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United States v. New Jersey Municipal Tax-Lien Bid-Rigging Defendants (D.N.J., 2011–2016)

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United States v. New Jersey Municipal Tax-Lien Bid-Rigging Defendants (D.N.J., 2011–2016)

Charge: Conspiracy in restraint of trade — bid rigging — in violation of Section 1 of the Sherman Act, 15 U.S.C. §1 · Court: U.S. District Court for the District of New Jersey (Newark) · Investigating agencies: DOJ Antitrust Division, New York Field Office, and the FBI (Atlantic City Resident Agency) · DOJ Press Release Nos. 11-1076 (Aug. 24, 2011); 16-373 (Mar. 29, 2016)

A multi-year DOJ Antitrust Division prosecution of investors who rigged the interest-rate bidding at New Jersey municipal tax-lien auctions. New Jersey is a “bid-down-the-interest-rate” state: by statute the bidding opens at 18 percent and competitive bidding drives the redemption interest rate down toward zero. By agreeing in advance not to bid against one another, the conspirators kept the purchased liens at artificially high (collusive) interest rates, so distressed property owners who later redeemed paid more interest than open competition would have produced. The investigation produced a long series of guilty pleas and at least one jury conviction; as of the March 2016 DOJ release, thirteen individuals and three companies had been convicted or pleaded guilty in the investigation.

Scope

Federal criminal antitrust enforcement of New Jersey tax-lien auctions. This page consolidates a clearly-related set of prosecutions arising from a single DOJ Antitrust Division investigation in the District of New Jersey. Individual defendants confirmed below are drawn from DOJ Antitrust Division press releases actually retrieved; the wiki does not list defendants it could not confirm from a primary/official DOJ source.

Facts (the scheme)

When a New Jersey property owner fails to pay property taxes, the municipality may attach a lien for the unpaid amount, and after a waiting period the lien is sold at a public auction. State law requires investors to bid on the interest rate the delinquent owner will pay upon redemption. Bidding opens at 18 percent and, through competitive bidding, can be driven down to zero percent. The winning bidder may eventually begin foreclosure if the lien goes unredeemed.

According to the felony charges, the conspirators agreed to allocate among certain bidders which liens each would bid on and not to bid against one another. Because the agreement suppressed competition, each conspirator obtained liens carrying a higher interest rate than honest bidding would have yielded, so property owners “were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition” (DOJ). The DOJ described the conspiracy’s primary purpose as suppressing and restraining competition to obtain selected municipal tax liens at non-competitive interest rates.

The charged conspiracy periods span from at least 2003 (and, for the trial defendant, from at least 1998) through approximately February 2009.

Holding / outcome (confirmed defendants)

  • Isadore H. May (Margate, N.J.), Richard J. Pisciotta Jr. (Long Beach Township, N.J.), and William A. Collins (Medford, N.J.) — charged in U.S. District Court, District of New Jersey (Newark) and pleaded guilty on August 24, 2011 to conspiring to rig bids at New Jersey municipal tax-lien auctions (DOJ Press Release 11-1076).
  • Crusader Servicing Corp. — pleaded guilty in September 2012 to participating in the same conspiracy (per DOJ Press Release 16-373).
  • James Jeffers Jr. (Mount Holly, N.J.) — a bidder for Crusader Servicing Corp. and its successor company — was convicted by a jury on October 2, 2015 of violating Section 1 of the Sherman Act, and on March 29, 2016 was sentenced to 12 months and one day in prison plus a $25,000 criminal fine by U.S. District Judge Susan D. Wigenton (DOJ Press Release 16-373).

Each Sherman Act violation carries a maximum penalty of 10 years in prison and a $1 million fine for individuals; the maximum fine may be increased to twice the gain from the crime or twice the loss to victims, whichever is greater. As of the March 29, 2016 DOJ release, the investigation had produced convictions or guilty pleas from thirteen individuals and three companies.

Reasoning

Bid rigging is a per se violation of Section 1 of the Sherman Act: an agreement among competing bidders to allocate or rig bids is unlawful without any inquiry into its reasonableness or market effect. The government did not need to prove a specific overcharge; the horizontal agreement to suppress competition is itself the offense. The tax-lien context simply identifies the victims — financially distressed property owners who pay redemption interest — and quantifies the harm as the spread between the collusive rate and the competitive rate. See sherman-antitrust-bid-rigging.

Practical impact

  • For the tax-lien investment industry, this investigation is the canonical modern example that interest-rate auctions are antitrust-covered “auctions”: an agreement among bidders to allocate liens or refrain from bidding down the rate is a felony, regardless of how informal the arrangement.
  • The “bid-down-the-rate” auction format used by New Jersey (and several other states) is structurally vulnerable to collusion because the competitive outcome (a low or zero rate) directly reduces every bidder’s return, giving all bidders a shared incentive to stop competing.
  • Penalties were real: prison terms, criminal fines, and — through the parallel civil exposure — treble-damages litigation by overcharged property owners. The collusion harms the owner (higher redemption cost), distinguishing it from the Maryland premium-price variant. See auction-bid-rigging-antitrust-compliance.

Good-law status

Still good law / still controlling enforcement posture. These are criminal convictions and guilty pleas under Section 1 of the Sherman Act, not appellate doctrine subject to being overruled. No retrieved source indicates any of the confirmed convictions or pleas above was vacated. Sherman Act bid-rigging liability remains per se as of last_verified 2026-06-02.

Why it matters

This is the leading real-world demonstration that rigging the interest-rate bid at a municipal tax-lien auction is a federal felony that sends investors to prison. Any operator participating in tax-lien auctions must treat pre-auction coordination with other bidders — even an informal “you take this block, I’ll take that one” — as criminal bid rigging.

Sources retrieved

Legal information, not legal advice. This page summarizes federal criminal antitrust prosecutions for educational purposes and does not create an attorney-client relationship. Verify against the primary DOJ releases and court records before acting. Last verified 2026-06-02.

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