A federal judge has denied a request by two St. Clair County residents to certify delinquent taxpayers for a class-action lawsuit over an alleged rigged tax buying system.
The suit was dismissed by U.S. District Judge Staci Yandle last week.
“While it would be more efficient to consolidate the litigation as it relates to that existence of a conspiracy, that benefit is outweighed by the necessity of conducting hundreds of thousands of individualized hearings on impact and damages,” Yandle wrote in her decision filed March 29.
In October 2014, Kurt Prenzler, who was then Madison County treasurer and is now County Board chairman, was running against Democratic candidate Marleen Suarez, when he held a press conference alleging “potentially illegal conduct” in St. Clair County’s tax auctions. Marleen Suarez is the sister-in-law of St. Clair County Treasurer Charles Suarez.
Prenzler took over for former Madison County Treasurer Fred Bathon, who received a 30-month prison sentence for rigging delinquent tax sales to benefit political contributors at the expense of property owners who were at risk of losing their property.
At the time, Prenzler said there were similar “patterns of fraud” in the St. Clair County Treasurer’s Office.
“The wheels of justice turn slowly but we aren’t surprised by the judge’s decision. We thought this whole thing was politically motivated. Mr. Prenzler used this to further his campaign. This lawsuit was filed just a few weeks before the election,” Marleen Suarez said Tuesday.
St. Clair County State's Attorney Brendan Kelly praised Yandle's decision.
"Judge Yandle's excellent decision is further confirmation of what the United State's attorney said nearly four years ago. The treasurer and his staff conducted a lawful and open process," Kelly said.
Former First Assistant U.S. Attorney Jim Porter, who was prosecuting Bathon, said at the time that his office had not been alerted to any misconduct in the St. Clair County Treasurer's office.
“The Court acknowledges that because of (relatively) low individual recovery potential, individual class members would not likely be interest in personally controlling their claims. On balance, however, this Court concludes that, based on the above-detailed issues with respect to predominance and superiority, class certification is inappropriate. …”
The suit was filed in 2014 by Kevin and Kathleen Dvorak, who had their delinquent property taxes sold on properties they owned in O’Fallon and Lebanon at a tax sale held by county treasurer Charles Suarez. The back taxes were then offered for redemption by the Dvoraks at 18 percent interest.
Under the law, tax buyers can charge up to 18 percent interest on the back taxes.
The Dvoraks sued, stating there was a civil conspiracy and violations of anti-trust laws.
Kathleen Dvorak knew something happened at the 2007 tax sale because “both properties were sold at tax sales before and after the 2006 and 2007 tax year sales at penalty rates ranging from 1 to 3 percent,” Yandle’s decision stated.
“It is possible that (the Dvoraks') proposed class contains owners who received the same rate they would have received in an auction that was not (allegedly) ‘rigged’ and who therefore, would not have compensable damages. But sorting them from those who did sustain an injury is an issue to be decided on the merits. By contrast, it is not possible for owners who did not redeem their property to have sustained the damages alleged in the Complaint. Because they did not actually pay the inflated rate, they cannot recover the difference between what they paid and the amount due under a ‘reasonable and appropriate penalty’ rate,” Yandle stated.
Yandle also found the claim was filed too late.
The time a person has to file this type of suit begins when they have knowledge “which would lead a reasonable person to investigate the possibility that her legal rights had been infringed.” The Dvoraks stated that they didn’t know there had been any wrongful conduct until now Madison County Chairman Kurt Prenzler had a press conference.
But in a deposition, Kathleen Dvorak stated she first earned of a potential issue with the property tax sale when she received a letter from another tax buyer, Ken Brosh, in October 2014. She further stated the high interest rate led her to believe the sales were rigged and the 18 percent rate was wrong, based on her past experiences redeeming her back taxes.
“One could reasonably find that the statutes of limitations began to run for the Dvoraks when Kathleen Dvorak received the 18 percent rate information,” Yandle wrote.
Lawyers for the Dvoraks did not respond to e-mails from a reporter seeking comments.