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Tax buyers in 'pay to play' scheme sentenced; Vassen receives 24 months, McLean 18 months

MADISON - ST. CLAIR RECORD

Friday, November 22, 2024

Tax buyers in 'pay to play' scheme sentenced; Vassen receives 24 months, McLean 18 months

Tax buyers who participated in a “pay to play” scheme under former Madison County Treasurer Fred Bathon were sentenced in federal court today by U.S. District Judge David Herndon.

John Vassen, 56, of O’Fallon received a 24 month prison sentence and Scott McLean, 51, of Belleville received an 18-month sentence for their participation in rigged tax auctions between 2005 and 2008.

Herndon sentenced both men outside guidelines to longer terms than prosecutors requested.

He said that Vassen was a “big player” and should therefore receive a sentence that was six months greater than McLean’s, but six months less than Bathon who bore the most responsibility for the “criminal enterprise.”

Prosecutors asked that Vassen be sentenced to 16 months in prison. Vassen’s attorney John O’Gara of Belleville asked for a split 10-month sentence of five months in custody and five months of home confinement.

For McLean, prosecutors asked for one year plus one day in prison.  His attorney, Jeffrey Demerath of St. Louis, asked for probation.

Vassen apologized to the court saying he was sorry for what his dishonesty had done to his family, community and colleagues. He said he would spend the rest of his life trying to regain their trust.

McLean said, “Words cannot express the shame that I feel for participating in these particular crimes.”

He apologized to “my community that supported me, to my friends that also have supported me and my family that loves me. I’m so profoundly sorry.”

Vassen and McLean pleaded guilty in October to violating the Sherman Antitrust Act, a crime punishable by a maximum of 10 years in prison and a $1 million fine.

Herndon ordered Vassen and McLean to each pay a $25,000 fine immediately.

They were both allowed to surrender voluntarily to the Federal Bureau of Prisons.

Bathon pleaded guilty last February to structuring property tax sales in a way that increased interest rates for tax buyers, in exchange for campaign contributions. He was sentenced in December by Herndon to 30 months in prison.

Assistant U.S. Attorney Steven D. Weinhoeft represented the government. U.S. Attorney Stephen Wigginton was present but did not address the court.

McLean's sentencing

Herndon was not persuaded by Demerath’s argument that his client was the “least culpable” because McLean did not participate in discussions in 2004 that hatched the conspiracy.

Demerath said McLean, a real estate developer, was a “good person” who walked into a crime but was “here to take his medicine.”

“He contributed what he was told to contribute and when he was told to contribute,” Demerath said. “Mr. Bathon was not a person to be contradicted.”

Demerath insisted that McLean had no discussions in the origination of the scheme.

“What does that matter?” Herndon said. “He paid to play.”

Before handing McLean a sentence that was six months longer than what prosecutors sought, Herndon pointed out that McLean made $686,437 in excess interest above and beyond what he would have made if market rates would have prevailed during the four-year period of the scheme.

“(His) role doesn’t just go to origination,” Herndon said. “It goes through the entire scheme.”

According to Herndon, McLean contributed $30,450 to Bathon’s campaign committee, the second highest amount among tax buyers. McLean also purchased $2.2 million in tax liens during the scheme period.

Herndon said that defined McLean as being “right in the middle of the pack” tax liens purchased and excess interest gained as well as “right in the middle of the pack” of campaign contributors.

“He is not like a substantially less player than these others when you look at facts and figures,” Herndon said.

“Defendant was all-in,” Herndon said. “He was not substantially less culpable…He had full knowledge he had to pay to play. He knew what he was doing. There was no minimal participation. He was a full blow part of the scheme pay to play.”

Weinhoeft said that of the more than 9,000 tax liens sold between 2005 and 2008, 7,119 of them were purchased by entities within the scheme. He described the scheme as taking place during the middle of a financial meltdown where “vulnerable” people may have lost their jobs or suffered some other calamity.

“Residential tax liens,” Weinhoeft said, “are more than parcels. These are peoples’ homes. Homes are special and sacred.”

While Weinhoeft argued that McLean’s role in “targeting” vulnerable people was an aggravating factor, he also told Herndon that McLean was the first to come in to talk to the U.S. Attorney, not knowing if he would be a witness or defendant. Weinhoeft said McLean gave his “best effort” and provided “useful information. “

Vassen's sentencing

Herndon said that Vassen purchased $2.3 million in tax liens, having earned $696,616 in excess interest above and beyond what normal market conditions would have produced during the period in question.  In terms of campaign contributions, Herndon said Vassen was third highest among tax buyers, having contributed on average $4,530 annually during the scheme period.

O’Gara told the court that tax buying is a legitimate business that helps keep local governments, including schools, properly funded with their share of real estate taxes.

O’Gara said that tax auctions can be “rough and tumble," but that tax buyers don’t set out to “screw” distressed property owners.

Herndon said that he understood that tax buying was a legitimate business and that government has to have tax dollars to operate.

“Government needs these tax dollars,” he said. “Government needs this process to operate correctly.”

Weinhoeft argued that Vassen was more culpable than McLean and he also portrayed Vassen, a real estate attorney, as participating in a pay to play scheme that threatened peoples’ homes.

“More than property ID numbers,” he said. “It’s where children are supposed to be safe. Where parents perfect cherished memories.”

He also said Vassen approached Bathon’s immediate successor Frank Miles and made a $1,000 contribution “to perpetuate the system and cultivate the same relationship, all of which a licensed attorney should have known better.”

O’Gara said things “devolved” after the 2005 tax auction.

He said that after that auction, Bathon approached the tax buyers.

“Fred goes to them – ‘Pay up, I’ve got a tough race in ’06’,” O’Gara said. “You did really well. I need $5,000- $7,000. Whatever. It devolves from there.”

He also asked the Court to consider that there would be no way of determining if the properties on the auction block were there due to “spend thrifts” or because an owner was “down trodden.”

He said that some people lost their properties because they bought “big homes” and were “over their head.”

O’Gara told Herndon that Vassen, as a former Village of Shiloh trustee, was well-respected on both sides of the political spectrum. He also said that Vassen has devoted significant time and effort toward charitable causes.

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