If doctors determine he is well enough to appear

Thu, 05/07/2015 - 2:45pm

Lynda Clancy

Rusty Brace, in 2007. (Photo by Holly Edwards)

PORTLAND — Rusty Brace is expected to appear in U.S. District Court in Portland May 29, where, his attorney said, he will plead guilty to three counts brought against him by the U.S. Attorney’s Office.

Peter DeTroy, of the Portland-based Norman, Hanson and DeTroy, said May 7 that Brace will be charged on one count of bank fraud and two counts of tax fraud.

“We have been told for Rusty to show up on May 29,” he said.

The charges are the result of two federal criminal investigations, one by the Federal Bureau of Investigations, the other by the Internal Revenue Service, of Brace’s $4.6 million diversion of charitable donations that were intended for United Mid-Coast Charities over the course of many years.

The bank fraud charge relates to Brace creation of a personal account to divert money meant for somebody else. The tax fraud charges are the result of Brace not filing income tax returns for the money that he diverted from the nonprofit UMCC into his own personal bank account, which resided at The First.

The second tax fraud charge is because Brace did not report the income that the charity was supposed to have received on UMCC’s annual 990 nonprofit tax filing.

UMCC filed a civil suit against Brace Oct. 3, 2014 after current UMCC President Stephen Crane said in court documents that he met with Brace on or about Sept. 25 and Brace admitted to the diversion of the checks, some in the amount of $100,000 to $200,000, into his personal account at The First.

The nonprofit said in its suit it determined that former president Brace had diverted checks intended for the charity into his own Brace Management Group checking account at the First N.A., a bank with branches in Rockport and downtown Camden.

On April 15, UMCC announced a settlement with Brace. Brace admitted to breach of duty, fraud and conversion of money belonging to UMCC as a result his theft of hundreds of donation checks that were made payable to UMCC. Brace admitted to breach of duty, fraud and conversion of money belonging to UMCC.

A judgement of $4,646,636 was entered against Brace, and UMCC’s attorney, Jay McCloskey, said he hoped to see a substantial portion of that returned following the sale of Brace’s properties.

McCloskey said he hoped to recoup 60 to 70 percent of the money that Brace deposited for the charity.

At the May 29 hearing, DeTroy said Brace is expected to plead guilty to the three federal criminal charges.

In the criminal system, he said, the judge will likely engage a pretrial investigation to determine what sort of sentencing is appropriate. The pretrial sentencing analysis provides the court with context with which to sentence a defendant.

The nonbinding report has a 44-day deadline, and will involve calculations that ultimately produce a “range of sentences from x to y,” said DeTroy.

The report is then sent to DeTroy, as well as the U.S. Attorney's office. Both attorneys have the right to object, if they think the calculations are wrong.

If there is disagreement, the judge will set up a hearing for the attorneys to talk.

Brace is expected to appear May 29 at the hearing; however, Detroy said Brace had surgery not long ago— “non-life-threatening” he said — and is still recuperating in a local rehabilitation center.

If he is not well, it will be up to the doctors to determine if he can appear in court. If not, the hearing will be rescheduled.

“He has to appear,” said DeTroy.

With the civil suit settlement, Brace agreed to sell real estate properties that he owns and to turn over his interests in the sale proceeds to UMCC. He also agreed to turn over all the money that he holds in bank accounts as well as his interest in certain items of personal property that will be sold.

Real estate property owned by Brace, and which are now attached, include:

• The Brace Building, 21 Elm St., Camden, assessed by the town at $1.7 million; the building is listed at $2.3 million by the Boulos Company. That building is under contract.

• House and land, 39 Spruce St., Rockport, assessed at $774,800; the house is on the market, listed by Sotheby’s, at $895.000.

• House and land in Washington, 69 Steele Lane, assessed at $314,954, and listed for $385,000.

• House and land at 51 Alpine Way in Rangeley, assessed value approximately $290,000. There is another piece of land he owns on Dorset Road that is assessed at $33,100. The house is on the market for $399,800.

McCloskey said May 7 that UMCC agreed to transfer ownership of the Washington Pond property to Rebecca Brace because she was joint tenant. In exchange, Rebecca Brace gave up her co-ownership rights of the Rangeley property.

This made financial sense, McCloskey said, because there is a $290,000 mortgage on the Washington Pond house.

When the Washington property sold, and after paying the mortgage, closing costs and commissions, the charity would have gotten $5,000 to $10,000.

“Not a whole lot of money left,” he said.

Rebecca Brace owned a small portion of the land at the Rangeley house, so it made sense to transfer her ownership to UMMC and take over the Washington Pond house. There is no mortgage on the Rangeley property.

The bank declared in October how much Brace’s banking accounts are worth.

1) Personal checking account in the name of Russell Brace, $15,346.86

2) Personal checking account in the name of Rebecca W. Brace/Russell W. Brace, $30.23.

3) Business checking account in the name of Brace Management Group, Inc.: $8,051.60

4) Business checking account in the name of Brace Management Group, Inc., DBA UCRC Char Fund: $694,731.30

Federal investigations of Rusty Brace inch closer to closure; lawyers anticipate movement on civil case

United Midcoast Charities enthusiastic about future

• Rusty Brace asks for more time in UMCC case as investigation continues

• The First discloses amounts in Brace accounts

• Legal, investigative wheels turn on Camden charity theft case