April 07, 2020

Transactions studied in theft trial District attorney says businessman sent thousands of dollars to Canadian girlfriend

MACHIAS – Financial transactions involving a 59-year-old New Brunswick businessman accused of bilking the city of Calais out of thousands of dollars came under scrutiny Friday in Washington County Superior Court during the fourth day of his theft trial.

District Attorney Michael Povich maintained that James Schmidt is a con man.

Schmidt’s attorney, Jeff Davidson of Cutler, said that he’s a businessman and the city is at fault for the mess it’s in.

Schmidt was arrested in November 2005 and charged with eight counts of theft by unauthorized taking and one count each of theft by misapplication of property and negotiating a worthless instrument after he allegedly stole $30,000 from the city’s revolving loan fund.

Around 2004, Schmidt was introduced to the Mi’kmaq Tribe in Newfoundland and they decided to set up a foundation in the United States. He was hired as director of the Wantaqo’ti Foundation, although he no longer is employed by that foundation.

Schmidt came to the state last year to start a business that would help American Indians and others. He met with Calais officials and eventually borrowed $100,000 from the city’s Economic Development Loan Fund to renovate a historic building at 419 Main St. Davidson said the loan was to the foundation, not Schmidt. Of that amount $70,000 was to be used to purchase the building and $30,000 to renovate it. Another $40,000 was supposed to come from the foundation.

Once completed, the building was to be used for retail businesses and upstairs apartments.

The renovations were never completed and in September 2005, police investigated.

Within weeks of starting renovations on the building, Schmidt was accused of failing to pay thousands of dollars to contractors and others. It also is alleged that several checks Schmidt wrote on a local bank bounced.

Povich said that $14,000 of the $30,000 from the loan fund that was supposed to be paid to vendors and contractors was sent to Schmidt’s girlfriend in Canada, while checks paid to contractors were returned marked “insufficient funds.” In September, the bank closed Schmidt’s account.

Davidson maintained that Schmidt was allowed a salary under the terms of the agreement and the money he sent to his girlfriend was his salary.

The girlfriend’s name first came up when Machias Savings Bank representative Siddy Cole testified on Friday that Schmidt appeared at the bank in July to open an account for the foundation and that Schmidt said he wanted the name of his Riverview, New Brunswick, girlfriend added to the signature card. It was never added.

“She never came in,” Cole testified. The only person allowed to write checks on the foundation account was Schmidt, he said.

Povich then reviewed with Cole checks Schmidt sent to his girlfriend over the course of several weeks, including a $5,200 check Schmidt wrote the day he opened the account. Schmidt sent several more checks after that to the woman.

The district attorney questioned Cole about the more than 15 checks written to contractors working on the building that were returned because of insufficient funds. “The bank did not pay them, and people did not get their money,” she said. The account was closed in September.

While cross-examining Cole, Davidson made much of the fact that on the day Schmidt wrote the checks he believed he had sufficient funds in the account to cover them. But Cole suggested that anyone who reconciled their accounts on a regular basis would know differently. The state then rested its case.

During a break in the trial, Davidson then moved for acquittal on all charges. He argued that the state had not proved its case against Schmidt. He said the weekly schedule Schmidt had submitted to the city showed that during the first two weeks he was to be paid a project manager’s salary. But Judge Joyce Wheeler didn’t buy the argument.

She said that although the Revolving Loan Fund bylaws did not specifically say that money should only be spent on renovations, it did say that the money was to be spent to help create jobs for the residents of Calais. Instead, she said, the same day Schmidt opened the account he immediately withdrew money to send to his girlfriend. Wheeler suggested that action did not pass the “straight-face” test.

“He took money when the funds were supposed to be used to create jobs for the people of Calais,” she said. She denied his request.

Sgt. David Randall of the Calais Police Department was the first person called to the witness stand by the defense. Davidson questioned him about his background and training. During testimony, the defense attorney hinted at one of the arguments he may use in his closing today – that it was a conflict of interest for the city’s own police department to investigate a case where the city was the victim.

Schmidt finally took the stand late Friday afternoon but because of the lateness of the hour only talked about his background and the foundation. It is expected that Schmidt will be back on the stand today.

This is not the first time Schmidt has faced criminal charges. In 1992-93, Schmidt was convicted of larceny in another state and sentenced to five years probation, First District Attorney Paul Cavanaugh said in February during Schmidt’s bail hearing.

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