SOUTHWEST HARBOR, Maine — Sam Chisholm, the Southwest Harbor fire chief, says the federal fraud investigation he went through four years ago is still painful to think about.
Chisholm’s memories of being prosecuted by the federal government have been revived with recent news that another local resident, Andy Mays, is being accused of defrauding the Coast Guard. Up until last Friday, when Mays was fired, the two men worked together as civilian employees in the electronic support detachment group at the local Coast Guard station.
In April 2010, federal prosecutors filed civil fraud charges against Mays and Chisholm in connection with a federally funded project in the mid-2000s to install security cameras at various locations on the local waterfront.
Prosecutors dropped the charges in November 2011 on the condition that the two men repay more than $4,600 to the federal government. Several former and current Southwest Harbor town officials contacted this week, including former Town Manager Robin Bennett, said they never were notified that civil fraud charges were pending against the town’s fire chief.
Mays and Chisholm each said this week that they volunteered to help with the security camera project and that the fraud accusations were trumped up by Coast Guard investigators. Chisholm added that, though some current and then-selectmen might not have known about the federal charges, he made sure to keep Bennett in the loop.
“No good deed ever goes unpunished,” Chisholm said Thursday, standing in the falling snow outside his home on Seal Cove Road. He’s been the town’s fire chief since 1985.
Attempts to get comment from Coast Guard officials about the case have been unsuccessful.
According to federal documents, the town applied in 2005 to the Maine Emergency Management Agency for Department of Homeland Security funds to install four cameras for a total cost of $52,000. The town was awarded funds in April 2006 and Chisholm was tasked with overseeing the project.
Mays owned and operated a small electrician business that received more than $13,000 of the project funds for installation of the cameras, though Chisholm had told state officials in a letter that the cameras would be installed at no charge by qualified local volunteers. The remaining cost of the project, $38,820.56, was paid to an electronics distributor that provided the cameras.
Prosecutors alleged that in May 2006, Mays submitted an invoice for $13,179.44 to Chisholm and then Chisholm forwarded the invoice to the state for reimbursement. The problem, federal officials said, was that Mays had not done any of the work he sought payment for and that Chisholm knew the work had not been done. The cameras were put in place the following year with help from unpaid volunteers from the Coast Guard electronic support unit that employed Mays and Chisholm.
Mays said Thursday that though his company’s itemized list of work did say “invoice,” it was really a proposal because it explicitly said it was work he would do, not work he had done. Chisholm added that regardless of what he wrote in the letter, the grant contract specifically allowed the town to hire contracted labor to do the work. The letter was not legally binding, he said, but the contract was.
Mays and Chisholm each said they never intended to mishandle the federal money. They got involved in the project as volunteers to help the town acquire and install the cameras, but Coast Guard investigators insisted that they aimed to pocket the money and have other people do all the work.
“The Coast Guard was imagining things,” Mays said. The project resulted in a working waterfront security camera system that everyone is happy with, he added.
The $4,633 Mays and Chisholm had to repay the federal government was the amount left over from the $13,179 payment to Mays after suppliers and subcontractors had been paid for materials and services they provided for the project, according to court documents. Mays said federal prosecutors settled for $4,633, after trying to get Mays and Chisholm to repay $40,000, because their case was falling apart.
Mays said he’s not the best bookkeeper. All the grant money his company received was paid out to others for labor or supplies, he said, and he never made any money off the project. He just couldn’t provide federal officials with receipts for $4,633 of the money and so was required to pay that amount back. He and Chisholm split the reimbursement cost, he said.
Their legal bills amounted to roughly $20,000, none of which was paid by the town even though Chisholm was involved in the project on behalf of the town. Mays paid the bill, working off some of it in trade with their defense attorney, Chris Whalley of Ellsworth, the two men said.
Chisholm said Thursday that it was clear to him that Bennett wanted nothing to do with the controversy, so he did not bother to try to get the town to foot his legal bill.
“She knew [about the legal dispute] and chose not to worry about it,” Chisholm said of Bennett.
Bennett, who served as Southwest Harbor’s town manager from July 2007 through June 2011, said Wednesday that she never knew Chisholm had been charged in federal court with fraud. She said an official with the Department of Homeland Security stopped by her office to inquire about the project after it had been completed, but added she was not given the impression that federal officials had any specific concerns about potential wrongdoing.
“[Chisholm] never let on that [he had been charged],” Bennett said. “I’m very shocked, I have to tell you. I never heard a whisper about it.”
Chisholm said the experience of being accused of fraud in federal court was a traumatic one for him and his family and that he’ll never get involved in a Homeland Security project again. He still helps maintain the security cameras on a volunteer basis, he added, and will be happy to continue doing so as long as they remain owned and operated by Southwest Harbor.