CAMDEN — The FBI has been interviewing people as an investigation into the alleged embezzlement of $3.8 million by former charity president Russell “Rusty” Brace continues with one official saying that action on the case could come within the next few months.

One woman says the alleged long-term theft by the prominent businessman already has cost the company she bought earlier this year from Brace and his wife, Becky.

Tammy Swasey-Ballou has decided to shut down the KAX Office Center, which she purchased on July 1. The business will move out of the Brace-owned building on Elm Street in Camden on Nov. 21 and will officially close Nov. 30, she said.

“I’m cutting my losses,” Swasey-Ballou said this week.

Swasey-Ballou’s attorney Christopher MacLean said Thursday that he is negotiating with Rusty Brace’s attorney and a settlement is pending in the civil suit his client filed against Brace on Oct. 3.

The announced closure of KAX, which provides bookkeeping, accounting, payroll and other services, was linked to backlash from Brace’s alleged embezzlement of donations intended for United Mid-Coast Charities Inc. over the past 13 years. United Mid-Coast was KAX’s largest customer.

Becky Brace had approached Swasey-Ballou in February and asked if she would be interested in buying the business, the lawsuit states. Swasey-Ballou said she saw the acquisition as an opportunity to expand her existing bookkeeping business.

Swasey-Ballou claims in her lawsuit that Rusty and Becky Brace misrepresented the strength of the business and that the embezzlement accusations made against Rusty Brace only three months after she bought the company led to the loss of accounts and a sharp decline in revenues.

A motion was filed on Swasey-Ballou’s behalf to have the court place a lien of $125,000 on Brace’s properties to recover the $60,000 purchase price and $75,000 in lost potential profits. District Judge Susan Sparaco denied that request on Oct. 6, however, saying that there were “only conclusory allegations of defendant’s misconduct at UMCC and not specific facts sufficient to warrant a finding that the defendant engaged in the fraudulent conduct alleged.”

A day later, however, Superior Court Justice Daniel Billings approved a request by United Mid-Coast Charities in its civil lawsuit for a $3.8 million attachment on Brace’s properties. Billings ruled that it was more likely than not that the charity could prove that Brace had committed the theft.

According to an affidavit filed with the organization’s lawsuit, new Mid-Coast Charities Board President Stephen Crane discovered the embezzlement in September after talking to a donor whose large contributions could not be found among the charity’s financial records. Crane said that when he confronted Brace on Sept. 25 about his discovery, Brace admitted to the embezzlement.

Brace served as volunteer president of the charity from 1997 until August of this year, when he retired. The charity maintains that Brace began embezzling in 2001 and continued his thefts up until he retired.

Brace has not yet been charged with any crime, though both Crane and Swasey-Ballou have said they have been interviewed by the FBI.

Swasey-Ballou said she met with an FBI agent at her attorney’s office a few weeks ago. She said the investigator was interested in where UMCC’s financial records were kept but she has not heard from the agency since.

Brace is accused of soliciting donations for the charity but then depositing some of the checks he received directly into his account at the First Bank N.A., leaving no paper trail in the charity’s financial records.

The charity’s lawsuit alleges that Brace has admitted to taking numerous, and sometimes large, checks earmarked for United Mid-Coast Charities and depositing them in his accounts at The First N.A. bank, including one labeled UCRC Char Fund and another called Brace Management Account. Those bank accounts have been frozen and liens have been placed on his downtown Camden commercial building, as well as his homes in Rockport, Washington and Rangeley.

Crane said Wednesday that he has spoken with the FBI on the telephone and that the investigation is not yet complete. He said there may be more information coming out in three to four weeks.

Brace has not commented publicly on the matter.

His attorney Peter Detroy, who has acknowledged that the FBI is investigating his client, anticipates that the criminal investigation will be completed in as little as two months and no later than six months. He said that one thing that slows down a federal investigation is when it involves possible tax fraud issues. He said all such tax cases must be reviewed by the Department of Justice in Washington.

Despite the involvement of more than one federal agency, Detroy said the case should be settled within the next few months, given the fact that Brace has “owned up to a lot of what has been alleged.”

In regard to the charity, Crane said banker Jack Williams is working with a consultant to come up with recommendations on how UMCC can change its procedures to assure that financial misconduct would not recur. The package of recommendations is expected to be presented to the board in mid- to late December, Crane said.

Since the news came out about the alleged embezzlement, public support for the charitable organization has remained strong, Crane said. He said UMCC recently received a $50,000 matching grant.

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