Defendants in tax buyer class actions argue that delinquent property owners brought trouble on themselves

By The Madison County Record | May 5, 2014


Madison County property owners whose tax troubles turned into campaign cash for Democratic candidates must respond to arguments that they brought their troubles on themselves.

In a civil suit over bid rigging at auctions of delinquent taxes, defendants claim apparent victims can’t sue because they didn’t object when paying their debts at high interest.

Former tax buyer Barrett Rochman and his companies advanced the argument on April 21, as did Empire Tax Corporation, a company of Dennis Ballinger.

Rochman’s lawyer, Andrew Kasnetz of St. Louis, wrote that the voluntary payment doctrine barred the claims of plaintiffs.

“Plaintiffs, or someone on plaintiffs’ behalf, voluntarily paid the named defendants an 18 percent penalty rate to redeem their properties under a claim of right to payment and with full knowledge that the named defendants purchased the property at 18 percent penalty rate," Kasnetz wrote.

He invoked the doctrine of accord and satisfaction, writing that plaintiffs tendered full payment of all demands and defendants accepted payments with that understanding.

They should have paid their taxes in the first place, Kesnetz wrote.

"Plaintiffs’ claims are barred or limited individually for each and every negligent action committed by plaintiffs, including but not limited to the non-payment of taxes or redemptions, payment of which would have precluded the alleged cause of action herein," he wrote.

For Ballinger, Gordon Nash of Chicago filed similar defenses of voluntary payment and accord and satisfaction.

He also argued that plaintiffs waived any claim for relief.

"Because plaintiffs, or third parties on their behalf, redeemed their delinquent properties by paying the 18 percent penalty rate, they voluntarily and intentionally relinquished their right to assert a claim based on the sale of their delinquent property taxes,” he wrote.

He wrote that plaintiffs suffered no damages, or their damages are speculative.

Each year from 2005 to 2009, county treasurer Fred Bathon conducted illegal auctions of more than 2,000 delinquent taxes.
He arranged to favor tax buyers who contributed to his campaign fund. In turn, he shared his contributions with other Democratic candidates.

U.S. Attorney Stephen Wigginton charged Bathon with antitrust violations last year.

Wigginton did not seek restitution, writing that it would be impracticable to calculate individual damages.

Lawyers for property owners disagreed, and they filed three class actions to recover the losses of their clients.

Clinton County Circuit Judge Dennis Middendorff, taking the cases by special assignment, consolidated them and invited answers.

The first two defendants to answer, John Scott of Champaign and Robert Luken of Alton, pleaded that they tried to stop the bid rigging.
Luken filed a counterclaim against county board chairman Alan Dunstan, former state’s attorney William Mudge, former county clerk Mark Von Nida, former assistant state’s attorney Thomas Gibbons, and assistant state’s attorney John McGuire.

Three of them have advanced to higher positions. Von Nida serves as circuit clerk, Mudge as circuit judge and Gibbons as state’s attorney.
Plaintiffs had already named Dunstan, Von Nida, auctioneer James Foley, and the county itself as defendants.

Their lawyer, Ann Barron of Heyl Royster in Edwardsville, filed motions to dismiss claims against them on April 21.

She wrote for Dunstan that, “Neither the Illinois Constitution nor Illinois statutes require a county board or a county board chairman to direct, oversee, monitor, supervise, or discipline a county treasurer or a county clerk with respect to tax sales.”

For Von Nida, she wrote that “the statutory duties of a county clerk do not relate to the actual conduct of tax sales or the selection of winning bidders at a tax sale.”

Plaintiffs included Foley as an afterthought, she wrote, alleging no facts to establish that he was part of any agreement.

For the county, she wrote that, “There is no allegation that Madison County retained any of the funds which plaintiff paid to redeem their properties after they failed to pay their property taxes.”

For tax buyer John Vassen, Paul Slocomb of St. Louis asserted First Amendment protection and complained of local prejudice.

“Defendants cannot receive a fair trial in this court because the inhabitants of the county are prejudiced against defendants in particular and tax buyers generally, due, in whole or in part, to the negative and one sided media attention that has been generated about tax buyers and the defendants generally,” he wrote.

Tax buyer Edward Beasley, through St. Louis lawyer Robert Bassett, moved to dismiss claims against him because he didn’t make contributions to Bathon.

On April 23, Luken objected to the answers of Dunstan, Von Nida, and the county.

His lawyer, John Stobbs of Alton, wrote, “Luken persistently objected to the illegality of the tax sales being conducted by Bathon. The objections were ignored.”

"Luken was scorned," Stobbs wrote. "Bathon retaliated against Luken.”

“The citizen had no power to control the sales. The officials had all the power to do so, but abrogated their power and their responsibilities.”

Bathon, Rochman, Vassen and tax buyer Scott McLean pleaded guilty of antitrust charges in federal court.

Chief District Judge imposed sentences of two and a half years for Bathon, two years for John Vassen, 18 months for McLean, and 16 months for Rochman.

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