During last Thursday's town council meeting, Atlee Goodwin discussed his concern about a potential conflict of interest relating to councilors simultaneously serving on the board of MAGIC.
"You've been voted in by the people of the town to serve the town on this council, to do the best job you know how," said Goodwin. "And I feel that you should decline your vote or withdraw from MAGIC, or withdraw from the council."
In response, Councilor Polstein suggested, "Perhaps what we need, once again, is a sort of a civics lesson on what a conflict of interest is and what the triggers for it are."
Polstein proposed that Attorney Dean Beaupain be asked to address the council and the public to speak to the conflict of interest statute.
Not a bad idea. The town's attorney, Dean Beaupain, should have a good understanding of conflict of interest issues.
Does anyone remember American Boat Builders? A year ago, a man by the name of Frank Kristan and his partner, Jim Montgomery, came to the town and to MAGIC, looking for funding, indicating that they were interested in manufacturing the Avenger Boat line of military seacraft in Millinocket, and promising that their operations could employ as many as 2,600 people within five years, paying salaries ranging from $10 to $20 per hour.
It took less than two hours on the Internet to find that a Frank Kristan had been the CEO of CyberSentry, a multi-million dollar company that went bankrupt amidst allegations of corruption and security fraud; that a Frank Kristan had been named as a defendant in a securities violation suit in a U.S. District Court in Florida; and that a Frank Kristan had been involved in several start-up companies that, after an investment of loads of money, never started up.
I wasn't certain that it was the same man, but I had certainly found enough to give pause. At the time, it appeared that they were only looking for a $50,000 loan agreement from the town, and the Frank Kristan I learned about over the Internet had been involved in multi-million dollar scams, so I wasn't certain that they were the same Frank Kristain, although so many of the pieces had fit together that I was fairly sure that they were.
I didn't realize at the time that MAGIC was working frantically, trying to get him another $8 million. Without so much as doing a simple search on Google, Bruce McLean had set up appointments with Representative Michael Michaud, Senators Susan Collins and Olympia Snowe, and Governor John Baldacci.
With MAGIC's urging, Senator Collins undertook a high priority project under the Homeland Security Act to fund the Avenger Boats training initiative, at a proposed cost of $3 million.
After a meeting between Dean Beaupain, Gene Conlogue, Bruce McLean, Frank Kristan, and Jim Montgomery, and Jean St. Pierre, Business Development Coordinator with the Department of Community and Economic Development in Augusta, a letter was sent by Beaupain to St. Pierre, requesting assistance in obtaining $8 million in loans, with $5 million slated for the building, $2 million for equipment, and $1 for working capital.
Beaupain sent a letter to Robert Small, Commercial Loan Officer, of the Finance Authority of Maine, asking for its assistance in obtaining $8 million for the start-up company.
From the letters, obtained through the freedom of information act, it is difficult to determine whether Beaupain was speaking for the town, the company, or MAGIC, as, strangely enough, he was representing both the town and the company, while serving on the board of MAGIC and acting as its attorney.
MAGIC busily contacted people at the USDA/Rural Development, DECD, EMDC, USDA, and others who might be able to help find financing for American Boat Builders.
Apparently, Kristan and Montgomery were seperately seeking financing for their start-up company, as McLean had to ask that they go through his office for any funding efforts.
"Any duplication of effort on a fast-track project like this is going to cause it to break down and waste valuable time," McLean says in an email to Kristan and Montgomery.
As we were to learn later, and as I had already figured out, the biggest part of the problem was that the town and MAGIC had both put an $8 million dollar deal on a fast-track without bothering to check it out first.
While everyone was hard at work trying to find $8 million for these people, no one had bothered to find out who these people were. No one, seemingly, had so much as entered their names into a search engine on the Internet.
On March 12, 2003, Gene Conlogue, Bruce McLean, and Dean Beaupain met with Governor Baldacci. The following day, the town council voted to approve a Community Development Grant Revolving Loan Fund in the amount of $50,000 to American Boat Builders, Inc. Councilor Polstein suspected that something might be wrong, apparently, because his was the sole vote against extending the loan.
Strangest of all, while the town's attorney was working on the loan agreement between the town and American Boat Builders, Inc., Beaupain says, in a letter to Conlogue, that "Bruce and Don stopped by while I was working on these documents and had a number of suggestions which I have done my best to incorporate," and specifies which parts of the loan agreement were changed as a result of suggestions by McLean and McNeil.
In a subsequent letter, Beaupain confirms that the "Bruce and Don" that he was referring to were Bruce McLean and Don McNeil.
Former Councilor Gordon McCauslin tells me that Councilor Polstein said that he had been present at that meeting as well, but I have found nothing in writing confirming this.
Beaupain also says of McLean and McNeil, "They have not seen the attached documents so I am sending them copies and maybe the four of us can get together at my office or yours this morning at your convenience."
The "attached documents" include the loan agreement between the town of Millinocket and American Boat Builders, Inc. MAGIC was not a party, nor were Bruce McLean or Don McNeil.
This is where the conflict of interest comes in, if indeed there is a conflict of interest.
The town of Millinocket asked Dean Beaupain to draw up the loan agreement for the purpose of extending a CDBG Revolving Loan to American Boat Builders. The contract was between the town and the company, with Beaupain representing both entities.
Then, McLean and McNeil, the director and president of MAGIC, are invited to review and suggest changes which were incorporated into this loan agreement, to which MAGIC was not even a party.
In defense of his actions, after complaints were raised by some members of the council, Beaupain says in a letter to Conlogue, "I believe that MAGIC is an integral part of our future and that we no longer have the luxury of 'going it alone'."
When Beaupain invited McLean and McNeil to assist in drawing up a loan agreement for the town of Millinocket, was he acting as the attorney for the town of Millinocket, as an attorney for American Boatbuilders, as MAGIC's attorney, or as a member of the board of MAGIC. And who did he bill for that one?
The fact that he has a positive opinion of MAGIC, on whose board he sits, does that override his responsibilities toward the town as its attorney in this matter?
I'm asking the question, not suggesting an answer.
I agree with Councilor Polstein when he suggests that Beaupain be invited to explain "conflict of interest" to the council. While he is there, perhaps he can explain "interference with a contract" and "incompatibility of office."
I'm not a lawyer, I don't even play one on TV, and I don't know if any actual laws have been broken, but if there isn't anything wrong with this situation, there should be.