Government: Determining restitution in Bathon case 'not practicable'

Calculating the losses of individuals who may have been victimized by the conspiracy that former Madison County Treasurer Fred Bathon pled guilty to earlier this month is not practicable, the government asserts.

The U.S. Attorney’s Office for the Southern District of Illinois filed a motion Monday regarding restitution, seeking an order from the federal court that it is impracticable to determine the losses of individual victims of the property tax sales scheme “given the complex issues of fact related to the large number of victims.”

The government also asked the court to find that it “has exercised its ‘best efforts’ to accord crime victims their right of restitution in the instant case” and should not expend additional resources in “determining the exact amount of restitution owed to each of several thousands of victims in the case.”

The motion stems from the conspiracy charge lodged against Bathon, who earlier this month pled guilty to violating the Sherman Antitrust Act. He admitted to structuring tax sales in a way that eliminated competitive bidding and allowed tax buyers to engage in price fixing.

Bathon, according to the U.S. Attorney’s Office, did this for delinquent property tax sales conducted between 2005 and 2008, during which time he awarded properties at non-competitive interest rates and made sure his largest campaign contributors were the winning bidders.

As a result, the federal prosecutor's office asserts that by 2007 and 2008, distressed homeowners were charged the statutory maximum interest rate – 18 percent – on nearly every property tax lien sold.

Bathon, who served as treasurer from 1998 until his 2009 resignation, is set to be sentenced May 17. Under the terms of his plea, he faces between  33 and 41 months in prison. He will also lose his entire public pension as a result of his conviction.

In its recently filed motion, the attorney's office notes that federal laws, as well as the U.S. Sentencing Guidelines, require courts to order restitution as a condition of probation or supervised release in cases in which restitution is appropriate.

The office, however, points to two exceptions to that requirement: 1) if the court finds that the number of victims is so large that it makes restitution impracticable and 2) determining complex issues of fact or the amount of losses would complicate or prolong the sentencing process.

The government asserts in its motion that both exceptions apply to Bathon’s case.

“A restitution determination would require the Government to begin investigating the particular details of roughly 10,000 property tax transactions after the guilty plea, when the criminal inquiry into Bathon’s activities has ended,” the motion states, noting that “the sheer volume of property tax sales involved in this case makes a restitution determination logistically impracticable.”

Pointing to a previously filed motion regarding victim notification, the government contends that determining restitution would “be expensive and largely unsuccessful for the Government to attempt to identify and locate each of the owners of the properties subject to the tax sale.”

U.S. Magistrate Judge Stephen Williams earlier this month granted the government’s motion "to establish a procedure for crime victim notification," finding that the number of victims makes notification nearly impracticable.

As such, he ordered the government to create a publicly-accessible web page to provide updates on the case and a contact for additional information.

The federal prosecutor's office also asserts in its motion that Bathon’s case presents the additional complexity of having varying interest penalty rates.

Some victims’ loss amount, according to the motion, would include “the original penalty rate applied to their unpaid tax bill” while other victims’ loss amounts would “correspond to a compounding interest rate.”

The motion also notes that determining restitution for a third group of victims, those who were forced into foreclosure as a result of the conspiracy, would require “an examination of the valuation of the property prior to foreclosure, offset by a credit against lost applicable to cases involving pledged collateral."

“It is obvious under the facts of this case that a restitution determination cannot reasonably be made,” the government contends in its motion.

The prosecutor's office further asserts that since Illinois law requires public employees convicted of a felony to forfeit their pensions, Bathon wouldn’t be able to pay a restitution judgment even if an amount could be calculated.

According to the motion, the Antitrust Division of the U.S. Department of Justice advised the federal prosecutor's office “that it is common in municipal tax lien bid rigging cases for the parties to agree, and the Court to order, that the complex and voluminous issues of restitution are better resolved by way of civil litigation.”

Late last week, St. Jacob attorney John Barberis and Collinsville lawyer Steve Giacoletto filed a lawsuit in Madison County Circuit Court on behalf of five property owners who suffered financial losses as a result of Bathon's tax sale auctions.

The suit that seeks class action status names Bathon, Madison County and individuals tied to the tax sales -- John Vassen, Dennis Ballinger, Robert Luken, John Scott, Scott McClean and Edward Beasley—as defendants.

The plaintiffs seek an award of money for the losses and injuries they suffered as a result of the tax scheme. The suit states that as a result of the defendants’ conduct, Madison County property owners have lost or could lose millions of dollars in interest.