Heather Isringhausen Gvillo Jun. 23, 2015, 4:37pm


After declaring his intention to approve a Madison County bid rigging class action, visiting judge William Becker filed his official order granting class certification on June 16.

He originally noted his approval of class certification on May 6, but postponed an official order until after a June 4 status conference to hear from the defendants if they planned to appeal.

The class consists of anyone who owned a parcel of property that was sold at a Madison County tax sale auction from 2005 to 2008 at a penalty rate bid of 12 percent or higher.

Becker, a Clinton County associate judge, was appointed to preside over the case to avoid the appearance of conflicts of interest.

Federal prosecutors, who brought down former Madison County treasurer Fred Bathon and tax buyers, say that between 2005 and 2009, tax buyers engaged in price fixing by only bidding the statutory maximum interest rate of 18 percent. The rigging was so pervasive that distressed homeowners were charged the maximum rate on nearly every property tax lien sold.

Bathon was convicted of structuring property tax sales in a way that eliminated competitive bidding and increased interest rates for the tax buyers in exchange for campaign contributors.

He and tax buyers Barret Rochman, Scott McLean and John Vassen pleaded guilty of antitrust violations in 2013.

Bathon was sentenced to 30 months in prison, but only has to serve 18 months. He will be free tomorrow – June 25.

In his order, Becker admitted that determining the damage for each individual class member affected by the alleged fraudulent tax sales is “somewhat problematic,” but said he is “satisfied that an appropriate method to determine damages can be reached.”

“The problem is that if the alleged tax sale scheme is proved true, all or some of the defendants created a system whereby it is difficult if not impossible for an individual plaintiff to prove that a lower rate would have been bid and what that rate would have been for a particular piece of property,” Becker wrote.

“The court fails to understand how the defendants, if liable, can essentially rig the game so that they can illegally obtain the money and then say, ‘We know we got the money illegally, we know that it belongs to the group or portions of the group, we don’t know which ones of the group are the owners, and because you the owners can’t prove your damage, we get to keep the money,’” Becker wrote.

He also pointed out that the court is “well aware” that each individual real estate is considered “unique.”

“The defendants argue that each property needs to be analyzed separately because some of the properties would have been sold at the 18 percent rate for valid economic reasons and myriad other individualized reasons,” he said.

But he likened the case to a hypothetical situation where a group stole from people in the courtroom.

“Imagine if on the day of the arguments January 22, 2015, several people in concert ran into the courtroom full of people and in concert stole the briefcases, wallets, purses, jewelry, papers, pens and other items in the courtroom. Can it really even be seriously considered that the culprits get to keep the items because not everyone remembers how much money they had or what was in their briefcase?

“Plaintiffs do have to prove damages but liable defendants do not get to keep the money because their conduct makes it difficult to determine the amount of damage.”

Becker noted that the case presents varying theories of liability, but held that the “central issue in the case is whether the defendants engaged in a plan or course of conduct that damaged taxpayers whose property was sold for delinquent taxes” from 2005-2008.

Becker also held that while the defendants are charged with involvement under various theories and counts in the complaint, the central issue remains the same and the jury or the court will be able to determine if a defendant is not liable under any particular count.

“The court fails to see how having multiple trials for what is essentially the same issue does anything other than create multiple cases and multiple possibilities for an inconsistent result,” he wrote.

“If each person whose property was sold for delinquent taxes in the alleged fraudulent tax sales filed a separate suit alleging various theories of liability, this court, in the absence of a motion to consolidate, would likely consolidate the separate claims of the separate plaintiffs for trial on its own motion. Any unrelated or purely personal claims could be severed.”

Additionally, Becker held that the “numerosity” requirement and the “adequacy of representation” requirement are met by the class, making class certification appropriate.

Steve Giacoletto, Aaron Weishaar and Nelson Mitten were present at the status conference for the plaintiffs.

Ann C. Barron was there for defendants Madison County and Jim Foley; Paul T. Slocomb for defendants John Vassen, Joe Vassen and V.I. Inc.; Timothy Sansone for defendants S.I. Securities LLC, Sabre Group LLC, Barrett Rochman, CDBR LLC, Blue Sky Vinyards LLC and Kenneth Rochman; and Gordon Nash for Dennis Ballinger Jr., Empire Tax Corp. and Vista Securities Inc.

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