SEATTLE (AP) — Washington’s attorney general said Tuesday he is opening a criminal investigation into state Auditor Troy Kelley, separate from the federal theft, tax dodging and other charges he faces.

The investigation by Attorney General Bob Ferguson is expected to focus on the relationship between Kelley and a former part-time worker at the auditor’s office, Jason JeRue, who has longstanding ties to Kelley.

SEATTLE (AP) — Washington’s attorney general said Tuesday he is opening a criminal investigation into state Auditor Troy Kelley, separate from the federal theft, tax dodging and other charges he faces.

The investigation by Attorney General Bob Ferguson is expected to focus on the relationship between Kelley and a former part-time worker at the auditor’s office, Jason JeRue, who has longstanding ties to Kelley.

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Attorney general to investigate indicted Washington auditor

SEATTLE (AP) — Washington’s attorney general said Tuesday he is opening a criminal investigation into state Auditor Troy Kelley, separate from the federal theft, tax dodging and other charges he faces.

The investigation by Attorney General Bob Ferguson is expected to focus on the relationship between Kelley and a former part-time worker at the auditor’s office, Jason JeRue, who has longstanding ties to Kelley.

Kelley, a Democrat who is on unpaid leave, was indicted in April on charges that he ducked taxes, obstructed a civil lawsuit and kept more than $1 million in money that he should have refunded to clients of his former real-estate-services business. JeRue worked for Kelley at that business. After Kelley was elected auditor in 2012, he hired JeRue to work part-time from home in California.

JeRue took a leave of absence after news of the federal investigation broke. He has since been dismissed from the agency, and he has not responded to repeated requests for comment, including another email by The Associated Press on Tuesday.

Under Washington law, the attorney general’s office can’t conduct criminal investigations unless a county prosecutor or the governor requests it. Gov. Jay Inslee, who has joined Ferguson and lawmakers from both parties in asking Kelley to resign, made that request in a letter Monday.

The attorney general’s office said it believes this is the first time the governor’s office has ever requested a criminal investigation of an elected state official.

In his letter, Inslee said that while Acting State Auditor Jan Jutte is doing a “tremendous job” carrying out the agency’s mission — improving government operations and eliminating waste and fraud — he remains concerned about potential misconduct by Kelley in running the office.

“I believe that the public and affected governmental agencies deserve greater assurance that the work of the office during Mr. Kelley’s tenure was handled properly, particularly as it relates to the employment of Mr. Jerue,” he wrote.

Ferguson declined to answer any questions about what might possibly have constituted criminal activity related to JeRue’s employment, or even about which laws his office might be considering as the investigation goes forward.

“I’m not going to speculate,” he said. “We’ve been asked to do an investigation. We’re going to do that investigation.”

Kelley has pleaded not guilty to the federal charges, saying at a news conference following his arraignment in April: “I did not break the law.” His lawyer, Mark Bartlett, declined to comment Tuesday.

Kelley’s company, Post Closing Department, worked with escrow and mortgage title companies to track certain real estate transactions. According to the federal indictment, it was supposed to collect up to $150 in advance as a fee for each transaction; keep $15 to $20 for its services; pay any government fees required; and then refund whatever portion remained. Instead, Kelley kept the money, the indictment said — an amount that totaled at least $3 million from 2006 to 2008.

One of the escrow companies Kelley worked with, Old Republic Title, sued him in 2009. He eventually paid more than $1 million to settle the case.

JeRue also worked with Kelley at First American, a real-estate title company in Los Angeles in the late 1990s. They were both laid off in 2000 as part of what the company described as a corporate restructuring, and both sued for wrongful termination. In Kelley’s case, First American revealed surveillance footage of a man stealing artwork from the company’s offices. Its lawyers identified him as Kelley, who denied the allegation but subsequently dropped the lawsuit. JeRue’s case also was dismissed.

In a written statement issued after the announcement, Inslee spokesman David Postman said that while the governor has not predetermined any laws were broken, both he and Ferguson felt “there were questions that needed to be asked.”

“This is the place where Troy Kelley’s business and official functions met — he hired a close business associate for an unusual official state job with very little work product to show for it,” Postman wrote. “The governor would like to know more about JeRue’s role and taxpayers have a right to know whether any laws were broken.”

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AP writer Rachel La Corte contributed from Olympia, Washington. Follow Johnson at https://twitter.com/GeneAPseattle

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