I want to thank Ken Brosh for inviting me today (Friday, May 30) to St. Clair County. After former Madison County Treasurer Fred Bathon went to prison this January for rigging tax sales, Ken asked me to review past tax sales in St. Clair County, because he felt there might be similarities to the tax sales in Madison County.
It’s important to note that buying taxes is a legitimate business, and tax sales is the statutory method of collecting delinquent property taxes, which benefits taxing districts.
As background, in 2006 I ran for treasurer in Madison County. One major issue in that campaign was that I criticized then-treasurer Fred Bathon for taking tens of thousands of dollars of political contributions from tax buyers who participated in tax sales that he ran.
Other county treasurers told me that, in their opinion, to take political contributions from tax buyers was clearly unethical, because it injected a conflict of interest in an auction.
I promised that, if elected, I would not take political contributions from tax buyers, and that I would replace the “open outcry” tax auction with automatic software.
At that time, my campaign manager, Steve Adler, felt that Madison County officials were ignoring the issue. He felt there was potential wrongdoing, and, as an elected county board member, he notified the FBI.
The tax sale issue is complicated. Many people don’t understand it. They didn’t understand it in 2006, and I lost the election.
In 2010, I ran again and won. I kept my promises: a) don’t take money from tax buyers, and b) automate the tax sales. My tax sales from 2011 through 2014 have all resulted in average penalty interest rates less than 4%, and my tax sale this February resulted in an average penalty interest rate of 1.59%.
The bottom line is that low penalty interest rates benefit taxpayers who can’t pay their property taxes on time. My tax sales have saved struggling taxpayers millions of dollars.
One way to explain, in a simple way, what happened in Madison County is this: the county treasurer received thousands of dollars of political contributions in exchange for “rigging” the tax sales to produce $4.5 million of excessive penalty interest - that went into the pockets of tax buyers. This hurt struggling taxpayers.
With that as background, let’s compare the tax sales in St. Clair County with what we have seen in Madison County.
Both counties are similar in location, size and population, each with approx. 267,000 residents.
Let’s look at the political contributions. The Illinois State Board of Elections reports that Madison County Treasurer Fred Bathon received more than $150,000 in political contributions. The same source shows that St. Clair County Treasurer Charles Suarez received more than $48,000 in donations from tax buyers. In St. Clair County, we also see that tax buyers contributed more than $54,000 to the St. Clair County Democratic Central Committee.
This year, Bathon and three tax buyers entered federal prison for their role in the bid-rigging scheme in Madison County.
The three tax buyers who went to prison donated more than $80,000 to former Madison County Treasurer Fred Bathon, and more than $60,000 to both St. Clair County Treasurer Charles Suarez and the St. Clair County Democratic Central Committee.
Tax sales held in years 2005 through 2008 in Madison County resulted in unusually high penalty interest rates, topping out in 2007 and 2008 at nearly 18 percent, the maximum rate allowed by Illinois law.
In St. Clair County, these same two years, 2007 and 2008, resulted in unusually high average penalty rates: 15.8 percent and 16.4 percent, respectively.
As a certified public accountant, I am trained to look for patterns.
Let’s look at the patterns.
• First, the penalty rates. Unusually high in both counties during 2007 and 2008.
• Second, political contributions. The tax buyers who are in prison gave high levels of donations to Fred Bathon, Charles Suarez and the St. Clair County Democratic Central Committee.
• Third, neither county used automated software, but had “open outcry” auctions.
• Fourth, complaints. In both counties tax buyers questioned the ethics of the sales.
To summarize, I answered the question posed by Ken Brosh. I can say that there are definite patterns when you compare the history of the tax sales in Madison and St. Clair counties.
Kurt Prenzler is Madison County treasurer.