Real Estate Journal Online

Baltimore attorney John Reiff and two of his law partners fixed bids in Baltimore area tax auctions for more than four years, according to Reiff’s recent testimony[1]. Using a strategy that has been exposed frequently over the past few months, Reiff and his partners used a co-conspiratorial system to buy tax liens at low prices at auction, then collect “millions in fees from debtors.” The investigation of Reiff and his colleagues began after a Baltimore Sun analysis of tax auction bidding showed that while “large numbers of investors participated in annual tax sales, three groups dominated in Baltimore and other counties in the state.”

Maryland is considered a “good state” for tax lien certificate investing because interest rates can be as high as 24 percent with redemption periods as short as six months[2]. While the state does not conduct formalized tax deed sales, more than 24 counties participate in annual sales, which are conducted by competitive bid. By keeping sales prices artificially low, Reiff and his cohorts not only optimized the amount of money they could collect on the liens, but they also prevented the city from recouping the maximum amount possible on the delinquent loans.

Banks and corporate investors represented by Reiff insist that they knew nothing about the price suppression, and Reiff’s testimony does not specify if any of the entities he represented were aware of his actions. Thanks to his testimony, Reiff avoided being charged.

Have you experienced this type of bid-rigging when you participate in tax lien auctions?

Thank you for reading REJournalOnline’s Tax Deeds Investment Newsletter.

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[1] http://articles.baltimoresun.com/2011-03-04/news/bs-md-tax-lien-auctions-20110228_1_tax-liens-property-tax-debts-tax-sales

[2] http://www.tax-lien-certificates.com/tax_lien_certificates_maryland_md.html