On June 25, 2013, about 0650 mountain standard time, a McDonnell Douglas 369E helicopter, N34CT, sustained substantial damage during an off-airport hard landing, about 6 miles south-southeast of Casa Grande, Arizona. The helicopter was being operated by the Pinal County Sheriff's Office as a day, visual flight rules, post maintenance test flight, under the provisions of Title 14, CFR Part 91. The three occupants of the helicopter sustained minor injuries. Visual meteorological conditions prevailed, and company flight following procedures were in effect. During a telephone conversation with the National Transportation Safety Board (NTSB) investigator-in-charge (IIC), the pilot said they were flying about 700 feet above the ground performing a post-maintenance test flight, when he heard an audible bang. The helicopter engine lost all engine power, and he did an autorotation. The helicopter landed hard, the right skid collapsed, and the helicopter came to rest on its right side. The tailboom and fuselage sustained substantial damage. The helicopter was being test flown with maintenance personnel on-board, following the modification of the air intake. In a written statement to the NTSB dated July 1, the pilot reported that he arrived at the Sheriff's hangar facility, and met with their aircraft mechanic, and another deputy/tactical flight officer. Their mission was to do a post maintenance test flight on the accident helicopter. This was the first flight since the installation of a Donaldson Air Filtration System and a new horizontal stabilizer. A pre-flight inspection was completed, and the pre-engine start checks were performed via a checklist. The engine start was normal. Pre-takeoff checks were performed per the checklist. No discrepancies were observed during the run-up. In a hover, all the flight controls and the engine indications were normal. The pilot hover taxied the helicopter to a ramp area, and performed a few hover maneuvers to ensure control inputs were normal. Once the maneuvers were complete, they departed the airport to the south-southeast. During the departure flight, the engine and flight instruments operated normally. A power check was completed; the pilot reduced the torque, and climbed to 2,100 feet(600-700 feet above ground level) where he leveled off. He continued cruise flight at about 110 knots. About 1-2 minutes after the power check, the pilot heard a distinct loud pop, the nose yawed to the left, and the helicopter begin to descend. The pilot, noting the loss of engine power, entered an autorotation. Approaching the ground, the pilot flared hard, leveled the helicopter, and pulled in collective. The helicopter landed hard, the right skid collapsed, and the helicopter rolled on its side. The helicopter was examined at the accident site by an Federal Aviation Administration (FAA) aviation safety inspector (ASI). The helicopter was recovered to the Sheriff's hangar. At the direction of the NTSB IIC, the helicopter was examined under the supervision of the FAA ASI, by representatives/investigators from the airframe and engine manufacturers, in the presence of the operator's representatives. During the examination, the investigators removed the air intake assembly, and found cloth material had been ingested into the engine intake. The engine was removed and shipped to the engine manufacturer's authorized maintenance facility for further examination. No other anomalies were found during the examination of the airframe. An examination of the helicopter's maintenance logbooks revealed that the helicopter was being returned to service after an exchange of the air inlet barrier filter system. During the exchange the engine had been removed from the helicopter. According to a mechanic, the engine was re-installed and inspected, prior to the air inlet barrier filter system installation. At the engine manufacturer's authorized maintenance facility, the engine was disassembled and examined under the supervision of an FAA ASI, in the presence of the operator's representative. During the examination, more cloth material was found in the engine, in a sufficient quantity and location to cause engine flame out. The cloth material found in the engine was consistent with a box of maintenance rags found at the operator's hangar facility.