'If these taxes are not paid ... you lose this property': Woman who missed tax payment stunned by note left on door

News-DemocratOctober 24, 2010 

Retired nurse Ora Leonard, 73, of 619 Broadway in Venice, nearly lost her home to a tax buyer in July 2009.


VENICE — Ora Leonard, 73, first learned about Dennis Ballinger in July 2009.

That’s when Leonard, a retired nurse, found a note left by an employee of Empire Tax Corp., one of Ballinger’s Decatur-based firms, on the front door of her tidy brick house at 619 Broadway.

In the note, Ballinger warned Leonard that he had bought up her 2005 back property taxes.

“To avoid losing this/your property contact the Madison County Clerk immediately,” wrote Ballinger, who could not be reached for comment for this story. “If these taxes are not paid immediately you lose this property!!”

The note stunned Leonard. Until that moment, she said, she had no idea she had missed a property tax payment — or that doing so could mean losing the home she and her late husband had bought two decades before.

Leonard and her daughter-in-law spent the next four months navigating Madison County’s tax-buying system. It was a stressful period, a time of uncertainty, as they tried to raise the money to pay the taxes and penalties.

“I feel like I’d been taken over hot coals,” Leonard recalled to a visitor on a recent afternoon.

Leonard spoke while seated in her house’s dining room, a cozy space crammed with photos of her five grandchildren. Outside, an American flag fluttered from a flagpole in her front yard.

“I couldn’t think straight. I couldn’t sleep,” Leonard said of the past year. “I felt like I was going to be put out. … It’s bad to have to wake up worried, to go to bed worried, to sit around the house all day worried.”

Ballinger had bought up Leonard’s unpaid 2005 taxes at a sale conducted by then-Madison County Treasurer Fred Bathon at an interest penalty of 18 percent, the legal maximum, county records show.

Leonard had missed her property taxes that year because she had just paid off her house mortgage, but still thought her bank was paying tax bills from an escrow account.

The tax sales conducted by Bathon from 2005 through 2009 are now the subject of state and federal investigations, prompted by a News-Democrat review of the sales. Bathon has declined requests for comment.

In Illinois, investors, known as tax buyers, can pay a person’s property tax debt. The tax buyers make money by charging the property owners a penalty rate, or, if the property owner doesn’t eventually pay up, the tax buyer can take the property.

The penalty rate for each piece of property is determined at the treasurer’s annual tax sale. In most counties, the sale is conducted like a reverse auction, where buyers undercut each other with lower bids. But witnesses say Bathon conducted the auction like a bid opening; multiple buyers would simultaneously shout 18 percent, then Bathon’s office would award the bid to whichever buyer appeared to shout first. In 2009, when Leonard was late on her 2008 taxes, Ballinger again stepped in and bought her unpaid taxes with a 12 percent penalty rate. Leonard was late on her tax bill that year because money was tight for her at the time, and she thought she had until the end of the year to pay it, she said.

For the two years, her total tax bill was $3,343. But interest charges and various county fees drove the amount of her debt up to nearly $6,000 — money she didn’t have.

“They’ve got you at a point where you don’t know which way to go,” Leonard said. “And with the economy like it is, it was hard to get any money.” Leonard eventually redeemed her taxes with the help of money borrowed from a family friend, enabling her to keep the house.

Leonard also depended on the help of her daughter-in-law, Tia Leonard, who accompanied her on many trips to the county courthouse to help straighten out the mess.

What especially irks Tia Leonard is the role that county government played in saddling her mother-in-law with such an excessive interest penalty, plus heavy fees.

“You trust it because it’s the courthouse,” she said. “And then to find that people are profiting, making money off senior citizens — it’s unconscionable. It’s not fair. I can’t think of words strong enough to express how bad that is.”

Tax buyers donate to Bathon

Ora Leonard is one of an estimated 10,000 Madison County property owners whose delinquent real estate taxes were sold at the maximum interest penalty of 18 percent to a handful of tax buyers who had given generously to Bathon’s campaign fund.

From 2006 to 2009, the last three years of Bathon’s tenure, the average penalty rate awarded to tax buyers was either 18 percent — the highest rate allowed under state law — or 17 percent.

The average fell to 9 percent after Bathon retired and Frank Miles, a fellow Democrat, was named treasurer in January.

In comparable counties, such as Champaign County — whose treasurer does not take donations from tax buyers — the penalty rate never rose above 5 percent and was as low as 1 percent.

With the penalty rates used between 2004 and 2009, Ballinger’s tax-buying firms have earned as much as $200,000 annually in penalties from Madison County property owners such as Ora Leonard.

Meanwhile, Ballinger became Bathon’s biggest campaign donor. During Bathon’s years as treasurer, Ballinger gave his campaign $29,100, state records show.

The three other biggest donors to Bathon's campaign — Scott McLean, of East St. Louis, at $27,950; Barrett Rochman, of Carbondale, at $27,200; and John A. Vassen, of Belleville, at $25,025 — declined comment or did not return calls seeking comment.

Election issue

The News-Democrat investigation has become the dominant issue in the race for treasurer between Miles and Kurt Prenzler, his Republican opponent.

The BND articles also led Bill Mudge, the Madison County state’s attorney, to call on U.S. Attorney Steve Wigginton and Illinois Attorney General Lisa Madigan to probe whether Bathon’s handling of the delinquent tax sales broke any laws.

The newspaper investigation also led Madison County Democratic and Republican lawmakers’ plans to introduce bills next month in the state Legislature aimed at making the tax sales more fair to property owners.

State Sen. Bill Haine, D-Alton, and state Rep. Jay Hoffman, D-Collinsville, have announced they are working together to draft a measure based on “best practices” followed by county treasurers statewide. These include the videotaping of tax auctions and mandating they be conducted as true reverse auctions with trailing bids — ideas already put in practice by Miles, Bathon's successor.

A team led by state Rep. Ron Stephens, R-Greenville, is taking a more aggressive approach. It is focused on barring county treasurers from accepting political donations from tax buyers, as well as drastically limiting the fees and interest rates on delinquent property taxes.

Stephens said he plans to introduce five separate bills during next month’s veto session in Springfield aimed at reforming the state’s tax-buying system.

One of the bills that Stephens plans to sponsor at the veto session next month would cap the total compensation that delinquent property taxpayers must provide to tax buyers at 18 percent per year, including all fees separately charged by the tax buyer.

Under current law, the interest penalty charged on late taxes compounds every six months by the amount of the original interest penalty. So after six months, the interest penalty Leonard was paying had doubled to 36 percent, and then to 54 percent after 18 months.

Stephens acknowledged that the five bills he plans to sponsor will make tax sales much less profitable to investors.

“But they’ll just have to learn to live with it,” he said. “It’s an idea whose time has come.”

Granite City homeowner Donna Ridgeway would be the first to agree.

A severe illness had left her in a coma for more than three months in 2007, during which she failed to pay her 2006 tax bill.

Financial hardships owing to her inability to work and huge medical debts forced her to miss the next two annual tax payments on her home at 3209 Wayne Ave., she said.

Prairie State Securities, of East St. Louis — owned by McLean, one of Bathon’s biggest donors — bought up Ridgeway’s unpaid taxes for $3,000. But by the time Ridgeway scraped together the money to redeem her taxes, interest and fees forced her to pay nearly $9,000.

Prairie State did not return Ridgeway’s phone calls, while the Madison County clerk’s office demanded all the money up front, Ridgeway said. “They demanded the full amount or don’t walk through this door,” she said.

When she tried to explain her medical problems to the people at Prairie State and to the county, no one wanted to listen, she said. “They said, ‘Too bad. You have until this date, and it’s over with,’” she said.

Contact reporter Mike Fitzgerald at mfitzgerald@bnd.com or 239-2533. Contact reporter Brian Brueggeman at 239-2511 or bbrueggeman@bnd.com.

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