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Seventh Person Pleads Guilty in Tax Lien Bid Rigging Scheme

Through an ongoing investigation into bid rigging, a former executive of a New York tax liens company pleaded guilty Tuesday for his role in rigging bids for tax liens auctioned by municipalities through out the state, according to statement issued by the ""Department of Justice"":http://www.justice.gov/.

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Stephen E. Hruby, who supervised the purchasing of municipal tax liens at auctions in New Jersey, was the seventh person to plead guilty from the investigation. A felony charge was filed against him in the U.S. District Court in Newark, New Jersey.

According to the felony charge, from at least as early as December 2002 until approximately February 2009, Hruby agreed to and directed others to assign liens for certain bidders to bid on. Hruby, and those under his supervision, submitted bids based on these assignments and bought tax liens at non-competitive interest rates.

The department said that the primary purpose of the conspiracy was to prevent competition and obtain selected municipal tax liens offered at public auctions at non-competitive rates.

When the owner of a property fails to pay property taxes, the municipality where the property is located in can attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction.

By law, the bid opens at 18 percent interest and can be driven down to zero percent through the bidding process. If the property owner still does not pay the unpaid lien after a certain period, the investor who purchased the lien can begin foreclosure proceedings against the property with the lien.

""Today's guilty plea demonstrates that the Antitrust Division will not tolerate illegal conduct that harms distressed homeowners,"" said Sharis A. Pozen, acting assistant attorney general in charge of the Department of Justice's Antitrust Division. ""The division will continue to prosecute the perpetrators of anticompetitive bid rigging schemes at municipal tax lien auctions in New Jersey and elsewhere.""

The plea is the seventh guilty plea from the investigation. On Aug. 24, 2011, three people pleaded guilty to one count of bid rigging at New Jersey auctions. On Feb. 23, 2012, two people pleaded guilty to one count of bid rigging. On March 27, 2012, one person pleaded guilty to one count of bid rigging in connection with the conspiracy.

About Author: Esther Cho

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