By Jen McCaffery

Archives Reprint

   jen.mccaffery@roanoke.com

   981-3336

    ABINGDON - Sixteen people and six companies in Buchanan County have been indicted as part of what prosecutors described as a public corruption scheme in which the defendants used state and federal money earmarked for flood cleanup for their own gain.

    In a case they are calling "Operation Big Coon Dog," federal prosecutors say contractors in Buchanan County paid bribes worth about $545,000 to county officials to win about $7.6 million in state and federal contracts. Some defendants made a total of about $3.2 million in cash and other benefits - including as much as $40,000 worth of raccoon-hunting dogs, according to federal prosecutor Tom Bondurant.

    "The floods of 2002 devastated the Buchanan County community and many of our families," U.S. Attorney John Brownlee said in a news conference in front of the federal courthouse in Abingdon on Thursday afternoon. "Virginia and the federal government provided over $8 million to help our citizens in their great time of need. Now, we learn that the very individuals who were elected to serve and protect the people were, in fact, stealing from them."

    Brownlee emphasized that the investigation is ongoing and said he expects more people to be charged.

    The case marks another allegation of public corruption in the county, in which members of the board of supervisors were also convicted of misappropriating funds in 1992.

    "It's a sad day for America when these things happen, if they happened," said Abingdon attorney Emmitt Yeary, who is representing a minor player in the case, James Robert Estep, 55, a contractor charged with fraudulent collection of Social Security benefits. "If what the government is alleging is true, it's a very serious matter."

    The bribes in the current case consisted of more than $350,000 in cash; $15,000 worth of all-terrain vehicles; tickets to see Washington Wizards basketball games, NASCAR races and University of Tennessee football games; $40,000 for coon dogs; services such as feeding the dogs and building and cleaning their kennels; and other services, federal prosecutors say.

    "We start hearing stories about Ray Blankenship getting coon dogs as bribes and we can't pass that up," said Bondurant, who is prosecuting the case with Assistant U.S. Attorney Jennifer Bockhorst.

    Blankenship, who served as chairman of the Buchanan County Board of Supervisors from 1999 to 2003, has already agreed to plead guilty to two counts of racketeering and one count of money laundering in the case, Bondurant said.

    The allegations against Blankenship, 52, are particularly notable because he represented the area of Hurley, which was hardest hit by the floods.

    Three other defendants - contractors Donald Ray Matney, 47; Terry Allen Keene, 40; and Kenneth Joseph Stephens, 48 - have also agreed to plead guilty to the same charges, Brownlee said.

    They each face up to 60 years in prison and a fine of up to $1 million. No date has been set for their guilty pleas, and they did not return calls for comment.

    Defendants who have agreed to plead guilty have already forfeited about $1.1 million in cash, Brownlee said.

    Federal agents arrested the first defendant, Gary Ray Moore, at 6 a.m. Thursday in Wise County, Bondurant said. Moore worked as a contract employee for the Federal Emergency Management Agency and owned his own company, called B&E Construction. That company was not among the ones charged in the indictment.

    All 16 defendants were arrested Thursday, made initial appearances in federal court, where they pleaded not guilty, and were released on bond. The defendants either declined to comment after their court appearances or could not be reached for comment. The companies charged are all affiliated with defendants in the case, Bondurant said.

    Federal authorities learned about the scheme allegations in the process of investigating another Buchanan County case, which federal prosecutors declined to elaborate on.

    Brownlee said the "underhanded dealings" began almost immediately after FEMA assigned the flood cleanup task to county officials.

    In May 2002, flooding killed two people in Hurley and caused an estimated $30 million worth of damage to homes, businesses, roads, bridges and other parts of the town.

    Initially, the contracts for rebuilding were supposed to be awarded to a New Orleans company, Brownlee said. But after public outcry, FEMA allowed county officials to decide who should receive the contracts, Brownlee said.

    The board of supervisors had the authority to award contracts for cleanup, bridge repair and structure demolition, Brownlee said. Subject to approval by FEMA and the Virginia Department of Emergency Management, the county would be reimbursed for 98 percent of those costs, Brownlee said. FEMA was to pay 75 percent of the costs, Virginia 23 percent, and the rest would be absorbed by the county, according to Brownlee.

    The county awarded $7.6 million in contracts, $5 million of which federal and state authorities have already reimbursed the county.

    Blankenship never publicly solicited bids, and he hand-picked contractors to work on projects, prosecutors allege. The contractors in turn bribed him to work on the projects, federal prosecutors say.

    For example, Stephens paid Blankenship about $127,000 for more than $2 million worth of awards and contracts, according to Brownlee. The contractors fraudulently increased reports about the amount of debris they were clearing to get more money, Brownlee said. And three of the contractors allegedly made $3 million from those jobs.

    County workers such as engineer Kenneth Hale and county emergency coordinator David Thompson also accepted cash bribes, according to prosecutors. FEMA employee Moore also allegedly accepted cash and tickets to sports events. Moore "looked the other way" when cleanup workers exaggerated the amount of work they had performed, federal prosecutors say.

    Of the at least half-dozen coon dogs Bondurant said were part of the case, at least two were worth about $15,000 each. None of the dogs, who had names such as Hairy Jr. and Echo, was seized as a result of the case, Bondurant said.

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