U.S. Court Rejects Appeal in State Auditor Fraud Case

SEATTLE (AP) — A federal appeals court has dismissed an appeal by departing Washington State Auditor Troy Kelley, paving the way for federal prosecutors to retry him on tax-related charges.

Three 9th Circuit Court of Appeals judges rejected Kelley's double jeopardy argument Tuesday related to Kelley's first trial, which ended in an acquittal on one count of lying to an Internal Revenue Service agent. The jury was unable to reach a verdict on other counts.

Kelley's attorneys argued that if Kelley was acquitted of lying to an IRS agent about his tax returns then by default he didn't falsify his tax returns and he should be acquitted of other tax charges. Attorneys said if he was retried it would amount to double jeopardy.

Kelley was accused of keeping $3 million he should have refunded to customers of his former real-estate services business about a decade ago.