Former Portland real estate mogul Michael Liberty pleaded not guilty Thursday to federal fraud and money laundering charges, the latest development in more than two years of legal trouble for a man once called “Donald Trump with a Maine accent.”
Liberty, 58, now of Windermere, Florida, and partner Paul E. Hess, 63, of Braintree, Massachusetts, were indicted last month by a federal grand jury in Portland for allegedly scamming investors out of $50 million to support their lavish lifestyles.
The criminal charges were lodged less than a year after the Securities and Exchange Commission sued Liberty and others for the same alleged conduct.
Liberty made his initial court appearance Thursday in Portland, where Judge George Z. Singal released him on $500,000 unsecured bail.
The indictments charged each man with one count of conspiracy to commit wire fraud, four counts of wire fraud and one count of securities fraud. In addition, Liberty was charged with one count of conspiracy to commit money laundering and three counts of money laundering.
Beginning in 2010, Liberty and Hess solicited investments in Mozido, a privately held financial technology startup that offered users the ability to make payments using their mobile phones, according to the U.S attorney’s office.
Prosecutors claim Liberty and Hess raised millions of dollars from investors telling them, among other things, that their money would be used to fund Mozido’s business operations and that Hess was not being paid to raise the money.
The indictment alleges that a substantial amount of the money did not go to Mozido, that a portion of the money was diverted to pay Liberty’s personal expenses, and that Hess received commissions and other payments in return for the money he raised from investors.
Hess pleaded not guilty to the charges last week, the Portland Press Herald reported.
Assistant U.S. Attorney Donald Clark on Thursday requested that Liberty be ordered not to interact with anyone on a list of investors, on the grounds that those people may be considered victims or witnesses in the case.
But Singal sided with Liberty’s attorney, Thimi Mina, who argued that many of the people on the list may not consider themselves victims, but rather partners of Liberty with whom he needs to continue to conduct business in the coming months.
The judge said he would not bar contact with the people on the list, at least initially, and asked prosecutors to narrow the list to just those they actually plan to call as witnesses. Singal entered the list into evidence and ordered it sealed.
Liberty, who grew up in Gray, was released from federal prison in January 2018 after serving a sentence for making illegal contributions to the campaign of 2012 Republican presidential candidate Mitt Romney. In November 2016, Liberty waived indictment and pleaded guilty to illegally donating $22,500 to Romney’s campaign. He obscured his total donations by splitting the contributions up into nine parts over about two weeks in May 2011, and by making the gifts under the names of employees, family members and associates, according to court documents.
In August 2017, a federal judge sentenced the real estate, franchising and software mogul to pay a $100,000 fine and serve four months in prison followed by one year of supervised release.
If convicted on the new charges, Liberty and Hess each face up to 20 years in prison and a fine of up to $250,000 or twice the gain to the defendant or loss to the victims, and a $5 million fine on the securities fraud charge.
Liberty faces up to 10 years in prison and a fine of the greater of $250,000 or twice the amount of any criminally derived property involved in the transactions on the money laundering charges.
In a Yankee Magazine profile early in his career, the outspoken and self-promotional Liberty was described as “Donald Trump with a Maine accent,” making fortunes building shopping centers, office buildings and condominiums all over the state. He continued to make money on regional franchise restaurant rights and would go on to found a Texas-based mobile payment startup firm, Mozido.
Forbes magazine has in recent years reported that after attracting more than $300 million from high-profile investors, such as former Google executive Eric Schmidt, Mozido has fallen on hard times, struggling to pay its employees and laying off others.
Follow BDN Portland on Facebook for the latest news in Greater Portland and southern Maine.