Federal prosecutors allege indicted Washington State Auditor Troy Kelley paid his defense attorney out of a pot of money that’s central to his tax evasion case.
That allegation is contained in a motion filed in federal court Tuesday.
In the month before he was indicted, Kelley wrote a check for nearly $450,000 to the IRS for future taxes owed. He also wrote a $900,000 retainer check to a trust account of the law firm Davis Wright Tremaine.
Prosecutors said that cleaned out a “pot of money” that Kelley “stole” through his previous work in the real estate services industry. And that those payments undermine Kelley’s defense, that he was holding that money because he was still wrapping up loose ends from his prior business.
They also said that if Kelley made those payments on advice of his lawyers, he can mount that defense at trial. For that reason prosecutors want a federal judge to conduct a “conflict of interest” inquiry to see if Kelley’s attorney, Mark Bartlett, can still remain on the case.
Barlett had no comment, but it’s anticipated he will file a response to the court.