A former Portland developer who helped transform the waterfront in the 1980s is returning to the city Wednesday under less than auspicious circumstances to be sentenced for violating federal campaign finance laws.

Michael Liberty’s start in Portland was a true rags-to-riches story of a young man who ran a sandwich shop in Gray and went on to become a hugely successful developer: Among his high-profile properties were the Chandler’s Wharf condominium project on the Portland waterfront and twin office buildings at 100 Middle St.

The tenants at 100 Middle St. now include the prosecutors in the U.S. Attorney’s Office who brought him to court earlier this year on charges that he had nine business associates, family members and friends contribute the maximum of $2,500 each to a presidential campaign in 2012. Although the candidate isn’t named, it’s believed to have been Republican Mitt Romney, to whom Liberty also donated individually. Then, prosecutors said, Liberty reimbursed those who contributed, skirting the individual limit on contributions.

George J. Marcus, one of Liberty’s Portland lawyers, declined to comment on the case. He said he would refer a request for comment from Liberty to the businessman’s publicist, but the publicist did not contact the newspaper.

The campaign finance violations are not the only legal problems currently dogging the 56-year-old Liberty: In a separate federal case in Philadelphia, regulators with the Securities and Exchange Commission said he lied about his net worth in an effort to avoid paying a $6 million settlement over defrauding investors, including several government pension funds.

‘HE WAS THE DONALD TRUMP OF MAINE’

Liberty’s legal problems are a far cry from his start in Portland, where in the 1980s he was alternately admired and reviled for his role in helping Portland transition from a rundown fishing port to a city with corporate headquarters, fancy restaurants and rows of boutiques and coffee shops.

“He was the Donald Trump of Maine,” said Dennis Bailey, who reported on Liberty for the Portland Press Herald/Maine Sunday Telegram in the late 1980s and later worked for Liberty when Bailey started a public relations firm.

“He’s a very big self-promoter and a big name-dropper,” Bailey said. “You never know what’s real and what’s not.”

Liberty’s brashness and developments provoked a backlash in the city: After he proposed a huge waterfront office-retail development on Long Wharf, valued at the time at $175 million, opponents drafted a referendum to restrict waterside development on Commercial Street to marine-only uses, intended to preserve space for the fishermen, seafood processors and other businesses dependent on immediate access to the water.

The referendum passed in 1987, Long Wharf was blocked and a sharp recession that hit the real estate market hard a couple of years later led to financial troubles for Liberty. He soon left Maine for opportunities elsewhere, including a stint in Hollywood, where Liberty produced movies (including “The Hit” in 2007, in which he had a role as the owner of a record label) and then to Texas where he founded Mozido, a mobile payments company.

Mozido has since become mired in legal problems. Forbes magazine recently compared the company to Theranos, a blood-testing startup that raised $700 million from investors, but has run into questions about its technology, faces a rash of lawsuits and is now reportedly almost out of cash.

Based on the investments, Mozido’s value has, at times, eclipsed $5 billion – Liberty once bragged that his stock was worth nearly $90 million – but, according to Forbes, it missed payrolls this year and has little commercially valuable technology to show for its efforts, which are aimed at facilitating mobile phone-based financial transactions to bring banking services to millions of people around the globe.

LEGAL TROUBLES WITH THE SEC

In 2010, the SEC reached a settlement with Liberty in Philadelphia over an investment fund he set up in Pennsylvania. The SEC said Liberty improperly disbursed more than $27 million to companies that he owned, controlled or had a financial stake in and also steered money to himself and associates personally, including $4.5 million for himself. Investors in the fund included the pension funds for public employees in the city of Philadelphia and the states of Pennsylvania and Connecticut.

Liberty, who did not admit to or deny the allegations as part of the settlement, was ordered to return nearly $6 million, representing what the SEC said were improper profits and interest. The amount was reduced to $600,000 after Liberty filed financial documents in which he said his net worth was negative $29.7 million.

SEC officials have since gone back to court, arguing that Liberty lied about his finances, including bragging in an email about the value of his stake in Mozido. The SEC said Liberty does not use personal bank accounts in an effort to hide his spending, and instead relied on partnerships and an account purportedly set up for his children to pay his daily expenses and bills for luxury travel, expensive meals at restaurants and cars.

BIG PERSONALITY DESPITE SETBACKS

Bailey said the Philadelphia case reflects the way Liberty structured financing for his real estate deals in Portland in the ’80s.

“He was never one to risk his own money,” Bailey said.

Jeff Smith, another former Press Herald reporter, said Liberty’s personal story had a lot of appeal.

Liberty’s half-brother died in a motorcycle crash when Liberty was 14 and his parents eventually moved to Massachusetts to care for another relative, leaving him behind in Gray. But through hard work, as Liberty tells it, he not only survived, but thrived.

Smith said he met Liberty in 1986.

“I think we were all intrigued that this businessman in his mid-20s from Gray, Maine, had become one of the most prominent waterfront developers in Portland almost overnight,” Smith said.

But in the late 1980s and early 1990s, Liberty suffered financial setbacks as the economy stalled.

Smith said Liberty continued to tout his accomplishments, but was “defiant about his financial and legal problems.”

At one point, Liberty went to the paper’s editors to complain about coverage of him and told the editors – and later repeated in a legal hearing – that he had hired a private investigator to follow Smith and Bailey, convinced they were getting tips and payoffs from rival developers to write stories to discredit him.

“The situation seemed typical of what business journalists face from time to time: A high-profile businessperson responding to scrutiny by attacking the credibility of the reporters,” Smith said. Neither he nor Bailey are convinced that there was ever a private detective.

Bailey said that even after setbacks in Portland, Liberty’s big personality remained constant.

Once, while Bailey was working with Liberty in the early 1990s, about the time that one of Liberty’s ventures had filed for bankruptcy, they went to Boston and pulled up in front of a building with valet parking.

Liberty got out of the car, was greeted by the parking attendant by name and then lavished a $50 tip on the attendant.

“There was a lot of flash and everybody knew him,” Bailey said.

IN BACKGROUND FOR DEALINGS WITH CITY

But Liberty also seemed to recognize the limits of that personal appeal.

Joseph Gray, who headed the city’s Planning Department when Liberty’s activities in the city were at their height, said he almost never presented his proposal to officials himself. Instead, Liberty relied on David Cope, his business partner at the time, to take care of the details.

Cope’s father, Mitchell Cope, was a developer well-known for residential development in Portland after World War II, so many city officials thought they were dealing with a known commodity with Cope, rather than the flashier Liberty.

“David was the front person,” Gray said. “He was easy to deal with. He was the person who could calm the waters.”

Pamela Plumb, a city councilor in Portland while Liberty was a key deal-maker, agreed that Liberty tended to step back when dealing with city officials.

Liberty and Cope parted ways in the early 1990s. Attempts to reach Cope, who moved out of state after ending the partnership with Liberty, were not successful.

Plumb said that, unintentionally, Liberty might have been good for Portland by proposing the development on Long Wharf, because it forced the city to reckon with the impact of waterfront development and, ultimately, rein it in.

deciding his sentence, size of fine

Although he now lives in Florida, Liberty maintained ties to Maine politics, including contributions to political campaigns in the state. In 2014, he set up a company in Florida that contributed $100,000 to a candidate for Cumberland County sheriff, an almost-unheard-of amount for a local race. The candidate lost.

In a sentencing memorandum on the federal campaign finance violations, federal prosecutors note that the guidelines suggest a sentence of six to 12 months in prison, and they’re recommending a sentence at the lower end of the range. They make no recommendation on how he serves his time, opening the door to the possibility of home confinement instead of prison.

Liberty’s lawyers are asking for probation. Both prosecutors and defense lawyers agree that a fine of $67,500 to $250,000, as called for in sentencing guidelines, is appropriate.

The prosecutor’s memo notes that Liberty’s history of political contributions suggests he knows the law, violated it willingly and is no stranger to courtrooms.

“The defendant’s business activities over the years have been checkered with conflict and litigation, some of which is still ongoing,” the memo says, and the illegal contributions did not “unfold on a blank slate.”

“Just months before … the defendant engaged in a similar scheme, using many of the same conduits, in connection with two state-level races,” the memo says. “This pattern of willfully circumventing election laws should weigh heavily in assessing the defendant’s history and characteristics.”

But Liberty’s lawyers called the 2012 contribution “a serious – but singular – lapse in judgment,” and said Liberty “is a good and kind person with extraordinarily positive character traits who should not receive a greater than necessary sentence.”

His attorneys’ sentencing memo notes that Liberty is the father of five children ranging in age from a newborn to a 27-year-old, and that he gives generously to charities.

“Mr. Liberty is a generous and compassionate man,” the memo states, “with remarkable dedication to his family, friends and community.”

Edward D. Murphy can be contacted at 791-6465 or at:

emurphy@pressherald.com

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