BANGOR, Maine — The town of Brownville, population 1,260 in 2005, was reeling from three recent economic blows when a Vermont man came to local officials with a plan to build a small manufacturing plant and employ at least 10 area residents, former Town Manager Sophia Leotsakos-Wilson testified Tuesday.

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 2007 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.

Leotsakos-Wilson, now town manager in Orono, took the stand on the second day of Sanborn’s trial in U.S. District Court.

“Around 2000, the traditional industries that had provided employment — Dexter Shoe, the Bangor and Aroostook Railroad and the mills [in Millinocket and East Millinocket] — collapsed,” she told jurors. “The median household income was between $20,000 and $30,000.”

Leotsakos-Wilson, who worked for Brownville from 2000 to 2011, testified 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.

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 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.”

Leotsakos-Wilson said that she issued the first reimbursement check on Nov. 4, 2005, and the last on Jan. 8, 2008, about a week after the grant period ended. She testified that to write such a check she needed an invoice that was marked “paid.”

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 check in early 2008.

Assistant U.S. Attorney Gail Malone has alleged that Sanborn falsified statements that said he had the $300,000 in matching capital the grant required and invoices that totaled more than $150,000.

Defense attorney Leonard Sharon of Auburn told jurors Monday in his opening statement that Sanborn’s intention was not to defraud Brownville but to build a business. Sanborn 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 case is expected to go to the jury Thursday or Friday.

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 will not learn of that incident during the trial.

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.