Editorial: Indicted state auditor needs to quit his job – now

When Washington State Auditor Troy Kelley was asked last month why federal agents raided his home, he said he was “puzzled by their interest.” But shortly thereafter, he sent a lump sum payment of $447,421 to the Internal Revenue Service.

When he sought to seal the court records of a 2010 civil lawsuit, a federal judge denied the request and noted the allegations included tax evasion and financial fraud.

When criminal investigators sought records from Old Republic Title, the company that sued him, Kelley was notified.

And yet the state auditor pretended not to know what the feds were after. A 10-count federal grand jury indictment returned this week cleared that up. It couldn’t have been a surprise.

Kelley is scheduled to stand trial June 8. He claims he’s done nothing illegal. But he hasn’t been straight with the public from the moment he announced his candidacy.

For that reason alone, he should resign.

It’s crucial for the state to have an auditor who respects transparency and accountability, because the office is charged with making sure other government agencies uphold those principles.

The indictment centers on Kelley’s former business, Post Closing Department, which collected fees associated with the final payment of loans, just before titles are transferred from lenders to borrowers. In deals set up with Old Republic Title and Fidelity (another title company), Post Closing was to collect money, take a small fee, and refund the rest to borrowers.

The indictment alleges Kelley’s company kept money it was supposed to refund. In addition, he’s been charged with failing to pay taxes on about $3.8 million he allegedly tried to conceal.

During the 2012 campaign, he accused opponents of smear campaigns when they cited the lawsuit and his business dealings. He also criticized the judge who refused to seal the records, suggesting he ruled that way because he was appointed by a Republican president.

Remarkably, Kelley was able to tamp down the controversy enough to be elected state auditor. The Spokesman-Review did not endorse him, citing his unwillingness to be more forthcoming then about his business dealings.

Kelley has lost the confidence of the governor, attorney general and state treasurer. All of them are fellow Democrats who have asked him to resign. If he were to leave before May 11, an election for his replacement could be held in the fall. If the governor were to appoint someone after that date, he or she would serve until next year.

Sooner is better.

Brian Sonntag, Kelley’s predecessor, has volunteered to be a caretaker until there’s a permanent replacement. He would be an excellent choice.

Kelley says he will take an extensive leave of absence to fully defend himself against the criminal charges. He should take a permanent one.