax fraud investigators with the Internal Revenue Service also have sought information about one of Kelley’s old companies, and the FBI requested his expenses for the years he served as a state lawmaker.

Kelley, a Democrat elected in 2012, returned to work Monday after a vacation and insisted in a statement that his past actions have been legal and appropriate. But the investigation focused attention on his relationship with Jerue, a key link between Kelley’s former life as an escrow-services executive and his current one as an elected official whose office is dedicated to rooting out waste and fraud in government.

Meanwhile, state officials said they didn’t know where Jerue was. A message left for him at the auditor’s office was not returned, and efforts to find further contact information for him were unsuccessful.

Thomas Shapley, a spokesman for the auditor’s office, said Jerue has worked from home in California since being hired as a part-time technical writer in 2013, but the state Department of Licensing said he has an active Washington driver’s license with a Kirkland address. He was paid $22,884 last year, state records say.

Shapley said he had met Jerue once at least a year ago. Asked what kind of work Jerue had done, Shapley cited a spreadsheet of media contacts he compiled.

Jerue’s supervisor is Matt Miller, the agency’s deputy director for external affairs, who served as Kelley’s campaign manager in 2012. Miller told The Seattle Times that he speaks with Jerue by phone a few times a week and that another of Jerue’s tasks is sending emails about audits taking place around the country.

Jerue and Kelley met in the late 1990s, when Jerue began working at First American Title Co. of Los Angeles as a computer systems administrator, according to court documents filed in California. Kelley, a lawyer, was in-house legal counsel and served in several executive roles.

They were both laid off in 2000 as part of what the company described as corporate restructuring, and both sued for wrongful termination. In Kelley’s case, First American revealed surveillance footage of a man stealing artwork from the company’s offices. Its lawyers identified him as Kelley, who denied the allegation but subsequently dropped the lawsuit. Jerue’s case also was dismissed.

The company’s lawyers said the two were in cahoots and alleged that Kelley gave Jerue “special projects” to work on even after Jerue’s position had been eliminated. A human resources manager wrote in a court declaration that she was never able to find Jerue’s personnel file - important for litigating his breach-of-contract claim.

Kelley’s former secretary wrote in her declaration that he fabricated conversations with her as part of the lawsuit.

“As the undisputed evidence clearly shows, Plaintiff and Mr. Kelley have pursued their lawsuits … in a conspiratorial fashion, each attempting to lend credibility to the other’s action,” the company’s lawyers wrote.

Kelley and Jerue also had business ties after leaving First American. Most recently, Jerue worked for Kelley’s company Post Closing Department, which was sued by a former customer over allegations that Kelley fraudulently transferred funds, evading taxes and hiding millions from creditors. The case was ultimately settled.

Scott A. Smith, an attorney who brought that lawsuit, described Jerue as Kelley’s right-hand man and said Kelley failed to provide information that would help the lawyers track down Jerue and question him under oath.

Jerue also supported Kelley politically, contributing more than $1,400 toward his successful 2006 campaign for the state House.

___

Johnson reported from Seattle. Associated Press writers Rachel La Corte in Olympia, Washington, and Anthony McCartney in Los Angeles contributed to this report.

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