Several tax buyer defendants accused of participating in an alleged bid rigging conspiracy with former Madison County Treasurer Fred Bathon object to the plaintiffs’ proposed class notice and method of distribution, arguing that "many people no longer read the newspaper" and won't see the "inaccurate and confusing" notice.
The defendants filed a joint objection to the plaintiffs’ motion to approve class action notice on July 8, saying "it did not contain the correct class definition or a correct list of the class representatives."
The defendants argue that the proposed class is improperly broad. They propose the notice be directed to “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 bid rate in excess of 12 percent and with respect to which a sale in error was not ordered by the court.”
The class proposed by the plaintiffs does not include the condition in regards to the sale in error.
“Indeed, there are approximately 594 parcels which fit within plaintiffs’ class definition that in fact suffered no loss whatsoever because the court declared a sale in error on those parcels and therefore the delinquent taxes, and the resulting penalty interest rates of which plaintiffs complain, are not owed by the owner of record,” the objection states.
The defendants also seek to specify that the class definition does not include properties that were not bid upon and went to the Madison County Trustee at a penalty bid rate of 18 percent.
The defendants object to the plaintiffs’ change in publication of the notice from mailing it to putative class members to publishing it in a newspaper. The plaintiffs allegedly made the change as “a result of a likelihood of property owners moving and the ‘poor operations of the U.S. Postal Service.’”
“As class counsel, however, it is inappropriate for plaintiffs’ counsel to state in 2018 and 2020 that individual notice via mail is the best method and now a year later state publication is best without providing any data that any of the class members have actually moved. In fact, it appears the named plaintiffs have not moved,” the objection states.
“Making suggestions on how notice should be given is insufficient,” it adds. “Plaintiffs must come forward with a plan to protect the interests of the absent class members who they represent.”
“If publication is the best practicable notice to be given under the circumstances, then plaintiffs must also include the names of the newspapers/publications that will reach a majority of the population in Madison County. Plaintiffs have not even identified what newspapers have general circulation in Madison County or how many individuals those newspapers reach. Given that many people no longer read the newspaper, publication on a website may also be necessary,” the objection continues.
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 for the amended complaint, 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.”
Bid-rigging allegations
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.
Several defendants filed motions for summary judgment in January 2019. A hearing on those motions is scheduled for Dec. 13 at 9:30 a.m.
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.
Madison County Circuit Court case number 13-L-276