Indicted State Auditor Pays His Lawyers in Stolen Money

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Summary: Lawyer Mark Bartlett is facing a motion to determine if the money his client paid him, which was stolen, renders representation a conflict of interest.

What to do when the money your client pays you counts as evidence against him? Attorney Mark Bartlett is faced with this conflict in representing Washington state Auditor Troy Kelley, who is accused of stealing money from clients of his former business at a real estate services firm. Per Kelley’s explanation, he stole no money, but was retaining it. However, after he was told in March he was likely to be indicted, he transferred $447,000 to the IRS and $908,000 to Davis Wright Tremaine, the law firm defending him.

  

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This counts as evidence he was using the money supposedly retained for clients for his own personal benefit. This complicates things. If Kelley claims he did so on the advice of counsel, the situation could get sticky for Bartlett, and thus the judge overseeing the case must decide whether all this amounts to a conflict of interest.

“The payments to Davis Wright Tremaine and to the United States government constitute evidence that – contrary to his statements in tax returns and to IRS special agents – Kelley in fact possessed and controlled the money in the Vanguard account, rather than holding it in impound for the benefit of third parties,” prosecutors wrote. “If Kelly in fact believed that the money appropriately should be held in an impound account … Kelley could not plausibly have decided in March 2015 that he was simply entitled to convert the money to his own benefit.”

Bartlett may have to cross-examine lawyers at their firm to ascertain whether they would have to serve as witnesses for how Kelley handled the money. The motion filed Tuesday in U.S. District Court seeks Judge Ronald Leighton to determine if this counts as a conflict of interest for the defendant’s lawyer.