Judge throws tax buyers in jail in Madison County bid-rigging case

News-DemocratFebruary 19, 2014 

Former Madison County Treasurer Fred Bathon.


— Two businessmen who profited from bid-rigging in Madison County's auctions of delinquent real estate taxes received prison terms Wednesday in excess of federal sentencing guidelines.

John Vassen of Belleville, who is an attorney and real estate agent, received a two-year term. Scott McLean, whose tax-buying business is based in East St. Louis, received an 18-month term.

The two were characterized by their attorneys as civic-minded, charitable individuals who have led otherwise crime-free lives, but U.S. District Judge David Herndon said their good attributes were outweighed by the harm done to thousands of taxpayers, a "very substantial number" of whom were "down on their luck" and couldn't pay their property taxes. Those property owners ended up paying inflated penalties or lost their homes.

Herndon said the pay-to-play scheme coordinated by former Madison County Treasurer Fred Bathon, who in December received a 30-month sentence, hurt "so many, who the court fears will go uncompensated."

Some property owners have filed class-action lawsuits, which are pending. Herndon did not require Vassen or McLean to pay restitution, in part because of the ongoing lawsuits, but mostly because it would be practically impossible to determine the impact on the penalty that was charged to each individual property owner.

Vassen and McLean both pleaded guilty last month to taking part in the scheme. Sentencing guidelines called for each to receive a prison term of 10 to 16 months.

Herndon said Vassen, "particularly as a lawyer," should have told Bathon that the scheme was wrong. Instead, when Bathon approached him with the bid-rigging idea, Vassen handed Bathon a court opinion that could be wrongly interpreted to allow the scheme.

At the annual tax sale in each Illinois county, investors buy the right to pay the delinquent taxes of property owners. Property owners who don't repay the taxes as well as 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.

Under Bathon's auction procedure, all the bidders would shout an opening bid. The one who shouted the lowest bid first was declared the winner. In most cases, each buyer would simultaneously shout 18 percent -- the maximum allowed under the law.

In some years under Bathon, almost every single tax bill was sold at the 18 percent penalty rate. The tax bills of more than 7,000 properties were sold during the scheme, from 2004 to 2008.

Vassen's attorney, John O'Gara, said Vassen's goal wasn't to hurt the down-trodden. At the auctions, the buyers dealt with just parcel numbers, not the sad stories behind them, O'Gara said.

O'Gara also argued that it was Bathon who orchestrated the scheme. O'Gara said when Bathon presented the idea to tax buyers, they figured "Christmas has done come early."

Assistant U.S. Attorney Steven Weinhoeft argued that, for the tax buyers, the scheme indeed was an early Christmas present, but it wasn't delivered by Santa or elves. "It was on the backs of people who can't afford it," Weinhoeft said.

Weinhoeft also pointed out that, after Bathon retired in 2009, both Vassen and McLean made political contributions to Bathon's successor, Frank Miles, apparently in the hope of continuing the scheme, although Miles put a stop to it by changing the auction procedure. Vassen gave about $4,500 annually to Bathon, then gave a one-time donation of $1,000 to Miles. McLean donated about $30,000 total to Bathon and $6,050 to Miles.

Herndon noted that both Vassen and McLean profited substantially from the inflated penalty rates. Vassen made about $700,000, while McLean made about $450,000. The judge issued them fines of $25,000 apiece.

Vassen, when given an opportunity to make a statement, told the court he's sorry that he has "dishonored my family, my community and my profession."

Vassen, 56, has served as a village board member in Shiloh.

O'Gara asked for some lenience for Vassen because Vassen will lose his law license, and everyone will always remember him as "that lawyer who was screwing people at tax sales."

McLean, when given an opportunity to make a statement, said: "Words can't express the shame that I feel for my participation in this particular crime." He added, "I am profoundly sorry."

Both Vassen and McLean, 51, were allowed to remain free for a while. They'll receive notices later, instructing them how to report for their prison stays.

In early January, Bathon began serving a 30-month prison sentence at the federal minimum security prison camp in Terre Haute, Ind.

Another tax buyer, 70-year-old Barrett Rochman of Carbondale, has pleaded guilty and will be sentenced later.

Besides, Rochman, Vassen and McLean, no other tax buyers have been charged. During the sentencing for Vassen and McLean, the lawyers and the judge made a number of remarks indicating six tax buyers were involved in the scheme.

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