Defendants accused of participating in a Madison County bid-rigging scheme allege circumstantial evidence is insufficient

By Heather Isringhausen Gvillo | Jan 24, 2019

Several defendants accused of participating in an alleged bid-rigging conspiracy with former Madison County Treasurer Fred Bathon argue in reply memorandums that the plaintiffs rely on circumstantial evidence in their third amended complaint.

Since the plaintiffs filed their third amended complaint on Sept. 25, 2017, several defendants have sought summary judgment.

The defendants have made various arguments in their motions, including allegations that the plaintiffs’ claims are barred by the statute of limitations and that several defendants were not involved in a conspiracy with respect to sales of delinquent property taxes in Madison County.

The plaintiffs responded by filing memorandums in opposition to the defendants’ motions for summary judgment on Nov. 30. They argue that there is “ample” evidence for the jury to find that the defendants agreed to the collusion and participated in the conspiracy.

Defendants Joseph Vassen, John Vassen, and VI Inc. filed a reply memorandum in support of their motion for partial summary judgment on Jan. 4 through attorney Paul Slocomb of Hoffman Slocomb LLC in St. Louis.

They argue that the plaintiffs have failed to plead any specifics under the fraudulent concealment doctrine. They add that the plaintiffs have not pled that VI Inc. nor the Vassens made misrepresentations or performed acts known to be false with the intent to deceive the plaintiffs.

“In fact, plaintiffs only claim that Bathon concealed the circumstances of the alleged conspiracy,” the reply states.

The defendants allege the plaintiffs have failed to provide any testimony or evidence that the defendants made any representations regarding the tax sales, that the plaintiffs relied upon any representations from the defendants or that an underlying conspiracy exists.

The defendants further argue that the plaintiffs failed to allege that a fiduciary duty existed.

“As a general rule, mere silence on the part of the defendant and failure by the plaintiff to discover a cause of action is not enough to establish fraudulent concealment,” the reply states.

The defendants argue that the plaintiffs plead a breach of fiduciary claim against Bathon for his acts while in office, but he was no longer a fiduciary when he ceased his position as treasurer in December 2009.

“Therefore, plaintiffs could no longer take safe harbor in the fiduciary duty exception to the fraudulent concealment doctrine after December 2009,” the reply states.

“Even if the fiduciary/special relationship exception applies, if there was an apparent reason to suspect that Bathon had committed wrongdoing, then the plaintiffs were obligated to further investigate and the statute limitations is no longer tolled,” it continues.

The defendants add that the statute of limitations cannot be tolled because the allegations of conspiracy involve publically known facts available as early as 2006 in a Belleville News Democrat article on Bathon’s campaign contributions coming “from investors who had the best seats at county tax auctions.”

Several 2010 articles also made public the same allegations raised by the plaintiffs: high penalty rates, favorable seating arrangements, campaign contributions and a no trailing bid policy.

The defendants also allege the plaintiffs failed to prove that their trust or confidence in Bathon prevented them from discovering the alleged scheme sooner.

Defendant James Foley filed a reply memorandum in support of his motion for summary judgment through attorney Ann Barron of Heyl Royster Voelker & Allen PC in Edwardsville.

“When plaintiffs’ best evidence is analyzed, it is clear that (1) plaintiffs are relying on circumstantial evidence, (2) plaintiffs are relying on their own interpretation of Bathon’s hearsay testimony, not the actual testimony and (3) plaintiffs’ evidence is not indicative of a conspiracy or an antitrust violation,” the reply states.

Foley argues that the plaintiffs have failed to provide evidence of his role in any conspiracy, instead relying on a “mish-mash interpretation of Bathon’s testimony to improperly attempt to establish Mr. Foley’s involvement.”

Foley also argues that he is not a competitor of any tax buyer and does not have market power.

“Clearly, Mr. Foley, by plaintiffs’ own admissions, was not a competitor, could not have restrained trade and could not have monopolized. Summary judgment should be granted in Mr. Foley’s favor,” the reply states.

Defendant John Scott filed a reply memorandum in support of his motion for summary judgment through attorney Mark McLean of McCarthy Leonard & Kaemmerer LC in Town and Country, Mo.

Scott argues that the plaintiffs fail to provide any evidence that he participated in any conspiracy, let alone that he did so knowingly and willingly. Instead, they allege that because Scott purchased properties at the sales in question, he must have conspired with those who pled guilty to violations of the Sherman Antitrust Act.

He further argues that conspiracy cannot be predicated on “guilt by association.”

Defendants Kenneth Rochman, CDBR LLC and Blue Sky Vinyards LLC filed a reply memorandum through attorney Natalie Kussart of Sandberg Phoenix & von Gontard PC in St. Louis.

The defendants argue that “mere presence at the commission of the wrong or failure to object to it is not enough to charge one with responsibility under the theory of conspiracy.”

The defendants argue that its ownership by “the Rochman family” is irrelevant.

Blue Sky also argues that the plaintiffs wrongfully assume it participated in a conspiracy because it allegedly sent wine to the treasurer’s office and Bathon visited the winery. However, the defendant was not a tax buyer and did not participate in the delinquent tax sales.

Further, Blue Sky made a single contribution to Bathon’s campaign in June 2009 for a golf scramble, after the relevant time frame for the alleged conspiracy.

Barrett Rochman, Sabre Group and S.I. Securities also filed a reply through Kussart, arguing that the plaintiffs have failed to provide any testimony or evidence that they made any representations regarding the tax sales in question.

Plaintiff attorney Nelson Mitten of St. Louis filed the bid-rigging suit on behalf of a class of individuals who allege Bathon arranged for tax buyers to charge interest at the maximum legal limit of 18 percent at auctions of delinquent property taxes from 2005 to 2008.

The plaintiffs allege Bathon conspired with each tax purchaser defendant to establish a “no trailing bid” policy, meaning the process required one-time, simultaneous bidding. Rather than allowing a series of bids, all bidders had to bid at once, with the auctioneer accepting the lowest bid that was heard.

The defendants allegedly then made an agreement with Bathon to bid the maximum of 18 percent in the simultaneous bidding.

Bathon was charged in February 2013 with violating the Sherman Antitrust Act. He pleaded guilty the same day. Defendants Scott McLean, Barrett Rochman and Joe Vassen also entered guilty pleas to federal antitrust charges in October 2013.

Mitten filed the third amended complaint after Associate Judge J. Kelly of Fayette County granted their request to re-join Madison County and Madison County Board Chairman Kurt Prenzler as defendants.

They had been previously excused by the Fifth District Appellate Court on an appeal regarding class certification.

Madison County Circuit Court case number 13-L-276

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