An energy industry investor and longtime Maine summer resident last week began serving prison time for failing to pay $45 million in income and sales taxes.

Morris E. “Mo” Zukerman, 73, who has owned a summer cottage on Islesford off the coast of Mount Desert Island for decades, was sentenced in March to serve five years and 10 months in federal prison. He began serving the sentence on June 26 at a federal prison in Otisville, New York, which is only about 75 miles away from his home on Manhattan’s Upper East Side.

But his continued ownership of his apartment on Manhattan’s Upper East Side and his Islesford cottage may be in question. Zukerman has filed an appeal with the Second Circuit federal court in Manhattan, asking to pay the $10 million fine in installments, rather than all at once, because he does not have the cash and would have to sell off some of his personal possessions in order pay it, according to court documents.

Federal judge Analisa Torres, who imposed the $10 million fine, agreed in a subsequent May 23 order to partially put the fine order on hold pending the outcome of Zukerman’s appeal. In the meantime, she wrote, Zukerman will have to start paying off the fine in $250,000 monthly installments, with the first payment due June 22.

If the appeals court upholds Torres’ earlier decision to require immediate payment, the remaining balance of the $10 million fine will be due within 120 days of the court’s decision, the judge wrote.

In addition to the fine, Zukerman also was ordered to pay $37.5 million total in restitution to the Internal Revenue Service and to the state of New York.

Zukerman may be able to come up with some of that amount by selling his Islesford property which, according to local municipal records, has an assessed value of roughly $2.5 million.

According to the Department of Justice, Zukerman evaded income and sales taxes in part by fraudulently claiming $1 million in charitable deductions for the purchase of 240 acres on Black Island off of MDI, which he claimed he had purchased as a gift to Maine Coast Heritage Trust but in fact kept for himself and his family; and by using corporate funds to pay a household employee in Maine and Manhattan whom Zukerman falsely said worked at one of his firms.

He also had more than $52 million worth of ‘Old Master’ European paintings he purchased delivered to addresses in Delaware and New Jersey, rather than to his Manhattan apartment, to avoid paying $4.5 million in state sales tax; and diverted corporate assets by directing that hundreds of thousands of dollars in fees be paid to family members “for which they performed little or no work,” federal prosecutors have said.

Bill Trotter

A news reporter in coastal Maine for more than 20 years, Bill Trotter writes about how the Atlantic Ocean and the state's iconic coastline help to shape the lives of coastal Maine residents and visitors....