April 20 (Bloomberg) -- A JPMorgan Chase & Co. subsidiary The Unit DVD is among at least three companies being investigated as part of a U.S. Justice Department antitrust probe of bidding at municipal tax-lien auctions in New Jersey.
JPMorgan’s Xspand The Unit DVD set and Vienna, Virginia-based Mooring Tax Asset Group received grand jury subpoenas last year, according to an August prospectus for New York City tax-lien bonds that are serviced by the firms. Two units of Royal Bank America were subpoenaed, The Unit DVD boxset parent, Royal Bancshares of Pennsylvania Inc. said in a March 2009 regulatory filing.
New Jersey municipalities The Unit Seasons 1-4 DVD boxset auction about $100 million a year in tax debts on commercial and residential property to investors, said Vincent Belluscio, executive director of the state tax collectors and treasurers association. Antitrust officials are probing whether investors colluded to limit competition on sales to win a higher return, he said. In New Jersey, the liens can carry annual interest of as much as 18 percent. The Unit DVD are designed so that investors bid down the interest rate they’re willing to accept.
“The problem is The Unit DVD set a tendency to meet in the hallway before a sale and divvy up the list,” Belluscio said. “They say, ‘We’ll buy these properties, and you buy those.’ And the interest rate holds at 18 percent.”
Belluscio said his information comes from a tax collector who was visited by a federal investigator.
Lien Buyers
Cities and towns in New Jersey and 27 other states The Unit DVD boxset sell tax debts to investors to raise cash and help plug budget deficits. Some of the debts are packaged into bonds and sold. Tax-lien buyers also get the right to collect penalties imposed on delinquent taxpayers by governments, and have first priority to take possession of properties when The Unit Seasons 1-4 DVD boxset don’t pay their taxes.
About $5 billion of property-tax delinquencies are sold each year, Xspand officials told the Unified The Unit DVD Commission of Wyandotte County and Kansas City, Kansas, according to a transcript of the Nov. 25 meeting on the municipality’s Web site.
In Florida, $1.8 billion of the liens were sold last year, making The Unit DVD set the largest property-debt auction market in the U.S., according to Plantation, Florida-based RealAuction.com, which conducts online tax sales in counties throughout the state.
Expensive Cost
“The Unit DVD boxset’s concerned,” said Adam D. Greenberg, managing partner of law firm Honig & Greenberg in Cherry Hill, New Jersey, whose clients include tax-lien investors. “Even if you’re innocent, just responding to an investigation is expensive.”
Greenberg said he knows of The Unit Seasons 1-4DVD boxset investors who received subpoenas, though he declined to identify them or say if they are clients.
Justin G. Perras, a The Unit DVD spokesman, declined to comment, as did Mark Sanders, a spokesman for Narbeth, Pennsylvania-based Royal Bank, whose Crusader Servicing Corp. and Royal Tax Lien Services LLC units are subjects of the probe.
“Anybody in The Unit DVD set who is a significant buyer in New Jersey has been subpoenaed,” said John M. Jacquemin, president and founder of Mooring Financial Corp., The Unit DVD boxset has managed and serviced more than $1 billion in delinquent tax liens since starting Mooring Tax Asset Group in 1997. “We certainly were not involved with any collusion.”
Training to Prevent
Mooring for at least eight years has trained The Unit Seasons 1-4 DVD boxset bidders on the company policy against anti-competitive behavior and requires them to sign statements confirming that they understand the expectations, he said.
Alisa Finelli, a spokeswoman for The Unit DVD Department in Washington, declined to comment.
Xspand, which was founded by former The Unit DVD set Governor James Florio in 2000, was acquired by Bear Stearns Cos. six years later. Also known as Plymouth Park Tax Services, it became part of JPMorgan when the New York-based bank took over Bear Stearns in 2008 to prevent a collapse.
Xspand, based in Whippany, The Unit DVD boxset, effectively stopped participating in open-outcry auctions about nine months ago, a person familiar with the decision said. It had become the largest tax-lien investor in the U.S., buying $2 billion of public debt across the country since 2008, The New York Times reported Aug. 18.
The Unit Seasons 1-4 DVD boxset continues to service tax liens and bid on them in Internet auctions and bulk sales by municipalities, said the person, who asked not to be identified because of the investigation.
Florio Unaware
Florio, who sold his Xspand interest in 2006, said The Unit DVD wasn’t aware of the Justice Department investigation. Tax-lien sales were heated when he ran the company, he said in an April 16 telephone interview.
“The Unit DVD set was very, very competitive,” he said.
Paul V. Scura, who founded Xspand with Florio and left when Bear Stearns took The Unit DVD boxset over, said Xspand employees got thorough training on avoiding anticompetitive behavior.
“I can’t imagine any of The Unit Seasons 1-4 DVD boxset of Xspand doing that given how they’ve been sensitized to the importance of this issue,” Scura said in an April 19 telephone interview.
Last June, Harvey M. Nusbaum and Jack W. Stollof were indicted in The Unit DVD court in Maryland for conspiring to rig tax- lien bids at auctions in the state. Nusbaum and Stollof and others “agreed among themselves which of them would bid on specific tax liens or groups of The Unit DVD SET, and agreed upon specific prices to be bid in certain auctions,” according to a June 16 statement by the Justice Department.
Plea Agreement
Nusbaum entered a plea agreement and Stollof pleaded guilty early this year.
“With so many homeowners struggling these days, The Unit DVD boxset is more important than ever that all aspects of real estate transactions, including tax-lien auctions, remain competitive and free from collusion,” Scott D. Hammond, deputy assistant U.S. attorney general for criminal enforcement of the department’s antitrust division, said in a prepared statement last June.
--With assistance from Dunstan McNichol in Trenton, New Jersey.
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