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Former Kansas legislator sentenced to federal prison for COVID fraud

Michael Capps, a 45-year-old Wichita businessman, has been sentenced to 27 months in federal prison and two years of post-release supervision for 12 felonies related to defrauding COVID-19 relief programs when he was a member of the Kansas House of Representatives.

Sentencing guidelines called for Capps to receive a prison sentence of 41 to 51 months with post-release supervision for an additional one to five years. But U.S. District Judge Eric Melgren gave Capps a lower sentence in part because of his military service, his relationship with his adopted son and his influence on several young men who said Capps was there for them when no one else was.

“I have tremendous respect for those who have served in the military,” Melgren said. Capps was allowed to leave the courthouse and will report to the U.S. Marshal’s office at a date that is yet to be determined.

Melgren also ordered restitution in the amount of $318,647.21 and forfeiture of $178,193.17 in illegal proceeds.

Melgren noted that Capps showed no remorse for his crimes, comparing him to Dr. Jekyll and Mr. Hyde — a character who does good deeds but also has a dark side.

Capps wiped away tears as his lawyer Kurt Kerns praised him as “a man I would aspire to be, outside of this.” He listened as two young men — his adopted son Chaz Capps and his former campaign worker Nathaniel Thomas — described him as honest, hardworking and kind. Capps calmly and respectfully asked Melgren to judge him on the totality of his 45 years, not “the moment” of his crimes.

But as soon as he left the U.S. Courthouse in downtown Wichita, Capps responded to a request for comment by flipping off reporters as he crossed the street before he sped off in a black car.

The Republican ex-lawmaker had contended that he should avoid prison, citing his military record and health problems, including high blood pressure and post-traumatic stress disorder. U.S. Assistant Attorney Molly Gordon sought a 51-month prison sentence, the upper limit of the sentencing range, because of the severity of his crimes, his breach of public trust and his lack of remorse.

Gordon compared Capps to a bank robber who gets away with it for a year, gets caught and offers to give the money back after he’s caught to avoid being punished. “It’s a robbery to get those loans,” Gordon said.

“We can thank him for his service, but it doesn’t mean he doesn’t have to go to prison,” Gordon said.

A jury convicted Capps in December of four counts of wire fraud, four counts of money laundering, three counts of making false statements on loan applications and one count of bank fraud after he lied on loan applications to steal nearly $500,000 from COVID-19 relief aid programs in 2020. He transferred some of those funds to a personal high-risk investment account.

An FBI agent testified in December that it began an investigation into Capps after a Wichita Eagle investigation in December 2020 found Capps used fake payroll numbers, fake employment data and fake revenues on multiple loan applications to tap into emergency funding provided through the CARES Act at the height of the coronavirus pandemic.

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Capps was awarded hundreds of thousands of dollars through the Small Business Association’s Paycheck Protection Program and Economic Injury Disaster Loan Program along with two grants through the Kansas Department of Commerce.

He obtained the COVID cash using two limited-liability companies and a now-defunct nonprofit charity under his control: Midwest Business Group LLC, co-owned by former Wichita City Council member James Clendenin; Krivacy LLC; and Fourth and Long Foundation, a youth sports charity that Capps, Clendenin and former County Commissioner Michael O’Donnell used to funnel money for a political smear campaign in 2019.

During the trial, Capps admitted that he counted Clendenin’s two young daughters, ages 10 and 14, as employees at Midwest Business Group. He could not account for several other employees he claimed to have at the two companies and foundation.

His justification for a lighter sentence included a concern that — given his mental and physical health — he would be more likely to contract COVID-19 and die from it if he were in prison.

“Mike (Capps) has Hypertension Stage I, Combat PTSD, complex sleep apnea, chronic migraines and is prediabetic,” Kurt Kerns, his defense lawyer, said in a recent court filing. “He is, therefore, at an increased risk of death or severe illness in the event he contracts an illness.”

Capps was a member of a coalition of Republican lawmakers who voted during a special session in June 2020 to severely limit the power of county health officers, the Kansas Department of Health and Environment and Democratic Gov. Laura Kelly to respond to the pandemic.

Kerns contended that Capps deserved leniency because he is a disabled veteran who served in the Air Force in the early 2000s. Kerns said Capps was diagnosed with post-traumatic stress disorder in 2018.

That year, Capps was appointed to represent the 85th House District, which includes parts of north Wichita and northern suburbs Bel Aire, Kechi and Benton. He was elected later that year and served through the end of 2020.

U.S. Attorney Kate Brubacher said in a sentencing memo filing that Capps’ health concerns were not “‘present to an unusual degree’ that would distinguish this case from other cases” covered under sentencing guidelines.

“He was caught in lie after lie, and continued to deflect and blame others,” the U.S. attorney’s filing says. “The defendant (Capps) has failed to take responsibility for his actions, and lied brazenly while an elected official to obtain government funds for his own personal use.”

Brubacher said in her sentencing memo that Capps’ actions signaled that he could continue to skirt the rules for personal gain if allowed to stay out of prison.

“His conduct also included efforts to conceal what he did. Defendant (Capps) has failed to demonstrate any remorse or contrition, and instead persists in casting himself as someone who simply made mistake after mistake after mistake. The defendant’s acts were intentional, goal-oriented, and duplicitous, and his persistence in offering up ill-conceived and illegitimate claims signals he will continue to try to gain personal advantage despite clearly defined rules.”

Federal and state agencies lowered their guard on verifying information submitted by applicants, allowing Capps and others to self-certify that the information they provided was accurate. To maximize his COVID awards, Capps overstated his business revenues and the number of employees at his businesses, allowing him to access more money than he was entitled to under program rules.

“His conduct has to be placed in that context — in the middle of a pandemic, he was stealing from the people who needed it most,” the U.S. attorney’s sentencing memo said. “While he is certainly not responsible for the pandemic, he should absolutely be held responsible for trying to take advantage of a tragedy to line his own pockets.”

Contributing: Sarah Moore of The Eagle