Madison - St. Clair Record

Monday, March 30, 2020

Hearing set in stagnant Madison County bid-rigging suit after year of no action


By Heather Isringhausen Gvillo | Jan 23, 2020

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After a bid-rigging class action has been stagnant for more than a year, Fayette County Judge Mark Kelly has scheduled a hearing on several pending motions filed by Madison County and various tax-buyer defendants.

The hearing is set for March 5 at 10 a.m. on Madison County’s motion to dismiss and the tax-buyer defendants’ objections and motions to strike a notice of pending class action.

Madison County had originally been dismissed as a defendant in the case when the Fifth District Appellate Court concluded that the plaintiffs could not state a valid claim against the defendant.

In its motion to dismiss, Madison County argues that the complaint is barred by the doctrine of res judicata, the doctrines of waiver and collateral estoppel, and the statute of limitations.

Defendant James Foley originally filed the motion to strike and objection in October 2018 through attorneys Ann Barron, Patrick Cloud and Michael Schag of Heyl Royster Voelker & Allen in Edwardsville.

Foley argues that the notice is “incorrect and confusing.”

Foley alleges the plaintiffs used a different class definition in their notice than the one that was certified by the court. Specifically, the approved class definition includes a penalty rate bid of 12 percent or higher while the proposed class notice includes a penalty rate bid in excess of 0 percent.

The class certified by the court is defined as “all persons who owned any parcel of property that was sole at a Madison County tax sale auction in the years 2005, 2006, 2007 and/or 2008 and with respect to which a Certificate of Purchase was obtained at such auction in response to a penalty rate bid of 12 percent or higher. This class does not include any property owners whose property was not bid upon at the relevant tax sale and was therefore forfeited to the State of Illinois.”

The class definition provided in the plaintiffs’ notice is directed to “all persons who owned any parcel of property that was sold at a Madison County Tax sale auction in the years 2005, 2006, 2007, and/or 2008 with respect to which a Certificate of Purchase was obtained at such auction in response to a penalty rate bid in excess of 0 percent.”

Foley also argues that Dawn Bueker, Jason Moss and Christine Moss were withdrawn as named class representatives in December 2014, but they included as plaintiffs in the notice.

Foley claims the plaintiffs “imply that the class will be certified in the future with respect to ‘the determination of damages’ when in fact the Illinois Appellate Court directed that ‘we partially decertify the class for the individual damages determination in light of the need for individualized proof.’”

Defendants Joe Vassen, John Vassen, VI Inc., John Scott, Scott McLean, Land of Lincoln Securities LLC, and Prairie State Securities joined the motion and objection.

The last action on the docket prior to the scheduled hearing included several motions for summary judgment and replies in support of those motions filed on Jan. 4, 2019.

The defendants seeking summary judgment 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, arguing that there is “ample” evidence for the jury to find that the defendants agreed to the collusion and participated in the conspiracy.

Plaintiff attorney Nelson Mitten of St. Louis filed an amended bid-rigging suit on Sept. 25 on behalf of the class after Kelly granted the plaintiffs leave to rejoin Madison County and former treasurer Kurt Prenzler as defendants.

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

In their complaint, the plaintiffs allege former treasurer Fred 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 sought to re-join Madison County to the action following former treasurer Fred Bathon’s May 11 deposition.

Mitten wrote that during Bathon’s deposition, he testified that numerous Madison County officials knew of, and participated in, the alleged conspiracy.

In their amended complaint, 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.

Mitten wrote that Bathon used a seating chart to ensure that the tax purchaser defendants would be recognized by the auctioneer and the Madison County employees conducting the sales as the winning bidders.

The plaintiffs allege Foley and non-party Patty Ward Stanley conducted the auctions and were supposed to “foster competition in order to obtain the lowest penalty percentage.” However, Mitten wrote that they agreed to act in concert with the conspiracy by accepting the bids at the maximum rate.

“The actions of Bathon, Foley, and Stanley were motivated in least in part to benefit not only themselves, but Madison County as well, by enticing the Tax Purchaser Defendants, as well as others, to purchase more tax certificates each year, such that the County would have more money in its treasury each year,” Mitten wrote.

The plaintiffs allege that as the actions of the tax purchaser defendants became evident, other purchasers also began bidding higher than they otherwise would have.

“Because there was no or virtually no competitive bidding, the bidding was rigged, prices were fixed, and almost every single property was sold at the statutory maximum penalty percentage of 18%,” Mitten wrote.

Then after Bathon resigned, every annual tax sale conducted has resulted in an average penalty bid of less than 5 percent, the suit states.

The plaintiffs allege that in return for rigging the tax sales, Bathon received campaign contributions and support from tax purchasers

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.

Madison County Circuit Court case number 13-L-276

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Organizations in this Story

Madison County Circuit CourtMadison CountyHeyl Royster Voclker and Allen