NH man denies defrauding Brownville of grant money when opening bullet-making business

Posted April 24, 2014, at 12:02 p.m.
Last modified April 24, 2014, at 8:32 p.m.

BANGOR, Maine — A New Hampshire prison inmate testified Thursday that he did not intend to defraud the town of Brownville when he received a $300,000 grant to construct a small manufacturing plant and employ at least 10 area residents.

Craig Sanborn, 64, of Maidstone, Vt., has pleaded not guilty to wire fraud in connection with the $300,000 grant he received between late 2005 and early 2008 from the Maine Department of Economic and Community Development to renovate the former rail terminal, purchase equipment and get the bullet-making plant up and running.

Sanborn took the stand in his own defense Wednesday afternoon after the prosecution rested. He continued to testify Thursday morning on the fourth day of his trial.

The case is expect to go to the jury Friday after rebuttal witnesses are called.

The Maine DECD funds come to the state from the U.S. Department of Housing and Urban Development. Brownville applied for the grant in August 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 denied Thursday that he submitted false invoices for reimbursement and a bogus $165,000 line of credit in the grant application, as Assistant U.S. Attorney Gail Malone said Monday in her opening statement. He said that he submitted invoices for the estimated value of equipment once it was refurbished and being used in the plant as he was instructed to do by Mark Scarano.

Scarano of Plymouth, N.H., testified Monday about how he helped town officials and Sanborn prepare the grant application when he was head of the Piscataquis County Economic Development Council. He told jurors that he made it clear to Sanborn that the businessman would be reimbursed the actual cost of equipment, not its fair-market value.

Sanborn disagreed Thursday. He said that the town took a similar action when it sold the railroad terminal building to him for $75,000 but assessed it for property tax purposes at $210,000. Sanborn said that he still owns the building and continues to pay taxes to Brownville.

The defendant also said that he paid taxes on the equipment. Those taxes were assessed at 95 percent of the value of the equipment, not what Sanborn paid for it, he said.

Former Town Manager Sophia Leotsakos-Wilson, who worked for Brownville from 2000 to 2011, testified Tuesday that Sanborn approached the town in mid-2005 about a project that would develop and produce a bullet designed to be used in muzzle-loading rifles. She said that from the beginning, discussions included asking for a block grant.

Sanborn was required to match the grant dollar for dollar, Leotsakos-Wilson told the jury of nine men and four women, including one alternate. She said that Sanborn never appeared confused about that or the stipulation that he would be reimbursed for money expended to purchase equipment and for other business expenses.

She testified that Sanborn “struck me as a very capable businessman.”

The former Brownville town manager said that Sanborn’s plant opened in late 2005 and employed the 10 people required by the grant. She also testified that Sanborn shut it down shortly after she cut the final grant check in early 2008.

Sanborn testified Thursday that he moved the plant to Colebrook, N.H., in 2008 when he began manufacturing black powder along with the bullets made in Brownville. He said Thursday that the Brownville facility was not large enough to accommodate the equipment to manufacture both products.

The Vermont businessman also told jurors that he applied for and received a block grant in New Hampshire similar to the one he received in Maine. Under cross-examination, he denied using money from the Maine grant to fund the gunpowder plant.

Sanborn is serving a 10- to 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 has not been told about that incident.

He 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.

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