Rexburg Man Sentenced to Federal Prison for Defrauding Construction Partners of More Than $580,000

The following is a press release from the U.S. Attorney's Office (Idaho).

POCATELLO – Kelly Ryan McCandless, 53, of Rexburg, was sentenced to 65 months in federal prison after being convicted of defrauding his partners of more than $580,000, U.S. Attorney Josh Hurwit announced.

According to court documents, in 2017, McCandless and two others formed a partnership to build a 96-bed student housing complex in Rexburg, Idaho. McCandless’s contribution was to build the property, using a loan secured by the partnership, at cost. In exchange for his efforts, and once the project was completed, he would be entitled to 24.5 percent of the equity in the building and future revenues.

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Over the next year, however, and beginning with the first bank withdrawal, McCandless falsified subcontractor invoices and bank withdrawal requests. He illegally used the subcontractors' signatures to withdraw loan proceeds from the bank in an amount greater than the amount invoiced for construction of the project. The bank relied on these documents and wired the loan proceeds to McCandless.

McCandless continued this scam for months and improperly took approximately $580,000, which he used to purchase personal items such as a brand new pickup truck, several snowmobiles, several dirt bikes, toy trailers, a Jeep, a Jeep Grand Cherokee, $5,000 in dental work, a vacation, among other expenses. His actions caused the project to be halted and, without the injection of additional capital by one of the partners, the student housing complex would never have been completed.

After a six-day jury trial, McCandless was convicted of four counts of wire fraud and four counts of aggravated identity theft on November 29, 2023.

Chief U.S. District Judge David C. Nye also ordered McCandless to pay a $10,000 fine and serve three years of supervised release after his prison term.

“The defendant defrauded partners who trusted him and spent the money he stole on a lifestyle he could not legitimately afford,” said U.S. Attorney Hurwit. “We will not tolerate this illegal behavior, which truly harms victims and threatens our local economies. I am grateful to the FBI for its hard work in this case, and we thank the jury for its service.”

“Like many fraudsters, McCandless was motivated by financial gain, lining his pockets with the embezzled money and spending it on expensive toys,” said Shohini Sinha of the Salt Lake City FBI. “While he may have profited in the short term, he will now face accountability for betraying and defrauding his victims.”

U.S. Attorney Hurwit praised the work of the FBI in bringing these charges. Assistant U.S. Attorney David Morse and former Assistant U.S. Attorney John Shirts prosecuted the case.