Federal prosecutors in Kansas have filed a 42-page indictment alleging that a group of men swindled investors out of $132 million with false promises and fraudulent reports, U.S. Attorney Barry Grissom said today.

The 67-count indictment alleges that from 2004 to 2008 a team of seven men executed a scheme in which they distributed false and fraudulent brochures, joint venture agreements, application agreements, reports, updates, profit and loss statements and other documents designed to entice investors with false promises of high returns on investments in companies that leased drilling rigs and related businesses.

Charged in the indictment are:
Michael J. McNaul, 58, formerly of Hutchinson,
Dale C. Lucas, 62, Wichita.
Russell W. Kilgariff, 63, Preston, Kan.
Lloyd F. Nunns, 68, Hutchinson, Kan.
Greggory A. Krause, 62, Hutchinson, Kan.
Steven L. Tallman, 58, Owasso, Okla.
Fredie J. Hembree, 57, Hutchinson, Kan.

All seven defendants are charged in the first count of the indictment with conspiracy to commit mail fraud. McNaul is charged in every count in the indictment, which also includes 20 counts of mail fraud, 38 counts of wire fraud, seven counts of money laundering and one count of bank fraud.

The indictment alleges the scheme began with the creation of two companies: Mid Continent Manufacturing, LLC, and Tr-State Production. Tri-State Production was in the business of purchasing, refurbishing and leasing oil and natural gas drilling rigs and associated equipment. Mid Continent served as the management company for Tri-State. As the scheme grew, new businesses were created including Consolidated Leasing Joint Ventures, Consolidated Management, Alliance Leasing Joint Ventures, Garner Management LLC and others.

The indictment alleges:
– The conspirators worked together to execute the scheme by mailing prospective investors documents that contained false and fraudulent representations and promises, and after the defendants had obtained money from investors they sent investors false and fraudulent reports, updates and profit and loss statements.
– The conspirators used investor funds to pay a $300,000 settlement with the Colorado Securities Commission, which they fraudulently failed to disclose to investors.
– The conspirators made false claims to potential investors, telling them they would be paid every quarter, they would receive a 25 to 40 percent annual return and that the companies were already seeing returns in the 15 to 40 percent range.

Upon conviction, the alleged crimes carry the following penalties:
Conspiracy to commit mail fraud: A maximum penalty of 20 years in federal prison and a fine up to $250,000.
Mail fraud: A maximum penalty of 20 years and a fine up to $250,000 on each count.
Wire fraud: A maximum penalty of 20 years and a fine up to $250,000 on each count.
Money laundering: A maximum penalty of 10 years and a fine up $250,000 on each count.
Bank fraud: A maximum penalty of 30 years and a fine up to $250,000.

The FBI investigated. Assistant U.S. Attorney Alan Metzger is prosecuting.

Leonardo Velasquez-Villa, 32, is charged with one count of money laundering and one count of possession with intent to distribute 120 pounds of marijuana. The crimes are alleged to have occurred June 16, 2012, in Sedgwick County, Kan.

If convicted, he faces a maximum penalty of 20 years and a fine up to $250,000 on each count. The Wichita Police Department investigated. Assistant U.S. Attorney Debra Barnett is prosecuting.

Kansas officials say the state will not participate in a federal program that matches local contributions with federal money to build recreation trails.

The decision makes Kansas one of only two states to reject the program, which is designed to encourage construction of bike, walking and ATV paths.

The trails program requires states to spend a specific amount on recreational trails. Florida is the only other state to opt out.

State transportation officials say staying out of the program gives the state more flexibility in how it spends federal money on transportation projects.

Critics say the decision likely means Kansas will have fewer new trails and less maintenance on those that already exist.

A standoff in Barton County came to a deadly end Tuesday evening. It happened in  Olmitz, just west of Hoisington.

The town has a population of 114, and neighbors say they were shocked by the incident. Residents say police asked them to stay inside their homes during the ordeal.

It is not yet known what instigated the standoff. When officers entered the house, they found the suspect dead from self-inflicted wounds.

The Barton County Sheriff’s Department is leading the investigation, and has yet to release more information. Eagle Radio will keep you updated, as more details are released.

Kansas State University is receiving a $120,000 federal grant to develop a training program on grain dust safety and explosion hazards at mills and elevators.

The Occupational Safety and Health Administration announced the award Tuesday. Kansas State is among 72 recipients nationwide of $10.7 million in safety training grants.

The dust generated at grain handling operations creates risks of fires and explosions. Kansas has had several grain dust explosions in recent years, including major ones at Haysville and Atchison that resulted in fatalities.

OSHA says Kansas State’s program will be targeted to workers and supervisors in small grain elevator businesses, including flour mills and feed mills. Training and materials will be developed in English and Spanish.

Police in Wichita say an 8-month-old girl whose mother claimed she had fallen off a bed was really under the influence of methamphetamine.

KSNW-TV reports the baby was upgraded to stable condition Tuesday at St. Francis Regional Medical Center. The 34-year-old mother has been arrested on suspicion of child endangerment and possession of drugs and paraphernalia.

Police say the mother called paramedics Monday saying her daughter was unresponsive after falling out of bed. The baby was taken in critical condition to the hospital, where doctors found meth in her system.

The baby has been placed in protective custody. A 50-year-old man living at the same extended-stay motel as the mother and child has also been arrested.

It wasn’t clear Tuesday how the baby inhaled or ingested meth.

The owners of an Overland Park, Kan., hotel have been indicted on charges of knowingly hiring undocumented aliens who were paid less than other employees, U.S. Attorney Barry Grissom said today.

Munir Ahmad Chaudary, 51, and his wife, Rhonda R. Bridge, 40, both of Overland Park, are charged with the following crimes:
One count of conspiracy to harbor undocumented aliens for personal gain.

– Five counts of harboring undocumented aliens for personal gain.
– Four counts of wire fraud.

The government is seeking to forfeit the proceeds of the crimes including two hotels the couple owns: The Clarion Hotel at 7000 W. 108th St. in Overland Park, and the Clarion Hotel at 11828 NW Plaza Circle in Kansas City, Mo.

“The grand jury’s indictment alleges these defendants knew they were hiring undocumented workers,” Grissom said. “They paid the undocumented workers less and they paid them in cash. Their economic motive was to cut their costs and to get an advantage on other hotels that abided by the law.”

In addition to the charges against the owners, one of the employees is being charged.Syed Naqvy, 34, Overland Park, Kan., a desk clerk, is charged with one count of making a false statement to the U.S. Department of Homeland Security (DHS) and one count of failing to depart from the United States as ordered.

None of the other undocumented workers is being arrested, Grissom said. They have been interviewed by immigration officials, who will decide what to do about their immigration status after the case has been concluded, Grissom said.

“This prosecution is aimed at unscrupulous employers who are a driving force behind illegal immigration,” Grissom said.

The indictment alleges that in December 2011 investigators from DHS Homeland Security Investigations and the Kansas Department of Revenue received information that the two Clarion hotels were employing undocumented aliens. Investigators interviewed hotel employees and learned that most of them were unlawfully in the United States.

In June 2012, an undercover agent took a job as a housekeeper at the Clarion hotel in Overland Park. The agent made it clear to Chaudary and Bridge when he was hired that he was unlawfully in the United States and had no documents allowing him to be employed, according to the indictment.

The agent learned that Chaudary and Bridge, through their business holdings including Rhonda & Son’s Inc., and Mac & Sons LLC, paid employees who they believed were illegally in the United States a lower hourly rate than other employees. When the undercover agent asked Chaudary why he was paid less, Chaudary told him it was because nothing was being withheld from wages to employees who were illegal.

The indictment alleges Chaudary, Bridge and their business holdings lowered their operating costs because:
– Illegal workers were paid less than other workers.
– The defendants did not pay the employer’s share of Social Security payments.
– The defendants did not pay workers compensation, unemployment insurance or other benefits.

Upon conviction, the alleged crimes carry the following penalties:

Conspiracy to harbor aliens: A maximum penalty of five years in federal prison without parole and a fine up to $250,000.
Harboring illegal aliens for financial gain: A maximum penalty of 10 years in federal prison without parole and a fine up to $250,000 on each count.
Wire fraud: A maximum penalty of 20 years in federal prison without parole and a fine up to $250,000 on each count.
Making a false statement to the government: A maximum penalty of five years in federal prison without parole and a fine up to $250,000.
Failing to depart the United States as ordered: A maximum penalty of four years in federal prison without parole and a fine up to $250,000.

Homeland Security Investigations (HSI) and the Kansas Department of Revenue (KDOR) investigated. Assistant U.S. Attorney Brent Anderson is prosecuting.

In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.

The names of 16 soldiers will be added to a monument near Fort Riley’s Cavalry Parade Field to mark the 11th anniversary of the Sept. 11 attacks.

Officials with the Army’s 1st Infantry Division will read the names being added to the Global War on Terrorism Monument during a ceremony Tuesday at the northeast Kansas post. The soldiers were either assigned to Fort Riley or mobilized through the installation before heading to deployments.

The ceremony pays tribute to the more than 3,000 people who were killed in the attacks on New York, Washington and Pennsylvania, as well as the thousands of soldiers who have been killed or wounded in Iraq and Afghanistan.

Brig. Gen. Don MacWillie, senior commander of Fort Riley and the 1st Infantry Division, will address the ceremony.

A Wichita man is appealing his nearly 27-year federal prison sentence for enticing a 14-year-old girl into texting him a nude photo of herself.

Twenty-six-year-old Shane McClelland filed a notice of appeal in the sexting case Monday with the 10th U.S. Circuit Court of Appeals.

A federal jury convicted McClelland in May of obtaining the picture via cellphone from the girl, who lives in upstate New York. He was acquitted of a similar count involving another teen.

U.S. District Judge Monti Belot sentenced him last month under enhanced penalties as a repeat sex offender.