The situation for embattled Washington state Auditor Troy Kelley just keeps snowballing for the worse.

Now he's accused by federal prosecutors of using some $900,000 in stolen money to employ the services of the attorney.  The feds are saying that has created a serious conflict of interest with the law firm.

When it became clear in March of this year that he was going to be indicted on a variety of federal charges stemming from illegal business activity before he became auditor, Kelley transferred $447,000 to the IRS, and $900,000 to the Seattle law firm Davis Wright Tremaine.  The money was for attorney Mark Bartlett, who is a former senior federal prosecutor.

The feds say the money came from a pool Kelley was supposed to use to be reimbursed to clients of his former company in California.

According to KOMO-TV in Seattle:

"Under an agreement with prosecutors, Davis Wright Tremaine is not spending the contested money. But prosecutors say it could nevertheless create a conflict of interest if they have to call Bartlett or other lawyers at his firm as witnesses to confirm whether the money was spent for Kelley's benefit, or if Bartlett has to cross-examine lawyers at his firm.

And if Kelley's transfer of the money to the law firm itself constitutes evidence of a crime, he could claim in court that he did it on the advice of counsel. In that case, Bartlett might also have a conflict, the government said."

Kelley has taken a leave of absence after being charged with filing false tax returns, obstruction of justice and possession of stolen property.  He has been called to step down by legislators and Gov. Jay Inslee, but has yet to officially resign.

 

More From 870 AM KFLD