A Tale of two Property Tax Liens

In this article we will dissect a particular law firms collection practices to demonstrate how they rob people from their houses. This is a direct insult to American dream perpetuated by big greedy investment companies and their rouge attorneys. While documents used in this post are original, identities of the properties are omitted due to privacy concerns.

Property #1

Property Description:              Empty Lot
Face Value of Property Tax:
Fees  
     


Year of unpaid Property Tax:     
Stage of collection:           PreLitigation
Third Party Investor:     Tax Ease Liens LLC.
                     Owner/Investor:              Phil Migicovsky
                     Collection Law Firm:
                     Collection Attorney:     

Property #2

Property Description: Farm House with acreage
Face Value of Property Tax:
Fees  
     



Year of unpaid Property Tax:     
Stage of collection:           PreLitigation
                        Third Party Investor:     Tax Ease Liens LLC.
                        Owner/Investor:              Phil Migicovsky
                        Collection Law Firm:
                        Collection Attorney:

      As you will recognize investor and the law firm are the same. So it will be fair to compare these two liens and see if their attorneys follow the state law. Reasonable attorney fees would mean they should charge the same attorney fees for a tax lien which was purchased at the same time instead of the maximum amount allowable by law. State laws intention was not to set the attorney fees but the set the caps to prevent abuse. If a law firm charges the maximum allowed for given lien regardless of the duration of ownership, it cease to be reasonable and becomes discriminatory and fraudulent.

Being Foreclosed due to a $300 property Tax Lien?

Per Laws Regulating the Property Tax lien Collections, pre litigation fees are very well defined. Unfortunately, I cannot state the same thing about the litigation fees. It will be more common see many new foreclosures since litigation is much more profitable instead of watchful waiting. I personally expect $3000-$4000 in legal fees just to be able to collect a $200 lien at its face value. However we will still encounter bad players (Attorneys) who would try to extract more than they should from less informed public.
    Laws regulating property tax liens are very concise so if a attorney breaks the law, does it willingly due to greed. Our other argument is we strongly believe that most attorney fees are being funneled into the coffers of the original investor. This is the only reason a company called "Tax Ease Liens" will have a dedicated lobbyist in Frankfort, Kentucky in addition to hiring another big name lobbying firm.
    Our goal to use the public resources available to us such as IRS, Kentucky Bar Association and Attorney generals office to stop these illegal acts.
   

Kentucky Laws Regulating Third Party Buyers

Here are the existing Kentucky state laws that regulates Property Tax lien industry. 

Per KRS 134.452 (Kentucky Revised Statues) Third-party purchaser of certificate of delinquency -- Fees -- Collection limitations -- Notice to proper owner.

Notwithstanding any other provisions of this chapter, a third-party purchaser of a certificate of delinquency shall be entitled to collect only the following:

(1) The amount actually paid for the certificate of delinquency;
(2) Interest as provided in KRS 134.125, calculated on the amount actually paid to the county clerk from the date the certificate of delinquency was purchased until paid; and
(3) Attorneys' fees as provided in this subsection.
(a) Attorneys' fees incurred for collection efforts prior to litigation as follows:
1. If the amount paid for a certificate of delinquency is between five dollars ($5) and three hundred fifty dollars ($350), actual reasonable fees incurred up to one hundred percent (100%) of the amount of the certificate of delinquency, not to exceed three hundred fifty dollars ($350);
2. If the amount paid for a certificate of delinquency is between three hundred fifty-one dollars ($351) and seven hundred dollars ($700), actual reasonable fees incurred up to eighty percent (80%) of the amount of the certificate of delinquency, not to exceed five hundred sixty dollars ($560); and
3. If the amount paid for a certificate of delinquency is above seven hundred one dollars ($701), actual reasonable fees incurred up to seventy percent (70%) of the amount of the certificate of delinquency, not to exceed seven hundred dollars ($700).
(b) If a third-party purchaser is the owner of more than one (1) certificate of delinquency against the same taxpayer, actual and reasonable prelitigation attorneys' fees for all certificates of delinquency against the same taxpayer shall not exceed one and one-half (1.5) times the maximum amount permitted in paragraph (a) of this subsection for the largest tax bill owed by the taxpayer.
(c) In addition to the prelitigation attorneys' fees established by paragraphs (a) and (b) of this subsection, a third-party purchaser may collect actual, reasonable attorneys' fees and costs that arise due to the prosecution of collection remedies or the protection of a certificate of delinquency that is involved in litigation; and
(4) Administrative fees incurred for preparing, recording, and releasing an assignment of the certificate of delinquency in the county clerk's office, not to exceed one hundred dollars ($100).

United We Stand, Divided We Fall

          As the citizens of my beloved Kentucky might know, the title of this post is actually our state motto. A very meaningful statement for a state which was a unforgiving frontier for new settlers such as Daniel Boone.During difficult time,  many people get in to a situation and feel helpless. Many people who receive their property Tax Collection Letter from an attorney, their first reaction would be disbelief. How a couple hundred dollar tax bill can miraculously become a $1000-2000 liability.  
            If unpaid, they state that they can foreclose on your property. Just a reminder for my readers, I am not an anarchist. I strongly believe property taxes are essential to our communities to function, but using it as a novel way to steal people's houses via foreclosure nor extortion of huge sums is completely unacceptable. There are many ways you can fight these guys. Lets discuss your options

      1- Complain to Attorney General's Office (I successfully used this approach): I can help you to draft a letter for this. But keep in mind, Mr. Jack Conway (Kentucky Attorney General) received political donations from "Tax Ease Liens". I hope he will be fair with his decision.

     2- Start a Class Action Lawsuit.  I believe  attorneys violated some of the Kentucky State Laws in their collection attempts for Property Tax Liens. If they knowingly inflated their attorney fees and overcharged beyond allowable limits stated in state laws, they should pay for damages. This will be the ideal solution and stopped them for good. This might receive some political backlash since property Tax Lien investors are the biggest spenders in Frankfort Kentucky. Business is so lucrative that, they sent one of their top employee to Kentucky, Trey Gulledge, to lobby for the company.

3-  Complain to the Kentucky Bar Association to disbar the involved Attorneys: This will be the most effective approach. Since if we can prevent certain attorneys (the ones that break the law) to take these cases, we can open the field to the ethical attorneys.

Al Capone would loved Property Tax Liens

      Property Tax liens are very attractive to many investors with very high potential interest rates. A whopping 12% yearly interest rate it can be very lucrative for an average investor. Only problem is the time consuming collection process and the hassle of hiring attorneys for the collection when needed. Companies soon realized that amazing profits were hidden within the so called attorney fees not the interest rates itself. It is not unusual for a 100$ tax lien to amount to 3000-4000 when hefty attorney fees added through foreclosure process. Attorney's will buy minuscule tax liens just for the privilege of charging such fees.

   If the defendant is an estate in a rural parts of Kentucky, they can obtain valuable property for almost pennies. It is very hard to believe that investment companies will let their independent attorneys make a killing why they are collecting their lowly 12% yearly profits. Given the lobbying efforts and money spent by "Tax Ease Liens" in Frankfort Kentucky, I highly suspect that bulk of the attorney fees might be funneled back to the company coffers instead of the attorney. Of course this sounds like a far fetched conspiracy theory but it will be very interesting to see what IRS thinks about this. By following who is paying taxes on the profits from this amazing investment scheme, your can find where the cheese is?

   Does this sound familiar to you? Remember Al Capano went to jail for tax evasion, not for his unaccounted murders.Contact me at lachinhatemi@gmail.com if you are being contacted by Tax Ease Liens.

What is a reasonable Attorney Fee?

 In Webster Dictionary, "Reasonable" is defined as "according to the rules of logic". As law states, in collection process for property tax liens reasonable attorney fees can be charged and the upper limit for those fees are stated depending on the face value of the tax lien. But in legal logic, what is reasonable? 
        Some attorney might say, his standard fee is 2000$ per hour and charge his clients accordingly. And client has the option to choose that lawyer for whatever task they have at hand. In a free market, market decides the fee. Unfortunately, in property tax liens, the payor of the attorney fees actually do not have any control over the fees which is why we need the existing state laws.
      But what is not reasonable is easier to define. For example, an attorney cannot charge a different rate for same amount/kind of work depending on a client. Such an action will be discrimination and Respective Bar associations discourage their members from such practices. By this logic you cannot change a different attorney fees for similar property tax liens purchased at the same time and are at the same stage of collections. It does not take more work to collect a $300 tax lien versus a $700 tax lien. Such practice should be reported to the Bar Association as a discriminatory practice.

Steven Beshear's 2009 Law for Tax Liens

     Kentucky Governor, Steven Beshear, signed the law in 2009, which suppose to regulate the major players in property tax lien investing. The new law required individuals and entities who purchase three bills in one county, five statewide or more than $10,000 worth to register with the State Department of Revenue and be in good standing with the Attorney General’s Office of Consumer Protection.
            This law is especially important since if you successfully prove the Attorney General's Office any wrongdoing, then you should be able to move the registered companies name from the list of buyers. This will simple prevent them from conducting any more business in Kentucky.
      The Kentucky County Clerks Association supported the legislation, which was introduced by state Rep. Arnold Simpson D-Covington. May be we can ask Mr. Simpson to help our cause when we encounter a bad player. When I heard about Mr Simpson's involvement in this law, I contacted him via e-mail. He was very helpful and ready to listen to our cause. Unlike Governor Beshear or Attorney General Jack Conway, he is not a beneficiary of generous donations from Tax Ease Liens. We will appreciate his input in our growing struggle in regulating this market.

Tax Ease Lien Investments Lobbyist

Tax Ease Lien Investments lobbying very heavily in Kentucky. Since its owner Mr Migicovsky picked only  Governor Beshear and Attorney General Jack Conway to donate, it would be interesting to see where the money is going. tax Ese lines even sent their Vice President of Development to Kentucky as a registered lobbyiest. I would like to remind everybody Kentucky is not for sale! I would like to see who they are lobbying too hard.

Here are the Registered lobbyists for Phil Migicovsky.

Tax Ease Lien Investments 1, LLC                                         214-420-5931         

      Gulledge, Trey                            14901 Quorum Drive, Suite 900, Dallas TX 75254

          Bentley, Jason R                                                            502-875-1176                                                                 
          MML&K Suite 308, 305 Ann Street, Frankfort KY 40601

          Cutter, Sean M                                                              502-875-1176                                                               
          MML&K, 305 Ann Street, Suite 308, Frankfort KY 40601

          Gulledge, Trey                                                              214-420-5931                                                             
         14901 Quorum Drive, Suite 900, Dallas TX 75254

          Higdon, James M                                                          502-8751176                                                                                                      
          MML&K, 305 Ann Street Suite 308, Frankfort KY 40601

          Hoosier, Dawn                                                              214-420-5931       
         14901 Quorum Drive, Suite 900, Dallas TX 75254

          Lambert, Charles                                                           502-875-1176                                                       
          MMLK, Suite 308, 305 Ann Street, Frankfort KY 40601

          McBrayer, W. Terry                                                      502-875-1176                                                     
          305 Ann Street, Suite 308, Frankfort KY 40601

          Nolan, Chris                                                                  502-875-1176                                                     
          MML&K, 305 Ann Street, Suite 308, Frankfort KY 40601

          Wilson, Marc A                                                             859-525-4901                                                               
           8459F US 42, Box 161, Florence KY 41042

James Ballinger a Jefferson county attorney filed for a lawsuit which questions pre-litigation charges. The lawsuit alleges that the Jamos Fund I LP, of Fort Thomas, Ky., is violating that stipulation by tacking on exorbitant legal fees before the year expires, merely for sending notices to taxpayers that their bills have been purchased.

    This is amazing news. Companies that buy delinquent property tax bills are charging unnecessary, exorbitant and illegal legal fees to owners who want to reclaim their property -- and preying on the elderly and unsophisticated, according to a lawsuit filed in Jefferson Circuit Court.he suit, filed earlier this month on behalf of an 86-year-old woman and two other plaintiffs, says that charging attorneys' fees, often within a year after the sales, is both unlawful and unethical. He said that the suit is the first of its kind filed in Kentucky and that the state's courts have never decided whether pre-litigation expenses can be charged during the year after a tax certificate is purchased.
      Now here is the catch, Mr James Ballinger also represents American Tax Funding Servicing. Now this is bizarre. A vulture taking another vulture to court of law?

Interesting connections In Kentucky Property Tax Lien Market

                                     A  JPMorgan Chase & Co. subsidiary is among at least three companies being investigated as part of a U.S. Justice Department antitrust probe of bidding at municipal tax-lien auctions in New Jersey. Idea was simple, creating multiple entities and outbid the market. Collusion is illegal because it's main purpose is to deceive regulatory bodies to believe that they are dealing separate entities but instead all the profits are channeled to the same umbrella entity in the end of the day. It is an illusion of competative markets to the outsider.
                                  Since market is very lucrative, collusion is a very tempting route for experienced attorneys. Third party tax lien buyers needs to declare if they are related to a previously registered buyer.

                            An interesting relationship exists between Lexington Kentucky based Kentucky Tax Lien Fund LLC and Florida based American Tax Funding LLC. KTLF was registered by the law firm attorney Scott Budnick of WYATT, TARRANT & COMBS and Mr. Bradford Cowgill, a lexington attorney, was listed as the organizer. WYATT, TARRANT & COMBS is also the same lawfirm who is in charge of collection efforts of "American Tax Funding LLC.", another tax lien buyer. All this can be a conspiracy theory coming out of my simple mind. It will be very interesting to find that who is funding KTLF and Mr. Bradford Cowgill.

Tax Ease Liens' Donations Under Radar

 
                 It is always interesting to look at campaign contributions and how people allocate their campaign funds. Isn't that Jack Abramoff  became a media darling when he used his money to buy political favors. When a Dallas based company owners Phil Migicovsky and Robert Stenton makes $1200 contributions each for Kentucky Attorney General, Jack Conway's senate race, it raised question marks.Why a Dallas company will pick Kentucky to make this donation but nobody else. For example why not Tenesse or Georgia but only Kentucky?
        Is it not a conflict of interest when Attorney general accepts a donation from a company which it supposed to regulate and investigate? One of the rules of being a third party Tax Lien Purchaser in Kentucky is to be never under investigation by Attorney General's office. I do not know all the details about this interesting relationship, but I am pretty sure, truth will reveal itself very soon. 

People Involved

American Tax Funding (juniper, FL) --> Tower Capital Management (Foreign company registered in NJ)

How these houses were purchased

Tax Ease Lien Investments 1, LLC
v. James Morse, et al.
09-CI-01056
120 Burris
Dawson Springs, Kentucky

Tax Ease Lien Investments 1, LLC
v. Ronald R. Bryant, et al.
09-CI-01057
1406 Redbud Lane
Madisonville, Kentucky
MAP:  M-34-20-15

Crittenden County Meet Vultures in 2007

       A peaceful Kentucky county, Crittenden County met their vulture investors in 2007 for the first time. According the county clerk, Carolyn Byford, she had never witnessed a third party buyer buying a tax lien.  Tax Ease lien started investing by buying 37 liens, for a total price of $29,211. This was recorded by "The Crittenden Press" in 2007.

Lincoln County, KY, A legal victory against Tax Ease LLC.

        It is always a pleasent outcome when a victim starts a legal battle and wins in the court.
In  recent court records from Lincoln County Kentucky, a local circuit Judge stated in a summary judgment that Attorney Fee's charges by Tax Ease Lien were in violation of Kentucky statues that regulates this practice

         Betty Martin, the property owner in Lincoln County, had seen her $254.33 tax lien soar to $1,246 before foreclosure action was even started. This was a clear violation of the Kentucky Statues.

I do not think this incidence is an isolated case and a possible heralding case for a class action lawsuit. Tax Ease's attorney is a well-known Kentucky attorney, Virginia Lawson, who is an expert

in real estate law. Mrs. Lawson had practiced real estate law for 21 years and it is very hard to believe she made such a basic misake. We would like to know the details of her relationship with Tax Ease Lien Investments. more importantly want to know how she calculates her attorney fees and her fee agreements with her clients.             

            

Attorney General Peter Nickles resigns

    Peter Nickles As attorney general of District of Columbia, resigns. He was one of the main advocates against abuses in the field ot property tax collections. He started investigations against companies like Chicago-based Aeon Financial LLC. He was one of the leaders in bringing attention to unregulated practices of major Wall Street Banks. According to the attorney generals office Aeon Financial is not the only company that they are investigating.
            "The imposition of taxes is one of the most feared powers of government, and when that power is transferred to a private entity, not only are they not accountable like the government, but their incentives are entirely different,” says Frank Alexander, a law professor at Emory University who specializes in Georgia real estate and foreclosure law. “The investor’s only incentive is to maximize profits.”

Publicani: Private Taxman of the Roman Empire

 Outsourcing tax collection to private individuals is not a new concept. It has its roots in ancient Rome and it had been tainted with corruption from its first days.The name for the private taxman was Publicani.
       Roman Empire, due to its immense size and difficulty in coordinating tax collection efforts, resorted to privatization of tax collections. Most of the Tax collection privilages were granted to warlord, senators or local nobility which was also called publicani.

Amazing Video that exposes Property Tax Lien Abuse

List of Registered Third Party Buyers of Property Tax liens in Kentucky

Here are the most frequeny buyers of Property Tax Liens in Kentucky
Also constitutes our watch list

Advantage 99	Nebraska Alliance Realty Co.
Virginia Lawson Representative	5106 California St
296-1331	Omaha, NE  68132-2232
	402-321-5982
American Tax Funding	snbtrustee@cox.net

ATFS gets all the propert tax liens in Youngstown, OHIO

           Another Company to watch in the incoming days. American Tax Funding is listed as one of the major Property tax purchaser funded with lines of credit with many major banks. We are still in the process of collecting data and collection practices by this company. According to ATFS's website, Mahoning County technically sold virtually their

          entire portfolio of over $40 million in delinquent tax liens to
 ATF, who became servicer for the entire pool of liens. As part of our partnership agreement with Mahoning County, ATF has an arrangement that the County can direct ATF to transfer ownership of tax certificates on vacant and low value/abandoned parcels to rehabilitation investors, property owners and other municipal redevelopment authorities at a nominal cost to the investor / re-development agent (generally the cost of foreclosure). 
            This is a very unusual practice from a county. Monopoly of American Tax Funding over property tax liens is questionable. We are investigating if any abuses of any residents being forced to foreclosure by charging astronomical attorney which might be out of proportion to the face value of the lien.

A Big Texas Company in seeking fortunes in Eastern Kentucky

            Another Company try to capitalize on misery of Property owners in distress. You wonder why a company with the size of Tax Ease Lien competes to buy as many tax liens as it can in the small towns of Eastern Kentucky. In their webiste, they claim to invest 125 million dollars since their first inception. What a company of this size is doing in small towns of Kentucky.

       There are multiple foreclosures initiated by this company in Boyd county and it makes you wonder if 12% rate of return is enough to entice a company with many resources to come and buy a tax liens of very small amounts.
        On its web site, Tax Ease describes itself as "an investment company focused on community opportunities. TELI works with state and local taxing authorities to provide millions of dollars in revenue by paying the tax obligations of delinquent debtor."

Ex-State Budget Director wants your money or more

       Mr Bardford Cowgill was known to many Kentuckians as the ex-state budget director under Governor Ernie Fletcher. His controversial appointment as director of Post-Secondary education ended with his resignation due to objections raised by the New Governor Steve Beshear and Attorney General, Jack Conway.
      Mr. Cowgill is not working for the state government anymore,  but currently owns and operates a company called Kentucky Tax Liens fund LLC. Shortly after his resignation he registered as a third party purchaser with  Kentucky Department of revenue to buy my and your property tax liens.

Why Wall Street wants your Property Tax Lien?

           Nearly a dozen major banks and hedge funds, anticipating quick profits from homeowners who fall behind on property taxes, are quietly plowing hundreds of millions of dollars into businesses that collect the debts, tack on escalating fees and threaten to foreclose on the homes of those who fail to pay.

           In my home state of Kentucky, government allows private parties to purchase property tax liens and make a 12% yearly interest income from such investment. It is a ultra safe investment protected by the government. But it defeats the common sense.