Fall from grace: Prominent Rockport businessman, head of charity under investigation for embezzling $3.8 million

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CAMDEN — Russell “Rusty” Brace was a prominent and trusted businessman for more than half a century and at one time oversaw a media conglomerate that included television and radio stations as well as magazines.

His business operations also made him the type of person sought by nonprofit organizations to serve on their boards of directors. For decades, Brace served on a variety of boards, becoming particularly known for his affiliation with the United Mid-Coast Charities of Camden.

But in September, a month after Brace ended 17 consecutive years as volunteer president of United Mid-Coast Charities, organization members determined that Brace had stolen $3.8 million from donors. Those dollars had been earmarked for other charities in Knox and Waldo counties, such as Meals on Wheels and child care agencies.

Brace’s legacy is now being scrutinized by the community he has been such a big part of and the charity that he had overseen has filed a civil lawsuit seeking the money that was allegedly taken. Brace has not been charged with any crimes but United Mid-Coast Charities has passed along its findings to the FBI.

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Stephen Crane, the newly elected board president for the charity, said he was stunned by what he uncovered about Brace.

“Everybody in the community knew him or knew of him in the past 25 years,” Crane said.

Crane said he uncovered the embezzlement three weeks ago — only a month after taking over as board president — when he approached a donor, asking for a contribution to the charity. The person informed Crane that he had already made three donations earlier in the year totaling $75,000. There were no records of those donations, however, with United Mid-Coast Charities. The donor’s canceled checks showed that they had been deposited in Brace’s Brace Management account at the First, N.A. bank in Camden, according to an affidavit filed with the civil lawsuit. A review of those bank records showed that since 2001, Brace had diverted $3.8 million in donation checks to his account, the suit asserts.

Crane said Thursday that when he and new board treasurer Eric Belley met with Brace on Sept. 25 they tried to get an explanation from him.

“He tried to say he was having financial difficulties with one of his companies,” Crane said.

While Brace admitted to the theft, at no time during the conversation did he apologize, Crane said.

The 81-year-old Brace is a Rockport resident who was born in Central America, where his father worked in the U.S. diplomatic service. After his family moved to Maine, Brace grew up here before serving in the Korean War. He graduated from Dartmouth College in Hanover, New Hampshire, in 1956 with a degree in government.

After college, Brace returned to take over from his father Journal Publications, which included a small magazine called Maine Coast Fisherman. The company would later acquire The Republican Journal newspaper based in Belfast. Journal Publications also later purchased National Fisherman, which was then a small New Hampshire magazine, merged it with Maine Coast Fisherman and turned National Fisherman into a nationwide trade journal. The company also acquired a trade show business called Fish Expo.

Brace’s uncle was former Maine Gov. Horace Hildreth, who owned Diversified Communications, with assets that included radio and television stations, including WABI-TV in Bangor and WAGM-TV in Presque Isle.

Diversified Communications and Journal Publications merged sometime around 1970 and Brace was named president of the growing company.

When Brace spoke to the Bangor Rotary Club in August 1975, he told those attending that pay television would soon arrive for eastern Maine thanks to Diversified Communications.

Brace also served on the Maine Management and Cost Cutting Survey commission along with future governor James Longley from 1973 to 1974. That commission came up with recommendations for cutting state government costs which were largely ignored by the Legislature, prompting Longley to run and win the governorship in 1974.

Among the various boards he also served on at the time, Brace was president of the Penobscot Bay Medical Center board of trustees in the late 1970s.

Brace began to experience a series of business setbacks in the 1980s. In 1981, he was edged out of Diversified Communications by the next generation of the Hildreth family.

After he acquired New England Publications, its outdoor magazines did not fare well and he ended up selling them, leading to the loss of jobs in Camden in 1984.

Unfortunately for Brace, the demise of that business occurred while he was running as the Republican nominee for the state Senate to represent much of Knox County. His challenger that year was Democrat Jean Chalmers, who faced a daunting challenge, as Knox County had not elected a Democratic senator in more than 50 years. But the layoff of workers from the magazines scuttled Brace’s campaign, which had emphasized his business background and his pledge to create jobs in Maine.

One Brace supporter, who wrote a letter to the editor to the Camden Herald on his behalf during the 1984 campaign, stated that Brace’s business expertise was extensive and that he provided counsel to top officials such as the president of the University of Maine and the president of Key Bank.

Along the way, Brace started Brace Management, which managed properties in Hanover, New Hampshire, as well as locally. The company has been based out of his 21 Elm St. office building in downtown Camden for more than 40 years.

Brace Management acquired the Center for Creative Imaging in 1993, which was formerly the Kodak Center in Camden. A former business associate, who asked not be identified because of the current controversy, said that this purchase was not a good fit for Brace, whose strength was not the new technology. He pointed out that Brace still has no cellphone and prefers to use a manual typewriter.

Not long after he acquired it, the center closed in August 1994, with a Brace company officer citing unsustainable financial losses. The previous fall the company had employed as many as 45 part- and full-time workers.

Brace also started Maine Coast Photo and Digital Inc. in 1992 at about the same time that photography was converting from film to digital. The company would eventually close stores that he had opened in Camden, Rockland, Belfast, Damariscotta and Brunswick.

In 1997, Brace joined the board of United Mid-Coast Charities and served as its president for the next 17 years. There are no paid staffers in the organization, which is run by the board of directors, who are all volunteers. The board has room for 45 directors, but currently has 43 members.

The charity’s lawsuit against Brace points out that his role as board president included receiving large donations which were intended to benefit more than 50 other agencies to support children’s services, medical care, community services and education programs in Knox and Waldo counties.

In an online letter to the community late last month, Crane assured residents that the organization would honor its 2014 commitment to those agencies. According to Crane, the charity on Thursday handed out this year’s contributions, totaling $330,000, to more than 50 organizations.

While he was president, Brace’s photograph often was published in local newspapers as he handed out United Mid-Coast Charities awards to local organizations. His service to United Mid-Coast was cited when he was named Townsperson of the Year in December 2005 by the Camden-Rockport-Lincolnville Chamber of Commerce.

A longtime friend and former longtime employee of Brace, Dave Jackson of Rockport said he enjoyed working for Brace.

“He has been a friend for nearly 50 years and I find this completely out of character for him,” Jackson said.

Federal investigations into financial wrongdoing can take a year or more before criminal charges are filed, if at all. A judge this week, however, approved liens being placed on Brace’s properties and bank accounts, saying that United Mid-Coast Charities was more likely than not to win its civil case and receive the damages it sought.

Brace Management owns the downtown Camden office building assessed at $1,647,000, Brace and his wife, Rebecca, also own a home in Rockport that is assessed at $775,000, a home in Washington valued at $320,000, and a home in Rangely valued at $256,000.

Brace has not responded to repeated telephone requests for comment from the BDN. His attorney Peter DeTroy of Portland would not comment on specifics other than to say that Brace and his family recognize the seriousness of the allegations.

DeTroy has a little more than two weeks to file a response to the charity’s civil lawsuit.

As far as the charity is concerned, United Mid-Coast Charities is trying to operate as normally as possible while moving ahead with fundraising efforts.

Dennis Bailey, who has been contracted by the United Mid-Coast Charities board to handle media relations, said this week that the board is looking at changing procedures, including requiring two signatures when financial transactions are made.

Meanwhile, the head of another nonprofit organization in Knox County spoke about the impact the alleged theft has had.

“We are all saddened and shocked by the news that money was embezzled from UMCC by a man we all knew, or thought we knew, and trusted,” said Muriel Curtis, director of Station Maine, which offers boating opportunities and seamanship education at no charge to youths in the midcoast area. Station Maine has been one of the beneficiaries of United Mid-Coast Charities grants.

“We want to point fingers and cast blame,” she said. “Maybe if they had been more attentive … Maybe if they had triple-checked … Maybe if they had been less trusting, perhaps less human, we might have seen this coming. But the coast of Maine is a very small town. We are all that trusting.

“Our neighbors at UMCC have had their name sullied,” Curtis added. “They rallied and decided first and foremost to support the charities which depend on them for that support. I, for one, appreciate the work that they do for Station Maine, my own organization, and for the many other organizations who enjoy their help. I hope that we will all continue to support these generous volunteers through this setback and help UMCC carry on its good work for generations to come.”

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