Morgan County Judge-Executive Timothy Conley has been charged with running a scheme to fraudulently steer county construction contracts to a Salyersville company in exchange for kickbacks, according to a federal indictment.
The scheme, which allegedly ran from early 2009 until this August, funneled about $1.1 million to the Salyersville firm, according to the indictment.
Some of the contracts involved were for the cleanup of debris left by the March 2, 2012, tornado that devastated West Liberty and much of Morgan County, the indictment alleges.
Conley was arrested by federal agents at his office Monday morning, according to Louisville FBI spokeswoman Mary Trotman. Conley was being held in the Fayette County Detention Center later Monday afternoon.
A 13-page indictment that was unsealed Monday names Conley, along with Kenneth Lee Gambill and Ruth L. Gambill, who are identified as owners of PBTHNOJJ Construction, a Salyersville firm that received contracts to build small bridges and culverts in Morgan County.
It involves four counts of mail fraud and one count of theft from a program receiving federal funds. In addition, all of the defendants are charged with conspiracy to launder money.
Conley is to appear in federal court in Lexington Tuesday afternoon. Kenneth Gambill is to appear Dec. 30. No court date has been set yet for Ruth Gambill.
According to the indictment, Conley allegedly took gifts and payments from Kenneth Gambill. In exchange, the county judge "rigged purportedly competitive bidding processes" so that various Morgan County construction contracts went to PBTHNOJJ. The indictment said Conley opened bids outside of public view and altered PBTHNOJJ's bids to ensure that they were the lowest.
Among other things, Conley allegedly abused his position and authority by ensuring that PBTHNOJJ received payments that were in excess of the tornado cleanup work it actually performed, according to the indictment.
It further charges that Gambill provided kickbacks to Conley, using cash that his construction company received from the various contracts involved in the four-year scheme.
Conley "took steps to hide, conceal and cover up" the arrangement by "surreptitiously" meeting with Kenneth Gambill at locations away from the county judge's office to accept the cash payments, the indictment says.
Monday's arrest followed a search of Conley's office by federal agents in late August. Trotman, the FBI spokeswoman, said at that time that agents had conducted an authorized search in connection with an investigation. She declined further comment.
Conley also declined any comment on the August search. No one answered at a number listed for "Pbthnojj Construction Co Inc."
Conley, a Republican, was the most visible Morgan County official involved in leading the county's drive to recover from the 2012 tornado. West Liberty and Morgan County ultimately received about $30 million in federal and state funds to build back.
Some local officials, such as West Liberty Mayor Mark Walter, had credited Conley with getting the recovery going and keeping it rolling along.
"Judge Conley, in my opinion, is the reason the progress has gone as far as it has," Walter said in August. "He contacted the right people. He was very instrumental in getting our recovery efforts instituted."
Monday's indictment charges that Conley and Kenneth Gambill furthered their scheme by causing various letters to be delivered by mail between April 2011 and Aug. 15, 2013, all in violation of federal law.
A separate count concerns the tornado cleanup contracts. It alleges that Conley, as an agent of a government agency that received federal funds, "embezzled, stole, obtained by fraud" and converted cleanup funds in excess of $5,000 in violation of federal law.
Another count charges that Conley conspired with Kenneth Gambill and Ruth Gambill to commit mail fraud, federal program fraud, and bribery.
According to the indictment, the first four counts each could carry penalties of not more than 20 years in prison and a $250,000 fine. The penalty for count five could involve not more than 10 years' imprisonment and a $250,000 fine, while count six could involve up to 20 years in prison and a $500,000 fine.