The owners of a Magoffin County bridge contracting firm accused of engaging in a bid-rigging, bribery and kickback scheme along with the judge-executive of Morgan County are scheduled to be arraigned Monday in federal court.
Kenneth Lee and Ruth L. Gambill of Salyersville, owners of PBTHNOJJ Construction, are slated to make their initial court appearances in Lexington before Magistrate Judge Robert E. Wier.
They will be represented by separate attorneys. Mark A. Wolhlander of Lexington, a former assistant U.S. Attorney, entered a notice of appearance last week for Kenneth Gambill; James Lowry IV of Lexington for Ruth Gambill.
Kenneth Gambill and Morgan Judge-Executive Tim Conley were charged with four counts of mail fraud and one count each of theft from a program receiving federal funds and conspiracy to money-laundering in an indictment returned earlier this month by a federal grand jury sitting in Frankfort. Ruth Gambill was charged with conspiracy to money-laundering.
Conley was arrested Dec. 9. He was arraigned the following day and pleaded not guilty to the charges. Wier allowed him to remain free on his own recognizance.
The indictment came roughly four months after FBI agents conducted searches of Conley’s home and office. The FBI confirmed at the time that it was conducting an investigation involving Conley, but would not say what it involved.
According to the 13-page indictment, from early 2009 until Aug. 20 of this year, Conley steered bids for small bridges and culverts in Morgan County to the Gambills’ company in exchange for “gifts, payments and other things of value.”
Conley identified potential projects for the construction firm and sought and obtained funding for those projects through the Kentucky Transportation Cabinet, the indictment states. He then allegedly “rigged purportedly competitive bidding processes” to ensure PBTHNOJJ Construction would be awarded the contracts for those projects.
Among the methods Conley allegedly used to subvert the bidding process was to open bids for projects outside of public view and then alter PBTHNOJJ Construction’s bid prices to “ensure the appearance” that the Gambills’ company had submitted the lowest bids, the indictment states.
Conley would secure the approval of the Morgan Fiscal Court for his selections “under the fraudulent pretense that PBTHNOJJ Construction submitted the lowest bids in the course of fair and competitive bidding processes,” according to the indictment.
PBTHNOJJ Construction obtained about $1.1 million in proceeds from contracts it secured with Morgan County through the scheme, the indictment states. Kenneth Gambill allegedly provided kickbacks to Conley, including cash payments derived from the proceeds of those contracts.
Conley and Kenneth Gambill are charged with mail fraud for allegedly using the U.S. Postal Service in furtherance of the bid-rigging scheme.
Conley and the Gambills also are accused of misusing federal aid dollars that flowed into Morgan County following the March 2, 2012 tornado that devastated the city of West Liberty and other locations in the county.
Following the tornado, the county contracted with PBTHNOJJ Construction for debris removal, and, according to the indictment, Conley misused his position and authority to ensure the firm was overpaid for the work.
The mail fraud and money-laundering charges carry a maximum penalty of 20 years in prison, while the program fraud count carries a 10-year sentence. However, any sentences the defendant might receive following conviction would be imposed following the consideration of federal sentencing guidelines. There is also a maximum fine of $250,000 for each count.
A grand jury indictment is a formal accusation of a crime and does not establish guilt.
KENNETH HART can be reached at email@example.com or (606) 326-2654.