Bank admits NJ tax ripoffs
Royal Bank agrees to pay $2M, faces civil damages, for Crusader Servicing bid-rigging against towns selling tax liens
Bank admits NJ tax ripoffs
Joseph N. DiStefano
UPDATED: Crusader Servicing Corp., a Jenkintown tax-lien manager, "pleaded guilty today to participating in a conspiracy to rig bids" for unpaid tax accounts auctioned by towns across New Jersey in 1998-2006, the U.S. Department of Justice says in this statement today.
The government has recommended the court fine Crusader $2 million, payable over five years, according ot the plea agreement, provided by Crusader's owner, Royal Bank. (PDF: Read the plea agreement here.)
Crusader has already reserved that sum for the payment of the fine, Royal spokesman Marc Sanders told me. The penalty "does not include a restitution order," since civil penalties "potentially provide for a recovery," according to the settlement.
Crusader was acquired by Royal Bank in 2001 in the purchase of a group of companies formerly controlled by Philadelphia politician Tom Knox and his fellow investors. Neither Royal nor Knox have been accused of wrongdoing in relation to the tax liens. Knox is out of the country and unavailable for comment, his assistant told me.
"The investigation is ongoing," Justice spokesman Daniel Stratton told me.
"The conspirators agreed to not compete with each other," artificially depressing the value of the towns' tax collections when they were sold to investors, federal criminal antitrust investigator Scott D. Hammond said in today's statement.
"The primary purpose of the conspiracy was to suppress and restrain competition." Under state law the minimum bid for tax liens was 18% interest on the unpaid tax; competition between bidders would drive the premium toward zero, but in some auctions the bids remained mysteriously stuck at 18%. More on previous NJ tax lien frauds here.
Prosecutors said eight people and tax lien manager DSBD LLC "have previously pleaded guilty as part of this investigation."
That includes DSBD owner David Butler, Cherry Hill, who pleaded guilty in federal court in Newark on April 23 to a felony conspiracy charge in connection to tax lien bid rigging, according to the Justice Department; also Robert W. Stein, Crusader co-owner, who pleaded guilty in January to one count of "conspiring to restrain trade by rigging bids." (Corrected)
Prosecutors recommended Stein be sentenced to at least 18 months in prison and a fine of at least $100,000. Sentencing is expected next year.
