Dunstan: Bathon, not Madison County, should repay scheme victimsNews-Democrat (BY BRIAN BRUEGGEMANN) 02/14/2013 6:24 AM
Madison County Board Chairman Alan Dunstan says taxpayers who fell victim to former county treasurer Fred Bathon's bid-rigging scheme deserve restitution, but it shouldn't come from county government.
Bathon pleaded guilty last week in federal court to rigging the county's sales of tax liens, so that investors who contributed to his political campaign earned inflated profits, while property owners who were late paying their taxes had to pay inflated penalties.
Federal prosecutors say their investigation is continuing, and that it involves others who allegedly colluded with Bathon. Dunstan said restitution should come from Bathon and any other conspirators, but not from Madison County taxpayers.
"Go to the people, the companies, or whoever took advantage of financially-distressed homeowners and benefited from these illegal actions," Dunstan said. "It is essential this situation be resolved without creating a burden for Madison County taxpayers. If it is determined restitution is appropriate, it should not come from Madison County taxpayers, it should come from those who illegally profited."
Madison County, like other counties, annually has a sale where investors buy the right to pay the delinquent taxes of property owners. The investors make money by charging a penalty to the property owners or, if the owner doesn't repay the taxes, by taking the property through court.
The penalty rate is supposed to be "bid down" through competitive bidding, to see which investor is willing to accept the lowest penalty for each piece of property. But for four years, from 2005-09, Bathon rigged the sales so that his favored investors got to buy the tax liens at inflated penalty rates -- often the maximum 18 percent allowed under state law.
Dunstan said inflated penalties don't benefit the county. The only money the county and the taxing districts receive through the tax sale are the original amounts owed for taxes.
"Neither Madison County nor any of the taxing districts received any additional money as a result of the excess penalty percentage rate. Those profits went to the investors who purchased the tax lien certificates," Dunstan said.
Prosecutors say there are roughly 10,000 victims, and current Treasurer Kurt Prenzler has said they likely lost "many millions" in excessive fines and lost equity. Prosecutors say even trying to locate the victims would be a challenge, so they've asked for and received court permission to notify victims through a website: http://www.justice.gov/usao/ils/Programs/VWA/Bathon.html
Trying to determine how much a victim lost would be complicated, because it's difficult to say what the penalty rates would have been without the bid-ridding. The victims' losses could extend beyond the actual penalties; some may have lost their homes because they couldn't afford to pay the inflated penalties.
Observers have said Madison County could legally have some financial obligation to the victims.
But Dunstan said U.S. Attorney Steve Wigginton can seek restitution from Bathon and co-conspirators, and has "a much bigger hammer than Madison County or any other entity would have."
Dunstan also warned County Board members not to make public comments about the case.
"First, there is an ongoing investigation by the U.S. Attorney. Secondly, a conspiracy is, by definition, an unlawful plan formulated in secret by two or more persons. And for any board member, or anyone else, to imply that any official in Madison County was aware of or party to Mr. Bathon's illegal actions is totally inappropriate," Dunstan said.
on February 14, 2013, 7:33 am