M.D. Sass, U.S. Bancorp Sued Over Lien Sales Probed by U.S.
M.D. Sass Investors Services Inc., a closely held manager of more than $5 billion, and a unit of U.S. Bancorp (USB) were sued in a racketeering lawsuit claiming they helped to rig New Jersey municipal tax lien auctions for a decade.
The complaint by homeowner Raymond V. Contarino Jr. was filed March 30 against New York-based M.D. Sass, U.S. Bank, and four of six individuals who pleaded guilty in a U.S. antitrust investigation of rigged lien sales in New Jersey. It claims they engaged in a “cynical conspiracy” to eliminate competition at auctions.
Contarino seeks to proceed in a group, or class-action, lawsuit for those “subjected to artificially inflated rates of interest on their tax liens, and, in some instances, a loss of their real property through tax lien foreclosure,” according to the complaint filed in federal court in Camden, New Jersey.
Six people admitted in guilty pleas that they colluded at auctions where bidding for liens began at 18 percent and failed to move downward. Bidders won the right to charge 18 percent interest to property owners, and additional penalties. Three who pleaded guilty had bid at a March 2007 auction in Newfield, New Jersey, where an M.D. Sass representative also won liens.
Mark Rotert, a lawyer for M.D. Sass, didn’t immediately return a telephone call and e-mail message seeking comment on the lawsuit.
U.S. Bank acts as custodian of M.D. Sass funds in “purely” administrative functions such as processing payments, Nicole Garrison-Sprenger, a spokeswoman for the Minneapolis- based bank, said today. She declined to comment on the lawsuit.
Contarino, 52, lives in Newfield. M.A. Sass bought the lien on his home at the March 2007 auction for $5,224. The Justice Department subpoenaed records of the auction on Feb. 15. M.D. Sass hasn’t been accused of wrongdoing.
A supervisor for a New Jersey landscaper, Contarino, 52, said in an interview last month that his debt began piling up after his parents died and he withdrew funds from an annuity to pay funeral expenses. He was able to stave off foreclosure and pay the lien and other debt by refinancing his mortgage.
Contarino said that the process was confusing and that he doesn’t know what it cost to pay off the lien. He was surprised at the time to learn that he may have paid a higher interest rate because of collusion at the auction.
“It’s aggravating as hell,” he said after being told that prosecutors were scrutinizing the auction. “You’re simply trying to scrape along. For a big company to put the screws to you, that’s aggravating.”
Contarino seeks to represent all property owners in New Jersey subject to a tax lien auction in the past decade.
The case is Raymond V. Contarino Jr. v. M.D. Sass Associates, 12-cv-1957, U.S. District Court, District of New Jersey (Camden).
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