AUGUSTA – The case of a Saco accountant accused of failing to forward client taxes to the IRS has brought back painful memories to people in central Maine who lost thousands of dollars in a payroll scam in the late 1990s.

The investigation of John Baert has left victims of the Mainely Payroll scandal and state officials wondering whether Maine has sufficient legal protections against abuses by firms that handle business payrolls and withheld taxes.

Baert, owner and operator of Harmon-Baert Associates Inc., is accused of failing to deliver $2 million of his clients’ quarterly payroll taxes to the Internal Revenue Service. He was indicted on 12 counts of mail fraud and one count of obstructing administration of the IRS.

Clifford Levesque, president of Augusta-based Mainely Payroll, was convicted in federal court in 1997 of failing to forward $2.2 million of client money to the IRS. He altered quarterly tax returns and sent a smaller amount than the total due, keeping the remainder and putting some into companies run by his son, Michael Levesque.

The six-year scheme unraveled in 1996 when Clifford Levesque could no longer continue masking the evidence and confessed to an IRS agent about the diverted funds.

Faced with the prospect of having to pay their tax bills a second time, some businesses were forced to close. Other people who had planned to retire had to continue working to satisfy their tax debts.

In the wake of the Mainely Payroll scandal, state law was changed to offer some protection for people who use payroll processors. Officials, however, are concerned that the law is too weak.

“The payroll processor statutes now in Maine law are very limited. In no way do they totally protect their clients,” said Jerome Gerard, acting Maine state tax assessor.

While payroll processors now are required to register with the Maine state tax assessor and provide proof of liability insurance, Baert’s firm was last registered in Maine in 2000 and was apparently uninsured, said Assistant Attorney General William Baghdoyan.

“We know of no assets or insurance that covers those losses,” Baghdoyan said. There are no state charges currently in the Baert case because the federal government is pursuing it.

“We deferred to them,” Baghdoyan said. “They have more severe penalties and more resources to do such a complicated investigation with large amounts of records.”