NORWAY — A woman who is serving time in prison for milking the state’s MaineCare program of $4 million has declared bankruptcy.

The Maine Attorney General’s Office had no comment Thursday on how it would recover the stolen money.

Dawn Solomon, a Norway-based health care provider, was indicted on charges of stealing from MaineCare earlier this year and began serving 42 months in state prison in June. The U.S. Bankruptcy Court in Portland allowed the personal debts of Solomon to be discharged last week. She was granted Chapter 7 bankruptcy relief on Aug. 15.

She also has filed for bankruptcy for her real estate holding company, New Horizons Investment LLC. She owes more than $1.8 million in secured and unsecured debts, said her attorney, Jeffrey P. White of Portland.

Brenda Kielty, spokeswoman for the Maine Attorney General’s Office, said “restitution would not be dis-chargeable” under the bankruptcy proceedings, but she repeatedly declined to comment when asked how the money would be recovered.

The Chapter 7 action was filed May 5, about a month before Solomon began serving her sentence at the Maine Correctional Center in Windham. At the same time, she filed for bankruptcy for New Horizons Capital Investment LLC. That action is pending before the Portland bankruptcy court.

Solomon is claiming $1,777,000 in secured debts and $63,500 in unsecured debts, White said.

“The lenders have filed foreclosures on the properties they hold as collateral,” he said. “All other legal action has been stayed by the bankruptcy.”

Solomon and the company owned a dozen or so properties in the Norway-Paris area, including a $1 million lake-shore property in Harrison that is going on the auction block on Tuesday, Aug. 30.

The property at 90 Zakelo Road is one of 10 owned by Solomon in Norway, Paris and Harrison that have gone to lender-ordered auctions since March. Each property is listed under the ownership of either Dawn Solomon, Dawn and Harvey Solomon, Dawn Cummings (her maiden name) or New Horizons Capital Investment LLC.

Solomon operated the Living Independence Network Corp. in Norway, which provided behavior management and physical and social development services to children with mental disabilities.

The Maine Attorney General’s Healthcare Crimes Unit began unraveling her overbilling scheme last year after a state audit raised red flags in September 2009. Prosecutors say the fraud dated to 2006, with $87,000 in false billings per month, before growing to an average of $134,000 per month in 2008.

The Solomon waterfront property on Long Lake sits on 7.2 acres with 435 feet of frontage on the eastern shore of the lake. The home is in various stages of completion and rehabilitation. The property is assessed by the town of Harrison at $1,041,000, with $696,900 value in land and $344,300 value in the house, according to town records.

The Solomons owe the town of Harrison more than $20,000 in back taxes, including $9,920 from 2010 and $10,256 from the current year’s taxes, which were mailed Aug. 8. If they are not paid by Sept. 8, interest will start accruing. If the 2010 taxes are not paid by next February, the town would foreclose on the property, according to town officials. The taxes will be the responsibility of the new owner if the house is sold.

The auction begins onsite at 11 a.m. Tuesday.

ldixon@sunjournal.com

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