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IMPORTANT information on the State Auditor’s Race


Washington voters are prone to split their tickets voting. I’ve done it for years by voting for Brian Sonntag for State Auditor though he’s a Democrat and I consider myself a Republican. This year, I am hoping liberals feel a similar compulsion to vote for the Republican James Watkins this year. They would have reason to do so.

For those of you who haven’t paid attention, candidate for State Auditor Troy Kelly has been accused (not convicted or charged) with theft, and settled out of court in a case in which he was accused of financial mismanagment (to put it mildly). Kelly has since dismissed this as a nusiance suit, but refuses to allow the settlement to become public.

As a result of apparently not reading their own coverage, The Seattle Times endorsed Kelly in one of the most poorly reasoned endorsements I have ever read. I hope Washington voters do better.


I received this letter which was forwarded by one of the attorneys that worked on the case that reinforces my view that the Seattle Times should have been less interested in being angry at the messager and more interested in what the messager revealed. Since he asks for it to be shared, I do so here:


From: “Smith, Scott A.”
Date: October 21, 2012, 3:49:57 PM PDT
Cc: “Smith, Scott A.”
Subject: Some Important Information About the State Auditor’s Race

In the past, I’ve sent emails about the upcoming judicial races. This time I write about a very different race, the one for State Auditor. I’m quite familiar with one of the candidates, Troy Kelley, because my client sued him for misappropriating money from homeowners. During the course of the lawsuit, I conducted a thorough investigation and spent a day questioning Kelley under oath.

The Seattle Times quoted the federal judge’s description of the allegations against Kelley: “’fraudulently transferring funds, intentional spoliation of evidence, shady business schemes, tax evasion, and hiding from creditors’ $3.8 million in newly formed accounts.” State Auditor Candidate Settled Misconduct Case

When Kelley realized he was about to be exposed, he engaged in a cover-up. He shut down his company, terminated his employees, and tried to hide the $3.8 million he had taken from mortgage customers. NPR detailed Kelley’s attempts to hide the money and his claim that he did it for estate planning purposes based on the advice of a California attorney who specializes in hiding assets. Wash. State Auditor Candidate Wired Millions, Linked Account to Belize

Kelley also insisted he lost all his business records in a fire. When that excuse was disproved, Kelley then said his computer had stopped working, that he cleaned it before giving it to a charity, and that he did not save any emails or other business records before abruptly shutting down his company’s website. The judge repeatedly rejected Kelley’s request to seal parts of the court file.

When the lawsuit became an issue during the course of Kelley’s current campaign for State Auditor, he tried to minimize it by claiming that the lawsuit was frivolous. Although he admitted he’d paid Old Republic to settle, he refused to say how much. A front page story in the Tacoma News Tribune described Kelley’s refusal to reveal the truth about the amount he paid: Kelley Won’t Disclose Details of Settlement Despite Litigant’s Offer

Kelley testified under oath that he had never paid taxes on the $3.8 million even though he insisted he had earned it fair and square. Kelley was also caught paying personal expenses from his business account, including family vacations, child care expenses, his housekeeper, his wife’s professional expenses, and a $49,500 Lexus. Kelley’s wife was on his payroll and Board of Directors although he later admitted she did no work for the company.

There’s much more to the story but this should suffice to explain why I believe Kelley is not fit to be elected as our state’s auditor. This race has not gotten a lot of press coverage, so I hope you will please consider forwarding this information to your friends, family, colleagues, and other voters.



Scott A. Smith | Riddell Williams P.S.
1001 Fourth Avenue, Suite 4500 | Seattle

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