Former president of Bath fuel business pleads no contest to failure to pay taxes

Posted Nov. 10, 2011, at 3:43 p.m.

BATH, Maine — Philip Sewall, former president of Bath-based M.W. Sewall & Co., pleaded no contest in West Bath District Court on Wednesday morning to three counts of failure to pay taxes collected.

Assistant Attorney General Gregg D. Bernstein, who prosecuted the case against Sewall, said Wednesday evening that Sewall, 54, pleaded no contest to the charges and was found guilty.

The state will recover just more than $1.3 million, according to Bernstein, including $225,000 Sewall paid recently to Maine Revenue Services, another $50,000 Judge Susan Oram ordered him on Wednesday to pay within 12 months, and $1.06 million from the bankruptcy estate from the sale of company assets.

“We believe that this was a very appropriate resolution to the case because, by working with the bankruptcy estate, we’ve actually recovered essentially all of the tax money that was diverted,” Bernstein said. “That may or may not have occurred if the case had gone to trial.”

Oram also fined Sewall $2,000 on each of the three counts.

Sewall was president of M.W. Sewall, a family-owned heating oil delivery business that operated 11 Clipper Mart service stations and convenience stores in the midcoast region, including branches in Bath, West Bath, Brunswick and Woolwich.

From January 2009 to March 2009, Sewall failed to pay Maine Revenue Services money collected as sales and fuel taxes, and instead used the money to pay his own compensation and other businesses expenses, Maine Attorney General William J. Schneider said in a release issued Wednesday.

The company filed for bankruptcy protection in March 2009 and its assets still are being sold.

A court-appointed trustee who ran the firm during the bankruptcy proceedings fired Sewall as president and requested a restraining order and injunction against Sewall to prevent him from having access to company information, among other conditions.

The convenience store assets were auctioned off in April 2010.

In April 2009, Sewall’s brother Edward “Ned” Sewall III, who had run the company from 1995 to 2007, outbid a number of other companies to purchase Sewall’s home heating oil operations.

Attorney Toby Dilworth of Drummond Woodsum & MacMahon, who represented Philip Sewall, entered the plea of no contest on his client’s behalf Wednesday. Sewall did not appear in court.

Dilworth said today that Sewall “did not admit to anything,” and that the $6,000 penalty — “with no jail time and no probation … is an indication that the state recognizes that while he was responsible as president, he was not responsible for the day-to-day decision-making of what bills to pay.”

“Philip was president of the company, not the [chief financial officer],” Dilworth said. “He was not running the day-to-day financial end of the business. … As the business was having difficulty, he took a pay cut and did whatever he could to keep his employees employed and the business operating. … Philip’s income during the period at issue was about $10,000. The rest went to pay the salaries of the employees and to keep the lights on.”

Under Maine law, as a director and officer of the company, Sewall must repay the taxes regardless, according to Dilworth, “so the only penalty he’s paying is the $6,000.”

Ned Sewall was out of town Wednesday and unavailable for comment, according to a woman who answered the phone at M.W. Sewall & Co. She said no one else in the office would comment on Wednesday’s decision.

To see more from The Times Record, visit timesrecord.com.

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