TREMONT – A Camden lawyer who was sued by the state over his control of a local antique auto museum has agreed to relinquish his roles with the museum but will not have to return any of the money the museum paid him in legal fees.

The agreement is part of a settlement recently reached by the state Attorney General’s Office, Seal Cove Auto Museum and John J. Sanford, who for more than 10 years served simultaneously as one of the few directors of the museum and as its attorney.

Sanford won’t have to repay more than half a million dollars in legal fees the museum paid over 10 years to Harmon, Jones & Sanford LLP, the law firm where Sanford was a partner, Assistant Attorney General Linda Conti said last week. She said that Sanford, either out of his own pocket or through his insurance carrier, will have to pay the state $15,000 to cover its legal costs in looking into the complaints against Sanford.

Sanford has resigned as a museum director and officer but will continue to serve with a charitable trust established by museum founder Richard C. Paine Jr. to provide funding for the museum, Conti said. But Sanford will have to work with a co-trustee to determine how the trust is managed, she said, and the trust will be subject to state oversight on how it operates.

“He has to accept a co-trustee,” Conti said. “He does not have the ability to make unilateral decisions.”

Conti said the state did not find that Sanford violated the law when, as a museum director, he authorized payments totaling more than half a million dollars to his law firm. She said the money Sanford essentially paid to himself annually between 1996 and 2005, ranging from $21,464 in 1996 to $91,863 in 2002, seemed unusual but that it appeared to be for specific services he provided. The total amount of money the museum paid during those years to Sanford’s firm was $558,264.

“If we had evidence of theft, we would have pursued the case differently,” Conti said. “He did what he paid himself to do.”

Malcolm Lyons, Sanford’s attorney, said Monday that Sanford voluntarily stepped down from his positions at the museum when the state filed suit last year. He said his client supports the appointment of a co-trustee to manage the charitable trust.

Lyons said Sanford had done nothing improper when overseeing the museum’s operations.

“There was no wrongdoing found on Mr. Sanford’s part,” Lyons said.

Conti said the settlement, which was reached after the state, the museum and Sanford went through a mandatory mediation, requires certain standards for how the museum’s board will be managed and how the museum’s finances will be maintained. The museum has agreed to increase the number of its directors from three to a minimum of five and a maximum of 15. The board of directors will adopt and adhere to a code of ethics, a conflict of interest policy, and a mission statement. It also will keep and maintain possession of all the museum’s books and records, to name a few requirements.

Serving on the trust established by Paine, Sanford will not be able to determine how the museum uses the money it gets from the trust, she said, and will not have the sole say over how the trust manages its finances.

“I think it is a good result. I think it should be educational and should send a message to people who serve on nonprofit boards about what the attorney general is looking for [in terms of compliance with state law],” Conti said of the settlement. “Hopefully, people will pay attention and not get in this kind of situation. You have to have some oversight.”

The state filed suit last year against Sanford and the Seal Cove Auto Museum after receiving complaints from Paine’s family about how Sanford was running the museum. Paine, who founded the museum in 1963, died Aug. 3, 2007, in a Bar Harbor nursing home.

Paine was listed as one of the museum’s directors from 1996 to 2007, even though in 1991 he was determined to be incapacitated because of complications from Alzheimer’s disease. During that time, Sanford also served on the museum’s board of directors, which fluctuated between three and four seats. Abram Homsher, a museum employee hired by Sanford, served as a third director from 1996 through 2000. Mary Platt Cooper and James Elliott, law partners of Sanford’s, served as the third and fourth directors from 2001 through 2004, after which Elliott left the board and was not replaced, according to state documents.

Contacted Monday, one of Paine’s daughters, Tina Weeks of North Yarmouth, declined to comment on the settlement. Attempts Monday to contact Paine’s other daughter, Diana Paine of Millerton, N.Y., were unsuccessful.

Peter Murray, a Portland lawyer who serves as president of the museum’s board of directors, said Monday that the museum itself looked into Sanford’s past handling of the museum’s affairs and determined Sanford did nothing to cause the museum any harm. He said all parties agree, however, that from this point on it is best not to have Sanford involved with both the museum and the charitable trust.

“It’s important to do business [with the trust] going forward and it would be difficult for him to wear two hats,” Murray said.

Murray said the trust likely will provide between $100,000 and $200,000 in funding to the museum each year, which he said should be “adequate” to cover the museum’s expenses.

This past September, a different private trust established by Paine raised more than $8.4 million when it sold more than 60 antique vehicles and hundreds of items of auto memorabilia it owned at an auction at the Owls Head Transportation Museum. Paine’s will called for the dissolution of the private trust and, after its outstanding obligations have been paid, for the transfer of its property to the charitable trust that will provide funding for the museum.

Among the cars sold at the auction were a 1910 Mercedes four-seat Tourabout, which went for $887,000, and a 1913 Rolls-Royce Silver Ghost that sold for $832,000. The two-day auction, conducted by London-based Bonhams International Auctioneers, drew an estimated 500 people to the museum and telephone bidders from around the world.

Approximately 60 antique vehicles remain at the museum that, according to Murray, represent “the best ones” that have been displayed there. Several are autos that were made in New England, he said, and another – a 1913 Peugeot with a wooden body – seems to be the only such model remaining in the world.

He said the new directors hope to raise the museum’s profile and to make it more of a viable institution on Mount Desert Island. The museum is open to the public between Memorial Day and Columbus Day each year.

“We’re quite enthusiastic and hopeful,” Murray said. “People should know that the car collection will knock their socks off.”

The Associated Press contributed to this report.

btrotter@bangordailynews.net

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