Victories for honest government came to Madison County in 2013 by way of convictions in a tax-buying, bid-rigging scheme.
Former Madison County Treasurer Fred Bathon pled guilty in February to violating the Sherman Anti-Trust Act. He 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 contributions.
Prosecutors say that between 2005 and 2009, 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 sentenced on Dec. 6 to 30 months in prison, two additional years of supervised release and a $20,000 fine by Chief U.S. District Judge David Herndon. His fine is less than a sixth of the minimum under court guidelines.
“None of this should have happened,” Bathon responded. “It was my fault.”
Apologizing to county tax payers, he said, “They didn’t get what they deserved.”
U.S. Attorney Steve Wigginton said Bathon used his position to obtain campaign contributions and engaged in illegal restraint of trade.
Bathon was elected treasurer in 1998, running the annual tax lien sale in a clean and legal manner until 2004 when he set a “one bid only” policy, which was encouraged by campaign contributors, according to prosecutors.
Tax percentages rose from two percent in 2004 to 18 percent in 2008. Just last year, it was back down to 2.64 percent.
Wigginton described the tax sales saying, “You would yell out your bid and that would be it, which basically made it a subjective sale.
"Anyone who yelled out an amount less than 18 percent would be ignored."
By 2005, Bathon instructed his employees to select winners, turning the auction into a reward for select individuals.
Of those awarded individuals, three of them pleaded guilty on Oct. 19 in federal court in East St. Louis.
Barret R. Rochman, 70, of Makanda, Scott K. McLean, 51, of Belleville, and John A. Vassen, 56, of O’Fallon each pleaded guilty to participating in non-competitive tax sales and violating the Sherman Antitrust Act.
They were charged with making campaign donations to Bathon in exchange for receiving property tax liens at non-competitive interest rates.
Violating the Sherman Antitrust Act is punishable by up to 10 years imprisonment and a $1 million fine, but Herndon said at Bathon’s sentencing that each buyer faces a sentence ranging from 10 to 16 months in prison. A sentencing hearing is scheduled for Feb. 19, 2014.
“It’s disappointing that we have so many public corruption cases here,” Herndon said.
Three class action lawsuits also were filed on behalf of distressed homeowners following Bathon’s guilty plea.
Clinton County Circuit Judge Dennis Middendorff is presiding over those lawsuits, which have been consolidated, in Madison County.
Plaintiff attorney Steven Giacoletto of Collinsville, representing Scott Bueker (13-L-276) said the guilty pleas bode well for the class action cases.
“Before the guilty pleas, we were convinced we were going to be able to prove our case,” Giacoletto said. “This will make it happen perhaps faster. I don’t want to say easier.”
Plaintiff attorney Nelson L. Mitton of St. Louis, representing Geralyn Lindow (13-L-390) said the guilty pleas prove corruption was at play.
“This is clearly a positive development for the plaintiffs and all the political class members,” Mitten said. “It obviously shows that Mr. Bathon and others engaged in inappropriate conduct.”
Attonrey Aaron G. Wishaar and Christopher A. Michener of Reinert, Weishaar & Associates in St. Louis represent plaintiff Virgil Straeter (13-L-376).
John Barberis Jr. of St. Jacob, who is running for Circuit Judge in Madison County in 2014, also represents plaintiff Bueker.
Herndon and Bathon’s lawyer, Clyde Kuehn of Belleville, suggested Bathon’s bid rigging scheme caused little harm to its apparent victims, arguing that Bathon didn’t directly benefit from the scheme, while others did.
“This is a very serious crime with drastic impact, but we are having a hard time discovering exactly what that impact was.”
Kuehn said 99 percent of the homeowners have redeemed their liens.
Current Madison County Treasurer Kurt Prenzler states that he blew the whistle on the scheme in 2006, having learned about the"unscrupulous" tax sales from other Illinois county treasurers.
Prenzler campaigned for Treasurer in 2006, but lost the race to Bathon.
"As a certified public accountant, I like to gather information on financials and began calling the treasurers to put together cost comparables on their offices," Prenzler stated. "Some treasurers told me tax buyers who came to their tax sales complained that in Madison County, they were pressured into making political contributions, and other payments.
"I checked it out. Indeed, Bathon received tens of thousands of dollars from tax buyers. The other treasurers who tipped me off told me that receiving those donations was ethically wrong.
"I decided then to become a whistleblower — to shed light on the unethical tax sales taking place."