New suit says Bathon destroyed evidence of tax auction sales

Former Madison County Treasurer Fred Bathon allegedly destroyed audio and video recordings of proceedings of tax lien auction sales from 2005-2008, according to a lawsuit filed March 6 in Madison County Circuit Court.

In the lawsuit filed by St. Louis attorney Aaron Weishaar, those recordings would have provided “the best evidence of the alleged collusive bidding practices, as well as the sham nature of the conduct of the sales by the auctioneer and county officials identified, all of which are directly at issue and relevant to the matter,” the lawsuit states.

Plaintiff Virgil Straeter is suing Bathon, Mark Von Nida, Alan Dunstan, Madison County and 16 other defendants in a third case Bathon is facing over his handling of tax sales.

"It would have been foreseeable to a reasonable person in the position of the county officials responsible for such recordings that said recordings would be needed as material evidence in potential civil litigation on behalf of persons wronged by the defense,” the lawsuit states.

Straeter claims he requested the audio and video recordings under the Illinois Freedom of Information Act but was informed they were lost.

Straeter claims he and other property owners who were required to redeem their properties at artificially inflated prices have sustained monetary injury. Straeter seeks class certification for anyone whose real estate tax debt on property in Madison County was sold to buyers at artificially high interest rates from 2003-2008.

The defendants, and in particular Bathon, had a duty to preserve those recordings as evidence. They breached that duty by destroying or otherwise disposing of them, so they cannot be produced in answer to lawful request, the suit says.

According to the lawsuit, Madison County property owners who were delinquent on property taxes were forced to pay artificially inflated prices to redeem their properties and avoid foreclosure. The second result of the conspiracy was Madison County property owners were unable to redeem their properties, because of the artificially high price.

Straeter owned properties that he was forced to pay artificially high prices to redeem and clear the liens from his properties, the complaint states.

“The scheme has been and remains ongoing as properties implicated in the tainted sales remain now or remained within the past year subject to redemption at inflated prices due to artificial interest attached to the sales tax certificates by the County,” according to the complaint.

Bathon served as Madison County Treasurer from November 1998-December 2009. On Feb. 5, Bathon was charged by the U.S. Attorney’s Office for the Southern District of Illinois with violating federal law, based on his activities in conducting tax sales within Madison County. He pled guilty to the charge the same day. His sentencing is set May 17.

The tax lien sale conspiracy from 2003-2008 affected the amount of interest attached to the tax liens on about 10,000 Madison County properties, meaning thousands of potential plaintiffs, the suit says.

Bathon and the buyers established, maintained and used monopoly power over a substantial part of state trade or commerce to exclude competition and control prices in violation of law, the suit says.

The lawsuit accuses Bathon, Von Nida, Jim Foley and the buyers of agreeing to participate in an “unlawful act,” the violation of the Illinois Antitrust Act and the federal Sherman Act.

The buyer and defendants agreed that none of them would bid lower than 17 or 18 percent on “good” properties, resulting in tax lien certificates being issued at non-competitive interest rates, also according to the lawsuit.

The remaining defendants in the lawsuit are RLI Insurance Company, Western Surety Company, Jim Foley, John Vassen, Dennis Ballinger, Scott McLean, Robert Luken, John Scott, Edward Beasley, Land of Lincoln Securities, Prairie State Securities, SI Securities, Sabre Group, Empire Tax Corp., and Vista Securities.

Straeter is requesting a judgment against the defendants for damages to compensate loss for him and his class, their costs and attorneys’ fees and for an award of damages. He demands a trial by jury.

Aaron G. Weishaar and Christopher A. Michener of Reinert, Weishaar & Associates in St. Louis represent the plaintiff.

The case is assigned to Madison County Circuit Judge William Mudge.

Madison County case number 13-L-376.