Federal probe into tax buyers expands

News-DemocratAugust 17, 2013 

Victoria Harper, the Fulton County treasurer, said she has received a subpoena to provide records to a federal grand jury in East St. Louis probing possible bid-rigging among buyers of delinquent property tax liens.

Harper declined to state the records she has been directed to provide, or the names of the tax buyers involved.

Harper indicated the subpoena arrived as part of the probe of tax buyers doing business in Madison County that widened after former treasurer Fred Bathon pleaded guilty to a federal charge of bid-rigging earlier this year in U.S. District Court in East St. Louis.

"This is a separate investigation," Harper said. "This has nothing to do with Fred."

Fulton County is located southwest of Peoria.

A federal judge in East St. Louis recently granted Bathon's request to delay his sentencing by more than three months while he continues to cooperate with federal prosecutors probing the activities of unnamed "co-conspirators," according to court documents.

Stephen Wigginton, the U.S. attorney for Southern Illinois, declined to comment on the tax buyer probe.

"Fred Bathon has been co-operating, I can tell you that," Wigginton said. "He has been cooperating and we expect him to continue to cooperate."

The investigation involving tax buyers "is ongoing, and we are looking at a number of different things as part of the investigation and that's really all I can say at this time," he said.

Bathon, 58, pleaded guilty to a single count of bid-rigging in February in federal court in East St. Louis. Bathon, who left office at the end of 2009, faces up to 10 years in prison when he appears at his sentencing hearing scheduled for Dec. 6.

Bathon's guilty plea, as well three class action lawsuits, occurred more than two years after a September 2010 series by the News-Democrat that exposed Bathon's bid-rigging scheme.

One of the tax buyers named in the class action lawsuits, Barrett Rochman of Carbondale, denied that he has been interviewed by federal investigators or received a grand jury subpoena.

Rochman declined to comment on the lawsuits other than to say, "Anybody can file a complaint anywhere. It'll go on for three to four years."

At Madison County's annual tax sale, investors buy the right to pay the delinquent taxes of property owners. Property owners who don't repay the taxes and a penalty to the investors can lose their property. The penalty rate is supposed to be determined through competitive bidding, to see which investor is willing to accept the lowest rate.

The average penalty rate in three of the years was either 17 percent or 18 percent, the maximum allowable under state law. In two of the years, the bid-rigging was so pervasive that the 18 percent penalty rate was awarded for almost all of the roughly 5,000 properties affected in those years.

The four biggest donors to Bathon's political campaigns were Dennis Ballinger, of Decatur, at $29,100; Scott McLean, of East St. Louis, at $27,950; Rochman, at $27,200; and John A. Vassen, of Belleville, at $25,025.

Named as defendants in the class action lawsuits are Bathon; Jim Foley, a former investment officer under Bathon; and Kurt Prenzler in his official capacity as county treasurer.

Also named as defendants are Rochman, Ballinger, McLean and Vassen, all of Belleville, as well as the businesses they run.

Tom Gibbons, the Madison County state's attorney, has moved to dismiss the county as a defendant in the lawsuits.

Contact reporter Mike Fitzgerald at mfitzgerald@bnd.com or 618-239-2533.

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