UPDATE 12/9/13 @ 4:30 p.m.
MORGAN COUNTY, Ky. (WSAZ) -- A Kentucky judge executive was taken into federal custody Monday, charged with a kickback scheme, fraud and money laundering.
Timothy Alexander Conley, the Morgan County Judge Executive, has been charged with soliciting and accepting kickbacks from a Salyersville, Ky. based bridge contractor, in exchange for contact awards, according to a federal indictment.
The indictment was unsealed Monday.
The indictment charges Conley and Kenneth Lee Gambill and Ruth L. Gambill, the co-owners of PBTHNOJJ Construction, with several offenses arising from the kickback scheme.
Conley and Kenneth Gambill are both charged with four counts of mail fraud and one count of theft from a program receiving federal funds.
All three defendants are also charged with conspiring to launder money.
The indictment alleges that from early 2009 until August 2013, Conley rigged competitive bidding processes to select PBTHNOJJ Construction for construction contracts.
After obtaining the payments for the contracts, Kenneth Gambill is accused of delivering cash kickbacks to Conley.
Conley and Kenneth Gambill are also charged with defrauding a federally-funded program. The indictment alleges that Conley misappropriated money from Morgan County, which received federal funding for emergency services, debris cleanup, and rebuilding efforts
following a tornado that swept through West Liberty, Ky., on March 2, 2012.
As part of the debris cleanup effort, Morgan County contracted with PBTHNOJJ Construction and other entities.
Conley allegedly abused his position to ensure that PBTHNOJJ Construction received excessive payments for this work.
Finally, Conley, Kenneth Gambill, and Ruth Gambill are charged with conspiring to launder the proceeds of these crimes, in order to promote ongoing illegal activities and conceal the nature and source of the funds, among other things.
The FBI and Kentucky Attorney General's Office investigated the case.
Conley is scheduled to appear in federal court Tuesday, December 10 in Lexington.
Kenneth Gambill is scheduled to appear in court on December 30.
A date for Ruth Gambill has not been scheduled.
The mail fraud and money laundering counts each carry a maximum penalty of 20 years in prison. The federal program fraud count carries a maximum penalty of 10 years in prison. The maximum fine for each count is $250,000.
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The sources say Conley's arrest involves a sealed indictment stemming from a federal investigation
It comes just four months after the FBI raided Conley's office and home.
In August, the FBI told the station there was an investigation involving Conley but did not say what it involved.
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