LEWISTON — Former Twin Cities developer Travis Soule has been charged with two federal counts of fraud and embezzlement.
The U.S. Department of Housing and Urban Development Office of Inspector General began investigating Soule’s housing and development activities in 2009 after learning of irregularities in his loan applications for HUD funding to rehab and repair his rental properties.
The charges stem from $180,000 worth of transactions between June 2007 and May 2008 for rehabilitation projects at three Pine Street properties.
According to the federal complaint, Soule solicited estimates from various contractors for rehabilitation of those properties and then filed the estimates with applications to the city of Lewiston for loans under HUD’s HOME program, which is aimed at improving availability of affordable housing for low-income families.
He did this, according to the complaint, knowing that his applications for funding were fraudulent and that the work “for which the funds had been authorized was not done.”
Soule, 47, who lived in New Gloucester during the time of the alleged crimes, now lives in Rockland.
The federal complaint also alleges that Soule embezzled money from the HOME Investment Partnership Program by converting checks and vouchers for his own use or the use of another, including depositing some of the checks into his personal checking account.
In a joint motion, the U.S. Attorney’s Office and Soule’s court-appointed lawyer, Henry Griffin of Lewiston, have filed an extension on the deadline for the federal government to indict Soule. If the motion is granted, the U.S. Attorney’s Office would have until July 1 to work out a deal in which Soule could avoid indictment or trial.
In his affidavit supporting the federal charges, Special Agent Stephen Tufts of the HUD Office of Inspector General, said the cities of Lewiston and Auburn received $574,826 in HUD HOME funds in 2007. Of that amount, Soule received $110,295 in low-interest loans.
He received an additional $69,705 in federal funds in 2008.
To qualify for HOME funding, applicants have to agree to have the city inspect their properties to ensure they are up to code and qualify for funding, and then the property owner submits a loan application for specific work to be done on the property and provides a contractor’s estimate for the work. If the city chooses to grant the loan, the property owner signs a promissory note and the city imposes a mortgage lien on the property.
Then, the property owner is free to contract for the work to be done. Once done, the city is required to inspect the finished work and the property owner then submits an invoice to the city for payment. If the work meets code and the terms of the loan agreement, the city then issues a two-party check, made out to the property owner and the subcontractor.
Soule is alleged to have received checks, forged subcontractors’ signatures, cashed the checks and kept the money for his personal use.
According to Tufts’ affidavit, Jeffrey Maxim, subcontractor and owner of Maxim’s Heating Oil Service and Installation, had performed about $11,000 worth of oil and heating work at Soule’s Pine Street properties, but was never paid for the work. Maxim told federal and local investigators that he provided Soule with an estimate for new boilers at 176 and 191 Pine St., but Soule did not award him the contract and he did not do the work.
However, Soule filed an application for HOME funding for the boilers and received two loans, one for $10,000 and another for $40,802, for the equipment to be installed.
When Soule sold the properties to Joseph Dunne in June 2008, including a $200,000 second mortgage for the outstanding HOME loans, Dunne asked Maxim why the city had issued the checks to replace boilers that were never replaced.
According to the complaint, Maxim examined the $10,000 check issued in November 2007 by the city for partial payment of HVAC materials, but the endorsement signature was not his signature. The second and larger check, issued in January 2008, did not have any endorsement signatures, even though it was cashed.
Soule is alleged to have employed the same scheme in getting loans to paint the properties, by submitting multiple estimates from painting contractor Robert Burns.
According to Burns’ statement to investigators, Soule asked Burns to submit “one bid that would reflect the actual cost of the painting job and an additional inflated bid for the same painting assignment.”
Burns said he expressed his concern to Soule, but Soule told Burns that he had received a low-interest federal loan for the work and had to repay the loan, “so submitting inflated bids was not improper,” according to court records.
Soule applied for loans to pay $21,600 worth of painting work, naming Burns as the subcontractor on all jobs. He eventually paid Burns about $8,000 for the work.
Investigators showed Burns' endorsement signatures on five checks issued jointly to Soule and Burns, but Burns said only one of the endorsements matched his signature.
In the case of loans issued for electrical work alleged to have been done at the property, electrician Jeremy Grahm told investigators that Soule asked him to endorse two checks that had been made out jointly to Soule and Grahm, but that Grahm was never awarded a contract for the work and never completed any electrical work at Soule’s properties.
Of the $200,000 in HUD loans granted to Soule, only $20,000 worth of rehabilitation work was completed at the Pine Street properties, according to court records.
Federal investigators estimate that $75,602 in two party checks issued by the city of Lewiston were deposited in Soule’s personal checking account at Camden National Bank. Another $50,058 in HOME funds deposited in Soule’s business accounts were transferred to his personal checking account, or cashed, almost immediately after the HOME funds were deposited.
When filing the federal charges against Soule, U.S. Attorney Thomas E. Delahanty II also filed a motion to seal the complaint until Soule was arrested.
According to that motion, witnesses told investigators that Soule “intimidates others” and “has an extremely aggressive temper.” Delahanty believed confidentiality of the charges would protect Soule from harming himself or harming law enforcement officers assigned to make the arrest.
When Soule was arrested, he remained in the custody of the U.S. Marshal for two days before posting $5,000 unsecured bond bail.
Soule was required to surrender his passport to U.S. District Court officials, and has been ordered to have no contact with any person involved in the investigation into his case or the prosecution against him.
If convicted, Soule faces up to $500,000 in fines and 15 years in federal prison.
Contacted Wednesday, Griffin had no comment on the charges against his client.
In addition to the federal charges, Soule has faced a number of court actions in the past two years.
In December, an Androscoggin County Superior Court judge ordered Soule to pay a former contractor more than $66,000 for work the man did on Soule’s Stevens Mills condominium development in Auburn.
In 2009, the U.S. Environmental Protection Agency filed complaints against Soule, alleging 51 violations of the federal lead disclosure law. If convicted, he could face more than $500,000 in fines.
Soule is also facing legal action in Cumberland County, including a civil claim by a former partner that Soule mismanaged the pair’s rental properties and diverted thousands of dollars to himself and his wife.
There have also been a number of foreclosure actions on his properties in Auburn and Lewiston.
Staff Writer Christopher Williams contributed to this report.