'I did not break the law': Indicted state auditor says he will not resign, will prove his innocence

OLYMPIA -- Democrats and Republicans in Olympia are in agreement: They are both calling for State Auditor Troy Kelley to step down, after he was indicted by a federal grand jury for allegedly stealing millions and filing false income tax returns.

Most of the accusations in the 41-page indictment have to do with Kelley’s business dealings before he was elected state auditor.

But many say his job is to hold other state agencies accountable, and he can’t do that if he’s lost the public’s trust.

“I did not break the law. I want to be clear here. I never ever thought I was breaking the law. I still do not to this day.”

Kelley publicly declared his innocence, just hours after he faced a federal judge on 10 counts of obstruction of justice and tax evasion. He pleaded not guilty.

The U.S. Attorney’s Office accuses him of stealing more than $2 million from homeowners when he owned the mortgage company ‘Post Closing Department’ from 2003 to 2008. They say he also tried to avoid paying taxes.

“They’ve been able to obtain that indictment,” Kelley says, “but they are a long way from proving any wrongdoing.”

But Gov. Jay Inslee says the indictment alone is cause for concern.

“It’s obviously disturbing, because of the importance of the auditor’s office,” says Inslee. “The auditor is the watchdog for the whole state government.”

Inslee says the person in that office needs to have the public’s trust, and focus completely on the job.

“I spoke to Mr. Kelley this morning. I advised him that he would incapable of effectively serving and therefore should resign. He did not agree with that position.”

State Attorney General Bob Ferguson, and many of Kelley's fellow Democrats in the Legislature, also called for Kelley to resign.

Kelley says that he will take a temporary leave of absence in May instead.

“I will take this absence to allow my office to do the important work without distraction and for me to participate fully in my defense. I fully intend to resume my duties once these legal matters are put to rest.”

Many lawmakers say that’s not enough. They’re considering taking steps to remove Kelley from office.

“I’ve been working with lawyers this morning to figure out the exact process for impeachment,” says state Rep. Drew Stokesbary, R-Auburn.

Q13 FOx News reached out to former State Suditor Brian Sonntag, who said he would be willing to step in if asked.

“I’ve had no conversations with the governor or anyone else, so I don’t know if that would be a possibility,” he says. “But just for the sake of that office, those employees and state government, I’d be more than happy to do that.”

Like many, he says the most important thing is to make sure the work of the state government is getting done.

“We need someone who can restore and maintain the public’s trust,” says Stokesbary.

Kelley says his leave of absence will start on May 1. His trial is scheduled to begin on June 8.