Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Probation for four individuals who pleaded guilty in municipal tax lien probe, (May 2, 2016)

By Jeffrey May, J.D.

Four individuals who pleaded guilty to conspiring to rig bids for the sale of tax liens auctioned by New Jersey municipalities were sentenced last week by the federal district court in Newark. William A. Collins, Stephen E. Hruby, and Michael Mastellone of New Jersey, and Robert W. Stein of Pennsylvania were each ordered to serve one year of probation (U.S. v. Collins, Criminal No. 2:11-cr-00563; U.S. v. Hruby, Criminal No. 2:12-cr-263-1; U.S. v. Mastellone, Criminal No. 2:13-cr-643; U.S. v. Stein, Criminal No. 2:12-cr-140).

Collins was among the first individuals named in the government’s bid rigging probe. In August 2011, he pleaded guilty to one count of bid rigging. He was charged with agreeing to allocate among certain bidders which liens each would bid on at auctions for the sale of municipal tax liens in New Jersey from 2003 through February 2009. Judgment was entered on April 26.

Stein was charged in February 2012. At that time, he admitted to participating in the bid rigging conspiracy for more than ten years, from 1998 until spring 2009. The sentence was handed down on April 27.

In April 2012, Hruby, a former executive of a New York-based tax liens company who supervised the purchasing of municipal tax liens, pleaded guilty for his role in the conspiracy. According to the felony charge, Hruby was involved in the challenged conduct between December 2002 and February 2009. He was sentenced on April 27.

In September 2013, Mastellone pleaded guilty to conspiring to rig bids from 2000 until February 2009. The government alleged that Mastellone and coconspirators submitted bids in accordance with the agreements and purchased tax liens at collusive and non-competitive interest rates. The probation sentence was imposed on Mastellone on April 27. All four individuals had agreed to cooperate with the government's investigation as part of their plea agreements.

According to the Justice Department, 12 individuals and three companies have pleaded guilty as a result of the government's investigation into bid rigging or fraud related to municipal tax lien auctions. Of five individuals who were also charged but refused to plead guilty in the probe, only one, James Jeffers Jr., was convicted at a jury trial in October 2015. The case against another individual defendant, Gregg Gehring, was dismissed in September 2015. The other four individuals who were indicted in 2013 were acquitted. Jeffers was sentenced to serve a prison term of 12 months and was ordered to pay a $25,000 criminal fine in March 2016.

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