State Rep. Michael Capps Former Wichita lawmaker indicted on 19 federal charges of COVID relief fraud, money laundering

That Eagle investigation found more about $495,000 in suspicious loans and grants to Midwest Business Group, a company Capps owned with Clendenin; Krivacy, a company solely owned by Capps; and Fourth and Long Foundation, a sports charity used to funnel thousands of dollars for a smear campaign against now-Mayor Brandon Whipple in 2019.

The grants and loans came from the Small Business Administration’s Paycheck Protection Program, or PPP, and Emergency Injury Disaster Loan, or EIDL, program.

Both programs were meant to help businesses stay afloat and pay their employees through the economic devastation caused by the COVID-19 pandemic.

Instead, Capps inflated his payroll and applied for loans to pay employees who don’t exist, according to the indictment.

In documents filed with the federal government and a federally insured bank, Capps claimed Midwest Business Group, which does business as VR Business Brokers of the Heartland, had eight employees in 2019.

He also claimed Krivacy had 18 employees and Fourth and Long had 12 employees. The grand jury determined those were lies, according to the indictment.

Capps’ companies and nonprofit fraudulently obtained hundreds of thousands of dollars from the SBA: Krivacy received $149,900, Midwest Business Group received $114,700, and Fourth and Long received $84,400, according to the indictment.

Capps’ companies also took money from the Kansas Department of Commerce’s Small Business Working Capital Grant program and Sedgwick County’s CARES Act grant program. Midwest Business Group and Krivacy each received $20,000 from the commerce department. Midwest Business Group also received a $5,000 grant from Sedgwick County.

The federal indictment says Capps laundered hundreds of thousands of dollars in COVID relief funding through his businesses and charity between May and August 2020.

Federal charges follow controversies

Capps, 43, now potentially faces decades in prison and millions of dollars in fines if convicted.

The one-term Republican lawmaker served as District 85’s state representative from 2018 to 2020, when he was defeated by Patrick Penn in the Republican primary amid allegations that he had offered a Black lawmaker campaign cash in exchange for a photo op and that he donated money to Planned Parenthood in Penn’s name.

Although Capps’ stint at the statehouse was brief, the freshman lawmaker was frequently embroiled in controversy.

As a candidate in 2018, Capps survived a residency challenge that claimed he didn’t live in District 85, which includes areas of northeast Wichita, Bel Aire, Kechi and Benton.

That same election cycle, the Kansas Department for Children and Families found that he emotionally abused boys as a court-appointed volunteer. The investigation’s findings were reversed on a technicality, and Capps won his race.

In 2019, The Eagle linked Capps to a dark-money scheme and potentially libelous video that leveled bogus sexual harassment allegations against Wichita mayoral candidate Brandon Whipple, who was a Democratic state representative at the time.

Whipple filed a defamation lawsuit against Capps, Clendenin and former Sedgwick County Commissioner Michael O’Donnell for their involvement in the plot last fall.

Capps did not immediately respond to questions Thursday afternoon. He has previously denied any wrongdoing and refused to answer questions about the number of employees on his payroll.

“You do not have a right to private, personnel information from a private company,” he wrote in a Dec. 8 email.

According to the indictment, Capps will face the following charges and potential penalties: