CAMDEN, Maine — During an emergency court hearing Tuesday, a judge approved having liens placed on the properties and bank accounts of Russell “Rusty” Brace, who is accused of stealing $3.8 million from a midcoast charity.
Attorney Peter DeTroy of Portland, who represents Brace, said he did not contest the request by United Mid-Coast Charities to place liens totaling $3.8 million on Brace’s properties. The liens will be registered at the registry of deeds in counties where Brace owns properties as well as at banks where the charity knows or suspects Brace has accounts, DeTroy said.
This action will freeze Brace’s accounts and he will not be able to withdraw any money or dispose of properties without approval of the charity, DeTroy said.
The hearing was held through a telephone conference with Justice Daniel Billings, who was presiding over cases in Lincoln County Superior Court in Wiscasset on Tuesday.
DeTroy said he has 21 days to file a response to the United Mid-Coast Charities’ lawsuit that was filed Friday in Knox County Superior Court. The attorney accepted service of the lawsuit on Brace’s behalf this week. That lawsuit seeks damages of $3.8 million as well as costs.
Brace and his family recognize the seriousness of the allegations being made against him and they appreciate the support of family and friends, DeTroy said Tuesday.
The lawyer said he could make no substantive response to the allegations on his client’s behalf because of a pending criminal investigation. No criminal charges have been filed. Federal investigations involving financial fraud can take a year or more to complete.
United Mid-Coast Charities Inc., based in Camden, contends that Brace embezzled $3.8 million from the organization from 2001 through August 2014 while he served as the board’s volunteer president. The charity filed a lawsuit and asked the court to place liens on Brace’s properties and attach his bank accounts.
The FBI is investigating the case, DeTroy acknowledged, because the allegations involve possible fraud against a bank. The charity’s lawsuit alleges that Brace admitted on Sept. 25 to taking numerous, and sometimes large, checks earmarked for United Mid-Coast Charities and depositing them in his Brace Management Account at the First, NA.
The owner of KAX Office Center also has filed a lawsuit and is seeking to place liens of $125,000 on Brace’s property, saying that she bought the company from him earlier this year not realizing that he had committed the fraud, which she said has damaged the business’ reputation.
KAX leases space in Brace’s downtown Camden office building. The First bank also has a branch located in Brace’s building.
The First President Tony McKim said Tuesday that the bank is cooperating with the investigation.
“Obviously it is highly unfortunate and disturbing when a charitable organization is victimized by theft,” McKim said. “The First is cooperating with United Mid-Coast Charities and law enforcement.”
He said he could not comment on specific matters because of the ongoing investigation.
Brace served as board president of United Mid-Coast Charities from 1997 until Aug. 20, when he stepped down and the board appointed Stephen Crane as his replacement. According to an affidavit filed with the organization’s lawsuit, Crane discovered the embezzlement last month after talking to a donor whose large contributions could not be found among the charity’s financial records.
Brace is founder and president of Brace Management Group Inc. of Camden. He has served on local boards over the years and was named Townsperson of the Year in 2005 by the Camden-Rockport-Lincolnville Chamber of Commerce. He ran unsuccessfully in 1984 as a Republican candidate for the state Senate to represent Knox County.
Brace and his wife own a home in Rockport, a home in Rangeley, a cabin and property in Washington and a commercial building at 21 Elm St. in downtown Camden valued at $1.6 million where his offices are located.
Dennis Bailey, who has been contracted by the Unitied Mid-Coast Charities board to handle media relations, said Tuesday that the full board met Saturday to get updated on the matter. There are 43 board members and he said it was a full house.
Bailey said the board is looking at changing procedures, including requiring two signatures when financial transactions are made. He said making the list of donors more transparent may also be considered, although he pointed out that some donors request anonymity.