- Associated Press - Friday, May 1, 2015

SEATTLE (AP) - Two newly unsealed search warrants indicate that the March search of Washington state Auditor Troy Kelley’s home by Internal Revenue Service agents led to a second, more detailed search of his personal computers, according to a newspaper report.

Investigators sought the expanded computer search after finding documents related to Kelley’s personal businesses that they considered “suspicious,” ”mysterious” and “self-serving,” The Seattle Times reported (https://is.gd/bOxAm7 ). The agents apparently wanted to determine when the papers were created.

The search warrants were unsealed late Thursday in U.S. District Court.

The documents relate mainly with Kelley’s business dealings before his election in 2012. They were seized in a March 13 search of his Tacoma home.

Kelley, a Democrat, plans to go on unpaid, indefinite leave Monday. He has been indicted on 10 felony counts alleging that he stole money from one-time business clients, ducked taxes and obstructed a civil lawsuit. Kelley has pleaded not guilty.

Kelley lawyer Mark Bartlett did not immediately respond late Thursday to an Associated Press email request for comment.

During the initial search, agents seized business documents and computers from Kelley’s home, the warrants indicate. Special Agent Aaron Hopper wrote that some documents raised questions, so he sought a second warrant to expand a search of the computers to determine when the papers were created.

“During the search of Kelley’s residence, searching agents found and seized hard copies of documents that, on their face, corroborate Kelley’s statements to the IRS” about how one of his businesses, Blackstone, continued to operate after Kelley shut down a real estate reconveyance business in 2008.

“However, a closer examination of these documents raises questions about the reasons for, and the timing of their creation” which a more detailed search of his computers might reveal, Hopper wrote.

Hopper wrote in his warrant application that some documents may support Kelley’s version of events, but a closer review of the computers was needed.

The documents included detailed spreadsheets that Hopper said appear to track reconveyances and would have been relevant to a 2010 lawsuit over his business that Kelley settled for $1.15 million.

In depositions related to that case, Kelley said he was unable to produce many business documents because they had been destroyed in a fire.

A 41-page indictment has alleged various misdeeds by Kelley in connection with mortgage title services companies that he previously ran. Federal prosecutors said he kept more than $1 million that should have been refunded to customers and that he unlawfully avoided paying taxes by claiming personal or campaign expenses were business-related.


Information from: The Seattle Times, https://www.seattletimes.com

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