CAMDEN, Maine — The former president of a midcoast charity who embezzled more than $4.6 million from the organization he oversaw spent the money on a variety of things, including propping up his businesses.
“He was not a very good businessman,” said attorney Jay McCloskey, who represents United Mid-Coast Charities.
Russell “Rusty” Brace remains free as no criminal charges have yet been filed more than seven months after the embezzlement was discovered. Both Brace’s attorney and McCloskey say, however, charges will be filed.
The charity settled a civil lawsuit last month with Brace in which he admitted to breach of duty, fraud and conversion of money belonging to the charity after his theft of hundreds of donation checks made payable to the charity. He also agreed as part of the civil lawsuit settlement to pay $4,646,636.
McCloskey said Brace agreed to sell off virtually all his assets in order to repay the charity. McCloskey said the charity will recover a substantial portion of the stolen from this settlement, which is unusual in embezzlement cases.
The original estimate of the amount embezzled by Brace was $3.8 million which is the amount that a judge approved placing liens on Brace’s properties. McCloskey said that amount was determined by a review by The First bank of its computerized records. The bank then did a manual review back to 1997, when Brace became president of the charity, and came up with the $4.6 million figure.
Brace was taking checks donated to United Mid-Coast Charities and depositing them in his own account at The First. United Mid-Coast Charities did not have an account at that bank. The charity settled its claims against the bank but details of that settlement are not being released by either side.
A review of bank records also showed how Brace spent the money, McCloskey said.
That review showed that he spent a lot of money on businesses that he operated that did not do well financially. Brace owned Brace Management, which managed properties in New Hampshire and Maine. That company has been based out of his 21 Elm St. office building in downtown Camden for more than 40 years.
Brace also started Maine Coast Photo and Digital Inc. in 1992 as photography was converting from film to digital. The company would eventually close stores during the 2000s in Camden, Rockland, Belfast, Damariscotta and Brunswick.
McCloskey said KAX Office Center, which Brace sold in July 2014, had also not been doing well. That sale ultimately led to a lawsuit when the woman who purchased it said that the embezzlement by Brace, which became public two months after the sale occurred, damaged the business. KAX would later close.
Brace also gave a bunch of money to his children, which he said they repaid, according to bank records. McCloskey said there is no evidence that anyone other than Brace was involved in the theft.
And the charity’s attorney said Brace also paid his living expenses with the embezzled money.
“He lived pretty well off the money for 15 years,” McCloskey said.
The couple’s 3,656-square-foot Spruce Street home is for sale with an asking price of $895,000. The property is assessed by the town at $775,000.
“Tucked away from the madding crowd on a quiet little-traveled side street, this spacious 5-6 bedroom colonial sits on a large private parcel one row off Rockport harbor. Peeks of the harbor from its waterside deck, glassed-in family room. Fireplaces in the living room and master bedroom. Superb location,” states the description of the property on realtor.com.
A deed transfer was filed on April 27 in the Knox County Registry of Deeds transferring ownership of the couple’s Washington properties to Rebecca Brace.
McCloskey said the charity agreed to that transfer because there was little equity in the Washington property because it has a $290,000 mortgage on it and is assessed at $320,000. In exchange for that transfer, McCloskey said Rebecca Brace is giving up interest in the Rangeley property, which has no mortgage.
The Rangeley property is for sale for $399,800.
“A true 4-season vacation home in an ideal location with 5 bedrooms, 4 baths, fieldstone fireplace and wrap around deck overlooking lake & mountains. There is a 2-car garage with a GREAT room above for additional entertaining, so entire property can accommodate up to 16 guests. There is also access to Rangeley Lake with 600 feet of frontage on the North Shore and walking distance to golf course,” the realtor.com description states.
The asking price for the Brace Management building is $2.3 million.