CEO blames Swartz for liens
SEAWAY CAPITAL: Debts prompt attacks from opponents to Scozzafava's House bid
By NANCY MADSEN
TIMES STAFF WRITER
THURSDAY, JULY 23, 2009
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Seaway Valley Capital Corp. CEO Thomas W. Scozzafava said Wednesday that former officer Christopher M. Swartz is responsible for the tax liens outstanding on three Seaway Valley businesses.
The liens, totaling about $192,000, were used in a conservative Republican blog attack on Mr. Scozzafava's sister, state Assemblywoman Dierdre K. Scozzafava, R-Gouverneur.
Ms. Scozzafava was endorsed Wednesday by the Republican Party county committees to become the party's nominee for the 23rd U.S. Congressional District, which will open once Rep. John M. McHugh is confirmed as secretary of the Army.
Mr. Scozzafava said the liens have nothing to do with Ms. Scozzafava, describing her as a "passive investor." Ms. Scozzafava was the chief operating officer of Seaway Capital Partners at its founding in 2002 and corporate secretary for WiseBuys, the retail chain owned by Seaway Valley, at one time.
The liens were filed by the state Department of Taxation and Finance and the federal Internal Revenue Service against Sackets Harbor Brewing Company, Alteri's Bakery Inc. and Good Fellos Brick Oven Pizza and Wine Bar. Those businesses were acquired by Seaway Valley in a merger with North Country Hospitality on June 1, 2008.
As part of the merger, Mr. Swartz, who was president and CEO of North Country Hospitality, became vice president and chief operating officer of Seaway Valley. He resigned the positions April 3.
He was unavailable for comment on Wednesday.
"Tax accrued and was unpaid way in excess of the amount disclosed prior to the deal," Mr. Scozzafava said.
In the merger filing, available through the Securities and Exchange Commission, Mr. Scozzafava and Mr. Swartz signed an agreement which said, "All Taxes due and owing by either North Country or any Subsidiary have been paid. Except as set forth on Schedule 3.08, which will be delivered after the Closing, neither North Country nor any Subsidiary is the beneficiary of any extension of time within which to file any tax return."
In the following section, it said "Except three distinct situations discussed between the two principals, there are no legal actions, lawsuits, proceedings or investigations, administrative or judicial, pending ..." against North Country Hospitality.
Those three distinct situations were what amounted to about $75,000 in payroll taxes owed by Alteri's Bakery, Mr. Scozzafava said Wednesday.
He said Mr. Swartz suggested the language at the last minute. The amount owed was not identified because the agreement is filed and available to the public, which Mr. Scozzafava said Mr. Swartz also encouraged.
"It seemed logical and I trusted him," Mr. Scozzafava wrote in an e-mail. "I shouldn't have."
In the end, about a dozen tax issues were discovered that totaled more than $400,000. Mr. Scozzafava said Seaway Valley intervened and paid past-due county property taxes for many of the properties.
"Seaway has paid its taxes from the point it took over forward, in addition to paying the tax liabilities from before the merger," Mr. Scozzafava said. "Mr. Swartz and I are working toward a resolution on the taxes."
The liens all list the individual properties, Mr. Swartz, or Sackets Harbor Brewing Co. co-founder Stephen S. Flynn as the principals responsible for the taxes
