In the first charges to stem from a broad federal investigation into Maryland's tax-sale auctions, a veteran real estate investor has admitted conspiring to rig bids over several years at auctions in Baltimore and five Maryland counties.
Steven L. Berman, 50, of New Freedom, Pa., will pay a $750,000 fine and face a possible prison term, federal prosecutors said yesterday. In pleading guilty to the single felony count, Berman agreed to cooperate with the investigation.
The Justice Department's antitrust division in Washington has been examining alleged collusion and restraint of trade in the annual auctions for more than a year.
Prosecutors allege that Berman conspired with other investors to rig the sales from at least 2004 through last year in Baltimore City and in Anne Arundel, Baltimore, Howard, Montgomery and Prince George's counties. In an affidavit filed last year to obtain a search warrant, FBI agents contended that bid rigging has corrupted the auctions for years, allowing a few bidders to win a large percentage of the properties.
According to an FBI affidavit, the other subjects of the investigation are Baltimore County attorney Harvey M. Nusbaum, 70, and his longtime business partner, Jack W. Stollof, 73, of Stevenson.
Berman, Nusbaum and Stollof, and some family members, are also major investors in Maryland ground rents and have been among the most aggressive at either seizing homes or demanding large fees from homeowners who missed as little as $24 in payments. Their tactics, highlighted in a 2006 investigative series in The Sun, helped move General Assembly lawmakers last year to overhaul the centuries-old system under which more than 100,000 homeowners pay rent to investors on the land under their homes.
Paul Mark Sandler, a Baltimore attorney representing Nusbaum, said his client "continues to cooperate with the Justice Department and anticipates resolution of this matter in the near future. Beyond that, there is nothing further I can say."
Stollof declined to comment. His attorney, Kirby Behre, a Washington specialist in white-collar crime defense, said that some of the FBI's allegations in the affidavit were "not accurate and never tested in court."
Tax assessors sell off thousands of properties to private investors in the annual auctions to recoup unpaid property taxes and municipal bills and help find new owners for abandoned or rundown properties. The process gives these investors the power to collect the debts - plus thousands of dollars in fees and interest - or to foreclose if property owners do not pay them.
