BANGOR — Former Chelsea selectman Carole J. Swan and her husband, contractor Marshall Swan, pleaded not guilty Thursday afternoon to a series of federal offenses.
The Swans were arraigned about 30 minutes apart in separate hearings by Magistrate Judge Margaret Kravchuk in U.S. District Court in Bangor.
Carole Swan, 53, of Chelsea was indicted by a federal grand jury on Feb. 29 on 17 charges including three counts of extortion, 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.
Carole Swan was accompanied by her attorney, Leonard Sharon, and she responded to the judge’s questions in a steady voice.
Marshall Swan was represented by attorney Walter McKee.
The Swans are free on personal recognizance with conditions that they do not violate any laws and that they avoid contact with any potential victims or witnesses in the case.
The only named individual in Carole Swan’s case was Whitefield contractor Frank Monroe, Sharon said.
Assistant U.S. Attorney Donald Clark told the judge that in light of the tax and federal program fraud charges, his concerns about Marshall Swan involved contact with “86 individuals and corporations from which he received income.”
Clark said it could include people from the Federal Emergency Management Agency and the Maine Emergency Management Agency who dealt with the Windsor Road culvert project as well as people who worked for the town of Chelsea and were involved in awarding contracts.
“We’re obviously not trying to trick the defendant here,” Clark said. “We believe that (the defendant) should avoid contact with individuals who were selectmen, town managers, and employees of the Town of Chelsea from 2005-1010. It is the intention to prevent any coercion or intimidation of victims or witnesses.”
McKee said he might file to amend the list on behalf of his client.
“He still runs a contracting business in Chelsea,” McKee told the judge.
Kravchuk put both cases on the May trial list, but said she would agree to allow attorneys more time to prepare after Clark told her there were “hundreds of thousands of pages of discovery.”
The charges stem from actions during five years and were investigated by five federal agencies as well as the Kennebec County Sheriff’s Office.
The charges as listed in the indictment:
* Hobbs Act extortion: Three counts involve Carole Swan’s role as a 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 2011.
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 during a five-year period. The indictment lists the following unreported 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 says.
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 taking $396,880 from the Windsor Road Culvert Project 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 allegation, the government seeks a forfeiture of property from the Swans of at least $396,880 of the proceeds from 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.
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