A class of property owners seek approval of their class action notice in an eight-year-old bid-rigging suit alleging several tax buyers participated in a scheme with former Treasurer Fred Bathon.
Attorney Steven Giacoletto of Collinsville filed the motion to approve class action notice on May 20 on behalf of the plaintiffs.
The plaintiffs filed a previous notice of class action, but some defendants filed objections to the notice in July 2020. The suit has been stagnant since those filings.
Giacoletto wrote that the new class action notice addresses the previous objections.
The plaintiffs propose to inform putative class members by publishing the notice in a “newspaper of general circulation in Madison County.”
“This is a change from the original motion, and is due to the fact that the various dispositive motions are still pending, addresses for those property owners are over 10 years old, that there is a strong likelihood that the sales upon which this case is based resulted in new owners of the properties, and that the age of the addresses combined with the current poor operation of the U.S. Postal Service such notices would not be forwarded,” Giacoletto wrote.
The proposed class includes “all persons who owned any parcel of real estate for which a Tax Sale Certificate was sold 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 in excess of 12% 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 most recent version of the class action was filed by attorney Nelson Mitten of St. Louis on Sept. 25, 2017. They 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.
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 auctioneer James Foley and non-party auctioneer 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 at 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.
A notice of Rochman’s death was filed in the case on Feb. 19 through his attorney Natalie Kussart of Sandberg Phoenix & von Gontard PC in St. Louis.
The complaint was originally filed on Feb. 13, 2013, and has gone through years of litigating to determine which defendants are proper . Madison County moved for dismissal as a defendant in the original complaint, and the trial court dismissed counts for conspiracy and respondeat superior for failure to state a cause of action.
In response, two new class actions were filed in March 2013. The plaintiffs in the original case then filed a consolidated amended complaint on Feb. 24, 2014. A second amended complaint under the theory of res judicata was filed on July 11, 2014.
Madison County was again dismissed as a defendant when the Fifth District Appellate Court concluded that the plaintiffs could not state a valid claim against the defendant. Fayette COunty Associate Judge J. Marc Kelly then granted the plaintiffs’ request to amend their complaint to rejoin Madison County and former treasurer Kurt Prenzler as defendants following Bathon’s May 2017 deposition. Prenzler currently serves as Madison County Board Chairman.
During his deposition, Bathon testified that numerous Madison County officials knew of, and participated in, the alleged conspiracy.
Madison County moved for dismissal again arguing that the complaint is barred by the doctrine of res judicata, the doctrines of waiver and collateral estoppel, and the statute of limitations. Kelly granted the motion on May 22, 2020.
Claims against tax-buyer defendants and county officials remain pending.