WINDHAM – Just weeks before his criminal trial was to commence, Kaile Warren signed a court-mediated settlement Wednesday with state prosecutors clearing him of all criminal charges.

However, the Windham resident will be required to repay investors the $1.9 million that he solicited for his Rent-A-Husband handyman company in violation of Maine securities law.

The prosecuting attorney, Assistant Attorney General Michael Colleran, said the agreement was settled at 1:30 p.m. on Wednesday with Cumberland County Superior Court Justice Thomas Warren presiding. Warren and his attorney, Daniel Lilley, and Colleran were present at the signing of the five-page dismissal document. Asked why the state dropped its criminal case, Colleran said new evidence, which he was unwilling to share, had surfaced after the indictment, which weakened the state’s criminal case.

When asked about the new evidence, Lilley said his legal team had “sifted through” hundreds of bank boxes full of documents as well as e-mails sent between Warren and his former law firms having to do with Rent-A-Husband’s investment transactions. Lilley presented what he found to Colleran, who then approached the court in order to drop the criminal proceedings.

Warren was indicted in December 2009 on three counts of securities fraud for the role he played in soliciting investments from dozens of investors. Justice Warren had dropped one the charges, sale of unregistered securities, last fall, but Kaile Warren was still facing a March 14 trial on two remaining charges: theft by deception and securities fraud. If convicted, Warren could have faced 10 years in prison.

Over the last year and a half, Warren has maintained that his law firms, Preti Flaherty and Marcus Clegg & Mistretta, were at fault by giving him bad legal advice and by drafting the language governing the investments.

“It became clear that for the entire eight to nine years (Warren) was following their legal advice to a T, but the legal advice was fatally flawed,” Lilley said Wednesday.

The new evidence likely could be the basis for upcoming lawsuits that Lilley said he would seek to help Warren pay back his investors.

Sights set

Now that Warren no longer faces threat of criminal prosecution, he and Lilley said Wednesday they will instead redirect their energy on his former law firms, which Warren contends misguided him in soliciting and executing investments for Rent-A-Husband. During a nearly 10-year period, the law firms had handled $1.9 million worth of investments from numerous investors, including several in Windham, where Warren still lives and has served as a town councilor.

While Marcus Clegg & Mistretta could not reached before press time, Jonathan Piper, managing partner at Preti Flaherty, said of Wednesday’s news regarding their former client, “We are pleased for Mr. Warren that the state has seen fit to dismiss the criminal charges against him. However, since he and his attorney have announced their intention to sue the firm, and a number of others, we will not be publicizing the numerous defenses to the allegations.”

In addition to aiming his sights at his former law firms, Warren said he would also pursue Ace Hardware in court for “stringing me along” on a deal that would have installed Rent-A-Husband kiosks in hundreds of Ace stores nationwide. Warren has previously made public e-mails from Ace executives showing that as late as 2009, the national hardware store chain had intended to do business with Warren. Based in part on Ace’s overtures, Warren had convinced many people to invest before Rent-A-Husband grew into a household name based in part on the proposed Ace venture. At one point, Warren said, Ace was publicizing the deal itself, saying Rent-A-Husband could grow into a $500 million-a-year corporation.

Strange bedfellows

Warren and his legal team have insisted for more than a year that Warren had no notion he was in violation of Maine securities law, and that he was only following his legal firms’ advice. Despite Warren’s attempts at the contrary, damage was done in the public eye, and his business started to fail. He closed his Riverside Drive, Portland, headquarters and moved his business into his home on Gin Mill Lane off Route 115 in North Windham. And Warren blamed the bad press on the investors, who, he said, didn’t realize Warren was acting in good faith on what he says was bad legal advice.

But with Wednesday’s settlement, Lilley said, those investors and Warren “are now on the same side,” since Warren has a financial stake in repaying the investors in full, as mandated by the court settlement.

“We will be filing suit on the investors’ behalf, trying to get their money back even though they were part of the reason Kaile got indicted in the first place. If that’s not ironic, I’m not sure what is,” Lilley said.

Lilley plans on bringing forth lawsuits within a few weeks and by the end of March at the latest.

“This isn’t the end of the story,” Lilley said.

One of those investors, Lane Hiltunen, who invested $10,000 with Warren in January 2009 expecting a 20 percent return within a year, doesn’t expect to get his money back despite the recent news and Lilley’s talk of going after Warren’s law firms and Ace Hardware.

“In my heart, I’ve already forgiven him, but I don’t think there was any hope of getting my money back,” Hiltunen said. “The only difference now is that I don’t have to sit in a courtroom.”

Hiltunen is a columnist for the Lakes Region Weekly.

Warren vindicated

Warren said he is thrilled to have been cleared of the criminal charges. In the settlement, although he is mandated to repay investors, he wasn’t held liable of fraud, allegations of which have severely cut into his personal and professional lives.

He said Wednesday afternoon that he feels “like I’ve had the stuffing knocked out of me. I feel broken, in so many ways.”

Although he said he was feeling confident that he would prevail at trial, Warren went on to say, “I have been raked over the coals. I really don’t like to use the word ‘victim,’ but maybe the better way to describe it is that I feel very disappointed in the criminal justice system, very disappointed it had to get to this point.”

And Warren also said, “I want to pay the investors back. I’ve always been consistent all the way through this that I wanted to see everybody do well. I want myself and the people who believed in me to be made whole again.”