A grand jury has indicted a former Lisbon economic development director on a charge of stealing more than $32,000 from the town program he was overseeing.

Daniel J. Feeney, 56, of North Yarmouth, served as economic development chief for 18 years and ran the town’s Community Development Block Grant program, which provides grants to low-income homeowners and low-interest loans to needy Lisbon businesses. Feeney resigned in April 2007 to take a job as economic development director in Topsham.

Police say just before Feeney left, he gave $32,500 in CDBG money to Atlantic Commercial Cleaners, a phony business whose listed address was a commercial building at 679 Lisbon St., or Route 196, in Lisbon Falls. The building, which has a garage in the back that is rented for car storage, is owned by Peter Stenberg, who knew nothing about the phony company or the use of his address, police Chief David Brooks said.

Feeney listed himself as a co-owner of the phony business, he said.

“He took the check and supposedly left the building with it and was to hand deliver it to the party,” said Brooks, who was serving as interim town manager last year when Jennifer Stowell Norris, Feeney’s replacement, discovered problems with Atlantic Commercial Cleaners’ CDBG paperwork.

According to Brooks, investigators found Feeney did not tell the town attorney or town council about the loan, as was protocol. They also found that a chunk of the $32,500 was used to buy a soda blaster from Texas, and that soda blaster – equipment that strips paint and cleans surfaces – was then sold to someone else for $19,000.

Investigators don’t know where that $19,000 went, Brooks said.

An Androscoggin County Superior Court grand jury indicted Feeney this week on a charge of theft, a class B felony that carries a five- to 10-year prison sentence.

Feeney declined to comment, referring all questions to his lawyer, Tom Marjerison.

Marjerison said the state made a mistake in charging his client.

“The allegations are not true. Mr. Feeney is going to clear his name through a jury trial,” he said.

Curtis Lunt, who worked with Feeney for 15 years and was Lisbon town manager when Feeney resigned last April, was surprised to learn of the theft charges Thursday. He said he always found Feeney to be trustworthy.

“I’ll be both shocked and disappointed if it’s true,” he said.

Investigators believe someone else – a person not connected to the town – was also involved in the theft, though no one else has been indicted, Brooks said.

The Androscoggin County District Attorney could not be reached for comment Thursday.

Feeney resigned from his job in Topsham less than a month after taking the position. It is unclear where he is working now.