Judge blocks recall attempt against indicted Washington state auditor

By Victoria Cavaliere SEATTLE (Reuters) - Washington state auditor Troy Kelley, who pleaded not guilty last month to charges of tax evasion and lying to federal agents, will not have to face a recall effort as he fights the charges, a state judge ruled on Friday. Kelley, a Democrat from Tacoma, has taken a leave of absence to prepare his defense against a 10-count federal indictment brought against him in April linked to a document-tracking business he formerly ran. Will Knedlik, a disbarred attorney and former state legislator, has led a recall effort against Kelley, but Pierce County Judge Frank Cuthbertson blocked that on Friday. The judge said that the allegations made against Kelley as part of the recall effort were insufficient to warrant a vote on removing him from office. Kelley was not in court for the ruling. Kelley, 50, has pleaded not guilty to charges including filing false tax returns and hiding stolen money both from the Internal Revenue Service and from those due a refund for home purchases or mortgage refinancing. Washington state Governor Jay Inslee, a fellow Democrat, has called for Kelley's resignation, saying the indictment will interfere with his work as auditor. Kelley has said he fully intends to return to the auditor's office, which is responsible for the accounting and oversight of state funds. The criminal allegations focus on his former document-tracking business for title companies during real estate sales and refinancing transactions in which he is accused of not returning money owed to borrowers from about 2003 to 2008. He was charged with one count of possession and concealment of stolen property related to more than $1.4 million of unused processing fees that should have been returned to borrowers, punishable by up to 10 years in prison. He also faces charges of false declarations and attempted obstruction of a civil lawsuit, punishable by up to 20 years in prison. In addition, Kelley was charged with failing to pay federal taxes, obstructing related IRS collections, filing false income tax returns and making false statements to IRS agents in April 2013. (Reporting by Victoria Cavaliere; Editing by Cynthia Johnston and Will Dunham)