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Hemorrhaging money and deeper in debt – Question to the Leader Herald: Where is the cash?

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By James Mitchell


The Certified Public Accountant for Dorchester Publications and the Everett Leader Herald newspaper, Wayne Sparrow, offered his sworn testimony at the Boston law offices of Saul Ewing on Sept. 8, 2023 in the ongoing Defamation Lawsuit filed by Carlo DeMaria, Jr. against the Everett Leader Herald Newspaper, Dorchester Publications, LLC, Andrew Philbin, Sr., Matthew Philbin, Joshua Resnek, and Sergio Cornelio.

Sparrow testified that he began as CPA since the newspaper was purchased by Andrew Philbin, Sr. in 2016 – as well as doing accounting services and tax preparations for owner Matthew Philbin for over 20 years for his various business holdings and properties. The CPA stated that he would receive the company QuickBooks files from Philbin’s bookkeeper, Alissa Johnson, which would provide Profit & Loss statements for the company. Sparrow stated that if someone provided cash to the company, he wouldn’t know it and it would not be reported on the company’s tax returns.

Sparrow stated that he has also provided CPA services for Andrew Philbin, Sr. since 1982 and had discussed the defamation lawsuit with him on only one occasion. Sparrow stated that he recalled the senior Philbin telling him that there was a lawsuit filed against his son, Matt, involving the mayor of Everett.

The accountant was then shown an exhibit from the Dorchester Publications Profit & Loss statements from January 1 through November 20, 2019, that was provided by Alissa Johnson, which showed the newspaper had lost approximately $129,000. The company balance sheet showed the company’s assets amounted to $849 for 2019, with debts in the amount of $234,417.38 that were owed to Philbin’s various entities he owned. By year’s end of 2019, the financial picture for the newspaper showed an income of approximately $112,000, expenses totaling approximately $254,000, total assets of $3,260.83, and it losing approximately $146,492.

Atty. Jeffrey Robbins asked Sparrow, “Mr. Philbin, according to this balance sheet that was provided to you, had loaned Dorchester Publications $254,000?”

“Except for that ‘Due to/from LOC 2110’ in the amount of $128,800,” replied Sparrow, referring to a possible Line of Credit from the bank.

In another exhibit, for Dorchester Publications Profit & Loss balance sheet for 2020, the total income for the newspaper was $117,076.74 with total expenses for that year at $198,810, showing the company lost $73,733.59. The total liabilities for 2020 amounted to $225,739.

“So at the end of 2020, Dorchester Publications liabilities were about – were more than 10 times the assets, correct?” asked the attorney.

“Yes,” replied Sparrow.

It was also noted by the attorney that the CPA marked “must be paid back” by the line item under liabilities for the amount of $28,100 in Covid relief or PPP money from the federal government.

The balance sheet for 2020 also showed that Philbin loaned Dorchester Publications approximately $185,000 under “Total Due to/from MTP” – initials for Matthew T. Philbin. But Sparrow said he questioned whether that was accurately reported by the company bookkeeper. “The LOC tells me that it’s a bank loan and I don’t really know – I don’t really know if it’s a bank loan or not,” he said.

When asked if he relied on the balance sheet to perform his work, Sparrow stated that on a single-member LLC, he only reports the income statement.

Asked if he agreed with the attorney if, according to the Dorchester Publications 2020 December balance sheet, the company’s liabilities exceeded 10 times what its assets were, Sparrow stated, “yes.”

Regarding the exhibit which provided Dorchester Publications Profit & Loss statement and balance sheet for calendar year 2021, Atty. Robbins inquired about the total income for the newspaper of $82,303 and total expenses for the newspaper totaling approximately $159,000-plus; twice its income. “And the newspaper lost, in 2021, $116,500, correct?” asked Robbins.

“Yes,” replied Sparrow.

According to the information provided during the deposition, the newspaper, in the years 2019, 2020 and 2021, had lost approximately $334,720. It might also be safe to say the company lost money in 2018 and 2022 as well, although Sparrow stated that he hasn’t prepared the company’s 2022 tax returns yet so he wouldn’t know. So at the end of 2021, the company’s balance statement shows total assets of $1,214. And liabilities over $300,00 – 300 times the company’s total assets. Sparrow agreed.

Atty. Robbins asked Sparrow if he’s ever seen any notes or instruments of any kind documenting any monies to the company; any notes or instruments of any kind reflecting any obligations on the part of Dorchester Publications to repay Philbin; or any itemization of money from customers or a complete listing of receipts from any source. Sparrow stated that he did not.

The witness was then presented an exhibit that featured excerpts from a deposition from Philbin’s former office manager, Elena Vega Molina, where she states under oath she confirms that the newspaper’s corrupt publisher, Josh Resnek, made a deposit of a large amount of cash, stating that she believes the amount of the deposit was approximately $7,000, based on her recollection. Vega stated that QuickBooks would reflect when cash was deposited and would also have the source of the cash.

Robbins presented another exhibit from another deposition, this time from Resnek himself in September 2022, where Resnek testified that cash was paid to the newspaper and was logged in by Mary Schovanec, the office manager. Resnek admitted that he took cash payments from opponents of Mayor Carlo DeMaria.

“So you were the instrument through which cash was provided to the Leader Herald by opponents of Mr. DeMaria, correct?” asked the attorney.

“Opponents and others,” replied Resnek.

“Will you agree with me – if not, no problem – that you have received thousands of dollars of cash payments for the Leader Herald from individuals that you knew were opponents of Mr. DeMaria?” asked Robbins.

“Yes,” replied Resnek.

Atty. Robbins then asked Resnek if the information of cash payments made to the newspaper over the past several years would be on record; that Mrs. Schovanec would have that information, Resnek replied it would be.

The attorney then asked Sparrow if any of records that were provided by Dorchester Publications reflect its receipt of cash payments; Sparrow replied, “no.”

The CPA is then shown an exhibit of a document provided by Dorchester Publications which lists balance sheets from the years 2019, 2020 and 2022, which also lists a separate page called “cash flows, profit and loss statements” and another page titled “Received Payments for All Customers” – all of which pertain to the years 2019, 2020 and 2022. Sparrow stated that he has never seen the document “Received Payments for All Customers” before or was aware that the company kept it in their ordinary course of business.

The attorney points out that in the document “Received Payments for All Customers” from January through December 2020, the only cash payment was for $20 dated Jan. 21, 2020, from “Over The Counter.” In 2021, the only cash payment made was on September 23 from the “Committee to Elect Stephanie Smith” for $500. and another cash payment made on September 13 for $20 from “Over The Counter.” Sparrow stated that by looking at the documents he could only identify $520 logged into the Dorchester Publications QuickBooks ledger.

Asked if there was cash received by Dorchester Publications but not logged into QuickBooks, if he would not know about it, Sparrow agreed he wouldn’t. And if they took cash and paid vendors, he wouldn’t know about it.

“As a tax preparer, you know that Dorchester Publications is required to list all their income, correct?”

“Correct,” replied the CPA.

“And if they didn’t pay taxes on that income, that would be a problem, correct?” asked Atty. Robbins.

“Correct,” replied Sparrow.

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