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Kelley indicted on federal charges; asked to resign

By | April 16, 2015 | 0 Comments

Washington State Auditor Troy Kelley, the official responsible for ensuring the state’s financial integrity, was indicted Thursday on federal tax evasion charges. A federal grand jury says the Tacoma Democrat stole millions, filed false tax returns and lied under oath.

A 41-page indictment alleges Kelley kept more than $1 million collected while operating a mortgage reconveyance company between 2003 and 2008.

He’s been charged with 10 counts, including possession of stolen property, corrupt interference with Internal Revenue laws, tax evasion and four counts of obstruction.

Acting U.S. Attorney Annette L. Hayes said in a statement: “Mr. Kelley spun a web of lies in an effort to avoid paying his taxes and keep more than a million dollars that he knew did not belong to him, but instead should have been returned to thousands of homeowners across this state.”

The indictment comes exactly one month after federal agents searched Kelley’s home on March 16, and, later, subpoenaed his office for records. He has been under investigation since 2013.

Kelley says he has no plans to resign, but will take a leave of absence beginning May 1. “I believe the indictment has no merit and want to note that none of the allegations touch on my work as an elected official in any way,” he said in a statement.

The first-term auditor appeared Thursday before a federal court in Tacoma. He pleaded not guilty and was released without bail. If convicted of a felony, state law would force him to step down.

At a press conference following the court appearance, Kelley read a version of the written statement he released earlier in the day, did not take questions and left through a back door while his lawyers spoke to reporters.

Meanwhile, lawmakers on both sides of the aisle are calling for Kelley’s resignation.

Gov. Jay Inslee asked him to step down right away. “This indictment today makes it clear to me that Troy Kelley cannot continue as state auditor,” he said in a statement. “He should resign immediately. An appointee can restore confidence in the office and assure the public that the Office of the State Auditor will operate at the high standards required of the post.”

Sen. Mark Miloscia, the Federal Way Republican who against Kelley, said the indictment compromises public trust in the office. “He’s a leader, representing all the voters and elected officials, making sure everybody is ethical, and not lying, cheating and stealing,” Miloscia said. “But having an auditor that has been indicted on lying, cheating and stealing, I know, gives nobody confidence in that office at all.”

If Kelley resigns, an interim state auditor would be appointed until the following election.

If he doesn’t resign, lawmakers have discussed options for impeachment. Under state law, the House has to vote to impeach an elected official, then the Senate can hold a trial and decide whether to remove him.

Auburn Republican Rep. Drew Stokesbary is leading the push to remove Kelley from office. “He needs to resign and it doesn’t look like he’s going to,” he said. “He did the same thing he always does at the press conference: deny everything, claim ignorance, evade, run and hide and hope people forget about it.”

Voters will get to elect a new auditor this year if Kelley steps down before May 10. If he stays in office past May 11, a vote wouldn’t happen until 2016. Stokesbary says the public shouldn’t have to wait that long.

Democrat leaders, too, want Kelley to step down.

Rep. Pat Sullivan, Covington Democrat and House Majority Leader, says it will help restore confidence. “We want to ensure the state auditor’s office has the standing and credibility that the public expects,” he said. “Him stepping down would allow for a process, either through appointment or through special election, in order for that to be filled and the credibility to continue in a way that it should.”

But former Democratic State Auditor Brian Sonntag says that trust might be tough to get back. “More than anything else, it’s a feeling of sadness,” he said. “I feel bad for state government, for the employees of that office and the citizens of Washington who really have a real trust in that office and whoever holds it. Public trust can be fragile and when broken, can be tough to repair.”

Kelley’s trial is set to begin June 8.

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Good-to-Go problems? Bill aims to address complaints

By | April 15, 2015 | 0 Comments

A bill aiming to address drivers’ complaints about the Washington State Department of Transportation’s Good-to-Go tolling system is moving forward, as it passed unanimously in the House Tuesday afternoon, with amendments.

The State Route 520 bridge uses electronic tolling. Photo by the Washington State Department of Transportation.

The State Route 520 bridge uses electronic tolling. Photo by the Washington State Department of Transportation.

Senate Bill 5481 adds customer service enhancements to the state’s electronic tolling system, including requiring a letter of apology to customers for errors made by WSDOT or the tolling system.

The state tolling system has been subject to much criticism over the past few years from drivers who say that they have been levied unreasonable penalties without warning, or mistakenly billed.

Drivers also have said that WSDOT’s toll appeals system is difficult to navigate.

The bill requires the WSDOT to contact prepaid electronic toll account holders to inform such holders of unpaid tolls.

It also gives additional discretion to administrative law judges to dismiss civil penalties due to mitigating circumstances, and authorizes the WSDOT to dismiss civil penalties in certain circumstances.

Vehicle dealerships would be able to sell Good-to-Go transponders under the measure. The bill also calls for a redesign of the website to be more user-friendly.

It heads back to the Senate for further consideration.

House lawmakers on the floor praised the intent of the bill.

“We should be talking about good customer service. We should talk about being civil, not civil penalties,” said Rep. Judy Clibborn, D-Mercer Island.

“I think this bill will do something to improve the public’s trust of the Department of Transportation,” said Rep. Mark Hargrove, R-Covington.

Payday lending bill stalls in House committee

By | April 6, 2015 | 0 Comments

A payday lending bill that would replace the short-term payday advance loans with six-month installment loans was passed over in Monday’s House General Government and Information Technology committee, the last meeting scheduled before Tuesday’s fiscal committee cutoff deadline.

moneylargeSB 5899 was scheduled for a vote in Monday’s executive session, but because the committee did not take a vote on the bill, it looks unlikely to pass this session.

Under current law, payday loan companies can offer short-term cash advances of up to $700, which come with a $95 fee.

The bill would allow lenders to instead offer a $700 payday loan with a six-month term. The lenders could charge an interest rate of 36 percent, as well as as origination and maintenance fees.

That would be a lot of money, said Bruce Neas of Columbia Legal Services on Monday.

“The bill in front of you will allow a $700 loan for six months to cost $450. We think that’s unreasonable,” he told the committee.

But Dennis Bassford, CEO of Seattle-based payday loan company Money Tree, told lawmakers borrowers want the longer terms to pay off their loans.

“Our consumers do not like the current rationing program that we have in this state of Washington for the current product,” he said.

Bassford said in Colorado, which allows for six-month installment payday loans, most borrowers pay off their loans before the end of the term.

The bill was modeled after a 2010 law passed in Colorado. The Senate version of the bill passed off the floor on a 30 to 18 vote, and the companion bill in the House had 35 co-sponsors.

However, a variety of representatives of groups providing services to low-income earners have argued in committees against the bill this session, saying that the fees on the six-month loans threaten to keep people in debt.

Seattle resident Afam Ayika testified against the bill and told the committee that many people like him who earn low wages can get into a “debt trap” because of the low fees.

“I have been in the payday loan cycle for years for a time. It’s emotionally debilitating, you work hard for your money,” he said. “You could have used that to buy your kids shoes. You could have used to feed your children.” (more…)

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Inslee says minimum wage ‘up to the people’ after bill stopped in Senate

By | April 2, 2015 | 0 Comments

Gov. Jay Inslee told reporters on Wednesday raising the minimum wage could be “up to the people,” after an announcement by Sen. Michael Baumgartner, R-Spokane, that the legislation would not pass this year.

Baumgartner, the chair of the Senate Commerce and Labor Committee, said Tuesday that bill would not pass his committee.

“This proposed minimum wage increase would be devastating to countless small businesses,” Baumgartner said in a prepared statement. “I won’t put people in Eastern Washington out of work to placate the egos of extreme Seattle liberals.”

House Bill 1355 would have raised the minimum wage to $10 an hour in 2016,  $10.50 in 2017, $11 in 2018, reaching $12 an hour in 2019, and then be adjusted for inflation afterward. The bill passed 51 to 46 off the House floor.

Inslee had requested the minimum wage increase legislation.

Inslee-press-conference

Gov. Jay Inslee

“If you work 40 hours a week and you do a good job, you ought to be able to have the basic necessities of life,” Inslee said. “This is an important issue to people, it has overwhelming support. Now that progress will be up to the people.”

Inslee on Wednesday said the fact that “four red states” passed minimum wage laws recently showed how important the issue is to citizens. Alaska, Arkansas, Nebraska and South Dakota, voted to raise their minimum wages in those states last year.

Of the four, Alaska might have a minimum wage higher than Washington’s by 2016. Washington’s current minimum wage is $9.47 an hour and adjusts each year for inflation. Illinois voters showed their support for a $10 minimum wage last year, but the change still needs approval by the Illinois state legislature.

Rep. Jessyn Farrell, D-Seattle, expressed disappointment over the legislature’s failure to pass a bill.

“We will keep fighting to bring a fair wage to all corners of Washington,” Farrell said in a prepared statement. (more…)

Auditor Troy Kelley responds to governor’s questions

By | April 1, 2015 | 0 Comments

Updated 4:30 p.m. April 1:

State Auditor Troy Kelley responded to questions from Gov. Jay Inslee‘s office late Wednesday regarding how the State Auditor’s Office is handling a federal investigation into his past business, and an employee of his office.

Kelley told the governor that he has removed himself from official action regarding the investigation.

“As is our standard practice the subject of any request for information is removed from any involvement in the preparation and production of that request,” he said. “I was removed form the process and that situation has not changed, just as I am removed from the process of responding to public records requests from the news media on this topic.”

He said the inquiries have not affected the office operations.

“In fact, members of our leadership team report messages of support and confidence in the job the Office is doing,” Kelley writes.

Kelley also provided information on Jason JeRue, the employee who reports say is part of the investigation.

Read the governor’s questions for Kelley and Kelley’s response to Inslee.

Original story:

The Senate Accountability and Reform Committee and Gov. Jay Inslee are seeking answers from state Auditor Troy Kelley, whose office and business dealings have been under federal investigation since the beginning of March.

State Auditor Troy Kelley

State Auditor Troy Kelley

Sen. Mark Miloscia, R-Federal Way, invited Kelley to his Wednesday committee, but Kelley was a no-show.

Miloscia ran for state auditor in 2012 as a Democrat, but lost to Kelley in the Democratic primary.

“I have been especially concerned about his decision to go in hiding from the media, the public and now the legislature,” Miloscia said. “All elected officials must be accountable to the public that is our responsibility and our duty.”

The committee meeting included a work session on the ethical standards in the Auditor’s office, and an overview of Legislative Subpoena authority.

Sen. Pramila Jayapal, D-Seattle, said the legislature should be cautious on the issue.

“As much as we all want answers, I believe the state legislature’s role at this point is to step aside and not interfere with the federal investigation,” she said. “And I believe we risk politicizing an issue that is of utmost importance to the citizens of the state of Washington.”

Federal investigators have been gathering information on Kelley’s former real estate services company in California and on Jason JeRue, an employee at the state Auditor’s office. Jerue worked with Kelley at the former company.

Inslee told reporters Wednesday that he also wants answers from Kelley, and sent a formal request for information about the investigation and about Jerue.

“I think we need to do what we can to make sure the law is followed and make sure the public has confidence in the auditor’s office. I think one thing that’s for sure the auditor should answer questions that I’ve asked in writing,” he said.

Inslee says the state constitution allows him to require a response from Kelley. The letter gives the auditor until April 6 to reply. (more…)

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State Auditor: ‘puzzled’ by federal investigation

By | March 23, 2015 | 0 Comments
State Auditor Troy Kelley

State Auditor Troy Kelley

State Auditor Troy Kelley says he doesn’t know why a federal grand jury is interested in his former real estate services company, and that he “remains puzzled” by a federal investigation that resulted in a subpoena and search of his home last week.

“I have fully cooperated with their investigation and remain puzzled by their interest,” his statement says. “I do not know any specifics about their inquiry, despite repeated requests for information, and cannot comment further.”

Federal investigators are looking into financial activities related to The Post Closing Department, Kelley’s former real estate transaction business in California, according to a subpoena released by the Auditor’s office last week.

According to The News Tribune and The Olympian, the U.S. Attorney seeks information on Jason Jerue, a California man who worked with Kelley at the business, and who has worked as a contractor for the state Auditor’s office since 2013.

The subpoena of the Auditor’s office seeks information on Jerue’s recent employment by the state auditor and emails related to a 2010 lawsuit against the company and “any criminal offense,” according to The Seattle Times.

Kelley’s office is cooperating with the federal investigation, he said in his Monday morning statement.

“I can assure you that all of my actions over the years have been lawful and appropriate,” the statement read.

Statement from Auditor Troy Kelley

Kelley says The Post Closing Department, which provided real estate services, closed in 2008. The Post Closing Department was sued by another company in 2010, under allegations of misappropriation of funds and questionable business dealings, according to a 2012 Associated Press story. The lawsuit was settled in 2011.

Kelley’s Tacoma home was searched by U.S. Treasury agents on March 16, according to The News Tribune, and federal investigators have requested information about Kelley from the House of Representatives and the state Department of Revenue.

Kelly, a Democrat, served for six years in the House, representing the 28th District. In 2012, he defeated Republican James Watkins for the seat vacated by Auditor Brian Sonntag.

During the election, Watkins accused Kelley of misdeeds in an interview with both candidates on TVW’s “Inside Olympia.”

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Medal of Valor issued to communities in Oso landslide

By | March 18, 2015 | 0 Comments

As one-year anniversary of the devastating Oso landslide that killed 43 people approaches, lawmakers honored the local communities with a Medal of Valor for rescue, recovery and relief work.

The medals were presented Wednesday to Arlington, Darrington, Oso and the Sauk-Suiattle Indian Tribe. The recognition was the first one ever issued to multiple people.

On the morning of March 22, 2014, a hillside near Oso gave way, pushing mud and debris into the Stillaguamish River and destroying more than 40 homes and other structures.

Dozens of people were injured or killed by the wall of mud, and many saw their homes destroyed and lives disrupted. Hundreds of rescuers, many of whom were from the immediate communities, arrived to help dig survivors and victims free from the mud, and help the community recover from the disaster.

Brantly Stupey, a 14-year-old accepting the award on behalf of the city of Arlington, said that despite the difficulties, many in the community showed their best sides by pitching in to help.

“The battle for healing is ongoing, but through continued unity, with time, all will heal,” said Brantly, who, with his schoolmates, helped distribute food and water after the disaster.

Quinn Nations, a logger who was one of the first ones to help after the disaster, accepted the award on behalf of the town of Darrington.

“I hope you have about 2,000 more of them, because there are a lot of people here who deserve one of them,” Nations said.

Willy Harper, Oso Fire Chief, said that there is still a long road ahead for the community of Oso, but the community was grateful for the outpouring of support.

“That day our community grew, it grew beyond Arlington, they grew beyond Darrington, beyond Sauk-Suiattle,” Harper said.

Kevin Lenon, vice chairman of the Sauk-Suiattle Indian Tribe, paid tribute to those who died.

“We can most respectfully honor the memories of the precious lost ones by working together to build a strong and inviting community for the world to come and see and share and forever implant the importance of the names and lives of those who have moved on to another world,” Lenon said.

Two others were issued the state’s Medal of Merit, which recognizes a lifetime of service in Washington. Gretchen Schodde is the founder of the Harmony Hill Retreat Center which helps individuals and families affected by cancer. The late Billy Frank, Jr., who died last year, was a Native American rights activist who participated in the Fish Wars and was the head of the Northwest Indian Fisheries Commission. His sons, Willie and Tobin Frank, accepted the award on their father’s behalf. (more…)

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Transportation, minimum wage, mental health bills make cutoff

By | March 12, 2015 | 0 Comments

capitol_domeSome of the bills that got a lot of attention this session made it through the chamber of origin cutoff deadline, which was 5 p.m. Wednesday.

Here’s a list of some of the notable legislation that made it through, and their statuses in the House and Senate.

Transportation package passes the Senate – A $15 billion transportation package, with an incremental 11.5 cent rise in gas tax, passed the Senate. The package comes with a variety of projects from all over the state, and with a number of policy changes requested by Republicans. Senate Democrats used the debate on the legislation to overturn a Majority Coalition Caucus-established rule to require a two-thirds vote for new taxes.

$12 minimum wage, sick and safe leave – The House passed a bill that would raise the minimum wage to $12 an hour by 2019. The House also passed a bill that would require employers to give employees mandatory personal leave for illness or dealing with a domestic violence situation. The bills now head to the state Senate, where the Republicans hold a majority. The Majority Coalition Caucus leadership has said the reception in the Senate may be “chilly.”

Medical marijuana regulations  – SB 5052, the medical marijuana proposal by Sen. Ann Rivers, R-La Center, passed the Senate. It would create a system to license medical marijuana growers and sellers, and creates a database for patients. The bill now heads to the House.

PTSD qualifies for medical marijuana – SB 5379 would allow doctors to prescribe medical marijuana for PTSD. A number of veterans testified on behalf of the bill, when it was heard in committee.

New Washington State University medical school – The state would get a new public medical school at Washington State University under bills passed in the Senate and the House. Currently, the University of Washington is the only public higher education institution in the state that has a medical school. Both bills will head to the opposite chambers for further consideration.

Alternatives to clean energy requirements – The Senate passed a bill that would allow power companies alternatives to a voter-approved requirements to get electricity from renewable resources. However, the bill passed after some tussling over an amendment that added language referring to climate change being caused by humans. (more…)

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Sheena and Chris Henderson Law, other mental health bills, pass House

By | March 9, 2015 | 0 Comments
Sheena Henderson (Photo via the Sheena Henderson Memorial Page via Facebook.)

Sheena Henderson (Photo via the Sheena Henderson Memorial Page via Facebook.)

The House passed six mental health bills off the floor Monday, including the Sheena and Chris Henderson Law.

HB 1448 would allow officers responding to a threat of suicide to refer the person to a designated mental health professional. That mental health professional can determine whether the person needs more intensive intervention, including involuntary commitment.

The law is named after Sheena and Chris Henderson, a Spokane couple who died after Chris Henderson shot and killed his estranged wife, Sheena, at her place of work, and then turned the gun on himself.

Chris Henderson had been making suicidal threats before the incident, which his family and friends had reported to law enforcement. However, his family says Chris Henderson was evaluated for a total of three hours before he was released, and his family reported that they were left with few options to make him get treatment.

Unbeknownst to his family, the day before the shooting, Chris Henderson retrieved his gun that had been confiscated by law enforcement. Another bill would establish a policy to inform families when confiscated guns are retrieved is also being considered by lawmakers.

The Sheena and Chris Henderson Law passed 93 to 5.

Another bill that was passed out of the House Monday, SB 5889, has already passed out of the Senate, and will head to the governor for a signature, according to the Associated Press.

SB 5889 would establish a 14-day maximum stay in jail while a defendant awaits the determination of competency to stand trial. The state faces a federal court case related to people being housed in jail for long periods of time while awaiting a determination of competency. The bill passed 84-14.

Other mental bills that were passed off the floor were:

HB 1599 – Concerning secure facilities for the criminally insane, passed 96-2.

HB 1536 – Addressing the timing of emergency detentions and assessments under the involuntary treatment act, passed 97-1.

HB 1450 – Concerning involuntary outpatient mental health treatment, passed 90-8.

HB 1713  – Integrating the treatment systems for mental health and chemical dependency, passed 63-35.

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Inslee criticizes intolerance after recent vandalism, violence

By | March 6, 2015 | 0 Comments

Gov. Jay Inslee called for greater tolerance of diversity after two acts of vandalism against two Hindu temples in the Seattle area in the past month.

“Diversity really is a cornerstone of our state, it’s what makes us such a great place to live work and raise our kids,” he said.

On Feb. 15, someone scrawled the words “get out” and a swastika on an exterior wall of the Hindu Temple and Cultural Center in Bothell. Two weeks later, the windows were broken out of the Sanatan Dharma Temple in Kent and the word “FEAR” was written on the wall.

Inslee also decried the recent violence against the gay community, including an arson of a nightclub and the murder of two men in Seattle’s Capitol Hill neighborhood, which took place last year.

“There are still elements that act as agents of intolerance and hate and we have got to stand up against them every day,” Inslee said. “I am condemning these acts of intolerance, intimidation and violence.”

Inslee also mentioned a recent incident in Pasco, in which a mentally ill man was shot to death by police officers.

“We don’t know yet all the facts behind the shooting death in Pasco and until we do we all will need to remain patient,” he said. “But we do know that some in the community clearly feel marginalized and expressed concerns about whether immigrants who don’t speak English or suffer from mental illness are treated fairly.”

Inslee made his remarks at the start of a press conference that touched a number of topics, including transportation and education. He also spoke with the leaders of the Hindu temples that were targeted and with local Muslim leaders.

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