AppId is over the quota
The owner of a New Jersey real estate company became the sixth person to plead guilty in a federal antitrust probe, admitting he conspired for a decade to rig auctions of municipal tax liens throughout the state.
Robert E. Rothman, an attorney who owns Rothman Realty Corp. in Englewood, New Jersey, pleaded guilty today in federal court in Newark, New Jersey. Rothman, 59, is the sixth person to admit his role in the scheme and cooperate with a growing investigation by the Justice Department’s antitrust division.
Rothman admitted he helped eliminate competition from 2000 to 2009 by submitting collusive bids at auctions. The group allocated “which tax liens each would bid on” and bought liens at “collusive and non-competitive” rates, he admitted. If liens were unpaid, their buyers could foreclose against the property.
“The Antitrust Division’s investigation into municipal tax liens is ongoing and active,” Sharis A. Pozen, acting assistant attorney general, said in a statement. “The division will not tolerate this kind of illegal conduct that harms distressed homeowners.”
Rothman faces as many as 10 years in prison, although he is likely to get far less time if prosecutors are satisfied with his cooperation. U.S. District Judge Dennis Cavanaugh set sentencing for July. He released Rothman on a $100,000 unsecured bond.
Rothman’s attorney, Robert Cleary, the former U.S. attorney in New Jersey, declined to comment on his client’s plea.
At the hearing, Rothman didn’t identify which municipalities were involved or identify his co-conspirators, beyond saying “out-of-state” bidders participated and bought liens with “out-of-state” funds.
Since August, five others pleaded guilty. One was lawyer Robert W. Stein, who co-owned two tax-lien firms with Royal Bank America, which runs banks in New Jersey and Pennsylvania.
M.D. Sass Investors Services Inc., a closely held manager of more than $5 billion, participated in an auction of New Jersey tax liens that has come under the scrutiny of investigators.
A representative of M.D. Sass, whose tax-lien funds have as much as $110 million in assets, was among seven bidders on March 5, 2007, for liens in the borough of Newfield, records show.
Three people associated with the seven bidders pleaded guilty to antitrust charges and are cooperating with prosecutors. The Justice Department subpoenaed records of the auction on Feb. 15. M.D. Sass hasn’t been accused of wrongdoing.
New Jersey municipalities seeking revenue sell about $100 million a year in local tax debt on commercial and residential property, according to Vincent Belluscio, executive director of the Tax Collectors and Treasurers Association of New Jersey.
Firms that buy liens at auction pay the tax liability in full and seek to collect from the property owner. They may earn as much as 30 percent on their investment, according to Belluscio. Beyond interest of as much as 18 percent on back taxes, the firms may add penalties of 12 percent, he said.
Bidders on the liens are supposed to compete fairly for the right to buy them and collect taxes on property. Buyers, who seek the return of their principal investment and interest, begin bidding at 18 percent interest and lower that rate with each bid.
Rothman admitted bidders didn’t compete on interest rates.
At least three people have pleaded guilty to similar charges related to auctions in Maryland.
The case is U.S. v. Rothman, U.S. District Court, District of New Jersey (Newark).
To contact the reporters on this story: David Voreacos in Newark at dvoreacos@bloomberg.net; David Glovin in New York at dglovin@bloomberg.net
To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net
No comments:
Post a Comment