The Sun reported last year that Maryland tax sales have been dominated by a small number of investors. In Baltimore, hundreds of homeowners have lost their property even when their property taxes were paid up, over minor debts such as water bills and rental property registration fees. Earlier this year, the General Assembly passed emergency legislation to reform the system.
"The division is committed to ensuring that all aspects of real estate transactions, including the tax lien auctions, remain competitive and free from collusion," Thomas O. Barnett, assistant attorney general in charge of the department's antitrust division, said yesterday in announcing the plea deal with Berman.
Berman's lawyer, Stephen J. Nolan, said yesterday that his client "has been fully cooperating with the government in its investigation from the moment he first learned of it. There are many things we would like to say, but feel constrained by Mr. Berman's cooperation."
Many details of the FBI's probe are spelled out in the affidavit, which was filed in August but only unsealed, with portions blacked out, in January. It asserts that Nusbaum, Stollof and Berman over several years divvied up large blocks of available liens at tax sales throughout Maryland.
For instance, an FBI special agent says she saw Nusbaum and Berman signaling each other when to bid and not to bid during Baltimore County's live auction last year. An FBI surveillance team also watched the men get together at Berman's office before the 2007 Baltimore City auction, according to the affidavit.
The FBI affidavit was filed in U.S. District Court in August just before agents raided two Baltimore County real estate offices used by Nusbaum, Stollof and Berman. A federal grand jury, at the same time, issued subpoenas to officials in Baltimore and several Maryland counties, seeking information about their tax sales and bidding processes.
Bidders in Baltimore's auction submit their offers through a Web site. Prince George's, Montgomery and Anne Arundel counties require sealed paper bids. Baltimore County and Howard County conduct live auctions, at which investors hold up paddles signifying their bids. Whatever the format, FBI agents assert, investors have fixed the auctions.
For instance, the FBI contends, firms linked to Berman and Nusbaum each won bids for 13 groups of liens in the 2005 Prince George's County tax auction for about the same dollar amount without bidding against each other once. Both submitted sealed bids the day of the auction.
