PORTLAND — A Jay man has been sentenced to serve a year and a day in federal prison on a fraud conviction and repay $79,639 in stolen federal funds.

According to a written statement from U.S. Attorney Thomas E. Delahanty II, Timothy P. Gallagher, 47, was sentenced Tuesday in U.S. District Court. In addition to jail time and restitution, he will serve three years of supervised release.

Gallagher pleaded guilty to the single charge in April.

According to court records, between May and November 2014, Gallagher embezzled $79,639 from Stanford Management LLC, a property management company specializing in affordable housing that received millions of dollars in federal benefits each year under programs administered by the U.S. Department of Housing and Urban Development and the U.S. Department of Agriculture.

While employed as a full-time construction project manager at Stanford, Gallagher set up a competing construction company he called Harley Construction and paid it to hire subcontractors to perform work on Stanford properties, the job he was being paid a wage to perform, according to court records. 

He concealed his ownership of the competing construction company from Stanford and federal agencies. 

According to the complaint filed in U.S. District Court, Gallagher knew that he had to disclose his interest in Harley, but did not because he saw the separate company as a way to make money by acting as the general contractor on these projects. He admitted that he was paid a salary to perform work.

“According to Stanford project business and financial records, between May 14 and Nov. 25, 2014, Harley was paid $251,072 for work performed at nine Stanford properties. According to bank account records for Harley at Androscoggin Savings, Harley paid $171,434 to subcontractors on those jobs. Consequently, the defendant obtained by fraud, the $79,639 difference,” according to the complaint.

A subcontractor who was paid about $108,000 by Harley on nine different projects told investigators Gallagher told him Harley was owned by Stanford.

The case was investigated by HUD, the USDA and Office of Inspector General, with assistance from the Jay Police Department.