By Stephen Betts, Bangor Daily News
PORTLAND, Maine — Former longtime charity president Russell “Rusty” Brace pleaded guilty Friday morning in federal court to three felony counts related to the embezzlement of $4.6 million.
No sentencing date has been set, but the Rockport resident faces up to 30 years in prison and a fine of double the amount he stole.
Brace, 81, was in a wheelchair for the approximately 30-minute hearing in U.S. District Court in Portland. The former president of United Mid-Coast Charities responded with short answers to questions from Judge George Singal about whether he understood his rights and whether he agreed with the facts as put forth by the prosecution.
Brace pleaded guilty to one count of mail fraud affecting a financial institution and two counts of tax fraud and making false statements.
Brace was accompanied by his attorney, Peter DeTroy, and his wife, Rebecca Brace.
After the hearing, Brace declined to comment to the Bangor Daily News about the case and whether he had anything to say to the public about his crimes.
Brace admitted to the federal charges that accuse him among other things of sending out mailings through the U.S. Postal Service seeking donations for the charity and diverting money that he received for his personal use. Brace began serving as president in 1997, and in 1999, he opened a bank account at The First, N.A. branch in Camden under the name of Brace Management doing business as UCRC Charitable Fund.
He then deposited checks totaling $4.6 million that had been intended for the charity into his account through 2014 when he stepped down as president of United Mid-Coast Charities. The organization distributes donated funds to local nonprofit organizations in Knox and Waldo counties.
The charity did not have an account at The First and has since settled its claims against the bank. Details of that settlement are not being released by either side.
Brace was the landlord of the bank, which has an office in his Main Street commercial building.
The tax fraud and false statement charges relate to the filing of his individual federal income tax returns from 2009 through 2013. The government states that Brace owes the government about $400,000 for unreported income during those years as a result of the diversion of the charity’s money. The charges also relate to the filing of the charity’s federal income tax forms in which he lied about receiving the money that he stole from the charity.
Brace was in a wheelchair because of surgeries to replace both knees during the past six months. Singal read a long list of medications that Brace takes for a variety of medical conditions, but Brace said none of them affect his ability to understand what he was being charged with and the potential sentence he faces.
The U.S. Probation Office will file a report on a recommended sentence, and the defense and government can then offer their recommendations. Singal said, however, he can impose a sentence less severe or more severe than those recommendations.
Two months ago, the charity settled a civil lawsuit against Brace. In the settlement, 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 back $4,646,636.
Brace has agreed to sell off virtually all his assets in order to repay the charity. The charity’s attorney, Jay McCloskey, who was in the courtroom for Friday’s hearing, has previously said that the charity would recover a substantial portion of the money stolen from this settlement, which is unusual in embezzlement cases.
McCloskey said Friday that none of the properties have yet been sold but that they were put up for sale in the winter, which is not a good time for such sales.
McCloskey said last week that Brace spent a lot of the 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.
McCloskey said Brace also was living well off the stolen money.
The embezzlement was detected in September, a few weeks after Brace stepped down as president of the charity. The new president discovered the theft when he found out that $75,000 donated by a foundation had not been deposited into the charity’s bank account.
Stephen Crane, the new charity president, said he then confronted Brace, who admitted to the theft, but added that Brace never apologized.
This article appears through a media partnership with Bangor Daily News.