Auto museum lawsuit alleges mismanagement



TREMONT — Allegations of mismanagement of a trust that benefits the Seal Cove Auto Museum have arisen again, this time with the filing of a complaint against the trustees by the museum’s board of directors.

Attorney Timothy Bryant of Preti, Flaherty, Beliveau and Pachios LLP in Portland filed the complaint Aug. 25 in Cumberland County Superior Court on behalf of the museum board.

The board is alleging that trustees of the Richard C. Paine Jr. Automobile Collection Charitable Trust – John Sanford of Camden, John Higgins of Cape Elizabeth and Spinnaker Trust, which does business in Portland – are mismanaging the trust in several ways. Sanford and Higgins are the current trustees.

The complaint alleges the trustees have “breached their statutory and common-law duties to the museum by paying themselves excessive fees and engaging in other conduct detrimental to the trust.”

The other “detrimental” conduct alleged includes filing incorrect or late 990 forms with the Internal Revenue Service, which could put the museum’s nonprofit status in jeopardy; investing trust money with a company owned or associated with Higgins; and Sanford’s failure to fully contribute to the trust’s mission of researching, buying and selling cars and arranging for the display of cars at antique automobile shows and similar events.

Richard C. Paine established the museum in 1963. The trust was established in 1986. In 1991, a probate court found Paine, who died of Alzheimer’s disease in August 2007, to lack the capacity for making decisions for himself. Sanford subsequently was named trustee.

At the time, Sanford also was trustee for the Richard C. Paine Jr. 1990 Trust, which consisted of cars, motorcycles and memorabilia, and a director of the museum itself. In 2007, at the urging of Paine family members, the Maine Attorney General began an investigation into the arrangement that led to a lawsuit accusing Sanford of violating state law by failing to maintain a legal board of directors and improperly billing the museum for more than a half-million dollars in legal fees and expenses.

In September 2008, the attorney general’s office and Sanford entered into a consent agreement that had the Camden attorney resigning from his position as director of the museum and to close out the 1990 Trust, transferring the remaining assets to the Richard C. Paine Jr. Automobile Collection Charitable Trust. The agreement allowed Sanford to stay on as trustee.

The complaint asks the court for a declaratory judgment that the museum is the primary beneficiary of the trust and that the trustees have paid themselves excessive fees and engaged in conduct detrimental to the museum.

The museum seeks injunctions barring the trustees from taking further excessive payments and paying investment firms in which a trustee has ownership and to repay overpayments made to themselves, correct errors in 990 forms and to respond in a timely manner to requests by the museum for information.

 

Mark Good

Mark Good

Reporter at Mount Desert Islander
Mark Good

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