BIDDEFORD (AP) – An investigation into alleged mismanagement of funds by a Saco payroll firm may show that its clients owe $8 million in taxes they thought were paid, says a group that represents many of the businesses that have been burned.

Maine Restaurant Association President Dick Grotton said he knows of five companies whose losses already total $1 million.

Federal agents raided Harmon-Baert Associates last week after the Internal Revenue Service served a search warrant.

The company did payroll processing and accounting, including paying taxes, for about 400 businesses for two decades.

Grotton said he considers the state partly to blame for the problems because it allowed Harmon-Baert to remain in business for three years without being registered or bonded.

He said losses could have been limited to around $1 million if the state had acted aggressively when the Saco firm failed to show it had taken the required steps to protect its clients.

State law requires payroll processors to show proof each year that they are bonded. Jerome Gerard of Maine Revenue Services acknowledged the state hasn’t followed through on such registrations because there are no procedures to do so.

Meanwhile, the restaurant association is asking Maine’s congressional delegation to intervene with the IRS in requesting special consideration for businesses whose taxes were not paid.

Grotton said he expects many businesses to shut down because of the mismanagement of their funds, eliminating as many as 3,000 jobs.

Two former clients have filed lawsuits in Superior Court against owner John Baert and the accounting firm, claiming he took payroll tax deductions totaling more than $285,000 but failed to make the tax payments.

In affidavits accompanying the suits, the former clients said Baert told them he had mismanaged the business and gotten in over his head.

Baert’s whereabouts are unknown and his home is for sale.

AP-ES-12-02-03 1414EST