Two Investors Plead Guilty to Tax Lien Auction Bid-Rigging in New Jersey
Two investors pleaded guilty to conspiring to rig bids at municipal tax lien auctions in New Jersey and are cooperating in a larger U.S. investigation, the Justice Department said.
The men admitted today after being charged in U.S. District Court in Newark, New Jersey, that they conspired to eliminate competition by allocating bids at public auctions by the state’s 566 municipalities. Bidders are supposed to compete fairly for the right to buy liens and collect taxes on property, with bidding starting at 18 percent and then going lower.
Robert W. Stein, of Huntington Valley, Pennsylvania, and David M. Farber, of Cherry Hill, New Jersey, admitted they worked to limit competition and buy liens which returned a higher interest rate. On Aug. 24, three other people pleaded guilty to bid-rigging in New Jersey auctions.
“Today’s guilty pleas demonstrate that the Antitrust Division will not tolerate those who manipulate the competitive process in order to harm home and property owners,” Sharis A. Pozen, acting assistant attorney general over the division, said in a statement.
Stein and Farber admitted violating the Sherman Act. They face as many as 10 years in prison, although they probably will get far less time for cooperating in the probe.
Stein was president of Pennsylvania corporations, identified as Company 1 and a successor, Company 2, that bought New Jersey tax liens from 1996 to 2009, according to court documents.
‘Collusive Bids’
From 1998 to 2009, he conspired to eliminate competition by “submitting non-competitive and collusive bids,” he admitted. He also admitted attending meetings with co-conspirators who allocated “which tax liens each would bid on or refrain from bidding,” according to court papers.
Farber was a partner in DSBD LLC, which managed investments held by two funds, CCTS Tax Liens I LLC and CCTS Tax Liens II LLC, court papers show. From 2005 to November 2008, Farber bid on tax liens held by the funds. For several months after that, he also bought liens as president of Company 1, court papers show.
Farber also admitted that he conspired to allocate who bid on which liens, according to court papers.
The cases are U.S. v. Stein and U.S. v. Farber, U.S. District Court, District of New Jersey (Newark).
To contact the reporter on this story: David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net.
To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.
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