News Column

Luken retracts counter-claim against county officials

May 6, 2014

By Sanford Schmidt, The Telegraph, Alton, Ill.



May 06--EDWARDSVILLE -- An Alton man has filed a motion to dismiss his counter-claim alleging Madison County and some of its officials claiming he tried to stop illegal tax sales but was ignored.

Robert Luken, an Alton real estate and investment businessman, filed a motion to dismiss his counter-claim on April 30 after filing it April 21.

Luken declined to comment on his latest legal action. His attorney, John Dale Stobbs of Alton, did not return a phone call seeking comment. The motion to dismiss the counter-suit did not include reasons why the motion to dismiss was filed.

Luken claimed in his counter-suit that he refused to participate in the bidding under former treasurer Fred Bathon because it was illegal. Bathon and three tax buyers have pleaded guilty and been sentenced to prison because of the scheme.

Several tax buyers, including Luken, were named in three class action suits, which have been combined into one, now being presided over by Judge Dennis Middendorf, a Clinton County judge.

Middendorf has dismissed the class action suits against Madison County, former county clerk Mark Von Nida (now circuit clerk), County Board Chairman Alan Dunstan, former state's attorney William Mudge(now a judge) and State's Attorney Tom Gibbons.

The judge said those county officials were not responsible for Bathon's scheme and did not profit from it. He said Bathon was not responsible to any other officials. He was an elected official, responsible only to the voters, Middendorf said. The responsibility is set by the Illinois Constitution, the judge wrote in his order.

Gibbons said previously the claims in the counter-suit were "baseless."

Gibbons said that, as soon as the state's attorney's office received credible evidence of illegal activity, the matter was turned over to federal authorities for investigation. Federal officials charged Bathon and three tax buyers. No other individuals or organizations have been charged.

The charges against Bathon and three of the buyers alleged that at Illinois tax lien auctions, investors bid to purchase tax lien certificates issued against delinquent tax payers.

Investors are supposed to compete to purchase these tax liens by bidding on the interest rate the property owner will be required to pay prior to redeeming the tax lien attached to the owner's property.

The bid opens at no more than the statutory maximum of 18 percent and through a competitive bidding process can be driven as low as zero percent. The bidder offering the least penalty percentage rate, i.e., the bidder who is willing to allow the owner to redeem his property for the smallest penalty, is allowed to purchase the tax lien.

As such, competitive bidding benefits financially distressed homeowners by reducing the amount of money that they have to pay to save their home from foreclosure; however, that same system reduces the profit made by tax buyers.

For the tax sales conducted in 2005 to 2008, Bathon structured the tax sales in a way that eliminated competitive bidding and allowed the tax buyers to engage in price fixing by only bidding the statutory maximum interest rate of 18 percent. The tax buyers who pled guilty today were charged with making campaign donations to Bathon in exchange for receiving property tax liens at non-competitive interest rates.

By 2007 and 2008, the bid rigging and price fixing was so pervasive that distressed homeowners were charged the statutory maximum interest rate on nearly every property tax lien sold.

Sanford Schmidt can be contacted at sschmidt@civitasmedia.com

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Source: Telegraph (Alton, IL)