Lawyer: System could be devised to compensate Bathon victims

News-DemocratJanuary 11, 2014 

— Attorney Don Weber believes he can do what federal prosecutors said they could not: Set up a restitution system to compensate 10,000 property owners ripped off by ex-Madison County Treasurer Fred Bathon's rigged property tax auctions.

Weber, who represents plaintiffs in one of the three class action lawsuits filed against Madison County because of Bathon's scam, said it would be relatively straightforward to devise a system to compensate victims of Bathon's five-year scheme.

"We may have to resort to experts," Weber said. "But I'm confident it can be calculated."

Madison County, its insurer Western Surety, and other defendants named in the lawsuits could end up paying up to $5 million in damages, according to Weber.

A federal judge on Dec. 6 sentenced Bathon, 59, to 30 months in prison and a $20,000 fine for orchestrating a scheme that cheated thousands of Madison County taxpayers out of millions of dollars.

Bathon's scheme ran between 2005 and 2009 -- when Bathon abruptly retired.

Tom Gibbons, the Madison County state's attorney, who oversees the county's legal defense, could not be reached for comment.

Jennifer Martinez, a spokeswoman for CNA Surety, the corporate parent of Western Surety, declined comment, citing pending litigation.

Last February, Bathon pleaded guilty to a federal criminal charge of rigging tax lien sales so that his political donors profited from inflated interest penalties paid by property owners on delinquent property taxes.

Bathon is set to begin his 30-month prison sentence in the upcoming week, when he reports to the minimum security work camp at the federal prison complex at Terre Haute, Ind.

Bathon has already been interviewed by lawyers representing other victims of Bathon's scheme, but he has yet to be deposed under oath.

Collinsville attorney Steven Giacolletto, who's representing plaintiffs in a separate class action lawsuit against Madison County, said that Bathon during his interview with him was "very informative and very forthcoming about a multitude of things," but declined to be more specific.

Three of the tax buyers who colluded with Bathon pleaded guilty to taking part in the bid-rigging scheme in October. Their sentencing hearings are scheduled for Feb. 19 at the federal courthouse in East St. Louis.

Those three defendants might also be interviewed by plaintiff attorneys.

In court papers filed after Bathon's guilty plea, Assistant U.S. attorney Steven Weinhoeft had argued that a "complete accounting of each victim's losses is not practicable due to the complex issues of fact related to the large number of victims."

In addition, the federal government has exercised its "best efforts" to accord the victims their rights to restitution and "no additional resources should be expended in determining restitution for each of the thousands of the victims in this case," Weinhoeft wrote.

Chief Judge David R. Herndon ruled in favor of Weinhoeft's argument and upheld the request to avoid being forced to tally the losses suffered by each of Bathon's individual victims.

Weber, the former Madison County state's attorney, said he did not see anything particularly difficult about determining how much is owed to each of the victims.

"That's something that can be done," Weber said. "The thing is, it's a number. It's a certain amount of dollars."

Bathon's scheme centered on his ability to manipulate the outcomes of the annual auction of unpaid tax bills of Madison County property parcels.

In a covert alliance with a select group of professional tax buyers -- who took part in a "pay to play" scheme by donating heavily to Bathon's re-election campaign -- Bathon ordered subordinates conducting the auctions to award the best properties to his top donors at 18 percent interest, the highest under the law, while refusing to recognize lower bids from other tax buyers.

At the 2005 tax sale, Bathon initially awarded more than 2,500 tax liens at a penalty interest of 18 percent, the maximum under the law. Apprised of how fishy that looked, Bathon retroactively marked down the interest penalty on half the sold tax liens, to 12 percent interest, according to Stephen Wigginton, the U.S. attorney for Southern Illinois.

But two years later, Bathon apparently quit worrying about appearances. Of nearly 2,600 tax liens awarded to tax buyers in November 2007, 99.03 percent were awarded at the top rate of 18 percent, Wigginton said.

Based on these facts, "I think the measure of damages is going to be what your house's (tax lien) should've been sold for, as opposed to what it was sold for," Weber said, noting that under Kurt Prenzler, the current Madison County treasurer, tax liens have been selling on average at around 4 percent interest.

"So I think what you do is take what your house should've been sold for, a percentage which is going to be around 4 percent, versus what your house sold for, 18 percent," Weber said. "There, you got your damages at 14 percent."

Right now, both the county and the plaintiff attorneys are waiting on a state court judge's ruling on whether to certify the class action lawsuits and combine them into a single lawsuit.

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

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