Boat yard tax evaders sentenced to probation


A Millersville boat dealer and his wife were placed on probation for two years yesterday and ordered to pay more than $16,000 in back taxes after they pleaded guilty to failing to pay excise taxes on boats they sold.

Arthur Lilly, 46, and Renee Lilly, 33, pleaded guilty to willful failure to remit excise taxes on boats sold at their marina in Edgewater from 1988 to April 1991.

Anne Arundel Circuit Judge Warren B. Duckett Jr. ordered the couple to pay $16,618 and suspended a five-year jail sentence after Assistant Attorney General Karen J. Kruger, the prosecutor, said she would not recommend jail time as part of an Oct. 23 plea agreement.

She said the couple's willingness to make the payments, combined with Mrs. Lilly's status as the mother of a 6-year-old and Mr. Lilly's recent heart attack helped rule out incarceration.

The couple showed up in court yesterday with a check for $10,000 toward the back taxes.

They had been operating Lilly's Yacht Yard in Edgewater from 1982 to 1990 when auditors from the state Department of Natural Resources (DNR) noticed discrepancies between the boat sales reported at the yard and the amount of excise tax collected, Ms. Kruger said.

The auditors, who were reviewing records, found that the Lillys had not paid enough excise tax on 18 boats and were late with payments for 24 others between 1987 and 1990, Ms. Kruger said. The state filed a civil suit and collected $8,294 from the Lillys.

After a more extensive audit found further irregularities, Natural Resources police seized the boat yard's financial records for the period from October 1988 to April 1991. Auditors found more sales for which taxes were not paid in those records, Ms. Kruger said.

She said that the boat yard's former employees would testify that Mr. and Mrs. Lilly hid documents and and files from DNR auditors and that customers often complained that they had not received their boat titles because the Lillys had not paid the excise taxes on them.

Mr. Lilly said after the hearing that he paid more than his share of state excise taxes.

He also complained that the DNR unfairly targeted him and put his boat yard out of business by seizing his property in June 1991 as part of the investigation.

"They came in with their shotguns and carted my file cabinets off in five truckloads," he said.

He said the dealership has been closed since then.

Mr. Lilly now operates the Indian Landing Marina, a boat storage facility along the Severn River in Millersville, and a boat service yard on the South River near Edgewater.

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