Monday, Dec 9, 2013
Southern Illinois Businessman Admits Bid-Rigging
WSIL -- One of the area's largest property investors pled guilty Thursday in federal court. 70-year-old Barrett Rochman admitted to participating in non-competitive tax sales between 2005 and 2008. Rochman is the owner of Blue Sky Vineyards and the co-owner of Illinois Star Centre Mall.
He and three others, which include the former Madison County Treasurer, were convicted of violating the Sherman Antitrust Act. The U.S. Attorney's office says the men worked together to rig a common bidding system that investors use to acquire new property liens. Rockman would get the liens and the treasurer would get campaign contributions.
In 2011, it was all smiles as Barrett Rochman announced the acquisition of Illinois Centre Mall. How he did it is what has made him a rich man.
"We're in 102 counties, we're the ultimate recyclers of property that's what we do. That's our specialty," Rochman said back on February 3, 2011.
Rochman bought the property rights of the mall at an auction after its former owners became delinquent on paying their taxes. After a few more years of falling behind, Rochman and his company took over the property for very cheap.
"Mr. Rochman started out on a sandwich cart at SIU and is one of the richest men in the state now, definitely, thanks to this business," says Jackson County Clerk Larry Reinhardt.
But now reality is coming down hard for Rochman. He pleaded guilty to federal charges that say he helped manipulate the bidding system by paying off Madison County Treasurer Fred Bathon through campaign donations.
"Issues like that and the potential for issues like that are, again, why many counties have gone to an electronic sale," explains Reinhardt.
He says it's easy enough to rig the system.
Here's how a property tax auction works: tax buyers competitively bid for the interest rate a property owner would have to pay them, starting at the maximum of 18 percent and going down.
"If everyone shouted out 18 percent let's say, the auctioneer might choose one bidder over another, you know, giving preference over certain bidders," Reinhardt explains.
The U.S. Attorney says that's exactly what Bathon would do, calling it a chaotic scene that would allow him and auctioneer to subjectively select the winner. And the interest rate would always remain at its max of 18 percent, making it more profitable for the tax buyer and easier for the property owner to default.
Reinhardt says, "You hope things like that don't happen, where interest rates are unduly inflated, because it's just that, it falls back on those who can least afford it."
News 3 tried calling Rochman and his attorney, neither got back to us.
The U.S. attorney says bid-rigging got so bad in Madison County that 99 percent of the property tax liens sold in 2007 were at the max rate of 18 percent.
Rochman's sentencing is scheduled for February 21st.
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