A Pennsylvania corporation has been found guilty of rigging bids for the sale of tax liens in New Jersey, leaving homeowners to pay higher interest on their tax debts.
Crusader Servicing Corp., of Jenkintown, Pa., pleaded guilty to a felony charge in the U.S. District Court for the District of New Jersey in Newark, according to a recent indictment. The charge states that from at least as early as 1998 until September 2006, Crusader participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders which liens each would bid on.
The conspirators agreed to not compete with one another at these tax lien auctions, depriving struggling homeowners of a competitive interest rate, said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “Today’s guilty plea demonstrates the Antitrust Division’s continuing efforts to prosecute those who manipulate the competitive process in order to harm home and property owners.”
The primary purpose of the conspiracy was to suppress and restrain competition to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. State law requires that investors bid on the interest rate delinquent homeowners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent.
According to the court documents, Crusader conspired with others not to bid against one another at municipal tax lien auctions in New Jersey. This allowed the conspirators to purchase tax liens with limited competition, each conspirator able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition.
A violation of the Sherman Act carries a maximum penalty of $100 million criminal fine for corporations. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than the statutory maximum.
This is the 10th guilty plea resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions. Eight individuals — Isadore H. May, Richard J. Pisciotta Jr., William A. Collins, Robert W. Stein, David M. Farber, Robert E. Rothman, Stephen E. Hruby and David Butler — and one company, DSBD LLC, have previously pleaded guilty as part of this investigation.
Today’s charge is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local agencies.
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Related Federal Cases
- Pennsylvania Corp Pleads Guilty to Bid Rigging in NJ Tax Lien Auctions · Pennsylvania
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- New Jersey Woman Sentenced for Wire Fraud and Tax Evasion · Pennsylvania
Key Facts
- State: Pennsylvania
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release ↗
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