Camden charity says former president embezzled funds

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CAMDEN — A prominent midcoast-area charity said Tuesday that its former board president embezzled a substantial amount of money from donations.

Members of the United Mid-Coast Charities Inc. board of directors had confirmed Monday that an investigation was underway into the possible misappropriation of money from the nonprofit organization.

Then on Tuesday in a “message to the community” on its website, the board’s new president revealed that former president Russell “Rusty” Brace was the person responsible for the “substantial embezzlement of donations.”

No criminal charges have been filed against Brace.

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Stephen Crane, the new board president, stated in the announcement that United Mid-Coast Charities has hired an attorney and contacted law enforcement authorities, including the FBI. As of Monday morning, neither Camden police nor the Knox County Sheriff’s Office or Maine State Police had been notified, according to those agencies.

“We are working with local banks to determine the full extent of the missing funds. We also have begun the legal process to recover the money that rightfully belongs to UMCC for its charitable giving,” Crane said in his message.

Dennis Bailey of Savvy Inc., a public relations firm hired by the organization on Friday, said that he did not want to speculate on the amount that was embezzled since the process of going over records was ongoing.

Bailey said the embezzlement came to light last week when a member of the executive committee detected discrepancies. Brace was confronted immediately, but Bailey said that he did not want to comment on whether the former president admitted to the theft.

Bailey said he expects United Mid-Coast Charities to have its attorney, former U.S. Attorney Jay McCloskey, file a request soon for a court attachment of Brace’s properties in order to try to recover money.

“As you know, donations to UMCC are distributed to more than 50 local agencies to support children’s services, medical care, community services and education programs for people in need throughout Knox and Waldo counties,” Crane said in the online statement. “We want to assure you that we are honoring our 2014 commitment to distribute $325,000 to those agencies in the coming weeks.”

He said more details would be provided as the investigation allows.

“We ask for your patience and support during these difficult times,” he concluded.

Brace served as president of the board for 17 years before he stepped down on Aug. 20, when Crane was elected the new board president. The embezzlement was not uncovered until after the transition, according to one source.

United Mid-Coast Charities had lauded Brace on its website at the time of the Aug. 20 change in leadership but has edited the news release since Monday evening by deleting the praise of Brace.

“Every day at the helm, Rusty set a strong example for our board and for our community, in both words and deeds, and the organization is on extremely solid ground as a result,” the organization stated in the section that was removed.

Brace has not returned repeated telephone calls made by the BDN on Monday and Tuesday.

Crane said Tuesday that United Mid-Coast Charities will move forward even though there will be bumps in the road.

Bailey said discovery of the embezzlement has touched off a discussion by the board about its policies and procedures.

“The truth is though that there is no foolproof system. A system ultimately depends on trust, and they had someone they trusted,” Bailey said.

He said regular audits had been done but had turned up no problems.

The Camden-based nonprofit organization’s latest publicly available filing with the IRS stated that its total revenue in 2012 was $308,000, which included $226,000 in donations, with the remainder being miscellaneous revenues, including investment income. That year, the organization handed out more than $330,000 in grants.

The largest beneficiaries of United Mid-Coast Charities’ grants in 2012 were Broadreach Area Childcare Services in Belfast, which received $40,000; the Penobscot Bay YMCA in Rockport, $32,000; and the Waldo County YMCA in Belfast, $25,000.

The organization’s net assets totaled $1,566,000 as of Sept. 30, 2012.

Brace is founder and president of Brace Management Group Inc. of Camden, according to filings with the Maine secretary of state. He has served on local boards over the years and was named Townsperson of the Year in 2005 by the Camden-Rockport-Lincolnville Chamber of Commerce. He ran unsuccessfully in 1984 as a Republican candidate for the state Senate to represent Knox County, being defeated by Democrat Jean Chalmers.

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