David Hammer / Eyewitness News
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NEWORLEANS-- Based on the findings of our Eyewitness Investigation, federal authorities charged a developer whose family is a major supporter of Gov. Bobby Jindal with fraudulently billing a state Katrina recovery program.

And Praveen Kailas pleaded guilty to one count of conspiracy to commit theft of government funds and one count of theft of government funds.

He was charged in June and agreed to plead guilty Aug. 1. The case was unsealed Tuesday by Chief U.S. District Judge Sarah Vance.

The U.S. Department of Housing and Urban Development Inspector General launched a probe of Kailas' company, Lago Construction, in October 2012, after Eyewitness News collected thousands of pages of Lago billing records and questioned how employees could have claimed hours working as construction monitors on the state's Small Rental Property Program when witnesses and other documentary evidence showed they were actually working on other projects.

Now, Kailas, 29, has pleaded guilty to precisely that specifically that from June 6, 2011 to Nov. 16, 2012, Kailas and others at Lago Construction overstated the number of hours they worked on the Small Rental program and that they increased the number of employees billed to taxpayers through the program without adding any additional work.

Kailas admitted that he overbilled for six Lago employees and it resulted in the theft of 'not more than $236,000,' according to the court documents unsealed Tuesday.

The Kailas family, one of the metro area's biggest landowners and developers. They have been close with Jindal through southeast Louisiana's small Indian community for years. The family has contributed tens of thousands of dollars to Jindal's campaigns over the years, including office space and supplies for his victory parties.

Jindal's office sent this statement Tuesday: 'We have no tolerance for fraud, which is why we moved swiftly and called for investigations by the State Inspector General and Attorney General, as well as the Inspector General for the U.S. Department of Housing and Urban Development. We appreciate today's outcome and we support holding bad actors accountable for their actions, which is why we also added stronger controls to prevent this type of misconduct in the future.'

The governor's office said it launched an internal investigation when we broke the story last year, but apparently dropped it after Mark Maier, the consultant who partnered with Lago on the rental program, wrote a note absolving Lago of any wrongdoing. The HUD IG, however, kept working the case and the U.S. Attorney's Office filed charges under seal in late June.

Praveen Kailas owns Lago Construction, and Cajun Elevation and Shoring, and Tower Realty, all while spending significant amounts of time coordinating a big development project at the Woolworth Building at the corner of Canal and North Rampart streets.

But from July 2011 to June 2012, WWL-TV found that taxpayers were billed upwards of $200 an hour for Praveen Kailas' supposedly undivided attention to the Small Rental Program.

The station also found that his younger brother, 25-year-old Naveen Kailas, claimed to work a full eight hours on Small Rental on all but eight weekdays the entire year -- at a cost of $185,000 to taxpayers, including when he was at meetings on another taxpayer-funded program, the home elevation grant program.

Two former Kailas employees, who declined to speak on camera out of fear of the Kailases' power, said Praveen and Naveen rarely worked full days on the small rental program, as their timesheets indicate. To the contrary, they said Naveen was mainly focused on the elevation program.

Naveen was caught in a sting offering improper freebies to clients under the home elevation program. Witnesses said other Lago employees who claimed to work full time on the small rental program were actually overseeing projects in the elevation program or working on building a mansion for the Kailases on Bayou St. John.

Court filings state that Kailas faces up to five years in prison for the conspiracy count and up to 10 years for the theft charge. He also could pay up to twice the gain from the scheme, or about $472,000. Kailas' attorney, Walter Becker, declined to comment.

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