Clinton County Circuit Judge Dennis Middendorff held a hearing Sept. 5 in Madison County Circuit Court in three combined class action suits accusing former Madison County Treasurer Fred Bathon and others of rigging the county’s delinquent property tax sales.
Associate Judge Stephen Stobbs recused himself from the case months ago. Middendorff was brought in presumably for his independence in a case involving a former county official. Chief Judge David Hylla has been contacted for comment, but had not returned a phone call by press time.
At the hearing, Middendorff set an Oct. 7 deadline for all discovery responses and discovery served on defendants, including all requests to admit served by one of the lead plaintiffs, Scott Bueker. In the Bueker case, he also granted a plaintiffs' motion to allow class certification to remain in effect.
Middendorf denied all defense motions to stay discovery in the three cases.
Bathon, who served as treasurer from 1998 until 2009, pled guilty in February to violating the Sherman Antitrust Act in relation to the rigging of tax sales.
Bathon faces between 33 and 41 months in prison and will lose his entire public pension as a result of his conviction. He was scheduled to be sentenced on May 17; however, a federal judge continued sentencing twice while Bathon cooperates with authorities.
Since entering the plea, Bathon and others have been targeted in the three civil lawsuits Middendorf presides over.
Charges against Bathon stem from delinquent property tax sales conducted between 2005 and 2008, during which time federal prosecutors say Bathon structured tax sales in a way that eliminated competitive bidding and allowed tax buyers to fix prices.
Before Bathon’s election, the Madison County tax sale allowed potential purchasers to make lower bids on the amount of penalty that would be assessed. Bathon created a system designed to inflate prices for home owners to redeem their homes and ensure properties would be sold to Bathon’s campaign contributors at non-competitive interest rates.
By 2007 and 2008, the federal prosecutor’s office says the bid rigging and price fixing was so pervasive that distressed homeowners were charged the statutory maximum interest rate of 18 percent on nearly every property tax lien sold.
According to court documents, Bathon and tax purchaser co-defendants allegedly tried to control or maintain the penalty rate, which was charged to property owners seeking to redeem their properties after such tax sales, in violation of the Illinois Antitrust Act.
Bueker is lead plaintiff in a case (13-L-276) that alleges property owners suffered financial losses due to tax sales between 2005 and 2009.
Virgil Straeter is lead plaintiff in a case (13-L-376) in which defendants are accused of forcing Straeter and others similarly situated to pay artificially high prices to redeem and clear liens from their properties.
Geralyn Lindow is lead plaintiff in a case (13-L-390) claiming she and others were forced to redeem property at inflated amounts. She brings the action on behalf of herself and anyone who owned property sold at a Madison County tax sale auction from 2005 to 2008 and obtained a certificate of purchase in response to a penalty rate bid of 12 percent of higher.
Madison County, Bathon, John Vassen, V.I. Inc. Retirement Plan, V.I. Inc., Dennis Ballinger, Empire Tax Corporation, Vista Securities, Robert Luken, Luken Investment Company, John Scott, Scott McClean, Land of Lincoln Securities LLC, Praire State Securities, Inc., Barrett Rochman and SI Securities are listed as defendants, according to court documents.
Robert Luken filed a motion to stay in April, which was denied, stating that it is “in the interests of justice to stay these civil proceedings until completion of the federal investigation.”
“The complaint and contemporaneous media accounts disclose that federal authorities are continuing their investigation into Madison County tax sales during 2005-2009,” Luken’s motion continues.
Clyde Kuehn of Belleville represents Bathon.
Paul T. Slocomb of St. Louis represents Vassen, V.I., Inc. Retirement Plan and V.I., Inc.
John Dale Stobbs of Alton represents Luken.
Andrew Kasnets, Timothy Sansone and Natalie Kussart of Sandberg Phoenix and von Gontard represents Barrett Rochman and SI Securities.
John Barberis of St. Jacob and Steve Giacoletto of Collinsville represent Bueker.
Aaron G. Weishaar and Christopher A. Michener of Reinert, Weishaar & Associates in St. Louis represent plaintiff Straeter.
Nelson L. Mitten, Charles S. Kramer and Paul A. Grote of Riezman Berger in St. Louis represent plaintiff Lindow.
Madison County Circuit Court case number 13-L-276, 13-L-376 and 13-L-390