ROCKLAND — An attorney for the owner of the defunct Castle Builders is asking a judge to dismiss the criminal case against Malcolm Stewart.
Stewart, 58, was indicted in March 2021 by a Knox County grand jury on two counts of theft by deception – one for taking money for work he is accused of not intending to perform and the other for soliciting money for the company by misleading investors. He pleaded not guilty in May 2021. Stewart remains free on bail and resides in Pelzer, South Carolina. He also had to turn in his passport. Stewart is a Canadian citizen and has a green card.
If the case does move forward, attorney David Bobrow argued Thursday that the case should be moved outside of Knox County because a large number of the individuals named as victims in the case still live in the region. Bobrow also argued that a deposition Stewart gave in a civil case brought by the state should be excluded.
There are 52 individuals listed as victims in the offenses alleged to have occurred from April 2018 until September 2019 in Knox, Waldo, Hancock, Kennebec, Lincoln and Somerset counties. The state claims they paid for home construction projects that were either not done or done poorly.
Several of the individuals attended hearings Thursday in the Knox County courthouse, with Justice Jeffrey Hjelm presiding. Stewart, his attorney, and the two lawyers representing the Maine Attorney General’s Office participated via Zoom.
The Maine Attorney General’s Office filed a memo last April calling for an eight-year sentence with all but five years suspended and three years of probation if Steward is convicted. Bobrow cited that memo during Thursday’s hearing as one reason to move the case outside of Knox County.
Assistant Attorney General Charles Boyle admitted that it was a mistake for the criminal division not to have asked the court to seal that memo so that it was not available to the public. The Courier-Gazette published that memo when it was filed in court.
Bobrow said that information being made public, along with a long list of news articles that he said included inflammatory headlines, will make it impossible for an impartial jury to be seated in Knox County.
The defense attorney also asked the judge not to allow a deposition, which Stewart gave to the AG’s office as part of a civil trial, to be used at any criminal trial. He said his client, who had a different attorney for the civil matter, was not given Miranda warnings and was not aware that a criminal case was pending. Stewart was indicted on the criminal charges two weeks after the deposition.
Justice Bruce Mallonee last year ordered Malcolm and his wife, Elizabeth Stewart, and their defunct company, Castle Builders, to pay $744,253 to more than 100 former customers. The state won a default judgment after the couple left a Zoom call on what was to be the first day of a civil trial in August 2022.
Liens against the Stewarts and their failed company were filed in the Knox County Registry of Deeds on Dec. 16. The judgment is to be paid to the Maine Attorney General’s Office, which will disburse any money received to the victims. A judgment, however, does not guarantee there is any money to recoup from the Stewarts.
Bobrow said most of the witnesses will likely testify that some work was done.
“As with many construction businesses, there were errors made in accounting and related to the workforce, to name two areas,” written motions filed by Bobrow state.
There was consistent turnover in the workers, he said.
“As time progressed, Castle saw its income dwindling and its bills expanding as evidenced by the monthly summary. Castle hoped to secure cash infusion by bringing in a financial partner(s), but were unable to close any deal. Finally, without money to pay the employees, Mr. Stewart closed his business on Sept. 8, 2019, leaving behind all of his business and main personal assets,” the defense motion states.
One couple from Damariscotta lost $192,750, according to the state. The couple contracted with Stewart to build a garage and workshop.
The 2022 memo from the AG’s Office states that Elizabeth Stewart worked primarily as the office manager and bookkeeper for the company. Malcolm Stewart was the only person charged criminally in the case.
The memo states, “Between May 2017 and September 2019, Stewart entered into scores of contracts with dozens of customers throughout central and Midcoast Maine, taking deposits and installment payments for a range of construction projects. In many instances, no work was ever started for the customer. In other instances, Stewart’s laborers completed just enough subpar work to secure further payments.”
“As Castle’s financial picture deteriorated in 2019, Stewart increased the scale and frequency of his fraudulent conduct until Sept. 9, 2019, when he abruptly closed Castle Builders and fled the state with his wife,” the AG’s Office stated.
A case in U.S. Bankruptcy Court concluded in March with only $5,000 in claims being paid and nearly $40,000 in administrative fees. The initial claims filed in the bankruptcy case totaled more than $1.1 million including taxes and payroll. There were 177 creditors listed in their bankruptcy filing with most of them former customers of Castle Builders. Former workers, suppliers and the government are also listed as creditors.
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