American Tax Funding, Matthew A. Marini, Justin F. Weisenbacher, Brian Lynch, and others
Fraud Complaint Against American Tax Funding
3. ATF engages in the purchasing and servicing of delinquent municipal real estate tax lien sales. Originally formed in 1997 as Transamerica Municipal Finance (TMF), a division of Transamerica Corporation. In August 2000 the founders (Mathew A. Marini and Justin F. Weisenbacher) completed a form of a management buyout of TMF, creating ATF. ATF currently buys and services real estate tax liens in over 14 states. Many ATF tax liens are secured by either Wells Fargo Foot Hill (now Wells Fargo Capital Services) or the Harris Nesbitt Corporation (now BMO Capital Markets Corporation). The process of privatizing the municipal tax foreclosures process and outsourcing to out of state third party, for-profit, private companies has drawn criticism from housing advocates who argue that a for-profit tax foreclosure process leads to more foreclosures, displacement and vacancy. These are “private takings” that are prohibited by federal law, as the Court has been extensively briefed by Dr. Stephanatos.
4. This defendant(s) has a number of subsidiaries, including, ATFH Real Property, LLC, Reoco, LLC, American Tax Funding Servicing, LLC, American Tax Holding, LLC, and other entities listed below. It appears that the holding or managing entity is American Tax Holding, LLC a Florida –registered company. Its owner is Matthew A. Marini; this information is based on the filings with the Florida Department of State. Source: http://search.sunbiz.org/Inquiry/Corporationsearch/SearchResults/EntityName/American%20Tax%20Holding/Page1
5. The CEOs of the defendants are Matthew A. Marini, Tadgh Macaulay, and Brian Lynch. Other officers of the defendant are: Justin Francis Weisenbacher (past president), Neil Harreveld, Jeffrey Michael Levine, Gene Stix Weil, John Demarinas, Tammy Katz (controller-VP and VP at ATFS, LLC), and John Joseph Nelligan. Another former VP of the defendant is Neil Harreveld (he was a VP of ATF from April 2001 through February 2009; he then left ATF and joined another defendant, XSPAND/J.P. Morgan Securities. Source: LinkedIn profile of Neil Harreveld).
6. Defendant Neil Harreveld writes the following in his LinkedIn online profile:
J.P. Morgan Securities
2009 – June 2010 (1 year)
XSPAND is a subsidiary of JPMorgan Chase & Co. We purchase, finance and collect real estate tax liens for local governments and to provide them with innovative and cost effective asset management solutions designed to accelerate the recognition of much needed budget revenue. Transforming real estate tax liens into revenue on behalf of our government clients is XSPAND's corporate focus. Since its inception our firm has provided over $4 billion in revenue to local governments through our purchasing and financing of these under-utilized assets. My 13+ years in this field with the experience of working with over 600 different taxing authorities in 21 states along with JP Morgan's financial resources makes for a reliable, and stable source for local government revenue enhancement.
XSPAND / JP Morgan
March 2009 – December 2009 (10 months)
Through the strength and experience of the nation's largest Tax Lien Servicer and purchaser, I am able to help provide innovative, cost-effective revenue enhancement solutions to local governments throughout the United States through the purchasing and or servicing of their real estate receivables portfolios
Defendant Neil Harreveld is now the executive director at Tower Capital Management LLC in Morristown, New Jersey. In his web pages, he writes the following:
• Tower Capital Management LLC
Just closed a $21,000,000 transaction with Monroe County, NY. Find out how your receivables can mean real revenue for your local government today, call 1-800-581-0616 to find out more!
About Tower Capital Management LLC
Over the past ten years, our team has managed the process that has provided local governments across the country with over $5 billion of revenue.
Our management team is the most experienced group of professionals in the tax lien monetization industry allowing us to provide the most innovative and cost-effective programs for our municipal partners.
7. Other associated defendants included Dutton Mill Services, LLC, American Tax Funding Servicing, LLC, Jmj Properties, LLC, Marin Properties, LLC, Reoco, LLC, Tobano Realty, LLC, Dutton Mill Capital, LLC, Jokane Realty, LLC, Mj Acquisitions, LLC, and many others.
8. Defendant Bryan Lynch was working with Marini and Weisenbacher at Transamerica Finance Corporation. He later worked for M Credit, Inc. (f/k/a Transamerica Finance Corporation (Municipal Finance Division)). According to his LinkedIn profile, he was responsible for “Managed the overall liquidation and disposition of an assigned real estate secured tax lien portfolio and REO portfolio spanning 21 States.“ While Marini and Weisenbacher left Transamerica Finance Corporation in 1999., Brian Lynch stayed until 2008 when he joined American Tax Funding, LLC as VP and State and REO Manager. According to his LinkedIn profile , Bryan Lynch is “Responsible for the direct management and acquisition of a $70M+ real estate secured tax lien portfolio in CT and NJ. Manage and oversee the REO (Real Estate Owned) department.” This Defendant was responsible for signing all the contract forms for the sale of Dr. Stephanatos’ home.
9. Defendant Bryan Lynch was working closely with Paul Safran while at M Credit, Inc. Safran was the Director of Operations, Vice-President and Counsel for Transamerica Finance Corporations' Municipal Finance Division: Transamerica Business Credit Corporation/M Credit, Inc., where he had direct legal and business oversight over all of the Company's assets. Paul's duties at Transamerica and M Credit, included, among other things, conducting negotiations, drafting and/or reviewing all documentation concerning the acquisition, financing or sale of bulk assets to/from Municipalities/Purchasers/Sellers; management of all aspects of the collection, preservation and disposition of the Company's portfolio, supervision of all due diligence and risk management functions, supervision and monitoring of all foreclosure and quiet title actions, direct supervision and oversight over the acquisition, maintenance, and disposition of all REO properties, consisting of over 750 properties in numerous states.
10. Based on the filings with the Florida Secretary of State, Matthew A. Marini and Justin F. Weisenbacher appear to be the two main owners of the above corporate entities; they created the numerous corporations after they left Transamerica in 2000. Marini appears to have the largest owner share and he is listed as the CEO in most of the transactions of the above companies. (He also held the role of the EVP while with Transamerica). Based on the various filings with the Secretary of State of Florida, the companies are “manager-managed” as opposed to member-managed. However, it appears that the only members (or owners) of the companies are Marini and Weisenbacher.
11. In a manager-managed LLC, the members of an LLC select the managers of the company. A member of an LLC may be selected to act as manager of the company, or as part of an appointed management team. The managers of a manager-managed LLC are responsible for handling the company's daily affairs. Most LLCs that employ a manager-managed business structure use outside parties to manage the company's daily affairs. Here, Defendants Marini and Weisenbacher have created tens of corporate entities that have these two defendants as their managers. They are listed as the owners of these entities. Therefore, although they state in the corporation papers that these are “manager-managed” LLCs, in reality they are operating as “member-managed” LLCs . All these entities do use the same “office space”, i.e. either the home of Weisenbacher or Marini or the home of their wives or daughters.
12. It is also important to note that the person who actually receives email communications for ATF and ATFS is Justin F. Weisenbacher himself at Justin@atfs.com. Thus, if the Court looks at the information provided to the Florida Secretary of State about these entities and the facts that they operate out of their own homes and respond to the emails, the owners of these entities are also the managers and they total and complete control over the management and operations of these entities. Justin F. Weisenbacher writes in his LinkedIn profile that he is an “expert on Tax Liens”. Therefore, he not only the owner, but also he is the manager and the expert on the operations of the corporate defendants. Marini and Weisenbacher are nothing but the alter ego of the corporate entities.
13. Here one of two individuals holds the ownership of all of the stock; the entities use of the same business or office; there is a commingling of funds or assets; there diversion or misuse of corporate funds or property to buy properties and personal items for Marini’s and Weisenbacher’s families; there is a complete disregard of corporate formalities; there is a failure to keep minutes and adequate records; there is the absence of corporate assets or inadequate capitalization; and, the corporations are conducting personal business of the shareholder. Further, the application of the alter ego doctrine does not require a showing of actual fraud and can be satisfied by evidence that adherence to the corporate fiction would promote injustice. Therefore, M. A. Marini and J. F. Weisenbacher are the alter ego of these entities and the Plaintiff should be allowed to amend his complaint to add all these defendants as individually liable for the damages of ATF and Robert A. Del Vecchio.
14. Following the dramatic events of June 28, 2011, Weisenbacher was either resigned or removed as president of American Tax Holdings, LLC or American Tax Funding, LLC on or about December 2012-this is the date of filing of the federal class action against American Tax Funding and other entities/individuals. This information was obtained from LinkedIn where defendant Weisenbacher has posted his resume.
15. Weisenbacher’s automated response to email’s send to his former email address at ATF (i.e., at Justin@atfs.com), he writes the following: i will no long be checking this email, please email email@example.com
please note my personal email address to send all non ATF related emails. thanks
16. He then created another entity, named Firefox, LLLP on May 8, 2012, two months after the federal lawsuit against him was filed by Dr. Stephanatos. The corporate address is listed as 101 Harbor Way, Hobe Sound, FL 33455. This is the address of his former home that he sold in September 2012 to David Stone for $2,000,060.
17. Defendant Weisenbacher lists himself as “president at Firefox, LLLP” although he is the only member of that entity. Firefox, LLLP is being managed by the sole partner, Pilot Management, LLC that is another entity created that same day by Weisenbacher. He is the sole member (owner) of Pilot Management, LLC. The business address of this entity is also listed as the former home address of defendant Weisenbacher. He sold this property in September 2012 for a little more than $2,000,000 to David Stone. Source: www.zillow.com and Martin County, Florida Property Search results.
18. The officer name of Firefox, LLLP is listed as Pilot Management, LLC, also having as corporate address the 101 Harbor Way, Hobe Sound, FL 33455. Please note that this address is not the home of Weisenbacher because he sold it in September 2012 to David Stone. Thus, Weisenbacher is providing false information to the Florida Secretary of state.
19. Pilot Management, LLC was also created the same day that Firefox, LLLP was created, i.e., May 8, 2012. The Pilot Management, LLC is listed as the only partner of Firefox, LLLP. Weisenbacher is also listed as the “authorized representative” of the “sole general partner” of Firefox, LLLP.
20. Weisenbacher is also listed as the owner of Pilot Management, LLC. This information was obtained from the Florida Secretary of State online records at http://search.sunbiz.org/Inquiry/Corporationsearch/. In the filing papers with the Florida Secretary of State, Defendant Justin Weisenbacher listed as his email address the same one he had with American Tax Funding Servicing, LLC, i.e., Justin@atfs.com. Defendant Weisenbacher also listed himself as the registered agent of Pilot Management, LLC having its mailing and principal address the 101 Harbor Way, Hobe Sound, FL 33455, i.e., the former home of Weisenbacher. This is fraudulent information because Weisenbacher no longer lives there. He had bought that home on July 23, 2004 but he sold it in September 2012.
21. A search of the Martin County property records indicates that Weisenbacher is the owner of the property located at 18898 SE JUPITER INLET WAY, TEQUESTA FL 33469. He bought the property on September 25, 2012. The total market value of the property is listed at $670,000.00. Source: http://fl-martin-appraiser.governmax.com/propertymax/rover30.asp?sid=E7F07DE0303B4E4FA92C0F5E9952D910.
22. Mathew A. Marini is the second owner of the entities mentioned above. He is the co-manager of these LLCs (American Tax Funding, LLC, American Tax Holding, LLC, American Tax Servicing, LLC, American Tax Holdings, LLC, etc.) along with Justin F. Weisenbacher. Exhibit xx shows the known entities owned by Matthew A. Marini.
23. Marini also owns a large number of other entities along with his wife, Donna L. Marini. The rest of the Marini family also participates in these activities.
24. In a filing with the Florida Secretary of State for the entity American Tax Holding, LLL, both Marini and Weisenbacher are listed as the managers of the entity. In February 17, 2009, Marini indicated that he changed his address from 2305 River Woods Drive, Naperville, IL 60565 to 291 Caravelle Drive, Jupiter, FL 33458. Marini purchased the Caravelle Drive home on September 22, 2008. Source: www.Zillow.com
25. Marini is the single owner of Dutton Mill Capital, LTD, registered in Illinois. The annual revenues are listed as $61,000 in 2011. Matthew Marini is listed as the owner, while Claude McAdams is listed as the vice-president.
26. In February 2013, Mathew Marini, 57, created a number of other companies, listing as his daughter, Dana E. Marini, 28, as the co-manager and/or co-owner. These entities names are: NSPS Holdings, LLC (19619 Trails End Terrace, Jupiter, FL 33458-2439), North Shore Payroll Solutions, LLC (19619 Trails End Terrace, Jupiter, FL 33458-2439 whose registered agent is M. A. Marini located at 8818 SE North Passage Way, Tequesta, FL 33469), North Shore Insurance Solutions, LLC (19619 Trails End Terrace, Jupiter, FL 33458 ), Martin Family Management, LLC (8818 SE North Passage Way, Tequesta, FL 33469 ), Martin Family Investments I and II, LLLP (8818 SE North Passage Way, Tequesta, FL 33469-1808 ). The creation of these entities is in the same style and format as the creation of the tax lien purchasing business that Marini and Weisenbacher started in 2000: Marini and Weisenbacher create holding companies that “manage” all other entities. In essence, however, there are only two individuals who manage all the operations, i.e., the owners of these entities: Marini and Weisenbacher. Marini is the accountant; while Weisenbacher is the “tax lien expert” (this is how he calls himself in the LinkedIn resume that he has posted on the internet).
27. The creation of so many corporate entities is for Marini and Weisenbacher to avoid paying taxes and to shield themselves from judgment creditors. As the court can see, these entities have Matthew A. Marini and Justin F. Weisenbacher as the owners. In their state filings they note that these entities are “manager-managed” companies but in reality they are managed by the two owners. They are in fact “owner-managed” and Marini and Weisenbacher are liable individually for the damages they entities caused.
28. It appears that Matthew Marini and Weisenbacher are leaving the tax lien business and started businesses inside their homes. These new business are in other areas, such as accounting, insurance, investment clubs, etc. These activities coincide with the federal law suit filed against American Tax Funding, LLC, American Tax Holdings, LLC, etc. It is also evident that the Marini’s and Weisenbacher recently bought homes in the Florida area.
29. Matthew A. Marini’s daughter, Dana E. Marini has also participated in the scheme. She has close relationships with the other conspirators, such Plymouth Park Tax Services, LLC (also known as XSPAND, a division of JP Morgan Chase). She is listed as the owner of many properties in the Florida area, including the property located at 6255 Lucerne Street, Jupiter, FL (parcel control number 30-42-41-15-01-027-0120, NORTH PALM BEACH HEIGHTS LT 12 BLK 27) and the one located at 19619 Trails End Terrace, Jupiter, FL 33458-2439.
30. Another daughter of Matthew Marini, Megan Marini, also participated in this conspiracy from May 2008 through 2010 when she serviced many accounts for American Tax Funding, LLC.
31. The lawyer (also a defendant in this action for committing fraud, defamation, conspiracy and other offenses against Plaintiff) for this entity is Robert A. Del Vecchio, Esq., 405 Lafayette Avenue, P.O. Box 561, Hawthorne, New Jersey 07507, Phone (973) 423-9035, fax: (973) 423-9036. ATF purchased the illegal liens levied onto Plaintiff’s homestead property. ATF and Del Vecchio also fraudulently and criminally falsified a certification to the Morris County Clerk that Plaintiff had no possessory interests in his home and hired the Passaic County Sheriff to act as an agent for the enforcement of a void and/or voidable court order. Robert Del Vecchio has purchased tax liens for himself and for his trust fund Robert Del Vecchio Pension Trust, LLC.
32. Del Vecchio is also the lawyer for Plymouth Park Tax Services and Xspand. J.P Morgan Chase and its subsidiaries, Plymouth Park Tax Services and Xspand, recently admitted their guilt in rigging delinquent property tax liens in 33 states- including New Jersey. JPMorgan Chase & Co. has agreed to pay $211 million after admitting one of its divisions rigged dozens of bidding competitions to win business from state and local governments. At the same time, JPMorgan Chase & Co. has announced that it is leaving the tax lien purchasing business. This announcement coincided with the finding that the Federal Bureau of Investigation begun its investigation of Xspand and other tax lien purchasers.
33. Since at least the beginning of 1998 continuing through the present, the defendants Robert Del Vecchio, Robert Del Vecchio Pension Plan, LLC, American Tax Funding, LLC, Atfh Real Property, LLC, American Tax Holding, LLC, American Tax Funding Servicing, LLC, and other related entities such as Dutton Mill Services, LLC who are among the largest purchasers of TSCs in the State of New Jersey, entered in an illegal agreement, combination or conspiracy whereby they would ensure there was little to no bidding at the auctions. Prior to each auction, the defendants would meet and allocate amongst themselves the delinquent property tax obligations up for auction, and agree to refrain from bidding on those which were not allocated to them. This resulted in there being only one bid at the auction, and therefore, the opening bid became the winning bid. This would ensure that the delinquent property tax obligation, whether that “obligation” was constitutional or legal or unlawful, carried the maximum interest rate allowed – 18% – to the benefit of the defendants and to the detriment of the property owner. As a result of the defendants’ illegal conduct alleged herein, Dr. Stephanatos have paid, tens of thousands of dollars in interest which has been artificially inflated due to the defendants’ illegal conduct.
34. Defendant Harreveld, after he left American Tax Funding in 2009, he conspired with ATF, Marini and Weisenbacher to split the tax lien markets. He worked for XSPAND and JP Morgan Securities and then he became an executive at Tower Capital Management, LLC. He conspired with ATF and XSPAND/JP Morgan Securities to allocate the Monroe County, NY and several Connecticut towns to himself where the other co-conspirators would not bid on the tax lien packages offered by these towns. In return, he would not bid on the other tax lien markets where ATF and XSPAND or MD SASS would participate.
35. The defendants obtain the so called “lines of credit” from Hedge Funds, investment funds, individual investors, and the large commercial banks or their subsidiaries, including, but not limited to: Wells Fargo, Wells Fargo Foothill, LLC, Wells Fargo Capital Finance, LLC, Bank of America, JP Morgan Chase, BMO Capital Markets Corp. (formerly known as the Harris Nesbitt Corporation), and others. These lenders would become “secured parties” in these transactions, the loans being guaranteed by these tax liens.
36. The defendants petition to the municipalities to consent to the “Collateral Assignment of Tax Liens”. See for example letter in Exhibit D from Justin Weisenbacher, President, American Tax Funding, LLC to the Mayor of Danbury, CT, dated January 2005, requesting the consent of the Danbury city counsel to the collateral assignment of tax liens to Harris Nesbitt Corporation as Collateral Agent for the secured parties. The Harris Nesbitt Corporation is now doing business as BMO Capital Markets, Inc. In Exhibit D, one of the co-conspirators, Justin Weisenbacher, president of ATF and other entities writes: “As discussed, we are going through a refinance of our business to increase our total credit facility by bringing on an additional lender, Harris Nesbitt. Our existing relationship with Wells Fargo Foothill is excellent and will continue.”
37. A sample agreement for the “assignment of municipal tax liens” is enclosed in Exhibit B between the City of Danbury and American Tax Funding, LLC.
38. Exhibit F includes a purchase agreement between the City of Rochester and American Tax Funding. It is important for the Court to read the sections of the agreement that deal with the representations of the city and ATF, LLC. Both parties make warranties that they will not violate any state or federal law. As the Court will see from the facts of this case, these defendants have violated a large number of state and federal laws. An excerpt from that agreement is presented below:
(d) No Proceedings. There are no proceedings or investigations pending or threatened in writing against it before any court, regulatory body, administrative agency or other governmental instrumentality (i) asserting the invalidity of any of the Transaction Documents, (ii) seeking to prevent the consummation of any of the transactions contemplated by any of the Transaction Documents, or (iii) seeking any determination or ruling that could reasonably be expected to materially and adversely affect the validity or enforceability of any of the Transaction Documents.
Section 4.02. Representations and Warranties of the City with respect to the Tax Liens.
(iv) the sale of such Tax Lien by the City did not violate, contravene or conflict with any federal, state, special or local law, statute, rule, regulation or ordinance, or any order, ruling or decision of any federal, state or local court, administrative agency or regulatory body, or any contractual or other restriction, limitation or encumbrance, in each case applicable to the City, and was effected in full compliance with all applicable Laws;
(v) the amounts secured by such Tax Lien were validly levied by the City in accordance with all provisions of federal, state and local laws, statutes, rules, regulations and ordinances, and all orders, rulings and decisions of any federal, state or local court, administrative agency or regulatory body, in each case applicable to the City;
(vi) such Tax Lien is a legal, valid, binding and enforceable lien on the related Property;
Section 5.02. Indemnity by the Buyer. The Buyer agrees to indemnify and hold harmless the City and its officials, employees and agents for losses, costs and expenses arising out of or relating to:
(a) Any breach of the Buyer’s representations, warranties and covenants set forth in this purchase and sale agreement; and
(b) Any claims or litigation brought against the City solely out of the violation of this Agreement or any applicable law with respect to the Buyer’s collection or enforcement of the Tax Liens caused by the Buyer’s gross negligence or willful misconduct.
39. A Tax Sale Certificate was issued with respect to Plaintiff’s residential property in September 2005, certificate #2310 from Wayne Township for $880.00, and such Tax Sale Certificate was purchased by one of the defendants pursuant to the conspiracy alleged herein. Dr. Stephanatos disputed the amount of the tax that he allegedly owed; that dispute has yet to be resolved.
40. The certificate may have been purchased by Robert A. Del Vecchio and then re-sold it to American Tax Funding, LLC. At one moment in 2010 he said to Judge McVeigh: “if I do not foreclose, I will lose my premium which is $20,000.”
41. Apparently, the defendants paid a “premium” of $20,000 to $30,000 to secure the eighteen percent (18.00 %) interest rate for subsequent taxes. According to this scheme that the Municipality of Wayne has knowingly and intentionally participated, they over-assess the homeowner’s property and if the homeowner refuses to pay the excess or and/or unlawful charges, then the Wayne Township files the unlawful liens on the property. The Wayne Township then continues to insist that the liens are lawful, despite the fact they know that the properties are over-assessed and that the assessments are unlawful. This is what they did to Dr. Stephanatos (See Docket, Civil Action No. 02:12-cv-01793 (FSH-PS)).
42. Wayne Township then sold the illegal liens to American Tax Funding, Robert Del Vecchio, and others, who blackmail the homeowners into paying these unlawful charges. The exact nature of the agreements between Wayne Township and American Tax Funding or Robert A. Del Vecchio is not known at this time, but it should be similar to the ones presented herein.
43. Exhibit A shows the “Tax Lien Assignment List” by American Tax Funding, LLC. The Exhibit was obtained from the web pages of this defendant and should be allowed into evidence as a self-authenticating document pursuant to Fed. R. Evid. 902. The document indicates that most of the assignments carry an interest rate of $18 percent, which is the maximum statutory interest in New Jersey. The defendants managed to obtain these maximum interest rates by participating in this conspiratory scheme to limit competition by “bidding” extremely high “premiums” (for example they “bid” a premium of $20,000 to $30,000 for Dr. Stephanatos’ certificate that was a mere $880.00) to eliminate, reduce or stiffen the “competition”. Dr. Stephanatos disputed and continues to dispute that he owed any money to the municipality, as his property was intentionally over-assessed by the municipal defendants by over forty percent. More information will of course be discovered as we proceed into the discovery process.
44. The defendants obtain these certificates from the various townships under agreements such as the one found in Attachment B. That document was obtained from the City of Danbury Tax Collector’s office.
45. Exhibit C contains the “procedures for bidding at tax sales in New Jersey”, obtained from the City of Camden.
46. Since, in New Jersey, tax liens have first priority against all other liens, save subsequent municipal tax liens. N.J. STAT. ANN. § 54:5-9; see also id. at § 54:5-29, the defendants have developed a scheme where they would retain their right of first refusal by paying a “premium” to the municipality. Under this scheme, the municipality will not issue a new tax sale certificate, but instead would attach the subsequent taxes to the original tax sale certificate.
47. It should be noted that although the statutes state that 0 percent bids will not be accepted, here, American Tax Funding, LLC and its co-cospirators, accomplishes or agents did offer a rate of 0 percent. After that, the defendant end up paying $20,000 to $30,000 premium for a certificate that was only $880.00. This is highly suspicious, as the procedures indicate that the “premium” shall be bid at $100.00 increments. The details of what happened and the exact written agreement municipal tax collector and ATF/Del Vecchio is not known at this time. This information will be revealed upon examination of the defendants’ documents and other records.
48. These defendants rely on the fact that a property owner does not know the procedures and does not redeem the certificate within two years from its issuance; then they have “purchased via the high premium” the right of first refusal for the subsequent taxes without having to bid on the new taxes. They now can charge 18 percent for the subsequent year taxes, because nobody of the other co-conspirators will bid on the subsequent taxes.
49. It is very important to note that should the lien holder does not foreclose the property within a five year time frame from the date of the purchase of the lien certificate, then, the “premium” is forfeited by the municipality. Since the original certificate was purchased in 2005, the forfeiture date was in late 2010. The property was not foreclosed until 2011. Thus, the defendants forfeited the $20,000-$30,000 “premium” they had paid to the municipality. The forfeiture of this sizable amount of money is perhaps the reason the ATF/Del Vecchio defendants intentionally decided to violate a number of other state laws that were protecting Plaintiff’s interests (such as the Forceful Entry and Detainer Law) so that they end up recovering their forfeited premium through the sale of Plaintiff’s property.
50. Thus, the scheme that these individuals (ATF, LLC and its parent and other affiliates, XSPAND, LLC, etc.) have developed is to pay a very high premium for obtaining the “right” to charge 18 percent interest rate for any subsequent taxes. It appears that the municipalities do not perform tax sales for the new taxes of subsequent years, but they add these taxes to the original certificate. Thus, there is no competition for the subsequent taxes, allowing the defendants to charge the maximum 18 percent initial statutory rate. The defendants also do not send notices to the homeowners to redeem the 0 interest rate original certificate. These acts most certainly violate the anti-trust provisions of the Sherman Act because the defendants have created a monopoly in this area by manipulating the statutory and procedural scheme.
51. These defendants demanded from Dr. Stephanatos payment of $65,000 in unlawful taxes, and interest and penalties, notwithstanding the fact that the only money that had to be redeemed by Dr. Stephanatos was the original certificate for $880.00. See N.J.S.A. 54:5-54, entitled “Right of Redemption by owner, person having interest.” These acts add to their conspiratory scheme to extort property from Dr. Stephanatos.
52. As a result of the defendants’ conduct alleged herein, the interest rate associated with Plaintiff’s delinquent tax obligation was artificially inflated and Plaintiff was damaged thereby. Plaintiff was faced with the prospect of foreclosure on his property by one of the defendants (American Tax Funding, LLC) due to the TSC associated with his property. The unconstitutional acts of the defendants in foreclosing and forcibly taking his homestead property have been detailed in Plaintiff’s complaint for violation of his legal rights by the defendants filed in March 2012, as was supplemented by his numerous submissions to the Newark District Court through November 2012.
ALLEGED VIOLATIONS OF SECTION TWO OF THE SHERMAN ACT
53. Beginning as early as January 1, 1998 through the present, defendants and their co-conspirators engaged in a continuing contract, combination or conspiracy with respect to the sale of Tax Sale Certificates in the State of New Jersey in monopolization, attempts to monopolize, and conspiring to monopolize trade and commerce in violation of Section Two of the Sherman Act, 15 U.S.C. § 2.
54. Section 2 of the Sherman Act prohibits monopolization, attempts to monopolize, and conspiring to monopolize. Any such act constitutes a felony. A monopoly conviction requires proof of the individual having intent to monopolize with the power to monopolize, regardless of whether the individual actually exercised the power. Congress designed these federal antitrust laws to eradicate certain frequently used anticompetitive practices.
55. Section 2 applies to all types of unilateral conduct by firms, and thus covers a vast range of activities. It is primarily aimed at preventing injury to competition accomplished through exclusion of rivals.
56. Certain types of vertical agreements, such as exclusive dealing and tying as alleged in my complaint between Del Vecchio, Wayne Township Tax Collector, American Tax Funding, LLC and others, are actionable under both sections 1 and 2.
57. Accordingly, “the effects of exclusionary conduct are always indirect: by excluding a rival, or impairing its ability to compete effectively . . . the predator hopes to obtain power over price or influence some other dimension of competition.”
58. The “first prong of Brooke Group’s test requires little adaptation for the predatory-bidding context. A plaintiff must prove that the alleged predatory bidding led to below-cost pricing of the predator's outputs.” Because of the risk of “chilling procompetitive behavior with too lax a liability standard,” “only higher bidding that leads to below-cost pricing in the relevant output market will suffice as a basis for liability for predatory bidding.” With regard to the second prong of the Brooke Group test, a “predatory-bidding plaintiff also must prove that the defendant has a dangerous probability of recouping the losses incurred in bidding up input prices through the exercise of monopsony power.” As with predatory pricing, the recoupment prong requires “a close analysis of both the scheme alleged by the plaintiff and the structure and conditions of the relevant market.” Id. at 326 (quoting Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 226 (1993)).
59. Here, American Tax funding bid extremely high “premiums” to secure an 18 percent interest on subsequent liens. They end up losing the premium and as a result they intentionally violated a number of other state laws so that they recover their lost “premium”.
ADDITIONAL CRIMINAL ACTS COMMITTED BY DEL VECCHIO, AMERICAN TAX FUNDING, LLC AND OTHER DEFENDANTS
60. Robert A. Del Vecchio committed a number of other crimes against Plaintiff: by making an ex-parte fraudulent certification to a Mercer County Clerk in May 2011 (Dr. Stephanatos’ home was located in Passaic County; Del Vecchio made the conscious decision to file his fraudulent certification in a Mercer County Clerk, in violation of state law) that Plaintiff had no possessory interests in his home; he then hired his friends Passaic County officers Lucas and D’Agostino (he resides in the same town as Del Vecchio) to perform an unlawful eviction from Plaintiff’s home and committed a forceful entry in violation of the New Jersey Forceful Entry statutes, he lied to judge McVeigh that Plaintiff owed $65,000 in taxes without revealing to the Judge McVeigh that Plaintiff was in dispute with Wayne Township due to the over-assessment of his property and that the taxes allegedly “owed” (Plaintiff disputes that he owed any taxes to the Township) were significantly less; Del Vecchio continued to feed Judge McVeigh on an ex-parte basis lies and fabrications (such as that Plaintiff had not paid taxes since 1993).
61. These are the same practices that Del Vecchio has used throughout his area of fraudulent activities (Townships of Wayne, Borough of Fort Lee, his home town of Hawthorne, New Jersey, and many other municipalities). For example, on September 28, 2010, Robert Del Vecchio purchased Tax Sale Certificate #2010-04, from the Town of Hawthorn, NJ, charging more than 20 percent interest. He received more than $4,200 in interest alone when the property owner redeemed the certificate on August 6, 2012. This interest is in excess of twenty percent. There are numerous instances like that available and known to the Plaintiff that will be provided to the Court at trial.
62. Robert Del Vecchio also served as a lawyer for defendants American Tax Funding, LLC and American Tax Holdings, LLC and Plymouth Park Tax Services, LLC ( a subsidiary of J.P Morgan Chase). Del Vecchio reached an agreement with these defendants not to bid for himself or the Del Vecchio Pension Trust and would instead allow American Tax Funding or American Tax Holdings or Plymouth Park Tax Services, LLC to charge the 18 percent or greater rate onto the tax lien certificate. In exchange, Del Vecchio would represent these defendants in any foreclosure and other legal proceedings. Del Vecchio would also make false certifications to the courts and clerks of the courts that the property owners have no possessory interests in their homes so that these conspirators would seize homeowners’ property, enriching themselves and causing many millions in property and business damages to homeowners, including the Plaintiff.
63. Del Vecchio and American Tax Funding, LLC met in person or communicated through the internet, email, voice mail, fax or telephone communications numerous times during this period to discuss their parallel conduct, to form a strategy for defrauding Plaintiff of his property;
64. The purpose of all the communications between the defendants was to facilitate the conspiracy.
65. As part of their conspiratory scheme, these defendants make false representations to the municipalities, such as the following excerpt from their web pages (http://www.atfs.com/about.asp):
Over the years the ATF team has dealt with every facet of the tax lien business, from multimillion dollar bulk purchases to individual lien assignments involving small investors. Through all its endeavors a few simple principals have guided it:
To deal fairly and honestly with everyone in the community;
To always surpass the expectations of our partners;
To be firm but compassionate with delinquent taxpayers
If you’re a municipal official searching for new ways to generate revenue a good place to start is our "For Governments" page. If you’re an investor looking for tax lien or real estate assets to purchase, please visit our "For Investors" page. To learn more about our company and how we can help your business or municipality, please feel free to contact us.
66. At other situations, such as the ones presented in Exhibit G for the bulk purchase of tax liens by XSPAND Bear Sterns (now owned by JP Morgan Chase), the issue was brought up by Director Keysa as to why there was no-collusion requirement in the RFP package or the sale agreement. It is noteworthy that Director’s Keysa’s question was never really answered by James Tuppen. What they did was to only ask bids from only two bidders. This is another way that the politically-connected tax lien companies such as the defendants obtain business form the municipalities.
67. American Tax Funding, LLC has acknowledged that it is under criminal investigation by the FBI into defendant’s antitrust conspiracy. As indicated earlier, 11 individuals and companies have already pled guilty to conspiracy charges filed against them by the United States.
SUBSEQUENT CONSPIRATORIAL ACTS OF THE DEFENDANTS TO FORCE DR. STEPHANATOS OUT OF HIS HOME AND PLACE OF BUSINESS
68. I will include below a summary of the subsequent conspiratory acts of the defendants so that the Court sees the magnitude of the criminal activities of American Tax Funding, Del Vecchio, Weisenbacher, Brian Lynch, and others.
69. Dr. Stephanatos was not personally liable for the property taxes and no personal judgment could have been issued against him. Only an in rem proceeding could have been legally instituted to take title from him and to force him out of his residence. However, according to New Jersey law only the municipality can institute an “in rem” proceeding. The municipally held liens can be foreclosed by municipalities under the In Rem Tax Foreclosure Act codified in N.J.S.A. 54:5-104.29 et seq. However, a private entity, such as ATF and Del Vecchio, is not allowed by New Jersey law to perform in rem foreclosures.
70. What these defendants did, then, was to treat the real estate taxes as a personal debt and they used the “in personam” foreclosure proceedings that are applicable to debtor-creditor residential mortgage proceedings or in situations where a person is personally liable for a debt. However, according to New Jersey law "A tax against real estate is not a debt of the owner; it is not founded on a contract express or implied but is an imposition against the property and no personal liability attaches." (emphasis added) Francis Realty Co. v. Newark, 16 N.J. Misc. 328, 330 (Essex Co. Cir. Ct. 1938). This position is supported by Rothman v. River Edge, 149 N.J.Super. 435, 374 A.2d 36 (App.Div. 1977), certif. den., 75 N.J. 19, 379 A.2d 250 (1977) in that court's statement that the unpaid taxes could not result in a judgment against the taxpayers but shall be a lien against the premises. [149 N.J. Super. at 442, 374 A.2d 36].
71. Thus, because the real estate taxes were not a personal debt of the Plaintiff and no personal liability attaches, these defendants could not have used the residential mortgage foreclosure proceedings or the “in personam” foreclosure proceedings to determine ownership and possession of the land and actual possession of the land. This could only have happened through an “in rem” proceeding and that proceeding could have only been conducted by municipalities under the In Rem Tax Foreclosure Act codified in N.J.S.A. 54:5-104.29 et seq. Thus, the actions of the defendants are thoroughly unlawful and also prohibited by the Public Use Clause of the Federal and State Constitutions. These irregularities also raise issues of Taking of Private Property without Due Process of Law, i.e., a Due Process 14th Amentment violation.
72. The “private taking” that was conducted by the defendants is prohibited by the federal constitution as the Court has already been extensively briefed. The Public Use Clause provides that “one person's property may not be taken for the benefit of another private person without a justifying public purpose, even though compensation is paid.” Hawaii Hous. Auth. v. Midkiff, 467 U.S. 229, 241 (1984) (quoting Thompson v. Consol. Gas Corp., 300 U.S. 55, 80 (1937)). Because a private taking cannot be constitutional even if compensated, “[a] plaintiff that proves that a government entity has taken its property for a private, not a public, use is entitled to an injunction against the unconstitutional taking, not simply compensation.” Carole Media LLC v. N.J. Transit Corp., 550 F.3d 302, 308 (3d Cir. 2008).
73. Here, there is no dispute that Plaintiff’s property was taken for a private purpose;
74. The defendants knew that the above statutes protect Plaintiff’s right to remain in actual possession of his residence. Specifically, N.J.S.A. 2A:39-7 says that title shall not be an issue since Plaintiff was in continuous possession of his residence for 16 years. N.J.S.A. 2A:39-7 Title not inquired into; defense of 3 years possession. Title shall not be an issue in any action commenced under this chapter. 3 years peaceable possession by the defendant shall be a defense to the action.
75. The above New Jersey state law specifically applies to Dr. Stephanatos, because Dr. Stephanatos was in possession of this home continuously since 1995 and it was being used as his residence. In May 2011, following the fraudulent issuance of a judgment by a Mercer County Court that had no jurisdiction over neither the Plaintiff nor his residence, Dr. Stephanatos became at least a “tenant at sufferance”. Dr. Stephanatos also had significant possessory interest, including the filing of a Suit to Vacate the Tax Deed , the filing of two appeals, the possession of a business in the premises (Metropolitan Environmental Services, PC and Metropolitan Environmental Services), and the right to buy back the rights to the property. See N.J.S.A. 54:5-104.100. This state law is consistent with the legislative findings in N.J.S.A. 2A:18-61.1a.
N.J.S.A. 2A:18-61.1a. Findings
The Legislature finds that:
a. Acute State and local shortages of supply and high levels of demand for residential dwellings have motivated removal of blameless tenants in order to directly or indirectly profit from conversion to higher income rental or ownership interest residential use.
b. This has resulted in unfortunate attempts to displace tenants employing pretexts, stratagems or means other than those provided pursuant to the intent of State eviction laws designated to fairly balance and protect rights of tenants and landlords.
c. These devices have circumvented the intent of current State eviction laws by failing to utilize available means to avoid displacement, such as: protected tenancies; rights to purchase; rent affordability protection; full disclosures relevant to eviction challenges; and stays of eviction where relocation is lacking.
76. The applicable statutes here are the so called Summary Dispossess Act statutes. The Summary Dispossess Act, N.J.S. 2A:18-53 et seq. was enacted in 1951 and amended in 1983 and 1991. Since enactment of the Anti-Eviction Act, N.J.S.A. 2A:18-61.1 et seq., the Summary Dispossess Act has been understood to cover the eviction of nonresidential tenants and residential tenants not covered by the Anti-Eviction Act. This is a very critical issue for the Court to note. Source: STATE OF NEW JERSEY, NEW JERSEY LAW REVISION COMMISSION, Final Report Relating to Landlord and Tenant Law, February 10, 2012
77. This Court should also compare the law of the state of New York, where similar process must be followed, i.e., the issue of actual possession must be decided by a Law Division Judge, after an owner (a tax sale purchaser) has met the conditions for taking possession.
78. Based on New Jersey and New York law, including the law of all other states, to remove a person in actual possession, the owner must occupy the premises himself (this was not the case here as ATF did not take actual possession of the premises and only took constructive possession) or no rent was being paid or for breach of the peace. In other words, only after they met few exceptions (such as not paying rent, etc.) and through an Order from a Law Division Judge could have allowed these defendants to enter Dr. Stephanatos’ property and to remove him from his dwelling.
79. The defendants intentionally did not follow the Anti-Eviction Act, N.J.S.A. 2A:18-61.1 et seq., and the Summary Dispossess Act, N.J.S. 2A:18-53 et seq. and refused to follow the Unlawful and Forceful Entry and Detainer statutes of the state of New Jersey, and they willfully lied to the Mercer County Clerk in May 2011 that there were no persons in the premises (see Exhibit E for the willful misrepresentation by Robert Del Vecchio that no persons with possessory interests were present at the residence of Dr. Stephanatos) protected by either the Anti-Eviction Act N.J.S.A. 2A:18-61.1 et seq., or the Summary Dispossess Act, N.J.S.A. 2A:18-53 et seq.
80. These criminals (especially Robert Del Vecchio, Esq who is a lawyer in New Jersey) knew that this was a residential property and they knew that they had to comply with the Unlawful Entry and Wrongful Entry statutes – but they knowingly decided not to comply with the state law. This way they managed to fool the sheriff (there is significant evidence, however, that Del Vecchio, D’Agostino and Lucas formed a conspiracy to violate the legal rights of the Plaintiff) to perform an unlawful search and unlawful entry and to forcefully remove Dr. Stephanatos from his lawfully-occupied residence on June 28, 2011.
81. The remedy for a violation of this statute is provided for by N.J.S.A. 2A:39-8, stating that a plaintiff who is successful under the act “shall be entitled to possession of the real property and shall recover all damages proximately caused by the unlawful entry and detainer including court costs and reasonable attorney's fees.” In those instances where return to possession would not be appropriate, a successful plaintiff shall be awarded treble damages. N.J.S.A. 2A:39-8.
82. In most states, including New Jersey, “it is immaterial in a suit for forcible entry and detainer whether plaintiff has the legal right of possession, and the action lies so long as the plaintiff had peaceful prior possession and was forcibly put out of that possession by the defendant, even if the plaintiff was devoid of any of the muniments of title or was a trespasser.” 35A Am. Jur. 2D Forcible Entry and Detainer § 18 (2001). See, e.g., Allen v. Harris, 755 S.W.2d 393, 395 (Mo. Ct. App. 1988) (“In an action of forcible entry and detainer, the sole issue is a question of actual possession, and not the right of possession, since one may be wrongfully in possession, yet he cannot be dispossessed against his will.”); Floro v. Parker, 205 So. 2d 363, 365-66 (Fla. Dist. Ct. App. 1967) (holding legal right of possession “immaterial” in an action for forcible entry and detainer).
83. There is no dispute about the following key facts, each of which are easily capable of accurate and ready determination by resort to the certified common level ratios whose authenticity and accuracy cannot be reasonably questioned.
• Plaintiff’s property was assessed by the Wayne Township Assessor at $237,000 from 1995 through 2011;
• The average common level ratio in Wayne Township from 1995 through 2011 is 50 percent;
• Based on an average common level ratio of 50 percent, and an assessed value of $237,000, the Assessor valued Plaintiff’s property at $237,000/0.50 = $474,000; this is the “true value” used by the Assessor in determining Plaintiff’s assessed valuation;
• The actual value of Plaintiff’s property in 2011 has been established at $330,000 based on the sale of the property in December 2011; thus, the Assessor’s “true value” was forty percent (40%) greater than the actual value of Plaintiff’s property; this overvaluation resulted in forty percent (40%) more taxes being levied onto Plaintiff’s property;
• In May 1995, the Plaintiff bought the property for $237,000; this is evidence of the fair market value or true value of the property in that year;
• In 1996, the Assessor, however, despite having knowledge of this true value, assessed Plaintiff’s property as if his property was valued at $475,000; this is impermissible over assessment because it exceeds the common level ratio by more than 15 percent; this over assessment was void ab initio according to New Jersey law (see case law below);
• This over-assessment of Plaintiff’s property continued from 1996 through 2011, resulting in more than $45,000 in unlawful charges onto Plaintiff’s property. As a result, Plaintiff did not owe any money to the municipality.
• Further proof of the negligence or deliberate indifference of the municipal defendants is provided by the fact that as of today’s date, the municipal defendants have not revised the assessment of the 687 Indian Road property, despite having proof of the fair market value of the property.
The New Jersey Court In Village of Ridgefield Park et al., v. Bergen County Board of Taxation et al., 62 N.J.Super. 133, 162 A.2d 132 said that any assessment levied in violation of the constitutional mandate of uniformity is absolutely void Ab initio.
84. Plaintiff’s allegations are that the municipal defendants have violated their authority under the state constitution by imposing unequal and discriminatory taxes under the home rule charter that are prohibited by the state constitution’s uniformity clauses, including the prohibition against local taxes (see N.J. Const., Article IV, Section VII, par. 9 ).
85. As Plaintiff has alleged in his complaint, “the taxes required to be raised by the general school law for the support of the free public schools of the State are State taxes for the use of the State.” Society, &c., v. Paterson, 89 N.J.L. 208, reversing 88 N.J.L. 123. The taxing district is therefore the state and the taxes are raised for the use of the State. As such, they have to be uniform throughout this taxing district, i.e., the State. However, there is significant inequality among the similarly situated homeowners across the state and this violates the equal protection clause of the 14th Amendment to the federal constitution, and the equal protection guarantee of the New Jersey constitution. However, the municipal defendants are refusing to obey the constitutional mandate and they have been using the Tax Sale statutes to blackmail the homeowners into paying exorbitant amounts of money to enrich themselves and without providing commensurate services to the homeowners.
No Title was ever vested in the municipal defendants, because no sale was ever conducted of Plaintiff’s property prior to the seizing of his residence on June 28, 2011
86. The Supreme Court of Louisiana in A. Remy Fransen, Jr. and Allain F. Hardin v. City of New Orleans, et al., 988 So.2d 225 (2008), also quoted the following:
Lands are not forfeited by the non-payment of taxes. The State, by such omission, acquires no title to them. Taxes, like a judgment of a court of record, are a mere lien upon the land, to be enforced in both instances by a sale, and the title passes, and can pass, by such sale alone. There can be no redemption by the owner until after a sale, for the reason that until that time the title is still in him, and there is nothing to be redeemed. After they are due and before the sale, he may pay the taxes and discharge the lien, but there is in no sense a redemption. The State, or other authority imposing the taxes, may become the purchaser at the sale, but until they are so purchased no title to the land vests in such authority. Until there be a sale, every vestage [sic] of title remains in the individual, and the lands are subject to a mere lien for the taxes. It need not be argued that the sale is in no sense a forfeiture.
3 PROJECT OF A CONSTITUTION FOR THE STATE OF LOUISIANA WITH NOTES AND STUDIES 200-203 (1954) (quoting Comm’rs of Miami County v. Wan-zop-pe-che, 3 Kan. 3[64, 370-371] (1865)).
87. Plaintiff concurs with this opinion and asserts that no title was ever passed to the defendants because there was never a sale prior to entering his residence and their acts were that of a trespasser. Although the property is "sold" as evidenced by a tax sale certificate, N.J.S.A. 54:5-46, a tax sale certificate is not an outright conveyance, and the certificate holder does not have title to the land. Savage v. Weissman, 355 N.J. Super. 429, 436 (App. Div. 2002); Township of Jefferson v. Block 447A, Lot l0, 228 N.J. Super. 1, 4 (App. Div. 1988); Gasorek v. Gruber, 126 N.J. Super. 511, 515 (App. Div. l974). The certificate holder succeeds to the lien interest of the taxing district. Weissman, supra, 355 N.J. Super. at 436; Township of Jefferson, supra, 288 N.J. Super. at 4; Manning v. Kasdin, 97 N.J. Super. 406, 417 (App. Div. 1967), certif. denied, 51 N.J. 182 (1968).
88. Furthermore, Plaintiff was in continuous possession of his residence since 1995 and his possessory interests were protected by the Forceful Entry and Detainer statutes of New Jersey. In addition, the Township could not commit a “private taking” that is prohibited by federal law. All the defendants’ actions were in violation of clearly established constitutional law that is far superior to any statutory law rights that the defendants may claim that they possessed.
Offender: American Tax Funding, Matthew A. Marini, Justin F. Weisenbacher, Brian Lynch, and others
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