Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Only one of five investors found guilty in tax lien bid rigging case, (Oct 6, 2015)

By Jeffrey May, J.D.

A federal jury in Newark, New Jersey, has acquitted four of five defendants on trial for conspiring to rig bids at auctions conducted by New Jersey municipalities for the sale of tax liens. James Jeffers, Jr., of Burlington, New Jersey, was found guilty on one count of conspiring to submit collusive and non-competitive bids for the purchase of municipal tax liens sold at New Jersey public auctions between 1998 and early 2009 (U.S. v. Wolfson, Criminal No. 2:13-CR-00745).

The jury reached its verdict on October 2, following a trial that began in mid-September. Jeffers was a bidder for Crusader Servicing Corporation. That Jenkintown, Pennsylvania-based company pleaded guilty in September 2012 to participating in the conspiracy.

Also named in the 2013 indictment were three other individuals: Joseph Wolfson, Gregg Gehring, and Robert Jeffrey, in addition to two entities that invested in municipal tax liens, Betty Simon Trustee LLC and Richard Simon Trustee. Simon Trustee was a New Jersey partnership. According to the indictment, the defendants agreed to allocate among certain bidders which liens each would bid on. They allegedly proceeded to submit bids in accordance with the agreements and purchased tax liens at collusive and non-competitive interest rates, the Justice Department alleged.

Since the alleged conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate on the liens, the Justice Department averred. As a result, property owners would have been forced to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition.

Acquitted defendants. Wolfson, who was a resident of Margate, New Jersey and a part-owner of the two named businesses, was found not guilty. According to the charge, he had purchased tax liens on behalf of the two entities at auctions in New Jersey. The named business entities—Betty Simon Trustee LLC and Richard Simon Trustee—also were acquitted. In addition, Jeffrey of Bradenton, Florida, was acquitted. He was an independent contractor for Crusader Servicing. The government failed to prove that Jeffrey participated in the conspiracy either in his capacity overseeing Crusader Servicing bidders or bidding and purchasing tax liens on behalf of the company or its unnamed successor company.

Dismissed defendant. Gehring who was a resident of Newton, New Jersey and an executive of an unindicted company that allegedly participated in the conspiracy, was dismissed without prejudice prior to the trial. Gehring purportedly oversaw bidders who were authorized to bid on behalf of his company. He also was alleged to have bid on and purchased tax liens on behalf of his company at municipal tax lien auctions in New Jersey. It had been alleged that Gehring joined the conspiracy in 2004.

Ongoing investigation. This was the first case to go to trial as a result of the Justice Department’s ongoing investigation into bid rigging or fraud related to New Jersey municipal tax lien auctions. The probe has netted 15 guilty pleas. Twelve individuals and three companies have pleaded guilty since 2011.

Attorneys: Edwin Joseph Jacobs, Jr. (Jacobs & Barbone) for Joseph Wolfson. Bryan Bughman for U.S. Department of Justice.

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