LUBEC – The town will use $10,148 from surplus to reimburse the state for Community Development Block Grant funds that were used to buy gravel, sand and pipe from a former selectman.

Just under 30 people attended Monday’s special town meeting, which ended with a resounding voice vote to use the town’s undesignated fund to resolve the conflict-of-interest issue involving former Selectman Sheldon Stanley.

The state Department of Economic and Community Development has assured the town that $10,148 will go back into the grant and be available as Lubec pays the final invoices on the $400,000 downtown revitalization project.

Stanley resigned from the five-member board of selectmen on Oct. 11, several weeks after questions arose about his relationship with Thomas DiCenzo Inc., the contractor for Lubec’s $400,000 downtown revitalization project.

Stanley acknowledged that he sold the gravel to DiCenzo, but maintained it was not a conflict of interest because he had abstained when the board voted to award the contract to DiCenzo.

Stanley never indicated why he was abstaining from that vote, and other board members, including Chairman Art Glidden, were not aware of Stanley’s relationship with DiCenzo until a town resident raised the issue during a Sept. 27 selectmen’s meeting.

The board discussed the issue in an executive session during the Oct. 11 meeting, at which time Stanley submitted his resignation, effective immediately.

He attempted to rescind the resignation, but Town Attorney Wayne Foote advised selectmen that they could not legally permit someone to rescind a resignation after it had become effective.

The board called a Dec. 13 election to fill Stanley’s seat and he ran for the position. He lost to Joanne Case, a former selectman who left the board at the end of her last term.

Following the Sept. 27 meeting – when the conflict-of-interest allegation first arose – selectmen learned that DiCenzo operates an asphalt plant in a gravel pit that Stanley owns in neighboring Whiting.

According to an Oct. 29 letter to Foote from Vernice Mains, the acting town administrator, DiCenzo has been the contractor for three projects since Stanley has been on the board, raising the question of whether Stanley may have received monetary gains from those projects or inside information for business associates.

Mains contacted Foote and Auditor Ron Smith at the board’s request, asking whether the money that Stanley received from DiCenzo constituted a conflict of interest.

Foote replied that while Stanley may not have voted on the contract award to DiCenzo, he discussed the award with other selectmen and voted on change orders.

Stanley’s actions violated federal conflict-of-interest provisions for CDBG grants, state common law regarding the duties of public officials and the Lubec charter, Foote said in a Nov. 8 letter.

Smith concurred. In a Dec. 5 letter to Mains, Smith said that by not fully divulging the nature of his relationship with DiCenzo, Stanley violated the public trust.

Smith is completing a federal compliance audit for Lubec and said his review will include not only Stanley, but all current and former board members and town managers over the last three years.

Smith also advised the town that Lubec could seek to have Stanley repay the $10,148 to the state.

That question was raised during the discussion preceding Monday night’s vote by a woman who asked if the board had discussed holding Stanley accountable for the money.

Glidden said the board had not discussed that.

New Selectman Joanne Case said the town has spent $3,800 to get to the point of resolving the conflict-of-interest issue with the state. To pursue Stanley could bring those costs to more than the $10,148, Case said.

Former Selectman Harold Jackson – who was recalled two years ago after petitioners alleged that he used his seat on the board for personal interest – questioned Case’s statement.

If Stanley is guilty of a criminal attempt to use his position on the board, the town could sue him for the cost and their expenses, Jackson said. The charge against Stanley has never been proven except by a “kangaroo court and a vigilante jury,” Jackson said.

Jackson and Selectman Diana Wilson argued against taking the $10,148 from surplus, saying it ought to come from the contingency fund for the downtown revitalization project. To take money from surplus and have it come back into the grant will just increase the cost of the project because the money will be spent, they said.

But Glidden said he had contacted the Maine Municipal Association, which had advised him against using project money to resolve a compliance issue. And any contingency money that isn’t spent by the close of the project will revert to surplus, Glidden said.