Washington state auditor says federal probe may be linked to a past business

By Victoria Cavaliere SEATTLE (Reuters) - Washington state auditor Troy Kelley, whose home was searched last week by U.S. Treasury Department agents, said on Monday he was aware federal investigators had questions about his former company's finances but was puzzled as to what they might be trying to uncover. Kelley returned to work in Olympia on Monday following a pre-planned vacation last week during which his home was searched by federal agents and his office turned over documents subpoenaed by the U.S. Department of Justice. "I am aware the U.S. Attorney has questions about some financial activities related to my prior business, The Post Closing Department," he said in a statement. "I do not know any specifics about their inquiry, despite repeated requests for information, and cannot comment further." The U.S. Attorney's Office in Seattle has declined to say if Kelley, a Democrat elected in 2012, was being investigated. No case or papers had been filed in federal court by Monday morning. Kelley said he was cooperating with federal officials and was confident the probe would turn up nothing. "I can assure you over the years all my actions have been lawful and appropriate," he said. "We knew about the subpoena, but if you've seen the subpoena, there's not much in there to indicate what the investigation is about," Thomas Shapley, a spokesman for the auditor's office, told reporters on Monday. The subpoena requested information about Jason Jerue, a part-time employee of the agency who previously worked at Kelley's now-closed real estate transaction company. The business tracked loan and other financial documents for large title and escrow companies. The company was sued in 2010 by a former client, Old Republic National Title Co, which alleged fraud, tax evasion and misappropriating nearly $4 million in customer fees, court records show. The case was eventually settled. Republicans have called on Kelley to step down, saying the investigation tarnishes the credibility of the auditor's office. Governor Jay Inslee, a Democrat, has urged Kelley to be as transparent as possible with the public amid the ongoing federal interest in his background. (Reporting by Victoria Cavaliere; Editing by Cynthia Johnston and Eric Beech)