LISBON – Former Lisbon economic development director Daniel Feeney has been cleared of a charge that he stole more than $32,000 from a town program he once headed.

At least temporarily.

The state dropped a charge of theft against the 56-year-old North Yarmouth man six months after a grand jury indicted him.

Feeney’s lawyer, Thomas S. Marjerison, said findings from a handwriting expert cast doubt on the case, prompting prosecutors to drop it.

“Basically, the investigation found that my client was telling the truth,” Marjerison said.

District Attorney Norman Croteau disagreed with that assessment. He said an investigation into the matter was still ongoing through the Attorney General’s Office.

“The matter was dropped without prejudice,” Croteau said. “That means we reserve the right to bring the matter back for presentation to the grand jury for prosecution.”

Feeney did not return a message seeking comment Tuesday night.

He 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 Lisbon businesses. Feeney resigned in April 2007 to take a job as economic development director in Topsham. He resigned from that job less than a month later.

At the start of the year, police accused Feeney of giving $32,500 in Intermediary Relending Program 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 early in the investigation.

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

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 in April on a charge of theft, a felony that would have carried a five- to 10-year prison sentence.