Last modified: Saturday, November 10, 2007 12:38 AM EST Jim Hanley (Staff photo by MARTIN GAVIN) Hanley seeks dismissal BY DAVID LINTON SUN CHRONICLE STAFF ATTLEBORO - The lawyer for City Councilor James Hanley, who was defeated in Tuesday's city election, wants a judge to dismiss larceny charges and find his client innocent, claiming the matter is a business dispute and not a crime. Judge James Sullivan took the case under advisement after listening to legal arguments during a hearing Friday in Attleboro District Court. He said he would rule within 30 days. Hanley, 64, allegedly took money from Michael Poulin, his former business partner, and used the funds to pay other business expenses instead of Poulin's health care premiums. The two men owned the weekly newspaper, My Backyard, before they had a falling out. Hanley now owns the newspaper. Hanley has pleaded innocent to larceny for allegedly not paying Poulin and his wife, Clara, $13,500 to cover medical expenses incurred because Hanley allegedly neglected to pay the company's health insurance bills. Hanley's lawyer, Roger Ferris of Attleboro, argued that the two sides tried to reach an out-of-court settlement before the case was forwarded to the police for criminal prosecution. "They pressured the Attleboro Police Department to bring this complaint, your honor. That's inappropriate. That's inappropriate prosecution," Ferris said. Ferris said the case lacks probable cause because there was no intent on the part of his client to permanently deprive the Poulins of their money. But Prosecutor Donna Bently said Hanley had repeatedly made late payments for health care premiums and admitted to police that he used the money the Poulins paid him to pay other business expenses. "The victims made payments on time to the defendant. It was the defendant's responsibility to take care of them and pay it," Bently said. The couple, Pawtucket residents, have a lawyer but have not yet filed a civil suit against Hanley. Hanley, of 34 Rosewood Ave. in South Attleboro, has been a Ward 1 city councilor for two years, but lost his bid for re-election on Tuesday. He was a former chairman of the city school committee.