Attorney General Bob Butterworth News Release
May 23, 2002
Media Contact: Jenn Meale
Phone: (850) 245-0150
Three Companies Charged With Rigging Tax Certificate Bids; 19 Others Agree To Pay $604,500 To Settle Similar Charges
TALLAHASSEE -- Attorney General Bob Butterworth today charged three companies with rigging bids on Lee County property tax certificates while announcing a $604,500 settlement of similar charges against 19 other companies.
Charges filed in Lee County Circuit Court against Coast Asset Management Corporation, Gulf Group Holdings Inc. and Saul & Company seek civil penalties and triple the amount of damages caused by the companies' actions.
The charges stem from an auction of tax certificates by the Lee County Tax Collector that took place from June 1 to June 10, 1998. According to Butterworth, that auction was marred by a conspiracy among bidders to boost the interest rates of the certificates they were purchasing.
"As a result of that conspiracy, thousands of Lee County property owners were forced to pay higher amounts than necessary to settle delinquent tax bills while buyers earned unduly higher returns on their investments," Butterworth said.
Tax certificates are in effect liens placed on properties for which taxes have not been timely paid. Each year, such certificates are auctioned by tax collectors around the state to individuals willing to pay the outstanding taxes. A property owner who later wishes to reclaim a piece of property from a certificate holder must pay the amount of delinquent taxes, plus accrued interest. Under state law, the maximum annual interest a tax certificate holder may earn is 18 percent. A given certificate is awarded to the bidder who agrees to accept the lowest amount of interest if the certificate is redeemed by the property owner.
According to Butterworth's complaint, competition in bidding on the Lee County certificates during the first couple days of the auction was "fierce," with interest rates on many certificates as low as one-quarter of one percent.
By the third day, however, Butterworth said bidders began meeting outside the auction room and conspiring to drive up the potential yield on the tax certificates by ceasing to compete.
"When the auctioneer selected a bidder at the maximum interest rate of 18 percent, all the other bidders would drop out and the winning bid would be at the top rate of return," Butterworth said. "The bidders essentially took turns picking up tax certificates at the highest allowable interest rate."
The attorney general named 22 companies, many of them related to one another, as being part of the conspiracy. Of that number, 19 agreed to settle the charges by paying a total of $604,500, which will be used to reimburse property owners the excess amount of money they paid to redeem their properties.
Butterworth said the settling companies, which did not admit wrongdoing, cooperated fully with his investigation. The groups of related companies agreeing to settle the charges and the amounts they agreed to pay were:
M. Credit Inc., TBC Tax I Inc., TBC Tax II Inc. and TBC Tax III: $225,000.
Bank United FSB, BankUnited Financial Corporation, BU Ventures Inc. and T&D Properties of South Florida Inc.: $132,000
BankAtlantic and Heartwood 88 LLC: $120,000.
TransAm Tax Certificate Corporation, TransAm Tax Certificate LLC, TansAm Financial Services Inc., Destiny 98 and Advantage 99: $77,500.
Capital Asset Research Corporation Ltd., Fundco Inc., Munico Inc. and Propco Inc.: $50,000.
Butterworth praised former Lee County Tax Collector Bill Fussell and current Tax Collector Cathy Curtis for bringing the matter to his attention and working closely with his office to resolve it.
The complaint and settlement agreements were handled by Antitrust Chief Trish Conners, Assistant Attorneys General Barbara Smithers and Eric T. Taylor and Government Analyst Laura Daugherty. Former Assistant Attorneys General Kimberly L. King, Douglas L. Kilby and Danielle Jorden also contributed significantly to the development of the case while with the attorney general's office.