EDWARDSVILLE, Ill. (CN) - A longtime Madison County treasurer rigged tax lien real estate auctions for his political allies, a class action claims in Madison County Court.
Plaintiff Virgil Straeter claims Frederick Bathon, Madison County treasurer from November 1998 through 2009, conspired with several companies and auctioneer James Foley to carry out the scheme.
Bathon has pleaded guilty to federal antitrust charges and promised to reveal his co-conspirators as part of the plea deal, according to the complaint.
"During his tenure as treasurer, and particularly in connection with the tax sales over which he presided from 2003 through 2008, Bathon colluded and conspired with Jim Foley and others, who called the sales as auctioneer, and with the buyers, who were also contributors to his re-election campaign, to rig the bidding at the sales so that the winning bid would always or nearly always by made by one of the members of the conspiracy at or near the statutory maximum 18 percent interest rate," the complaint states.
Bids in the tax-lien auctions start at the state's maximum 18 percent annual rate, and are bid down toward zero, with the low bidder awarded the lien certificate.
Straeter says the scheme forced distressed property owners to pay inflated prices to redeem their properties and avoid foreclosure. In some cases, Straeter says, the owners were unable to reclaim their property because of the conspiracy.
Straeter says the scheme caused him to pay higher prices to reclaim 11 of his properties. All of those properties were bid at the 18 percent maximum, according to Straeter.
"Since Bathon stepped down as treasurer and competitive bidding was reintroduced to the process, the average interest rate has been below 4 percent for each sale," the complaint states.
Straeter claims approximately 10,000 properties were subject to the tax lien conspiracy.
The class consists of all property owners whose property was auctioned off to the co-defendants, or who had to reclaim their property at inflated rates from 2003 to 2008. They seek actual and punitive damages for violations of the Illinois Antitrust Act, civil conspiracy, spoliation, breach of fiduciary duty and negligence.
They are represented by Aaron G. Weishaar, with Reinert, Weishaar & Associates of St. Louis.
Named as defendants are Bathon, Foley, Madison County, RLI Insurance Company, Western Surety Company, Land of Lincoln Securities, Prairie State Securities, VI Inc., SI Securities, Sabre Group, Empire Tax Corp., Vista Securities, former Madison County Clerk Mark Von Nida and seven individual buyers.
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