
DATE: Wednesday, March 12, 1997             TAG: 9703120416

SECTION: FRONT                   PAGE: A1   EDITION: FINAL 

SOURCE: BY LYNN WALTZ, STAFF WRITER 

DATELINE: NORFOLK                           LENGTH:  277 lines

BROTHER AGAINST BROTHER A FAMILY FARM IN KENTUCKY WAS USED TO GROW TONS OF POT, SOME SENT TO HAMPTON ROADS.

When Fred McMahan was a toddler growing up on the Old Home Place in Kentucky in the 1950s, his older brother Milton affectionately called him Cotton, on account of his white-blond hair.

When Fred testified against his older brother last week in federal court, Milton called him a liar.

It was a tragic culmination of a 10-year-old marijuana case that pitted brother against brother in a double-edged betrayal that took both men down.

In return for a reduced sentence, Fred pleaded guilty to illegally trying to keep the government from seizing family land used to grow and process tons of marijuana shipped to Hampton Roads in the 1980s. He also agreed to testify against his brother.

Milton was already serving a 24-year sentence for running a pot business that had earned him more than $13 million in cash. Thursday, he was convicted of talking friends and family into fraudulently claiming they owned land he had bought in their names with drug money.

Once charmed by Milton's promises and generosity, they went down with him, convicted of lying to cover up his interest in the land.

Fred faces prison time and will lose his license to practice law in Florida. He was fired from a promising new job with the Florida attorney general's office and will probably never be able to practice law again.

It was the land Milton and his daddy loved that drove the brothers apart at an early age. It was the land that drew them back together. It was the land that ultimately destroyed them both.

Testimony and court records, as well as interviews with defense attorneys and federal authorities. tell the story of the McMahan brothers.

Land in western Kentucky in years gone by produced huge cash crops. Though most people still earn their living from the land, more and more are turning to the factories and uranium plants around Paducah, the largest city in the western counties.

Even Paducah, where the tallest building is 10 stories, hearkens to the past, hailing the annual quilt festival as one of its big attractions.

In the old days, this was moonshining country, especially between the Kentucky and Tennessee rivers. That was before the Tennessee Valley Authority dammed the rivers, creating two lakes and electricity, said Kentucky IRS agent Jim Rafferty, who has worked the McMahan case since the mid-'80s.

Those were the days when hemp was the leading crop, from the 1700s until it was outlawed in 1937. A close sister of marijuana, hemp was used to make paper, fabric, rope and carpeting.

The land still coddles the cannabis family plants. Today, Kentucky is one of five top marijuana-producing states in the nation. And - federal agents will tell you - Kentucky marijuana is the best.

Klyne Milton McMahan Sr., Fred and Milton's father, moved his family to Kentucky from Tennessee in the 1950s.

McMahan found a small farm on Highway 58, a two-lane rural road near Wingo. Wingo was a crossroads with a post office, bank and a couple of stores. A place where, if a federal agent comes to town, by the time he stops by the local cafe for lunch everyone eating knows who he is and why he's there.

McMahan raised cattle and taught his boys about the farm. Milton would later brag that he got his first job at age 4; driving a tractor cutting hay. Most of the men grew tobacco or corn, or raised livestock.

The women, like Willodean McMahan, the boys' mother, were church-going - Southern Baptists or Methodists. Most had probably heard the preacher read at one time or another from Proverbs 17:17: A friend loveth at all times, but a brother is born for adversity.

And so it seemed on the McMahan farms, where the two boys were, as one neighbor said, ``oil and water.'' Milton loved the land, loved the farm, loved the animals like his father, whose name he carried: Klyne Milton McMahan Jr.

The older brother, despite his dark hair and American Indian looks, was the fair-haired child. Fred, despite his fair looks, could never quite garner his father's approval, even to this day.

He wasn't drawn to the land, didn't like the feel of it between his fingers, didn't want to make a life there.

Milton was charismatic, a charmer and manipulator even then, paying friends to take tests for him, lavishing his parents - and numerous girlfriends - with attention. Fred looked up to him, wanted to be like him, those involved with the case have said.

So when Milton moved to Florida in 1972, Fred followed. The brothers took their farrier skills learned on the farm to shoe horses for the fast-living race track and horse breeding crowds. There, Milton began dealing small amounts of cocaine and marijuana he grew with lights in enclosed stalls.

Then, as happened time and again, something lured Fred back to Kentucky with Milton. In the early 1980s, when Milton plowed the land for his marijuana crops, Fred joined in, hoeing, helping him water and grow.

Fred soon tired of it and Milton offered a plan: Go to law school. Already earning bundles of money, Milton gave Fred $70,000 cash to live on and pay for college and law school.

Fred would be forever beholden.

``There were no threats. No promises. No promissory notes,'' Fred testified. ``He never expected me to pay it back.''

Federal prosecutor Kent Porter asked, ``He was just doing it out of the goodness of his heart?''

Fred gave a little smile. ``I doubt that,'' he said.

Fred became a public defender in Daytona Beach, then took a job with the attorney general's office. ``I wanted to break all ties with my brother,'' he recalled.

Milton wrote in a letter from prison, ``I love Fred, he's just not interested in the farms. More could be lost with the farms than most people make in a lifetime.''

Still, as always, it was the Kentucky land, the land Fred never really loved, that lured him back.

By 1986, the Kentucky state police had launched a campaign to put a stop to the huge marijuana crops, using helicopters and planes to spot hidden acreages and destroy them. They found 15,000 plants, worth about $1,000 a plant to the grower, growing at the Old Home Place, surrounded by properties Milton had surreptitiously bought through the years. It remains one of the largest seizures in the state.

By that time, Milton was in Virginia, running the distribution end of the business and dealing with a growing problem - too much cash.

It was bulky, heavy, hard to ship and dirty. He was investing cash in properties and businesses as fast as he could, mostly in other people's names or the roughly 30 fake names he used.

He still couldn't get rid of it fast enough. At one point, he stashed a half-million dollars in a trailer off U.S. Route 17 in York County. He hid $400,000 in a Newport News house.

He heat-sealed cash in packages with rice, to keep it from rotting, and buried it. He gave it to his parents. He hid it in the trunks of cars, putting it in long-term parking at the airport where security would unknowingly guard it for him.

He bought acres and acres of land in Virginia, Florida and Kentucky, and bayfront condos, houses and ranches in Hampton Roads.

The law wouldn't catch up with him until December 1990, when an undercover DEA agent sold McMahan 500 pounds of pot.

Milton signed a plea agreement that gave him five years in return for turning over all his contacts. He didn't, later saying: ``I didn't tell on my associates; I certainly saved a few.''

Milton also didn't tell the feds about everything he owned. Prosecutors retaliated, hitting the millionaire with nine counts of money laundering and obstruction of justice charges. McMahan pleaded guilty, giving up his rights to hundreds of thousands of dollars in real estate and cars.

In 1993, Milton made headlines. The press dubbed him the ``Donald Trump'' of local marijuana dealers, ``an enigmatic farm boy who turned an illegal cash crop into a multimillion-dollar real estate holding company.''

He looked the part in court, one reporter wrote, ``with his western-cut shirts, low-slung horseman's build, and straight black hair pulled back into a long ponytail.''

When McMahan was sentenced to 24 years in 1994, federal authorities estimated he had supplied at least $10 million in marijuana to Hampton Roads.

The federal courts had not seen the last of McMahan. When he would next appear in March 1997, he brought his brother, his nephew and his oldest friends with him.

A peculiar McMahan family trait played heavily in the latest trial. They love to write letters. And they are downright compulsive about saving every letter they get.

Milton wrote between 700 and 1,000 letters from prison in the '90s, as he dreamed of getting out of jail and going home. Norfolk federal agent Arlene Campsen and Kentucky agent Rafferty, of the Criminal Investigation division of the IRS, read every one, piecing together the coded, veiled language and reading between the lines.

In the early 1980s, Milton convinced old friends to let him buy properties in their names. He concentrated on the land surrounding the Old Home Place, where the pot fields were. He needed a land buffer to ensure privacy from snooping eyes.

He expanded the original farm tenfold. In 1993, he had to forfeit his rights to all land and property. But his friends and family didn't. In his letters, he urged them to fight the government forfeitures to keep the land.

There was the Rose Place, the Roberts Place, the C.J. Gray Place, the Equitable property, the Humphreys Place, the Fields Place, the McMasters Place - named for the people who had owned them through the years. Hundreds upon hundreds of acres of good farm land with sturdy houses.

``We must have the land,'' Milton wrote his brother. ``I refuse to lose without some kind of battle. We may lose a few battles, but we must win the war.''

Fred responded, his attorney Cathy Krinick said this week. ``The government was threatening to take his parents' home. He was trying to save it. He could care less about Milton's property. He was very distressed.''

Fred acted as a conduit of information, reminding people what their stories were, where the money had come from to buy the property, what they were going to use it for.

Everyone's stories must match, his brother Milton reminded him, so the judge will believe the land is theirs. Milton wrote hundreds of letters in coded language - Tell them the truth, he wrote the property owners. Tell them you bought the farm for yourself, for retirement, to raise horses, as an investment, to train dogs.

Fred was angry to find himself back in the business, even angrier that Milton had placed property in his name without telling him.

``He parted ways with Milton in 1982 because he didn't want to be part of the drug business,'' Fred's attorney said. ``He didn't want to live that lifestyle and thought he had made the break. Twelve years later, he gets reinvolved by the forfeitures.''

Fred was also angry that his brother, who loved Dale Carnegie's book, ``How to Win Friends and Influence People,'' had succeeded in luring other family members into his plan, including his nephew, Chris, whom he loved dearly.

``His entire life he's manipulated people, and he's still manipulating people,'' Fred said Friday through his attorney. ``Milton has never had any regard for the effect his actions have on the people around him. He just does what Milton wants to do and doesn't care about the consequences.''

However reluctant, they all agreed - his nephew, former lovers and friends, and his brother. Milton, once again, was ``doing the Dale,'' as he called it. Long regarded as ``the goose that laid the golden egg,'' Milton was calling in his chits.

Those who had convinced themselves there were no strings attached to Milton's extraordinary generosity found themselves at the end of a hook, line and sinker. Nearly all would eventually plead guilty to perjury on the forfeiture petitions.

Nancy Landi, whose son is a police officer, lost her real estate license in Illinois and will go to prison. Chris Woodard, Milton's nephew, an engineer, will go to prison.

Milton's attorney, Jennifer Stanton, said Milton loved to make money but didn't care about it. A Robin Hood, he gave freely to those in need, once giving the coat off his back to a woman at a rest stop, once giving $5,000 to a hairdresser about to lose her house.

Federal prosecutor Fernando Groene didn't agree. ``He was like Midas,'' Groene said. ``Except everyone he touched went down the'' tubes.

Alternate jurors released before deliberation began Wednesday said they thought Milton was a manipulator and liar who doomed his own credibility on the stand by rambling about paying people to take tests for him in school.

They thought Willodean looked like a woman displaced in time in a video they watched. They thought her sad and said she looked as if she knew what her son was doing and didn't like it.

They wanted to know if the government still planned to go after the farm where Willodean and Klyne McMahan Sr. live. They wondered what happened to a family after one brother testifies against another.

Fred McMahan wonders the same thing.

Part of his plea agreement allows him to visit his parents one last time. As far as he knows, he told his attorney, his parents don't know he testified. But others involved in the case say they do and are angry.

``He hasn't talked to them since he testified,'' attorney Cathy Krinick said Friday. ``I think he's afraid he will be an outcast, more so by his father than his mother.''

Krinick said Fred had a sense of finality and relief and believed he made the right decision.

``He dreaded having to do it,'' she said. ``It wasn't something he enjoyed. But it was something he had to do. There was no pleasure in it at all.

``He knew he'd made the right decision. All he can do is make the best out of the situation.''

Fred doesn't know how Milton feels. The two are not permitted to speak until after they are both sentenced.

``Milton has no hard feelings about Fred testifying,'' Milton's attorney, Stanton, said. ``He's angry that he lied. He wouldn't have been if he told the truth.''

Stanton said Milton never had a plan to trick the government and that the title owners had a legitimate right to claim the land.

``Milton can call him a liar till the cows come home, but the facts speak for themselves,'' Fred's attorney, Krinick, said. ``Milton is motivated by love of money and greed.''

Fred is also motivated by greed, Stanton said. He saw an opportunity to take over the properties when his brother went to prison and when that didn't work, saved his own skin, she said.

Fred's sentence could be reduced from as high as 20 years to as little as 5, several attorneys estimated. A 20-year sentence was ``a terrible risk to run,'' Krinick said.

``Fred's not a bad man,'' Krinick said. ``He's a good man who did some bad things . . . Fred lived dirt poor for years working as a public defender in a run-down apartment.

``All he did was come in and tell the truth,'' she said. ``If that hurts Milton and he doesn't like to hear it, that's too bad.''

As to brotherly love, only time will tell.

``They loved each other,'' Stanton said. ``Or did before this happened.'' ILLUSTRATION: Drawing

ALBA BRAGOLI

THE TRIAL: From the witness stand, Fred McMahan, center, sadly

looked at his brother Milton last week as he testified against him

in federal court in Norfolk.

Color photos

THE FAMILY: Milton McMahan lured many family members into his

operation, putting his properties in their names. From left: B.J.

Woodard, Sonja McMahan Woodard, Milton McMahan, his girlfriend Allie

Tangauy, Chris Woodard (Sonja's son), Willodean McMahan, Fred