DATE: Saturday, June 7, 1997                TAG: 9706070277

SECTION: LOCAL                   PAGE: B3   EDITION: FINAL 

SOURCE: BY LYNN WALTZ, STAFF WRITER 

DATELINE: NORFOLK                           LENGTH:   88 lines

KINGDOM BUILT THROUGH FUNDS FROM MARIJUANA ENDS BROTHERS WHO WORKED TOGETHER IN OPERATION ARE SENTENCED THIS WEEK.

The last vestiges of a kingdom built on marijuana millions crumbled this week.

The fight for the spoils - hundreds of acres of Kentucky land - pitted brother against brother and their family against the federal government.

In the end, the federal government won. The McMahan brothers, Milton and Fred, were sentenced to prison. The extended family has given up all but two small claims to the once-vast dynasty.

And the bitter, 82-year-old family patriarch, Milton Klyne McMahan Sr., was left to live out his final years on 40 acres of land once surrounded by the largest marijuana farm in Kentucky.

On Wednesday, federal agents went to the farm and dug up a bucket with $24,000 in cash buried in a cooler 12 years ago. It is part of millions Milton Jr. buried in Kentucky and Virginia when cash poured in too fast to launder during the years he oversaw a multistate marijuana operation.

``I wonder if anybody will ever find it all,'' federal Judge Henry C. Morgan Jr. said Thursday. ``Probably not in our lifetime.''

Then Morgan tacked an additional four years onto the 24-year sentence McMahan got in 1994 for distributing tons of the drug in Hampton Roads in the 1980s.

On Thursday, McMahan was sentenced on charges of obstruction of justice for manipulating family and friends to keep the feds from seizing his property holdings. He will be 68 when he is released from federal prison in 2016.

His younger brother, Fred, was sentenced Friday to four years for money laundering. Two years were suspended because he gave federal agents detailed information about his brother's operation and his attempts to foil property seizures.

The sentence was a small part of the cost to a man who once was devoted to his big brother.

Fred's cooperation has alienated him from other family members. A former attorney in the Florida attorney general's office, he watched a promising legal career go up in smoke.

Milton McMahan Sr. probably will not live long enough to see his namesake released from prison. Fred McMahan has been virtually disinherited by his father for testifying against his brother.

Ironically, it was his father's land that lured Fred back into his brother's marijuana industry. He wanted to make sure the family held onto their extensive landholdings, which included hundreds of acres in Western Kentucky.

In the early 1980s, Fred helped his brother produce the marijuana crop. But by the time Milton's profits approached $13 million, Fred had gotten out of the drug trade. He went to college and law school, compliments of his brother's overflowing cash reserves, and got a job as a public defender.

Two colleagues testified Friday that Fred McMahan was honest, a ``down-home country boy,'' trustworthy and reliable. He worked hard for his clients, they said.

Fred helped his brother try to hide the true ownership of the real-estate holdings. He coordinated the stories told by friends and relatives to make it look like they actually owned the land.

``More money can be lost from the land than most people earn in a lifetime,'' Milton wrote to his brother from jail, urging him not to give up the land without a fight.

Papers signed by Milton McMahan Sr., releasing his final claims to properties that had been in the family for years, were filed in court this week.

Milton Jr. complained about his sentence to Judge Morgan Thursday, saying it didn't fit the crime.

``There was never any violence, no enforcers,'' he said of his dealing. ``Cocaine dealers with bigger crimes get less time.''

Morgan agreed the sentences were high for someone who never used violence. Still, he said, ``The problems caused by the drugs the defendant distributed over his lengthy career is difficult to assess.''

On Thursday, Milton sat in his orange jail-issue jumpsuit, his long dark hair tied back. On Friday, Milton wore a light green suit with a blue shirt, his light, trimmed hair combed in place.

Fred told the judge, ``I've lost everything. I'll be penalized forever. I'll never practice law again. My family's torn apart. We may never be reconciled again.''

Morgan responded, ``I can see the difficulties you've had. They're the very type of thing the drugs you helped distribute does to families on the other end.'' ILLUSTRATION: Drawings

Fred McMahan, left, was sentenced Friday for money laundering.

Milton McMahan was sentenced on charges of obstruction of justice

Thursday. KEYWORDS: SENTENCING MARIJUANA ARREST U.S. FEDERAL COURT

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