Charges include defrauding FEMA, not reporting income
By Betty Adams
Former Chelsea selectwoman Carole J. Swan faces federal extortion charges, and she and her husband are both accused of working together to defraud the Federal Emergency Management Agency of money and failing to report more than $600,000 in income to the Internal Revenue Service.
Staff file photo by Andy Molloy
SWAN CASE TIMELINE
• August 2010, a Kennebec Journal investigation into contracting practices of Carole Swan, chairman of Chelsea Board of Selectmen, finds she may have violated town ethics and contracting rules by erroneously declaring town jobs emergencies and billing them in increments less than $10,000.
• Feb. 10, 2011, Swan is arrested on charges of aggravated forgery, theft and improper compensation for services charges; bail conditions ban her from being at the Town Office.
• June 30, 2011, Swan’s 19-year tenure as selectwoman ends after her term expires.
• July 27, 2011, Swan is indicted on the charges.
• Aug. 5, 2011, she pleads not guilty.
• Feb. 29, 2012, Swan is indicted in federal court on 22 charges, including extortion and tax fraud. Her husband, Marshall Swan, is indicted by the same grand jury on 10 counts of tax fraud and defrauding a federal program.
Swan, 53, of Chelsea, was indicted Wednesday by a federal grand jury in Portland on 22 separate charges.
Her husband, Marshall Swan, 54, also of Chelsea, a contractor who did a lot of road work for the town, was indicted on 10 separate charges.
In announcing the federal indictments on Thursday, Assistant U.S. Attorney Donald E. Clark said the case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service, the Office of Labor Racketeering and Fraud Investigations and the Offices of the Inspector General in the Department of Homeland Security, U.S. Department of Labor, and the U.S. Postal Service, as well as the Kennebec County Sheriff’s Office.
An indictment is not a determination of guilt, but an indication there is enough evidence to proceed with formal charges and a trial.
Carole Swan’s federal indictment has long been anticipated. She was indicted in state court last July on charges of aggravated forgery, attempted theft and two counts of improper compensation for services, and her attorney, Leonard Sharon, said afterward that he expected her to be indicted by federal authorities.
On Thursday, Sharon said he had not yet seen the indictment but had been in contact with the federal prosecutor’s office to learn about the charges and “the crux of the evidence” against Carole Swan.
“Our investigation of the case has been going on since Carole’s arrest last year on the state charges and recently expanded when Don (Clark) made me aware of the extended nature of the investigation,” Sharon said. “We will continue to investigate with the intention of defending the matter at trial.”
There were previous hints of an investigation into Marshall Swan and his business activities, but the first formal charges against him came in the federal indictment on Thursday. Walter McKee, the attorney representing Marshall Swan, said he was still reviewing the indictment.
“Clearly this is a complicated case that will take a great deal of time to sort out,” McKee said.
Marshall Swan is scheduled to be in U.S. District Court in Bangor at 3 p.m. Wednesday.
Carole Swan is scheduled to be in Kennebec County Superior Court on Tuesday at 1:30 p.m. on the four state charges, to which she has pleaded not guilty.
Alan Kelley, acting district attorney in Kennebec County, said the state charges could be dropped soon. Carole Swan has a hearing in federal court 2:30 p.m. on Tuesday, March 13.
“It appears that the federal charges do supersede the state charges, and once Carole Swan has made her appearance in federal court then we will make decision about the dismissal,” Kelley said Thursday. “It will certainly be my intention to keep the state charges pending until she’s appeared in federal court and bail has been set.”
Both Carole Swan and her husband were summoned to court and not arrested on the federal charges.
The federal charges
Here is a detailed look at the charges against the Swans as outlined in the indictment in U.S. District Court:
* Hobbs Act extortion: These counts involve Carole Swan’s role as selectwoman “who had decision-making responsibility for awarding and paying for services contracted by Chelsea.”
She allegedly demanded kickbacks from Frank Monroe Construction in exchange for town contracts. She is accused of receiving or seeking extortion money on three different dates: $3,000 on Jan. 21, 2010; $7,000 on Dec. 3, 2010, and $10,000 on Feb. 3, 2011.
Monroe, a plow contractor from Whitefield, told investigators in February 2011 that he had paid Swan $3,000 and $7,000 on separate occasions in 2010, and was being asked to inflate a bill for road sand so Swan could receive $10,000 more during the first week of February.
Kennebec County Sheriff’s Office deputies then set up and recorded a sting in which Monroe paid Swan an undisclosed sum in marked bills. Kennebec County Sheriff Randall Liberty said Swan was later arrested with the cash in her car and admitted to the scheme in a subsequent police interview.
* Tax fraud and false statements: Carole and Marshall Swan are accused of signing tax returns that under-reported their income over a five-year period. The indictment lists the following amounts and tax years: $190,435 for 2006; $72,820 for 2007; $178,753 for 2008; $164,068 for 2009; and $70,039 for 2010.
* False statements to get federal worker’s compensation: Carole Swan is charged with making false statements between July 2008 and May 2011 to get more than $1,000 in payments annually.
Swan denied being employed or self-employed the 24 months before July 28, 2008, “when in truth and in fact, as she well knew, she failed to report her ownership interest and her active participation in the operation of Marshall Swan Construction and a harness horse racing business, and her activities on the Board of Selectmen for the town of Chelsea.”
The indictment alleges that Swan wrote on those forms in April 2009, May 2010, and May 2011, that “I do not work, I cannot work, I cannot even clean my own house or blow-dry my hair.”
She is also accused of under-reporting the hours she worked as selectman during those years and, in 2011, of failing to report $17,000 that she extorted or attempted to extort from Frank Monroe Construction.
The Federal Worker’s Compensation Program covers federal and postal workers, and at one point Carole Swan drove a local route for the U.S. Postal Service, according to former selectman Sharon Morang.
• Carole Swan is charged with obtaining $396,880 from the Windsor Road Culvert Project — a repair project following a 2007 Patriots Day storm — for Marshall Swan Construction, which she co-owned. Part of that, the indictment alleges, came from deceiving town employees and officials and other potential bidders on the project that the true cost was $130,000, when it was only about $58,000. Money for the project came from the Federal Emergency Management Agency.
• Marshall Swan is charged with aiding and abetting Carole Swan in getting the culvert job for Marshall Swan Construction and being deceitful about the true cost.
• In a final charge, the government seeks a forfeiture of property from the Swans of at least $396,880, of the proceeds of the federal program.
Maximum penalties against Carole Swan range from three to 20 years per charge, with fines up to $250,000. Marshall Swan faces the same penalties, except his charges carry maximum prison penalties of up to 10 years.
Betty Adams — 621-5631
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