LEWISTON – City and federal officers are investigating a prominent Twin Cities developer for possible fraud stemming from alleged misuse of federal money.

City officials confirmed Tuesday that Travis Soule, 45, of New Gloucester, may have misused federal money earmarked for replacing furnaces in three Pine Street apartment buildings by allegedly forging the heating contractor’s name to endorse at least two checks totaling $50,000.

When Soule failed to make payments on the loan, city officials discovered in February he had transferred ownership of the three Pine Street buildings to local landlord Joseph Dunne.

The federal inspector general in New Hampshire is investigating the case for the U.S. Department of Housing and Urban Development. Once that investigation is complete, the case could be turned over to the U.S. Attorney’s Office for possible prosecution, City Administrator Jim Bennett said.

A detective at the Lewiston Police Department is conducting an investigation at the local level and Soule has been interviewed by police. No charges have been filed against him.

Soule’s rehabilitation project at the Pine Street buildings began during the summer of 2007 when he tapped the city for money under HUD’s HOME program, aimed at improving availability of affordable housing. That winter, he allegedly solicited estimates for replacing the furnaces in all three buildings, and submitted paperwork to city officials the following spring. The city cut at least two checks, one for $40,000 and one for $10,000, for furnaces and labor – payable jointly to Soule and the hired contractor – drawing on federal money through the HUD program.

One of the checks was issued for upfront costs and equipment, said Jim Andrews, the city’s director of Economic and Community Development. The other check was based on invoices Soule had submitted to city officials, Andrews said.

The contractor’s signature was forged, sources said, and Soule allegedly cashed the checks and kept the money.

The city’s practice of issuing two-party checks is aimed at preventing building owners from simply pocketing public money without making the promised improvements, Andrews said.

“There were two signatures that were on the checks,” the authenticity of which may be in doubt, according to Bennett.

Those transactions weren’t discovered until months later when the city was seeking to collect on the loan, which was in default. The city held secondary mortgages on the buildings located at 176 Pine St.; 191-193 Pine St. and 200 Pine St., which Soule had signed over in June 2008 – along with many other properties – to Dunne for a total of $3.3 million. Dunne apparently assumed the primary mortgages on the Pine Street buildings, city officials said.

The city hadn’t been notified of the transfer of property and hadn’t agreed to let Dunne assume its secondary mortgages. Nor had the city been paid back for those loans, Andrews said.

Dunne, who declined to talk to the Sun Journal about this story, told the newspaper last year that in his deal with Soule he had assumed some loans. According to city officials, that did not include loans for furnace replacement on the Pine Street properties.

City safeguards

Andrews said he had never come across a similar case involving public money during the 16 years he has worked for the city, nor during his decades in public service with the Maine State Housing Authority or in Florida, where he also worked in the housing field.

Although city officials hadn’t found any irregularities in connection with other properties owned by Soule, they would continue to review their records, they said.

Bennett said he believes there was nothing city officials could have done differently to avoid the situation, based on the two-signature requirement already in place.

He asked that auditors review the transactions with Soule to assure city officials its policies and procedures are sound.

City inspectors usually review work for which they provide money, Bennett said. But in this case, the properties were sold without their knowledge.

Soule projects

A longtime Twin Cities developer, Soule has had a hand in a string of projects, from affordable housing to high-end condominiums.

In 2007, he owned about 30 properties in the area. Several years ago, Soule struck a deal with the city to redevelop the site of the former Libbey Mill, the Cowan Mill and the former CMP building and substation at 134 Main St. The so-called Island Point project promised to include a major-chain hotel and other commercial enterprises. That $30 million project, in the works for years, fizzled in 2007. A joint development agreement with the city expired when Soule could not secure financing.

The city is now working with a different developer for that property, Bennett said.

Soule has operated his development business under several names, including Solo Properties, LA Italian Properties and Pine Properties.

In January, tenants at a Bartlett Street building owned by Soule complained repeatedly that their apartments had no heat because the furnace kept running out of oil. One of the tenants said she called Soule several times, but he was unresponsive, she said. Soule later explained that the outage resulted from a mechanical failure and that he had hired a new manager to oversee the building.

He ran afoul of the law last year when he was arrested on a drunken-driving charge when police stopped him near the Island Point site. It was Soule’s third drunken-driving arrest since 1996. He first arrest was in Portland for driving 100 mph and crashing an Oxford Plains Speedway-owned vehicle, where he worked as a security guard.

He was arrested again in February 2005, after a series of crashes in Lewiston, and served 14 days in jail in 2006.

Soule was sentenced to serve 12 days in jail on the most recent conviction and his license was suspended for 18 months. A charge of driving without a license was dismissed.

The phone at Solo Properties has been disconnected, and Soule did not return messages left by phone and e-mail.

Sun Journal staff writer Scott Taylor contributed to this report.