July 24, 2013

Fraud trial testimony shows Marshall Swan had a booming business

By Betty Adams badams@centralmaine.com
Staff Writer

BANGOR — By all accounts — business, personal — Marshall Swan had a booming business.

The Chelsea man, owner of Marshall Swan Construction, worked for municipal and state governments, small businesses and private individuals, apparently raking in the money as fast as he could shift the ground.

But it wasn’t enough. For 2006–2009, the $2 million income total was outstripped by losses and expenses, according to federal tax returns he filed jointly with his wife, and the Swans paid no federal income taxes.

An Internal Revenue Service agent testified in U.S. District Court Wednesday that defendant Carole Swan, a former Chelsea selectwoman, and Marshall, who filed together, claimed to owe no federal income taxes between 2006 and 2009 and didn’t pay the $2,879 they owed in 2010 when they reported gross receipts or sales of $420,000.

The government accuses both Swans of failing to report an additional $670,000 in income over those years.

Carole Swan, 55, is on trial on those charges as well as charges of defrauding the federal workers’ compensation system and committing fraud in connection with federal program funding for repairs to Windsor Road while she was a town selectman.  

It was the second day of testimony for IRS agent Paul Crowley, and the third day of Carole Swan’s trial.

As Crowley went through five years of the Swans’ 1040 forms line by line, jurors followed on computer screens mounted in the jury box.

Attorneys and court personnel also could see the figures. However, two large monitors for viewing by the public remained black, cut off today at the prosecutor’s request.

On Tuesday, Chief Judge John A. Woodcock Jr. warned U.S. Attorney Donald Clark that some personal identifying information — dates of birth and Social Security numbers for the Swans — had appeared on those screens.

Crowley read numbers aloud in his testimony, showing the Swans had hundreds of thousand of dollars in income from Marshall Swan Construction, their excavating and septic installation business, but most times that was outweighed by losses in Carole Swan’s harness horse-racing business as well expenses for running both businesses, so they claimed to owe no taxes.

For those years, Carole Swan received between $4,000 and $6,000 in connection with her selectman’s post in the town of Chelsea.

On Wednesday 20 people testified, most very briefly, describing the work Marshall Swan did for them from 2006 to 2010 and how he was paid. Few of those people said they knew Carole Swan.
The amounts paid varied.

Lori Andre, a state accounting systems manager, testified that Marshall Swan was paid $1,170  in August 2008 for a quick response to an oil spill and 14 months later was paid $15,759 for contracted delivery of gravel for Camp Keyes in Augusta, the headquarters of the Maine Army National Guard.

Richard Tardiff, president and owner of J.S. McCarthy commercial printing firm in Augusta, paid Marshall Swan $30,000 to move earth for retention pond creation.

John Meehan, a Jefferson contractor, paid Marshall Swan $18,700 in 2007 for ground work for a home.

Andrew Hertler paid Marshall Swan $38,600 to create an 80-by-200-foot riding ring for horses.
Denny Johnson of Augusta paid him $15,500 for earth-moving.

There was testimony about less costly jobs as well.

John Blouin, who formerly operated Blouin Auto Sales in Augusta, paid Marshall Swan checks totaling $900 in 2009 and $550 in 2010 for snow removal.

Manly Hiltz Jr. of Chelsea paid Marshall Swan $750 for gravel in 2006.

Most paid by check. Lisa Hughes of Vassalboro said she and her husband paid $6,000 in cash and $260 by check for repairing their Vassalboro driveway.

Most of those testifying said they had little or no contact with Carole Swan and did not know who prepared the invoices they received.

Also on Wednesday, Clark, the prosecutor, presented reams of documents as exhibits, much of it records of three bank accounts: a Northeast Bank account in the names of Carole and Marshall Swan doing business as Marshall Swan Construction, a separate Northeast Bank account of Carole Swan and a Key Bank account of Carole and Marshall Swan. Clark also brought exhibits of checks cashed at Kennebec Savings Bank, Bangor Savings Bank and Northeast Bank.

He did not discuss details from those records.

Carole Swan’s attorney Leonard Sharon briefly questioned some of the state’s witnesses.
While witnesses were kept outside the courtroom until they testified, several on Wednesday opted to stay afterward and watch some of the trial.

The trial is expected to last three weeks, and the government’s witness list includes almost 90 names of people who have yet to testify.

Betty Adams — 621-5631
badams@centralmaine.com

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