OLYMPIA — The state’s highest court on Thursday disbarred Troy Kelley, the former state auditor who was convicted in 2017 on a slate of federal charges stemming from his real estate business dealings.
The state bar’s disciplinary board recommended disbarring Kelley, who could not be immediately reached for comment Thursday.
Kelley, suspended from practicing law in Washington since 2018, appealed to the state Supreme Court seeking a three-year suspension followed by three years of probation.
But the court, in a unanimous opinion Thursday, said they agreed with the disciplinary board and that Kelley failed to demonstrate that disbarment was a disproportionate punishment.
Kelley served as a state representative for three terms before he was elected state auditor in 2012. He was indicted by federal prosecutors in 2015, took an extended leave of absence that year and didn’t seek reelection in 2016.
Kelley came under investigation by the IRS and the FBI after his successful campaign for auditor when his opponent pointed to a 2009 lawsuit alleging that, while operating Post Closing Department, Kelley failed to refund real estate fees to homebuyers.
The investigation focused on dealings Kelley was engaged in from roughly 2003 through 2008. Prosecutors said Post Closing collected between $120 and $140 from each of tens of thousands of escrow customers to perform services Kelley promised could be done for between $10 and $20. The remainder of the money, according to testimony at his trial, was intended to cover county and recording fees.
Any money left over was supposed to be refunded, but wasn’t, prosecutors said. Kelley, they alleged, amassed more than $3 million in unrefunded fees, at least $1.4 million of which was fraudulently retained.
Kelley, who had been a licensed attorney in Washington since 2001, was convicted in late 2017 of nine federal felonies, including possession and concealment of stolen property and filing false income tax returns. In May 2018, a court granted Kelley’s motion to dismiss one of the counts, lowering the total number of convictions to eight.
In September 2018, he was sentenced to 12 months and one day in prison, followed by a year of supervised release, but did not begin serving his sentence until July 2021. He was released in February 2022, according to Bureau of Prison records.
A grand jury in 2015 made him the first state official indicted in more than 40 years.
