ROCKLAND — A former Rockport resident accused of defrauding a former romantic partner out of at least $3 million through a series of limited liability companies he created is denying all the allegations.
The attorney for Mark X. Haley II filed an answer in the Knox County Superior Court on Dec. 28 to a lawsuit filed against Haley by Rachel Klotz of Rockport in October. The case, which had been sealed at the request of Klotz’s attorney, was unsealed Wednesday by Justice Daniel Billings.
Haley’s attorney, Walter McKee of Augusta, had asked the court to unseal the lawsuit on Dec. 2, saying it was difficult to defend against the allegations without seeing the documentation filed with the court. The lawsuit was served on Haley at an address in South Thomaston on Dec. 14.
Billings ruled in his Oct. 28 decision in the Knox County court that Klotz was more likely than not to obtain a judgment against Haley and his LLCs. In addition, Billings approved the attachment without notice to Haley, noting that there was a clear danger that if Haley was notified in advance of the request for an attachment, he would try to conceal or remove assets.
The seal was lifted Wednesday after attorney Christopher MacLean, who represents the woman, said all the financial institutions had been served the attachment notice issued by the court.
MacLean filed Klotz’s lawsuit Oct. 21 against Haley and the LLCs he created: Burntcoat Capital, Boyaca Trading Company, MHRK Investments, Burntcoat – Flybridg, Burntcoat – Highbyte, Burntcoat – Kinotek, GME Holdco, Bellamy Eagle, Burntcoat Simpletrade, Eastern Investment Advisors, Honduras Imports, J 100 X, One7Seven Productions, Dashii Foods, Xavier Food Groups and Secure Capital Management.
Haley was vice chair of the Rockport Planning Board but resigned after the lawsuit was filed. He also resigned his position as chair of the board of directors of the Maine Ocean School Foundation in Searsport. He also served on the board of United Midcoast Charities from December 2021 until late summer 2022, resigning before the lawsuit was filed.
Messages were left with Haley by The Courier-Gazette in October. He did not respond to the requests for an interview.
DENIES ALL ALLEGATIONS
He denied all the allegations in the response McKee filed Dec. 28.
When Haley joined the UMC board in December 2021, his biography stated that he was the “founder of Burntcoat Capital, a private investment fund focused on socially and environmentally responsible opportunities. His passions are surfing, sailing, fishing and aquaculture. He has family roots in Maine, having spent summers on Swan’s Island.”
His biography on the Maine Ocean School Foundation states he has experience in finance, private equity and real estate investments. “He is also an entrepreneur. Mark currently sits on the board of several portfolio companies and nonprofits,” the foundation’s website states. The foundation raises money for the not-for-profit charter school in Searsport.
The lawsuit alleges that Haley and Klotz met in Maine in 2019 and formed a romantic relationship. Over the course of the next three years, Haley induced Klotz through fraudulent misrepresentations, to transfer large amounts of money – totaling $1.1 million – to him on the claim that he could get better returns on her investments, the lawsuit alleges. Klotz also loaned $500,000 to Haley after he promised to repay her in three days with what he said would be from proceeds of a Small Business Administration loan that he was set to receive, the lawsuit states. The loan was never repaid, according to the lawsuit.
Klotz also purchased a $100,000 Land Rover Defender, which he possesses and has not returned to her, the suit states.
The two jointly own a home in Rockport. She paid half down for the house and he promised to pay the other half but was unable to get a loan, the lawsuit alleges.
IRS AGENTS CAME TO HOME
Klotz learned of the potential fraud in August 2022 when Internal Revenue Service agents came to her home and advised her that Haley was being investigated for Paycheck Protection Program fraud, the lawsuit states. Haley had listed the woman and her family members as employees of the limited liability companies in order to get $1.2 million in federal aid, the lawsuit alleges. The woman and her family were never employees of these LLCs that he created in Delaware, the lawsuit states.
A review of the federal government’s Paycheck Protection Program website shows seven of the LLCs listed in the lawsuit as having received PPP loans. The companies all have an address of the home that Haley and Klotz jointly own on Mill Street.
One of the companies claims to be a soft drink manufacturer with seven employees, another is a fresh fruit and vegetable wholesaler with eight employees, and others are investment advisers with seven to nine employees. The loans were received in February and March 2021, according to the federal website.
Haley wrote an apology letter to the woman, according to the lawsuit, and she ended their relationship.
Haley, however, has not repaid her any of the money he claims to have invested, according to the lawsuit. The $3 million figure includes the money he allegedly invested for her, the $500,000 loan, the vehicle, as well as loss of investment income she would have received, half the equity in the property and capital gain taxes she has incurred. She also is seeking punitive damages against Haley.
The U.S. Attorney’s Office said in October that it was unable to confirm or deny the existence of any investigation. That is the standard response by federal prosecutors unless a criminal complaint has been filed or indictment issued.
No criminal charges have been filed.
The response filed in court by McKee on behalf of Haley states that Klotz was aware of all the transactions he was making. The response also contends she was aware of the risks of the financial transactions.
McKee’s response also contends that Klotz “engaged in false and fraudulent actions with respect to statements and promises” to him. The response does not detail those claims.
Haley wants compensation for his portion of the home they jointly own.
Damages that Klotz experienced were “caused by intervening events and not because of the defendant,” the response states.
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