Son tells jury that former Kansas lawmaker accused of fraud is ‘selfless, hard working’

Former Kansas Rep. Michael Capps’ defense is working to show a federal jury that Capps is a good guy — a selfless Air Force veteran, single adoptive father and geeky computer whizkid targeted by federal authorities just as his business was ready to take off.

Capps is standing trial on 18 federal charges of COVID-19 relief fraud — including submitting false statements, wire fraud and money laundering — related to more than $450,000 in CARES Act money, including a loan from the U.S. Small Business Administration’s Paycheck Protection Program.

Defense lawyer Kurt Kerns told The Eagle before the trial that Capps has “earned the right to be viewed as the good man that he is.”

During the trial on Thursday, Kerns called multiple witnesses from Capps’ inner circle — where the lines between politics, business and charity blend into a singular philosophy: “results matter,” as his former campaign field operations manager testified Thursday.

Capps took the stand late in the day Thursday, telling his life story to a jury instructed not to do any independent research over a three-day weekend.

So far, Capps has done little to explain the nearly half a million dollars in COVID relief aid federal prosecutors allege he lied to get and then shifted to out-of-state personal investment accounts. Those issues will wait until Monday, when Capps will continue his testimony and face cross examination.

As Capps told his life story Thursday, his testimony was paused at 5 p.m., just as he began talking about the time period in question by federal authorities — the year a series of controversies thrust him into the spotlight: 2019.

Before that, he told of his fatherless childhood in Valley Center as the only child of a penny-pinching mother and his crushing loss when she was killed by a Pizza Hut delivery driver in February 2018, leaving him a $300,000 inheritance. He later sued Pizza Hut and received a $625,000 settlement.

He told of his decision as a 27-year-old single man to adopt Chaz, then a sports-obsessed child from a broken home, after the two met through the Big Brothers Big Sisters program. “The link was instant,” Capps said.

Chaz Capps, who blossomed into a standout football player before a back injury sidelined him in college, spoke to the jury through tears, describing his father as “a gift from God . . . selfless, hard working, always puts himself second.”

The Wichita Republican also explained his introduction to politics, when one of his son’s football coaches encouraged him to run for the Wichita school board in 2015. He lost that election and lost a Kansas House race in 2016.

He met people. Joshua Blick, also unsuccessful in the 2015 school board race and owner of Wichita Tire Store, was one such connection. He later introduced Capps to James Clendenin, a Wichita City Council member at the time.

“I was kind of a groupie in that circle,” Capps said.

Then there was business. Capps, now 44, described entrepreneurship as “kind of like a disease” that he caught right out of high school in 1996 after a deacon at his church landed him a job in information technology at Koch Industries.

At Koch, Capps said, he absorbed the market based management philosophy of the company’s CEO Charles Koch.

“That’s really where I got my first vision for entrepreneurship,” Capps said. “I really enjoyed the culture while I was at Koch Industries.”

From there, he moved on to Westar Energy (now known as Evergy). At 20, he said, he was put in charge of the energy company’s IT department for all operations south of Salina.

In 1999, Capps worked on preparing Bombardier-Learjet’s information systems for the Y2K scare. The next year, he enlisted in the United States Air Force, where he became an airborne communications specialist. After 9/11, he was deployed to Afghanistan.

After two tours, he was granted an honorable discharge and returned home, he said. “You kind of feel lost . . . it takes time to get back in the flow.”

Capps said he then worked as a contractor on the FBI’s Trilogy project in Honolulu, Hawaii, aimed at modernizing the bureau’s IT systems.

Around 2004, he returned to the Middle East as a contractor with multinational company Halliburton. Capps said he ran IT and communications systems at the Tallil Air Base in southern Iraq.

“It felt good to be back in a familiar environment,” Capps said.

He worked in Iraq less than a year before returning to Wichita to work as a project manager for AT&T.

He later took a job as a senior systems engineer for Results Technology, where he said his job was to “shut down the Wichita office.”

That’s when Capps decided to start his own business, using Results’ last remaining contract in Wichita: IT management for the city of Wichita.

He grew the company out of his garage into what would become ITKansas, which by 2014 had been named one of the top 500 service providers in the nation. The next year, the U.S. Small Business Administration selected Capps as member of the “Wichita Emerging Leaders” class for 2015.

Capps sold ITKansas to Cybertron in 2016 for an undisclosed amount. As part of the sale, Capps remained on the staff of Cybertron. That business relationship quickly fell apart, and by 2017 he was out of work. (Cybertron was later awarded $215,000 in a lawsuit against Capps alleging that he conspired with another employee to convince clients to move to a competitor, Century Technology Solutions, despite a non-compete contract. Cybertron accused Capps of sharing customer lists, contracts and other confidential information. Capps has not paid the company.)

Capps said he woke up one morning and felt “like a zombie.”

“No politics, just lost. Didn’t have my business, just sold. Didn’t have my son, (who was) away at college,” he said.

Capps said he took five or six months off work to “find myself.” That’s when he met Clendenin, whom he described as the yin to his yang — a more outgoing person he said was better at forming relationships, well-suited for sales and customer service.

Around that time, Capps had decided he wanted to start a business selling businesses — in the same way real estate agents sell properties. “I wanted it to be my terminal career,” Capps said. “I wanted it to be my last job.”

He granted Clendenin, then a Wichita City Council member, a 20% share in the business, Midwest Business Group. The business incorporated as a Kansas limited liability corporation in early 2018, records show. Capps said he used $30,000 from his inheritance to enter a franchise agreement with VR Business Brokers, setting up shop in downtown Wichita as VR Business Brokers of the Heartland.

Months later, members of the Sedgwick County Republican Party asked if he wanted to be in the Kansas House of Representatives, and he agreed to be appointed to the vacancy left by Chuck Weber. That appointment allowed him to run for the seat in November as an incumbent before actually serving in the Legislature. He won with 54% of the vote in 2018 against Democratic candidate Monica Marks.

“Third time’s the charm,” Capps joked to the jury.

By then, it was nearly 5 p.m., and Capps’ testimony had to be paused. Federal Judge Eric Melgren sent the jury home for the weekend. The trial is scheduled to continue at 8:30 a.m. Monday.

Two young men

The FBI began investigating Capps after a December 2020 Wichita Eagle investigation found two Capps-owned companies and a nonprofit under his control submitted inflated payroll and revenue numbers to a federally insured bank, federal and state government agencies, and Sedgwick County government to secure more than $450,000 in COVID-19 relief money.

To get the COVID cash, Capps submitted applications claiming that, in 2019, Midwest Business Group had eight employees and an average monthly payroll of $32,715 and gross revenues of $252,738; Krivacy LLC had 18 employees and gross revenue of $728,520; and Fourth and Long Foundation had 12 employees with gross revenue of $285,000.

None of those figures are accurate, the U.S. Attorney’s Office has said.

The inflated numbers reported for 2019 gave Capps access to more federal COVID money than his businesses were entitled to receive, federal prosecutors say. He transferred some of the money to personal investment accounts at TD Ameritrade and Pershing, a financial analyst testified.

Clendenin said at least eight people worked for Midwest Business Group in different capacities: Capps and his son; Clendenin and his two daughters, ages 10 and 14 at the time; two Capps political campaign workers, Matthew Colborn and Nathaniel Thomas; and Vanessa Christophersen, Clendenin’s appointee to the Wichita Animal Control Advisory Board.

Bank records showed no payments to Christophersen, Chaz Capps, Thomas or Colborn from Midwest Business Group in 2019.

Clendenin’s daughters, Lily and Eden, did receive checks from the business, usually in amounts of $25 to $50. Some of those checks bounced, an FBI special agent said.

Midwest Business Group did not file payroll taxes, pay unemployment insurance, withhold Social Security and Medicare taxes, or report them as independent contractors, according to court documents and testimony from multiple witnesses. An FBI investigation found no W-2 or Form-1099 employees and no paychecks or payments to employees in 2019.

Christophersen, who appears on the VR Business Brokers of the Heartland website, was added to the company’s website in 2020. Clendenin testified that she was paid on a commission basis, not an hourly rate or salary.

Chaz Capps and Thomas, two of Capps’ witnesses, testified that they completed work for Midwest Business Group as early as 2019, although neither could give a specific start date or recall how much money they received or when they were paid.

“It’s kind of like asking when you bought shoes,” Thomas said.

Thomas, who said he met Capps through Freemasonry when he was about 18 years old, said Capps paid him for his photography, graphic design and social media work.

“When you’re my age, money is money,” Thomas, 22, said. “I was just trying to get by. I have bills to pay.”

So when Capps asked Thomas to do something, he didn’t ask whether he was doing work for Capps’ campaign or his nonprofit sports charity or his business brokerage or his IT company.

“I view it all as being Michael Capps,” Thomas said. “I didn’t really see it as a boss-employee relationship.”

Kansas campaign finance records show Capps’ campaign account paid Thomas and Colborn $500 each several times in 2019 and 2020.

Chaz Capps, who is majoring in accounting, said he did some book work for Midwest Business Group, mainly checking his father’s work for errors, which he said he sometimes found. “Everybody makes mistakes,” he said.