TACOMA, Wash. -- Former state Auditor Troy Kelley was found guilty Wednesday of several charges related to when he ran a real-estate escrow services business during the height of last decade's housing boom.



Emily Langlie, a spokeswoman for the U.S. attorney's office in Seattle, said Kelley was convicted of possession of stolen property, two counts of making false declarations in a court preceding and six counts of tax fraud. He was found not guilty on five counts of money laundering.



Judge Ronald B. Leighton handed down the verdict in Tacoma after a 21-day trial. Sentencing is scheduled for March 30.



This was the second trial for Kelley, a Democratic state lawmaker from Tacoma who was elected auditor in 2012. He was charged in 2015 with possessing stolen money, laundering money, lying under oath and filing false income-tax returns. His first federal fraud trial last year ended with an acquittal on one count and a deadlocked jury on more than a dozen others. The charges stemmed from Kelley's operation of a business called Post Closing Department, which tracked escrow paperwork for title companies.



Prosecutors said that to obtain business from the title companies - and access vast sums of money from homeowners - Kelley promised that Post Closing Department would collect $100 to $150 for each transaction it tracked; keep $15 or $20 for itself; use some of the money to pay county recording and other fees if necessary; and refund the customer any remaining money.



In tens of thousands of cases, the additional fees were not needed, but Kelley retained the money anyway, prosecutors said. He refunded the balance only in a few instances when title companies began asking uncomfortable questions or when homeowners were savvy enough to demand it, prosecutors said.



Kelley insists he was entitled to keep the money.



One of the companies Kelley worked with, Old Republic Title, sued him for not paying the refunds. Kelley settled the case for $1.1 million after making what prosecutors contend were false statements about his practices under oath.



The first Washington state official indicted in 35 years, Kelley took a seven-month leave of absence after he was charged. He returned to office after the trial, defying bipartisan calls for his resignation, but he decided not to seek re-election as auditor. The position, which is tasked with rooting out waste and fraud in state government, is now held by Democrat Pat McCarthy.







