Rexburg Builder Siphons $580K, Gets 5+ Years

POCATELLO, ID – Kelly Ryan McCandless, 53, of Rexburg, is trading blueprints for bars after being sentenced to 65 months in federal prison for a brazen scheme to defraud his business partners. U.S. Attorney Josh Hurwit announced the sentence today, bringing a measure of justice to a case riddled with betrayal and self-enrichment.

Court records detail how McCandless, in 2017, entered a partnership to construct a 96-bed student housing complex in Rexburg. His role: oversee construction using a partnership-secured loan, in exchange for 24.5% equity and future profits. It was a deal built on trust, a trust McCandless promptly shattered. From the very first bank withdrawal, he began a calculated pattern of falsified invoices and fraudulent requests.

The scheme was simple, yet effective. McCandless forged signatures of subcontractors, inflating invoice amounts and pocketing the difference from the loan proceeds. The bank, operating on the assumption of legitimate documentation, wired the funds directly to McCandless. Over the course of a year, he siphoned off approximately $580,000 – cash he didn’t earn, and didn’t use to benefit the project. Instead, the money fueled a lavish lifestyle, including a brand-new pickup truck, multiple snowmobiles and dirt bikes, toy haulers, a Jeep, a Jeep Grand Cherokee, $5,000 in dental work, and numerous vacations.

The construction project ground to a halt, teetering on the brink of collapse. It was only through the financial intervention of one of the partners – injecting additional capital – that the student housing complex was ultimately completed. Without that lifeline, the project would have been a total loss, leaving investors and future students in the lurch. On November 29, 2023, after a six-day jury trial, McCandless was found guilty of four counts of wire fraud and four counts of aggravated identity theft.

Chief U.S. District Judge David C. Nye didn’t just hand down a prison sentence. He also levied a $10,000 fine and ordered three years of supervised release upon McCandless’s eventual release. “The defendant defrauded partners who put their trust in him and spent the funds he stole on a lifestyle he could not legitimately afford,” Hurwit stated. “We will not tolerate this illegal conduct, which truly harms victims and threatens our local economies.”

Shohini Sinha of the Salt Lake City FBI put it bluntly: “Like many fraudsters, McCandless was motivated by greed, lining his pockets with the embezzled money and spending it on expensive toys for himself.” She added, “While he may have benefited in the short term, he will now be held accountable for betraying and defrauding his victims.” The FBI led the investigation, with the case prosecuted by Assistant U.S. Attorneys David Morse and John Shirts. The case serves as a stark reminder: greed doesn’t pay, and those who exploit trust will face the consequences.