Defense: Vermont man intended to bring jobs to Brownville not defraud it of $300,000 block grant

Posted April 21, 2014, at 12:01 p.m.
Last modified April 21, 2014, at 5:05 p.m.

BANGOR, Maine — The jury trial of a Vermont man accused of fraudulently receiving federal block grant funds to open a black powder ammunition plant in Brownville nearly a decade ago began Monday in U.S. District Court.

Craig Sanborn, 64, of Maidstone, Vt. has pleaded not guilty to wire fraud in connection with the $300,000 he received in 2005 from the Maine Department of Economic and Community Development to renovate the former rail terminal, purchase equipment and get the plant up and running so it could employ 10 area residents.

The Maine Department of Economic and Community Development funds come to the state from the U.S. Department of Housing and Urban Development. Brownville applied for the grant in 2005 and it was approved the same year, according to court documents. Sanborn had until the end of 2007 to apply for reimbursement for money he spent on the project.

Sanborn was required to match the grant dollar for dollar, Assistant U.S. Attorney Gail Malone told the jury of nine men and four women, including one alternate, in her opening statement. In his application, Sanborn included a letter that said he had a line of credit for $165,000 with Rod Garrett of Saranac Lake, N.Y. Malone said that Garrett would testify that he advised Sanborn on business matters but never gave him any funds for the project.

The federal prosecutor told jurors that Sanborn submitted fake invoices to the town that totaled more than $150,000. She said that at least four witnesses would testify that the value of equipment and services they sold Sanborn were not worth what he claimed they were in the invoices.

Defense attorney Leonard Sharon of Auburn told jurors that Sanborn’s intention was not to defraud Brownville or Maine but to build a business that would develop and produce a bullet designed to be used in muzzle-loading rifles. He originally worked with Ox Yoke Industries, a Milo firm, but it closed abruptly in 2004.

Sanborn bought equipment from Ox Yoke for 10 cents on the dollar, Sharon told the jury. The businessman honestly believed that he could submit an invoice to the town for what the property was actually worth once it was being used in his plant, not what he paid for it, the defense attorney said.

The defense attorney told jurors that after they have heard all the evidence, they will find the defendant not guilty because Sanborn did not set out to defraud the town but followed directions he was given in seeking reimbursement. Sharon also said that in the end, the business failed as many startup businesses do.

Debra Johnson, who works for the Maine Department of Economic and Community Development, explained Monday how the grant process works. Mark Scarano of Plymouth, N.H., testified about how he helped town officials and Sanborn prepare the grant application when he was head of the Piscataquis County Economic Development Council.

Former Brownville Town Manager Sophia Wilson is scheduled to take the stand Tuesday to tell the jury about her interactions with Sanborn.

The Brownville plant opened in late 2005 but was forced to close at the end of 2007 or in early 2008, according to the defense team.

The case is expected to go to the jury Thursday or Friday.

Sanborn, who wore a sport coat, slacks, dress shirt and tie to court, is serving a 10-20 year sentence in a New Hampshire prison in connection with a 2010 explosion at his New Hampshire gunpowder plant that killed two men and injured a third. The jury will not learn of that incident during the trial.

He denied responsibility for the explosion, according to WMUR, a New Hampshire television station. Mark Sisti, the Chichester, N.H., attorney who represented Sanborn at the trial, told jurors that his client was out of town when the explosion happened. The defense attorney also said the explosion could have been caused by various scenarios, including employee error or a stray piece of metal creating friction inside a machine.

Officials from the Occupational Health and Safety Administration investigated the explosion and fined Sanborn $1.2 million after concluding there were many serious, willful safety violations at the plant, according to NHPR. That fine was rescinded when OSHA determined Sanborn could not pay it. Instead, Sanborn promised never to be involved in the manufacture of gunpowder again.

Sanborn is appealing his New Hampshire conviction. If convicted of wire fraud in federal court in Maine, Sanborn faces up to 20 years in prison along with a fine as high as $250,000, and he could be ordered to pay restitution.

He could be ordered to serve any federal sentence after he completes his New Hampshire prison term.

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