Antitrust Feds Pre-Charging Negotiations Lead To Suspect Take-Down In NJ Tax Lien Bid Rigging Probe; Plea Deal Filed Simultaneously w/ Charging Docs

From the U.S. Department of Justice:

• A former executive of a New York-based tax liens company who supervised the purchasing of municipal tax liens at auctions in New Jersey pleaded guilty today [April 17, 2012] for his role in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities throughout the state, the Department of Justice announced.



• A felony charge was filed today [April 17, 2012] in the U.S. District Court for the District of New Jersey in Newark, N.J., against former Vice President Stephen E. Hruby, of Hainesport, N.J. Under the plea agreement, which is subject to court approval, Hruby has agreed to cooperate with the department’s ongoing investigation.



• According to the felony charge, from at least as early as December 2002 until approximately February 2009, Hruby participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to, and directing others to, allocate among certain bidders which liens each would bid on. Hruby, and those under his supervision, proceeded to submit bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates.

***

• According to the court documents, Hruby conspired with others not to bid against one another at municipal tax lien auctions in New Jersey. Because the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was 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.

For the Justice Department press release, see Former Executive of New York-Based Tax Liens Company Pleads Guilty to Bid Rigging at Municipal Tax Lien Auctions in New Jersey.

(1) According to the press release, a violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. 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 victim if either amount is greater than the statutory maximum.

Hruby’s plea is the seventh guilty plea resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions, the press release states. Others include Isadore H. May, Richard J. Pisciotta Jr. and William A. Collins, each pleading guilty to one count of bid rigging in connection with their participation in a conspiracy to allocate liens at New Jersey auctions on Aug. 24, 2011. Going down next were Robert W. Stein and David M. Farber, who each pleaded guilty to one count of bid rigging on Feb. 23, 2012. On March 27, 2012, Robert E. Rothman pleaded guilty to one count of bid rigging in connection with his participation in this conspiracy.