Steven Gibbs / Fermental
Vs. North Carolina Department Of Revenue

Hello and thanks for your curiosity and concern.

For legal purposes, the following statement is from Kristen Gibbs, owner of Fermental, and wife of Steven Gibbs.

As a long-standing member of the Wilmington community as well as a strong supporter of local charities, nonprofits, and public schools over the years, I would like the opportunity to share my portion of the facts in relation to this ongoing battle with the state tax department. It may be a bit lengthy, but this story has many layers and has encompassed a large amount of time.

When the original charge was first presented against Steve, he was unable to offer much information due to the ongoing investigation as well as potential counteraction from the state of North Carolina.

After negotiation, accepting the state’s final plea offer was a very difficult decision to make for himself and our family, but I believe it was the best decision considering the circumstances and the need to move forward. This unfortunate legal dispute has been ongoing for several years. Its conclusion is a welcoming moment in a lengthy and unnecessary conflict that has adversely altered my life and business, postponing numerous opportunities for growth and success.

But we are still here. Fermental isn’t going anywhere.

Yes, my husband entered a plea of guilty under a plea agreement to end this legal predicament. It sucks. It really does. The decision was based mainly on financial concern as well as the potential risk that a jury trial adds for both sides.

To take this case to trial would have cost a minimum of $50,000.

Fifty-thousand-dollars.

After trial, the state would not be responsible for paying any associated attorney fees or legal costs if the results did end in his favor. We had to use loans and credit cards just to get to this point in legal representation. As you can imagine, the state of North Carolina is not a simple entity to challenge in court.

As a reminder, he was not found guilty or convicted in an actual trial, he accepted a negotiated plea with the state.

Anyone that knows us and knows Fermental, also knows that none of these criminal charges are true. It is a complex assembly of false accusations centered around an incompetent accountant who didn’t pay much attention to us and completely mishandled a simple state tax audit.

And, why are there multiple charges against him? Basically, the state investigators could not find enough in assumed underpaid tax figures to reach their ultimate goal of $100,000. Instead, the prosecutor divided our tax years into select periods of time, allowing them to curate multiple charges for the state and for the county. A larger monetary number would have resulted in one, single charge, attached with much larger fines and retributions. Unlike most other states, North Carolina places this tax misconduct into a tier of penalty that is well beyond its actual worth. It is set into the same criminal level as manslaughter and the possession of weapons of mass destruction.

In some states, this tax penalty is a misdemeanor offense with minimal consequences.

As you can imagine, the past few years have been quite a challenge for us and for Fermental. Procuring a lawyer to defend him from something he never did is still a bit surreal to us and the Fermental staff.

Nonetheless, let’s get one thing set straight and in the open. We paid taxes. He paid taxes. We continue to pay taxes. Every month. Every month since we opened in March of 2013. Sometimes, he was a couple days late. Sometimes, the state sent us a notice with corrections that were always fixed and paid immediately. He submitted what he believed to be the required and collected amount due and went on with business as usual. We filed all end-of-year taxes appropriately and accurately with the assistance of licensed, professional accountants and CPA firms. Accountants we employed to handle the delicate and overwhelming administrative duties of tax preparation and state/federal paperwork.

Unfortunately, given the circumstances that occurred during the audit and after prolonged negotiations, it was recommended by several lawyers to voluntarily accept this guilty plea offer from the state.

Oddly enough, if he had never collected and remitted any taxes at all, nothing would have happened. Not collecting taxes at all is a misdemeanor. Instead, his valid attempts to pay sales tax and hire accountants to handle his bookkeeping have resulted in felonious charges that, although fictitious, have brought about this final stage of judicial resolution.

There is and has never been any embezzled money to benefit himself or others.

We decided to take the road of less resistance. We are tired, we are ready to get past this unfortunate situation, and we want our lives back. To fight for justice would mean more money, time, and energy that we don’t have.

We are done. We want this behind us, and we want to continue to push forward with Fermental.

And that’s what we’re doing. We’re not going anywhere. Fermental will carry on as usual.

But for the record, here’s a condensed history of the situation:

In 2017, the state began an extensive audit of Fermental. Under the recommendation of the auditors, we appointed our CPA as Power Of Attorney to handle the details of the audit process.

This particular CPA firm was: Stilwell & Mills, PLLC. Specifically, Joseph “Jay” Stilwell.

This was a big mistake.

During the course of this examination, Steve became aware that there were issues in the way he was collecting, calculating, and remitting our monthly sales tax. Basically, our outdated POS system was a mess and not sufficient at reflecting accurate numbers in the reports he was using. This was a Point Of Sale system we originally found online for free.

Once the audit concluded, we had been patiently waiting to receive a final number for the amount we owed the state. Instead, state tax agents initiated an investigation into a crime: assuming that he knowingly, with intent, stole money from the state to line his own pockets. This is not true.

Any quick look at our personal financial records will show that my family and I live simple lives. We don’t have much and don’t need much.

The auditors could have easily used this as an opportunity to educate and inform, however, they chose to hand over their findings to state investigators who simply took the auditors information as accurate and complete. Very little investigation occurred.

Assigning our CPA as Power Of Attorney seemed like the best option at the time, as Steve had no background or education in tax preparation or finance management. In the end and after additional analysis, it was evident that our CPA completely mismanaged our audit, inserting his own information without our knowledge as well as providing the auditors with fabricated documents that eventually selected us for this criminal investigation.

The Power Of Attorney in this matter is held to little legal significance.

Since its inception, Fermental has utilized two different accounting firms. Each had access to everything and never once mentioned an issue with the sales tax we were paying/reporting. These were professional, long standing CPAs handling several major businesses around the local area.

None of them said anything or noticed any problems. We hired them to reconcile our monthly numbers and to confirm accuracy of all deposits and withdrawals. We employed professional accountants to assist with our financial reporting and they appear to have failed.

Shortly after these issues were presented by the state, we moved on to a more reliable and detailed accounting team. A new and modern POS system is now in place to avoid any future reporting errors.

On a side note, my family and I look forward to handling our accountant’s misconduct in a separate legal case that will most likely not be publicized.

In short, what was obviously a simple computer error from a substandard POS program is being construed as an opportunity for the state to serve an agenda: to charge a small business with a crime for publicity; as well as a scare tactic for other businesses.

Be careful if you own and operate a business in North Carolina.

And please find yourself a reputable accountant. We do not recommend Joseph “Jay” Stilwell, CPA.

But, most importantly, Fermental isn’t going anywhere. Steve is not going anywhere. This is a personal issue that he will resolve on his own. You’ll still see him at Fermental working as usual. There will be no Go Fund Me account. There will be no benefit event. We will simply continue our daily business and work towards the future.

*If you do want to help, please continue to support Fermental when you can, give us a few positive reviews online, and educate any social media antagonists we may gather as a result of this legal mess.

Feel free to share this webpage.

As always, Fermental will continue to offer the area’s best selection of wine, beer, food trucks, entertainment, and family fun. Fermental will continue to host and support charity events and donate to a growing list of local nonprofits and public schools.

This temporary obstacle is near its end and we will carry on as usual.

We are grateful for all we have learned during this process. Our debt to the state has been paid in its entirety. As we move on to the civil side of this legal mishap, we hope to share more details as time progresses to help other local business owners avoid going through what we did. We have been stretched to grow, develop, and change for the best. We are thankful for the outpouring of support from family, friends, staff, and patrons. It’s because of you that Fermental pushes through this bureaucratic obstacle and onward into a future of fun and fermentation.

Thank you for your support.

See you soon. We love you.

-Kristen Gibbs/Fermental