State settles lawsuit against trustees who oversee vast legacy of antique autos – Press Herald

The state has settled a lawsuit against two trustees of an antique auto collection linked to a museum on Mount Desert Island who were accused of paying themselves excessive fees.

A consent decree and order was signed this week by the Maine Attorney General’s Office and attorneys for John Sanford and John Peabody Monks Higgins, trustees of the Richard C. Paine Jr. Automobile Collective Charitable Trust.

As part of that agreement, Sanford, a Camden attorney, and Higgins, a financial planner from Cape Elizabeth, will each be paid $62,500 annually to manage the trust, which has $27 million in assets, mostly automobiles from the early 20th-century period known as the Brass Era. The fees represent less than half of what the two men earned in 2015, the year before Seal Cove Auto Museum sued the two men, alleging mismanagement.

The museum is a separate entity from the Paine trust, but it displays dozens of the trust’s vehicles and receives an annual payment for operating expenses. Museum directors voted in 2016 to sue the two trustees for allegedly violating the Maine Nonprofit Corporation Act. Although that suit was dismissed over jurisdictional concerns, the Attorney General’s Office filed its own complaint in 2017 that included many of the same allegations.

The dispute carried on for nearly two years, but Linda Conti, head of the Attorney General’s Consumer Protection Division, said her office was pleased with the outcome.

“We spent a long time exploring options that included removing the trustees, but that’s something they wouldn’t concede,” Conti said Friday.

The Attorney General’s Office investigates complaints against nonprofits and brings legal action when appropriate, but Conti said the goal – if there is no evidence of criminal conduct – is always to reach an agreement to avoid trials, which are costly.

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Toby Dilworth, an attorney for the trust, said Friday morning that he still needed to speak with his clients and could not immediately comment.

The battle over Richard Paine’s collection and legacy goes well beyond the current legal case.

Paine, a descendant of Robert Treat Paine, an original signer of the Declaration of Independence, spent his adult life amassing an automobile collection with few rivals.

It includes a 1900 steam-powered Skene that for half a century was hidden away in a barn in central Maine,  a 1913 wooden-bodied Peugeot considered the grandfather of race cars, and several early-model Fords. He eventually established the Seal Cove Auto Museum to display his collection publicly.

In the early 1980s, after a messy divorce, Paine set up a trust and appointed Sanford as the conservator. By the mid-1980s, Paine’s health deteriorated and he set up another, the Richard Paine Jr. Automobile Collection Charitable Trust, to protect his assets if he died.

Sanford became the sole trustee. Paine’s two adult daughters and sister later challenged Sanford in probate court but were unsuccessful.

Richard Paine, founder of the Seal Cove auto museum Photo from museum’s Facebook page

When Paine died in 2007 at age 78, Sanford effectively became the sole arbiter of what would happen to his wealth.

At the urging of Paine’s family members, the Attorney General’s Office sued Sanford in 2007, alleging he had been paying himself fees from the trust without any oversight – from as little as $21,464 in 1996 to as much as $91,863 in 2002.

Initially, the state suggested Sanford be removed from the museum board and pay back that money – $558,000 over a 10-year span – but that didn’t happen. Instead, as part of an agreement, Sanford was required only to remove himself from the museum’s management structure and board and then add another trustee for the Paine Trust, Higgins.

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The relationship between the trust and the museum continued quietly until 2014, when David Glaser, an attorney and accountant, joined the board and took over treasurer duties. He noticed that payments to Sanford and Higgins, which were calculated at 1 percent of the trust’s assets, were increasing steadily. In 2012 the two split $179,420. By 2015 they combined to earn $276,949. At the same time, the trust’s annual payment to the museum was declining.

Museum directors also were concerned about Sanford’s plans to sell some vehicles, including the Peugeot, the trust’s most valuable automobile.

Conti said this week’s agreement truly represents a compromise. The state sought to remove Sanford and Higgins as trustees but ultimately backed off. The trustees wanted to move all of the Paine trust assets under the administration of the Owls Head museum, which has a broad collection of transportation memorabilia, not just cars, and which Sanford also is involved with. The state rejected that idea.

Other than setting a maximum fee, and allowing the trustees up to $5,000 in travel fees each year, “the provisions of the charitable trust and the authority of the trustees are not in any way affected.” That means they could sell the Peugeot or other assets as it sees fit.

Now that a settlement has been reached, Conti said she hopes the trust and museum rebuild their relationship.

“We certainly hope there is no animosity and that everyone learns from this,” she said, acknowledging that her office could intervene again if that doesn’t happen.



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