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Firm not a target of federal probe

By The Mercury

Federal charges brought earlier this week against a former executive of a Manhattan-based technology firm do not threaten the company itself.

Aaron Madison, former chief operating officer of Nanoscale, was charged in federal court in Topeka with fraud in conjunction with what officials say was the improper submission of bills eventually paid to Nanoscale by the government. U.S. Atty. Barry Grissom alleged in the complaint filed in Federal Court in Topeka that Madison perpetrated the fraud in order to prop up the company’s financial position. Grissom asserted that at the time of the fraud, Nanoscale’s accounts payable past due for 90 days exceeded $500,000, and the company was having difficulty meeting payroll.

Jim Dietz, who was named the company’s president and CEO in May, confirmed receipt of a letter to the effect that the firm was not a target of the investigation. 

Nanoscale is a firm that researches, develops and markets a variety of chemical, military, human health and decontamination-related products. It has facilities in the tech park on North Manhattan Avenue. In March, Kyle Knappenberger was named vice president and general manager of the Manhattan office. The board chairman, Bill Sanford, is based in Florida, but several members of the board of directors reflect the company’s local ties. Those include KSU head football coach Bill Snyder, former KSU deans Terry King and John Graham, and area rancher Joe Downey.

When created more than a decade ago, the firm initially received some state and local assistance, but its operations have been privately funded for a number of years.

Sources inside the company, who spoke on condition of anonymity because they were not authorized to discuss the matter, indicated that as the government investigated the allegations against Madison, it also spent “months and months” investigating the company itself to determine whether there was corporate liability.

The investigation concluded with a finding that no company officials other than Madison knew about the actions that comprised the basis of the complaint against Madison.

Government officials confirmed that, although adding that if it were found that proceeds from the illegal activity were found to have gone into company accounts, the government would seek to recover the funds from those company accounts.

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