The former president of M.W. Sewall & Co. has been ordered to repay $1.3 million in diverted sales and fuel taxes, money his attorney says he was using to try to keep the business afloat.

Attorney General William Schneider announced today that Philip Sewall was convicted on three counts in West Bath District Court of failing to pay the state revenue service taxes collected between January 2009 and March 2009. Sewall used the money to pay his own salary and business expenses, the attorney general said in a press release.

M.W. Sewall & Co. was a family-owned company based in Bath that ran a heating oil delivery business and 11 service stations and convenience stores in the Midcoast area.

The company filed for bankruptcy protection on March 27, 2009, and its assets are being sold. Philip Sewall has repaid $225,000 and was ordered to pay another $50,000 within 12 months. The state continues to work with the bankruptcy trustee to collect the remaining $1.06 million from the sale of company assets.

Sewall’s attorney, Toby Dilworth, said his client faces no jail time or probation for the three misdemeanor convictions, to which he pleaded no contest. He said that is because the state recognizes Sewall was not the chief financial officer in charge of day-to-day payments and that he put all the money into trying to keep the company out of bankruptcy. The amount applied to his salary was less than $10,000 because he had taken a pay cut in an effort to save the company, Dilworth said.

“This happened all within six weeks as his business was falling apart,” Dilworth said.

The companies have emerged from bankruptcy under new ownership.

“The agreement reached requires Philip Sewall to personally pay out a large amount of money to cover the unpaid taxes owed by the company and other assets are available to repay the state through the bankruptcy,” Schneider said in his written release.

The case was investigated by the Maine Revenue Services’ Criminal Investigations Unit. Assistant Attorney General Gregg D. Bernstein handled the matter for Schneider’s criminal division.

Staff Writer David Hench can be contacted at 791-6327 or at: [email protected]