Attorneys from three law firms who have worked as class counsel in a Madison County bid-rigging suit are asking the court to approve their fee request after two tax buyer defendants reached a $300,000 settlement agreement.
The motion for distribution of settlement proceeds for reimbursement of class counsel’s costs was filed March 20 by plaintiff attorney Steven Giacoletto of Collinsville.
The motion states that the court approved two settlement agreements for $150,000 with defendants Dennis Ballinger and John Scott, for a total of $300,000.
The settlement notice allowed up to $75,000 of those funds to be used for reimbursement of costs incurred by class counsel. They request just $49,176.09.
Specifically, the Giacoletto Law Firm requests $17,913 in costs, Riezman Berger PC requests $27,533.39, and Aaron G. Weishaar requests $3,729.61.
“The costs incurred by the class counsels have been necessary and reasonable in their amounts; and the reimbursement of these costs does not prejudice the defendants or the class members in any way,” the motion states.
Several tax buyers who are also accused of participating in the bid-rigging conspiracy from 2005 to 2008 opposed the settlement agreements. Attorney Andrew Kasnetz of Sandberg Phoenix & von Gontard filed the opposition on behalf of defendants Barrett Rochman, who is deceased, Kenneth Rochman, Blue Sky Vineyards LLC, CDBR LLC, Sabre Group LLC and SI Securities LLC.
They argue that the motion to approve notice of the settlement is “incomplete and does not meet the requirements of Illinois law governing class action settlements.”
“Specifically, the motion asks this court only to approve the proposed notice to the class but does not ask this court to approve the substance of the settlement itself as required by Illinois law,” Kasnetz wrote.
“Plaintiffs have not presented the necessary information and documentation to allow the court to conduct the required fairness analysis,” he added. “Plaintiffs have not articulated or demonstrated any workable damages methodology necessary to administer a class settlement.”
The defendants argue that the plaintiffs are attempting to quickly bypass the procedural requirements for class action settlements.
Defendants Joseph Vassen, John Vassen, VI Inc. and James Foley filed joinders to the opposition.
Bid-rigging allegations
According to a third amended complaint filed by class co-counsel Nelson Mitten of St. Louis on Sept. 25, 2017, the class alleges former Madison County Treasurer Fred Bathon arranged for tax buyers to charge interest rates 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 Foley was supposed to “foster competition in order to obtain the lowest penalty percentage.” However, Mitten wrote that he agreed to act in concert with the conspiracy by accepting the bids at the maximum rate.
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 percent,” 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.
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. Presiding Judge J. Marc Kelly of Fayette County 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.
Madison County Circuit Court case number 13-L-276