Routt County Treasurer Lane Iacovetto works in her office at the Routt County Courthouse on Wednesday. Her office has generated record investment revenue since Iacovetto took office this year and increased tax collection by 31% compared to last year. Derek Maiolo
STEAMBOAT SPRINGS — Under new leadership since the start of the year, the Routt County Treasurer’s Office has recorded sweeping improvements in tax collection and investment revenue.
Treasurer Lane Iacovetto, who took office in January, said the improvements will help local tax authorities like schools and fire districts get the allocated funding they need to operate. The spike in investment income, the highest in at least five years, will benefit county programs and operations.
The improvements come as good news to the Treasurer’s Office after Iacovetto’s predecessor, Brita Horn, stained its public reputation over several disputes and instances of mishandling the county’s finances. In 2018, for example, Horn spent more than $100,000 on legal services to an outside law firm, most of which had to be paid for with taxpayers’ money. She recruited the law firm to help her respond to allegations in 2018 that she was improperly working on her state treasurer’s campaign from her office, among other matters.
When Iacovetto took office, she could sense a palpable distrust among county residents and negativity toward the Treasurer’s Office.
“I think the citizens had lost faith in the accuracy of the office and rightly so,” she said.
Iacovetto has therefore made accuracy and timeliness top priorities during her first year in office.
Seven months after the national deadline to submit taxes, Iacovetto’s office has recorded 98.7% compliance with tax collection, according to her records. Her office collected a total of $65,996,330 in taxes from the 2018 tax year.
Each year, some people inevitably do not pay all of the taxes they owe, Iacovetto said. Usually it is an unintentional mistake.
“They either don’t know or forget,” she said.
In the past, the Treasurer’s Office was limited in how it could reach out to people and notify them of the taxes they owe. Sending letters in the mail and advertising in the newspaper were the main options, according to Iacovetto, but they often failed to get compliance. This year, she employed more modern technology, including calling and emailing delinquent taxpayers. Iacovetto even used Facebook occasionally to track people down.
“You can find somebody in an instant, and it’s free,” she said.
Each year, the Treasurer’s Office also has some leftover funds after distributing taxes to area schools, fire districts, museums and other tax authorities. Iacovetto invests those funds to raise revenue for the county.
So far this year, the office has generated $261,984.95 more in interest income for the county. That marks a 56% increase compared to the amount generated in 2018 and more than the Treasurer’s Office has generated since at least 2015.
Most of that money will go toward the county’s general budget, according to Iacovetto, which the Routt County Board of Commissioners uses to fund various, often essential programs and operations ranging from road maintenance to mental health services.
Speaking of investments, the public has until Thursday to participate in the county’s annual tax lien sale. Investors pay the delinquent taxes that residents owe on their property and in exchange receive interest on the tax amount. If the property owner has not paid the owed taxes in three years, the investor may be able to take over the property.
Iacovetto said most locals do not participate in the sale because many do not know enough about tax liens to feel comfortable investing. Though property values are high in Routt County, many investors believe it is a relatively safe investment.
It is important to know there is an element of risk involved in the purchase of tax liens. It is up to investors conduct their own investigation to reduce the possibility of loss of interest.
“You are guaranteed something at the end of the investment,” she said. “Either you get your money back with interest or you can apply for a deed on the property.”
County employees, elected officials and their immediate family members are not allowed to participate in the tax lien sale.
Looking to the future, Iacovetto plans to implement more automated processes at the Treasurer’s Office to make operations more efficient. These include automated tax payment processing, tax authority disbursements and banking transactions, according to Iacovetto.
Routt County Commissioner Beth Melton, who took office the same month as Iacovetto, is pleased with the changes at the Treasurer’s Office.
“She has been incredibly efficient at fixing problems she has seen,” Melton said.
Tax liens can be sold in a variety of ways. In this video we’ll be discussing the interest bid down auction method. For more information on investing in tax defaulted real estate click the link above!
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You may have thought that investing in real estate is beyond your financial means, but it could be more achievable than you thought. There are countless ways to invest in real estate, and tax lien investing is one of the most accessible options. Although this won’t be the best path forward for every investor, individuals looking to diversify their investment portfolios may want to consider investing in tax liens.
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What is tax lien investing?
A lien is a legal claim against an asset that is established when a property owner fails to pay the tax debts associated with that asset. In real estate, tax liens are placed upon individuals or businesses that fail to pay property taxes. The landowner or homeowner can typically only remove a property tax lien before its expiration if they repay the debt, along with any penalties and interest.
Property tax liens are initially placed on taxpayers by the local government, including a town, city, or county. While many governments retain rights to collect the tax debt themselves, demand has grown for tax lien certificates. Buying one of these certificates, usually at a public auction, means you take the responsibility for paying the municipality the taxes it’s owed. You also assume the responsibility of collecting that debt from the property owner.
By selling a tax lien certificate to a third-party investor, the municipality receives a guaranteed payment for the late taxes, and investors willing to accept the risk will be rewarded with interest payments as property owners repay that debt over time.
Purchasing a tax debt
Prior to holding a public auction where tax liens will be sold, municipalities will publish the liens that will be for sale. This gives interested parties time to review the debt and research the properties before the auction starts. Some of these certificates represent relatively small amounts of unpaid property taxes — a few hundred dollars — but others represent a larger percentage of the underlying property’s value. Some certificates that represent large values come with the indication that failure to repay the debt would result in foreclosure on the property.
There are two primary methods to auction off tax lien certificates:
Accept a premium
Municipalities will set a price for their tax liens — which is typically the balance of the late, unpaid debt — and investors can bid any amount above that starting bid. Their return on investment will be the amount they collect from the property owner, in interest, that exceeds their bid.
Accept the lowest interest rate
Following the “bid-down” method, potential investors will compete to bid the lowest stated interest rate on the tax lien. The winning bid will establish the interest rate that the investor receives from the property owner as they repay their debt.
Tax lien investments can be risky
Many property owners will repay their debts in a timely fashion, following the initial debt repayment schedule. In these instances, investors will profit off the interest portion they collect that exceeds the price they paid for the debt at auction.
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But, some homeowners will be unable to repay their debts or will file for bankruptcy. In these cases, investors may be able to recoup their investment in foreclosure proceedings. If their lien is significant enough, they may even be awarded rights to the property itself.
Property acquired through foreclosure will pose its own set of problems (for example, it can be costly to renovate, or it can be difficult to enforce an eviction), but investors may still see a positive rate of return, or make money when taxpayers fail to satisfy their debts.
Because the outcomes of the debt repayment can vary wildly, tax liens are notoriously risky investments. You should perform sufficient due diligence by researching your local laws before investing in this option.
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Questions to ask before investing in a tax lien
Each jurisdiction is unique, so research your state’s tax lien laws before you decide to invest. Ask yourself the following questions:
The property
When was the property last valued?
Has the condition of the property changed since its most recent valuation?
Where is the property located?
Is there a chance the demand for property in this location will change?
Is the property located in an area where foreclosures are common?
What other liens are on the property?
The records
Were all procedural requirements followed when the lien was established?
Have there been partial payments on the outstanding debt?
What is the length of the redemption period?
What is the maximum interest rate permitted by the state?
The market
What is the current market rate of return for tax liens?
How familiar am I with the housing market in this area?
What does my competition look like, and how much experience do they have investing in tax liens?
If the responsibility of researching liens and taking on tax debt isn’t for you, you may be able to invest through tax lien investment funds instead.
Passive investment
An investment fund is simply a collection of assets that multiple investors can buy into. Though they may not be as common as mutual funds or index funds, there are funds composed solely of property tax debt.
The fund manager researches investment options on behalf of the investors and selects which liens to purchase. The fund manager is also the one to file the required paperwork, track the redemption period of each lien, and inform property owners of repayment schedules.
Because individual investors are paying for somebody else to carry out administrative tasks, their potential return will be smaller than if they ventured out on their own. Investing in such a fund offers the benefits of diversifying your investments without the high costs associated with purchasing your own variety of tax liens.
Investors who want to dip their toes into the real estate market may find success by starting with tax lien investing. If you’re familiar with the risks and understand the tax consequences of this investment, tax lien investing may be just the thing to bring into your portfolio.
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DOWNTOWN — Nearly 1,000 people gathered at this year’s Scavenger Sale auction, aiming to nab one of the more than 30,000 local properties up for sale.
The sale is the first step in a complicated process of trying to take over a tax-delinquent property so it can be restored, benefitting its community while returning it to the tax rolls. But many of the lots that go up are snapped up by hedge funds and large institutional buyers, or they stay unused for years, if not decades, while going through the sale again and again.
Officials have made changes to the process, hoping to make the auction more accessible to everyday people. But opinions are split on how the sale can better benefit smaller investors in the future while allowing properties to get redeveloped.
“Why should the scavenger sale property just go into a general pot and then be opened up to the fastest, most aggressive, most well-resourced bidder who gets to the starting line first?” said Michael Davidson, a senior director at the Chicago Community Trust who has worked to make the auction more accessible. “Is there a more equitable way of dealing with properties?”
The sale is “potentially good” because it allows people to buy who might not normally be able to participate, said Myra Penny, a real estate investor who has used the sale since 2017. Penny’s firm plans to develop empty South Shore and Austin lots acquired at the sale.
“Because the amount of money that people would typically need to purchase a property on the market, the Scavenger Sale allows everyday people to buy several properties for a smaller amount,” Penny said.
In practice, few properties make it off the list, with most cycling through the Scavenger Sale for years. If a parcel doesn’t sell in 20 years, it’s forfeited to the state.
In the meantime, the property can be an unused blight on the neighborhood. The majority of such lots are in communities of color that already suffer from disinvestment.
It’s “intolerable” that some properties sit on the list for decades, said Bridget Gainer, a Cook County commissioner and Cook County Land Bank Authority chairwoman.
“Whole neighborhoods are held hostage by the fact that they have to live with vacant housing,” Gainer said.
Changing The Scavenger Sale
The properties up for auction at the Scavenger Sale have severely delinquent taxes. The Treasurer’s Office uses the sale — which has happened every other year since the ’40s — to find new owners for the properties in hopes of getting them back on the tax rolls. The person who places the highest bid is entitled to a tax lien on the property; they must then complete a series of steps to own the deed to the property.
But companies and big investors snap up properties at the auction, leaving out smaller investors. And many properties cycle through the sale again and again, sitting vacant or with unpaid taxes.
Opinions differ on how to change the sale to better benefit smaller investors and communities where the lots are located.
Cook County Treasurer Maria Pappas made it cheaper to participate: In prior years, people who wanted to participate in the sale had to pay a $250 fee to get a hard copy of the enormous spreadsheet that shows which properties would be available. This year, it was available for free with an interactive map on the the Cook County Treasurer’s Office website.
While fewer than than 200 people on average registered for the sale in the past, more than 900 people registered for this year’s sale, which was held over two weeks at the end of February.
This year, the sale was held in person at Navy Pier. Participants waited for hours while paying close attention so they wouldn’t miss the property they wanted to bid on.
The standard starting bid on the properties was $250, but some went for tens of thousands — and a few saw bids go past $100,000.
Steven Vance, an urban planner and founder and CEO of real estate database Chicago Cityscape, said he saw two bidders who waited for hours — only to quickly lose when the property they were interested in came up.
“They just sat there for hours to get nothing,” Vance said.
The next time the sale is held, in 2024, it’ll be done all online. Some housing advocates have said they fear that will make it easier for hedge funds and investment corporations to cash in on homeowner woes.
But Vance and Davidson said holding the auction online could level the playing field.
“If it’s done well and if it remains accessible, it sounds to me like it brings enormous efficiency to a process that seems like it’s operating in the Dark Ages,” Vance said.
This year, Vance and Davidson developed a Zillow-like tool so people could see what’d be up for sale at the auction, hoping that’d help smaller buyers.
“The Scavenger Sale is really not working effectively from a community development point of view for the residents of Cook County,” Davidson said. “I think [the way it is now] weeds out the mom-and-pops and the community scale developers. The only participants who have the wherewithal and the time to participate under those conditions are these large institutional purchasers.”
Davidson said he hopes there will be a way for community organizations to get priority consideration in the future.
Anton Seals, lead steward of Grow Greater Englewood and a co-founder of the Englewood Community Land Trust, said the issue with the way the system works now is “investors come in and try to take advantage of the depressed value of real estate, but neighborhoods with a lot of Scavenger Sale parcels are the product of failed public policies,” like the legacies of contract lending, redlining and unequal tax assessment.
More creative solutions, like using land banks that redevelop abandoned properties, are needed to address this issue, Seals said.
But that idea is contentious: County Treasurer Pappas said government entities like the Cook County Land Bank Authority get an unfair advantage over private bidders since they can place no-cash bids on properties at the Scavenger Sale. For a private bidder to win over the land bank, they have to pay the entire amount of delinquent taxes due on a property plus $100, Pappas said.
“Why should the Land Bank have this much of an upper hand?” Pappas said.
Throughout the auction, Pappas handed out surveys asking bidders if a property they wanted to bid on was taken by the Land Bank. The Treasure’s Office will use that data to lobby for change in Springfield and in the county, she said.
The Cook County Land Bank Authority acquires vacant and abandoned properties, helping to redevelop them to stabilize neighborhoods and stimulate the local economy.
The authority is “really just a hack for a broken system,” Gainer said.
In 2015, the Cook County Land Bank Authority made the Scavenger Sale its primary means of acquiring properties, scooping up about 27,000 parcels of the approximately 96,000 cumulative properties since then. It’s returned more than 9,000 of those properties onto the county rolls — only to re-acquire 353 of those properties again, according to the Treasurer’s Office.
The result has been to deprive private bidders of the opportunity to nab the properties themselves, Pappas said.
But Gainer said there’s several reasons why that happens, including times when the authority has let go of properties if it finds out someone lives there.
“One of the myths that the land bank was able to dispel is that the reason why so many properties sit on the scavenger sale is because there’s no market for them,” Gainer said. “We’ve proven 1,000 times over that there’s a market in these communities.”
One of the issues with that system is that the government has “made the wall too high” for people who buy at the scavenger sale to actually acquire the property, Gainer said. A bidder has to wait two and a half years before they can get the title to the deed, and the process involves dozens of steps, including appraisals, inspections and court appearances.
In mid-February, the Land Bank celebrated its 1,000th renovated home. The Garfield Park house, once abandoned and vacant for years, was made over by a developer who partners with the land bank.
“We’ve proven that the work can be done by local developers,” Gainer said. “You don’t need to be subsidized. You don’t need any kind of special care in bidding. What you need to do is make the process actually workable.”
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TaxlienTrainingsite.com – Join us for a Free LIVE Training & download our Free Ebook – ‘Tax Lien Investor Secrets’. Purchasing delinquent Tax Foreclosures or Tax Liens has never been EASIER than RIGHT NOW! The internet has REVOLUTIONIZED how counties hold their Tax Sales. This is part 1. The Basics of Online Tax Sales. Please comment if you have any questions!
SPRINGFIELD, Ill. (NEXSTAR) — A Republican businessman running for governor says taxes are too high in Illinois. If he wins, Gary Rabine would take over a state agency that has unsuccessfully tried to collect more than $10,000 in delinquent taxes from one of his dissolved companies.
“My accounting firm is a great accounting firm, and we’re very seldom actually delinquent,” Rabine said in an interview.
Tax records show the Illinois Department of Employment Security filed a tax lien for $10,262 against Rabine Utility Pavements, LLC, in 2017. Rabine dissolved that company in 2019, according to records filed with the Illinois Secretary of State, but the bill remains unpaid.
When we asked Rabine to explain the delinquency, he said he was unaware of the outstanding debt until we asked him about it. His campaign aides claimed it never showed up in a rigorous financial background check.
“You found the needle in the haystack,” Rabine said in an emailed statement, before blaming the state for failing to properly notify him of his company’s debts.
“We placed a call to IDES,” Rabine said, “and the phone went unanswered. We will continue to reach out to them until this matter is resolved. If the debt is legitimate and we owe IDES, we will of course pay in full. But we will not do so until we determine its legitimacy.”
The tax lien has no mailing address listed on it, which raised questions about whether or not IDES ever sent it to the proper location. A spokesman for IDES refused to comment on the pending matter, citing a law that “prohibits IDES from disclosing information about individual employers/businesses.”
Weeks after the first questions were raised, Rabine’s campaign said they were still unable to connect with someone at IDES to resolve the outstanding debt.
“The fact that a Lien Notice floats around for 5 years from the State of Illinois with no follow-up says more about the mismanagement of the State of Illinois than any reflection on the Rabine Group,” Rabine said.
His campaign aides pointed to the bigger picture of Rabine’s overall business operations, highlighting how many Illinois workers Rabine’s companies employ, how much his companies pay in taxes ($3-6 million per year), and that his companies generate more than $100 million in annual revenue while operating with “virtually no debt.”
Authorities in three other states have also issued tax liens against Rabine companies over the years. Mississippi officials filed 41 various sales tax liens against Rabine Paving America worth more than $162,000. In Indiana, officials filed tax liens against Rabine companies worth more than $20,000. Those debts have since been paid in full.
The most recent tax lien against Rabine’s companies showed up in Wisconsin court records. Rabine claims he paid the bills but the state of Wisconsin was slow to update its paperwork during the pandemic. He provided a copy of a receipt that showed the final warrant was satisfied in January of 2022.
Tax records from Illinois and Wisconsin showed that companies owned by Gary Rabine had tax liens filed against them when he launched his campaign for governor.
Homeowners must pay their real estate taxes or risk losing their home, writes real estate contributor Lew Sichelman. Above: View of single-family homes on Palm Island on Friday, January 07, 2022.
Pedro Portal
pportal@miamiherald.com
Deborah Foss is a 67-year-old grandmother in New Bedford, Massachusetts, who survives on a small fixed income from Social Security. She has several medical conditions, including chronic lymphocytic leukemia, COPD and neuropathy.
She used to be a homeowner but now resides in her car.
She no longer has a roof over her head — largely because an investor in tax liens took the equity she had in her home. But with the help of a nonprofit legal group, she is fighting back.
Foss has filed suit against Massachusetts, challenging a law that allows private investors to confiscate all the equity owners have in their homes — above and beyond what they owe in back taxes and interest on the unpaid balance.
Pacific Legal Foundation is the nonprofit representing Foss, as well as homeowners in other states who have suffered the same fate. Between 2014 and 2020, according to PLF, Massachusetts has allowed the taking of some $37 million more than what owners owed in property taxes. In Foss’ case, she was delinquent on roughly $30,000 in back taxes, yet the private investor who purchased her tax lien foreclosed, taking a house that was valued at $241,600.
That’s what makes investing in tax liens so profitable. Though PLF does not have an exact count, “it’s fairly safe to say” investors have raked in “hundreds of millions” nationally, senior attorney Christina Martin told me. She called the practice “despicable.”
While it’s entirely legal to collect on tax liens, PLF argues that collecting more than what’s owed amounts to “equity theft.” Says Martin: “We believe it’s not only unconstitutional, but excessive punishment.” And the Sacramento-based legal group is having none of it.
PLF, which defends people from government overreach, says 11 states — Alabama, Arizona, Connecticut, Illinois, Maine, Massachusetts, Minnesota, Nebraska, New Jersey, New York and Oregon — allow this sort of thing, which can affect commercial and residential property owners alike. A handful of other states have loopholes that allow the practice.
But a few states have seen the folly of legalized tax lien thievery and changed their rules. Last month, Wisconsin modified its law to ensure that property taxes are paid, while providing that former homeowners receive whatever is left over from the sale of their property. North Dakota and Montana have done the same.
In Michigan, meanwhile, the state’s supreme court found the old lien law violated the state’s constitution, ruling that people have a right to any surplus equity in their homes after back taxes are settled. In the case that spurred that ruling, Oakland County sold Uri Rafaeli’s house at auction for $24,500 because he underpaid his property tax by $8.41. The county took all of the proceeds.
Nevertheless, PLF is now working with eight homeowners in their suit against the same county Michigan’s high court ruled against. They are seeking to recover hundreds of thousands of dollars in equity lost when the county treasurer took their homes as payment for tax debts totaling only a fraction of their value.
According to PLF, the city of Southfield, Michigan (where Rafaeli lived), took advantage of a loophole in the state law that lets cities buy foreclosed homes from the county for the cost of the tax debt — while not paying former owners the difference. While this scheme is a boon to some well-connected businesses in the area, it perpetuates the predatory seizure of home equity, says attorney Martin.
“When the government takes private property, it must pay just compensation, no matter how it acquires the property,” she says. “The government has compensated homeowners with forgiveness of debts worth only a fraction of the homes that the government took. That is unconstitutional and unjust.”
In New Jersey, the group is aiding an East Orange property owner who is challenging a state tax scheme that allowed the city to take her commercial property because she paid her taxes late. The property was worth about $80,000 more than she owed.
Lynette Johnson purchased the property in 2014 but claims she never received her tax bill for that year. Unbeknownst to her, the city purchased a lien on her property, foreclosed and sold the property to private investors for $101,000 in 2018. The city kept every penny from the sale, leaving Johnson with nothing.
“Although the government can take property to settle back taxes, it isn’t entitled to anything more than it’s owed,” says David Deerson, the PLF attorney representing Johnson. “When the government takes more than someone owes, it’s stealing, and it’s wrong.”
Even in places where owners are allowed to keep what’s left over, state and local jurisdictions can sell tax liens to investors, usually for pennies on the dollar. Not only can those investors force the sale of the property, they can often charge whatever interest rate they want until the lien is finally satisfied.
Still, the news isn’t all bad, says Martin, citing Florida as an example. The Sunshine State requires investors to compete on the interest rates they charge. The winning bidder is the one offering the lowest rate, meaning delinquent owners will owe less interest. Investors can still foreclose to satisfy liens in the state, but what’s left over must be returned to the former owner.
There are several lessons here, with No. 1 being, “Pay your taxes.” States aren’t the only entities that can take your house in lieu of payment: Private investors can, too. So can Uncle Sam, if you don’t pay your income taxes.
Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at lsichelman@aol.com.
Kendall Hamersly is a longtime Miami Herald editor with more than two decades of experience writing about restaurants. He has reviewed hundreds of restaurants in Miami-Dade County, from the best to the worst.
Check out some of the Tax Liens that are being offered in Butler County, Alabama. The tax lien auction in Butler County started on March 18, and is scheduled to end on the 18th of April.
We review tax liens ranging from five hundred to a few thousand dollars against single family homes and land. We also review a larger tax lien against a commercial property. We cover this and more in this Deal of the Week video.
This video is part of our Property Deals of the Week video series. In this series we share some of the amazing properties that we come across as we gather tax sale lists. The lists we gather are compiled for our Membership Program at TaxSaleSupport.com.
Join our membership program for just $39 per month, cancel anytime. Membership includes access to a variety of tax sale lists including, Online Auctions, Auction Calendar, OTC Database, and many more which are updated daily. Membership also includes training materials, videos, and weekly webinars. It’s a training bargain, and the list service alone could sell for more. Did we mention a money back guarantee? To learn more go to https://taxsalesupport.com/membership .
Larimer County will hold its annual tax lien sale at 7:30 a.m. Thursday, Nov. 18, at the Thomas McKee 4-H and Community Building at the Larimer County Fairgrounds at The Ranch, 5260 Arena Circle, Loveland.
Liens are placed against the properties and are purchased by investors who, in turn, earn interest against the tax amounts.
The annual tax lien sale is held to collect unpaid property taxes, which must be collected to meet the budgetary requirements of all certified taxing authorities, according to a news release from the county.
The release said there are currently 772 real property and 76 mobile home delinquent accounts in Larimer County, totaling nearly $2,404,047 in unpaid taxes.
Those who want to participate in the tax lien sale, must complete a W-9 at the time of registration or already have one on file from previous years, the release said. Registration will begin at 7:30 a.m. Nov. 18.
For information on the tax lien sale, visit larimer.org/treasurer/liens/sale or call the county treasurer’s office at 970-498-7020.
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A federal tax lien is the government’s legal claim against your property when you fail to pay a tax debt. The lien protects the government’s interest in all your property, including real estate, personal property and financial assets.
Chapters:
0:00 – Intro
0:32 – Types of Liens
0:36– Secret Lien
0:54 – Recorded Lien
1:31 – Collection Due Process Rights
2:09 – Subordination
2:32 – Discharge
2:50 – Withdrawal
2:58 – Lien Release
3:25 – Outro
A tax lien is a lien imposed on real property and assets of a taxpayer by operation of law.
There are generally 2 types of federal tax liens:
1) The Secret Lien, and
2) The recorded lien
The secret lien takes effect upon notice and demand, where the IRS sends their demand for payment and it is not met.
It is “secret” in the sense that it is not public. What it operationally does is encumber the taxpayer’s property.
The recorded lien is a lien filed publicly, normally in the courthouse in the jurisdiction where the taxpayer resides. It puts other creditors on notice of the liability and puts the IRS in line to collect, generally in the order the lien was filed.
A lien should not be confused with a levy, the taking of property, which is another tool in the IRS enforcement toolbelt which will be discussed another time.
The IRS must send the taxpayer a notice of federal tax lien within 5 days of filing. While that notice comes out AFTER the lien has already been filed, watch for that notice, it carries collection due process rights (CDP) to appeal the lien filing and offer a collection alternative, or in some limited circumstances, to challenge the underlying liability.
If a lien filing will be truly detrimental, there are ways to work with the IRS to hold off the filing, but don’t wait until the lien is filed to deal with the issue. Contact a tax professional early to avoid the lien filing.
Lastly, there are a few different ways to remove a lien. We will briefly discuss the most common.
Subordination – when refinancing, the bank typically wants to be in first place ahead of the IRS, so you ask the IRS to subordinate.
Discharge – – when selling property and buyer wants clean title. IRS will typically take the net proceeds. There is a formal process to request this. Do not wait until the week of closing to request this.
Withdrawal – ex. erroneous
Release – ex. When debt is satisfied
I will leave you with a last important tip when dealing with IRS collections enforcement – never shift funds around solely to avoid payment to the IRS. By taking that action, you can change a case from civil enforcement to a criminal tax evasion case.
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DISCLAIMER: This video is not legal, tax, or financial advice. Talk with a professional about your situation before making any legal or financial decisions. These videos also do not create attorney-client privilege.
In our Tax Sale Starter series we take one specific topic and break it down in less than two minutes (or close to it!). This is a great series for new investors to get familiar with tax sale investing.
Overview of the newly released 2022 Jefferson-Birmingham County Alabama tax lien auction using Parcel Fair (https://www.parcelfair.com) to show you how to research, organize and prepare a shopping list for the auction.
The actual tax lien auction will happen online at www.govease.com and you should refer to their training materials to understand how to bid on a tax lien once you’ve completed your research.
To reach out and start a discussion with us about Parcel Fair and tax property investing in Alabama or other states, you can contact us here: https://parcelfair.com/Home/Contact
Brian Petersen, Founder of Tax Lien Code, discusses what happens if a property owner does not pay their taxes and the certificate holder has to foreclose. Most property owners will eventually pay their taxes, you’ll get redeemed and get your investment plus the interest owed. But when that doesn’t happen, the investor is protected by their lien position.
The little lot next to Jamie Denning’s family home in West Philadelphia may not be worth much, but to her neighbors it’s a safe haven. A mason who lives nearby laid down pavers and installed a sturdy fence. A box holds a modest food pantry. And, for years, Denning has poured her own funds and sweat into greening the lot.
“We have so many shootings in the neighborhood, and the guys will often run up and down the street after a shooting. We don’t have any speed bumps on the street,” Denning said. So the lot, in her view, is quite literally a life saver, providing kids with a play space out of traffic and cross fire.
Recently, though, Denning learned the land was set to be sold at sheriff’s sale on Friday — without regard to her efforts to transform it, and divorced from any broader city strategies for community development or preservation of open land.
What triggered that sale was a $23,000 privately held tax lien on the property, a sum substantially larger than the lot’s assessed value. The property is one of thousands across Philadelphia tied up in a nearly 25-year-old gambit that was touted as a bold financial maneuver at the time — but that the city controller later declared to be a “worst-case scenario” for the city.
In that 1997 initiative, the city raised $72 million by selling off tax liens on 33,000 properties to a private lienholder that would recoup the investment with aggressive collection efforts. But those collection efforts fell short, and the city defaulted on $42 million in bonds secured by the liens. An unintended result was to privatize control over the fates of thousands of abandoned, tax-delinquent properties, which have been sold in backroom deals, auctioned at sheriff’s sales, or remain in the real-estate equivalent of purgatory.
Advocates have long urged the city to develop a mechanism to regain control over the disposition of those properties. About 2,300 remain — concentrated in poor, primarily Black and Latino communities in North and West Philadelphia where some blocks are home to five, 10, or more. But the city’s Land Bank, City Council, and administration officials all say they’re unable to intervene. A spokesperson for the sheriff did not respond to interview requests.
Meanwhile, Linebarger Goggan Blair & Sampson, the law firm hired by US Bank to dispose of the liens, is ramping up sale efforts. The firm aims to dispose of all remaining lien sale properties within two years, said Mark Harris, a managing partner. Harris said the liens on the remaining properties were worth $5.27 million; with penalties and interest, though, the tab is $25.4 million.
Now that tax sales, which had been suspended since the start of the pandemic, are set to resume, advocates say urgent action — and a clear process — is desperately needed.
“One of the biggest frustrations that a lot of community groups have had is it’s impossible to even get answers about what to do,” said Adam Butler, a volunteer with the César Andreu Iglesias Community Garden in North Philadelphia, which comprises an assortment of parcels, including bank lien properties.
City Councilmember Maria Quiñones-Sánchez keeps a map in her office of the 1,357 lien-sale properties that, by her last count, dotted her Kensington and North Philadelphia district.
She called it a daily reminder “of how frustrating bureaucracy is.”
“I’ve put this [issue] on the record at least four times a year for the last 13 years,” she said, but her proposals have not yielded results. Still, she believes the city could find a path to secure these properties. “It’s not that we don’t have leverage. It’s that we don’t have the political leadership to use that leverage.”
She worries most about lots in gentrifying South Kensington, where residents have tended to properties for years, saving the city thousands of dollars. In her view, the city should ensure those residents aren’t now shut out.
But Anne Fadullon, the city’s director of planning and development, said there is no recourse. She said the city has sought to negotiate the release of some liens, but the trust held by US Bank has taken an all-or-nothing stance.
“They want the city to pay all of them off. That number is north of $25 million,” Fadullon said. “What’s happened is not that there hasn’t been political will. There hasn’t been the financial wherewithal with all the other budget priorities for the city to find that money.”
Nonprofit developers have fared no better, said Rick Sauer, president of the Pennsylvania Association of Community Development Corporations, who called the bank liens a “big impediment” to assembling parcels.
“The only conversation with Linebarger is one where they tell you what the payoff amount is” to clear the lien, said Jenny Greenberg, executive director of the Neighborhood Gardens Trust, which holds the lease or title for about 50 community gardens. Often, that amount is triple or quadruple the original lien due to penalties and interest. But raising funds to pay off the lien does not create a path to ownership.
And enlisting pro bono lawyers for these parcels has proved all but impossible, according to Ebony Griffin, who heads the Public Interest Law Center’s Garden Justice Legal Initiative. Every law firm she’s contacted on behalf of an affected gardener either had a conflict of interest involving the bank or feared establishing one.
What’s confusing to community organizers like Butler, though, is that some developers are finding ways to secure the bank lien properties. The Iglesias gardeners began organizing around the issue last year, Butler said, after discovering that a bank-lien-encumbered property adjoining the garden had been quietly transferred to a developer.
“There is obviously a pathway that is not accessible to normal people,” he said.
Analyzing city sale data, he found that many of the lien-sale properties had been sold in bulk. He identified 15 LLCs that had bought 10 or more parcels, and one that had purchased more than a hundred.
Quiñones-Sánchez said the city could find ways to exert more control over these sales, for instance by leveraging additional city-held liens for demolition or cleanup work that’s been incurred. In some cases, Harris said, Linebarger has honored city requests to hold off.
Denning, for one, said that after frantic calls to City Council members, she was told her side lot is safe for at least a few months. But there are no guarantees.
Victor Young, who helped build a garden on five lots in the Hestonville section of West Philadelphia, said he’s been able to secure the majority of his garden — all except a plot with a bank lien.
“We’ve been trying for several years to get information from US Bank what they were going to do,” he said. “One moment we thought they were going to settle with us. Then nothing happened.”
Young said the lush garden has helped unite the community, feed neighbors, and even drive away drug dealers who once capitalized on the isolation of the block. “A cool breeze seems to blow through there,” he said. “It’s an oasis in a concrete jungle.”
To preserve those efforts going forward, Quiñones-Sánchez emphasized that a larger strategy is needed, especially given that hundreds more liens were sold in 2015, over the objections of community groups.
“This is nothing compared to what’s coming,” she said, “and this is why lien sales are so problematic if there isn’t a long-term plan.”
The Philadelphia Inquirer is one of more than 20 news organizations producing Broke in Philly, a collaborative reporting project on solutions to poverty and the city’s push toward economic justice. See all of our reporting at brokeinphilly.org.
Every February on the second Tuesday, thousands of tax liens resulting from unpaid property taxes go up for sale by the Yavapai County treasurer.
This year, 2,236 liens are listed for a Feb. 8 online auction. (The list is published Friday, Jan. 21, in The Daily Courier’s legal notices.)
The 2022 total is down from last year’s total of 2,786; the 2020 total of 2,987; and 2019’s 3,064. The number of lien properties has generally been trending downward since the end of the Great Recession that started in 2008 and lasted through the early 2010s. Also the county has been removing from the auction properties that historically have not been selling.
Yavapai County Treasurer Chip Davis said his department annually lists for-sale-by-auction the liens that have been placed on properties with delinquent taxes.
A lien is a legal claim on property to satisfy a debt or obligation. When people bid on and buy the liens through the Yavapai County Treasurer Office’s auction, they are getting the lien, not the property.
Davis said interest rates are a big factor on both sides: “Banks are paying next to zero on interest rates so purchasing tax liens should pay far better than most investments in the market. It should be better for property owners that couldn’t make their payments because interest rates to buy back and get current should be lower than past years.”
In this year’s Feb. 8 auction, liens resulting from delinquent taxes from 2020 and prior will be up for sale. Before properties are listed in the lien sale, Davis said, owners receive a number of notices to alert them to the unpaid taxes.
“We also let people know when a lien is due to expire,” he said. “If you hold one for 10 years it expires; if someone holds one that long, then it is no longer a good investment.”
The Feb. 8 tax sale is an online auction at yavapai.arizonataxsale.com. General information is available on the county treasurer’s website at https://yavapaiaz.gov/treasurer/Treasurers-Back-Tax-Sale.
After purchasing a lien, the successful bidder must hold onto it for at least three years. In 2025, if the property owner has not paid off the lien, the lien holder would then be able to file a lawsuit to foreclose on the property and get ownership.
Typically, about 100 of the tax liens ultimately result in the foreclosure procedure. Davis said there were 54 foreclosure actions last year.
The auction involves proxy bids, in which auction participants enter their lowest acceptable bid for a certificate, with auction participants placing a proxy bid for an interest rate. A deposit is required in the amount of $25 or 10% of the certificate face, whichever is greater.
“I still think it’s a great investment for folks not wanting the zero-percent (interest) coming out of the banks,” Davis added.
A Carabinieri police officer walks inside a specially constructed bunker ahead of the first hearing of a maxi-trial against more than 300 defendants of the ‘ndrangheta crime syndicate, near the Calabrian town of Lamezia Terme, southern Italy, Wednesday, Jan. 13, 2021. A maxi-trial opened at that time in southern Italy against the ‘Ndrangheta crime syndicate, arguably the world’s richest criminal organization, one that quietly amassed power in Italy as the Sicilian Mafia lost its influence. (Valeria Ferraro/LaPresse via AP)
Valeria Ferraro
AP
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Pandora Papers
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In March 2013, Italian real estate developer Antonio Velardo was charged in two separate real estate money-laundering probes connected to organized crime in Italy.
But by then, he and three other associates had already turned their attention to a new target: South Florida.
As they would soon learn, the charges were no impediment to snapping up millions of dollars worth of property in Florida.
Companies tied to the four men have purchased more than 130 homes in the state since 2012 — the bulk of them in Miami-Dade County. A hundred of the homes were purchased after Velardo was charged, a Miami Herald analysis of property records found.
The charges against Velardo were connected to real estate deals in the southern Italian region of Calabria, including a seaside development called the Jewel of the Seas.
Prosecutors alleged that Velardo’s activity was tied to the fearsome ‘Ndrangheta, a powerful southern Italian criminal organization that dominates the Calabrian region and has been described by U.S. officials as “Europe’s most dangerous organized crime syndicate.”
Velardo was charged alongside lawyer Francesco L’Abbate and accountant Domenico Musarella in one of the probes, while the fourth man, Jacopo Iasiello, was picked up on a wiretap discussing Velardo’s desire to present a gold chain and Rolex watch as gifts at the baptism of the grandson of an ‘Ndrangheta boss, which Velardo described as a “political operation.” Iasiello wasn’t charged in either of the probes.
The four men began their South Florida real estate buying spree in the wake of the Great Recession, when banks were looking to unload foreclosed properties for pennies on the dollar. The homes favored by companies tied to them were typically inexpensive and often purchased in foreclosure, with an average price of roughly $120,000. But taken together the purchases added up to more than $16 million.
Most of them appear to be cash transactions, records show. A significant number of the properties were subsequently sold to linked entities, typically at a steep markup and sometimes in a matter of days.
The activity of the four men in Florida is known thanks in part to the “Pandora Papers,” a massive leak of offshore financial documents that has revealed how the ultrawealthy stash assets overseas and take advantage of shadowy financial systems to evade taxes and, in some cases, move illicit cash. The documents come from 14 offshore service providers from around the world and include 11.9 million records. They were leaked to the International Consortium of International Journalists, which shared the trove with the Miami Herald and 150 other news outlets. The Herald worked in conjunction with the Italian publication L’Espresso to produce this story.
Companies tied to all four men appear in the leaks, several of which indicated they were established to invest in real estate in the United States.
L’Abbate, the lawyer charged alongside Velardo in one of the probes, told the Herald that he faced “no problem” buying properties in South Florida despite the charges. He even secured mortgages for seven of the nine properties his companies purchased.
Deena Sabry
While there is no indication that any of their purchases involved the laundering of illicit funds, the fact that they had no difficulty purchasing so many properties as they faced charges in connection with a money-laundering probe highlights the ease with which anyone can buy property in the United States with few questions asked and raises the possibility that money connected to Italy’s powerful ‘Ndrangheta has flowed into South Florida’s real estate market.
American real estate, especially in South Florida, has long been an attractive target for those looking to launder illicit cash and anti-money-laundering laws require banks and most mortgage lenders to perform due diligence on home buyers seeking a mortgage and file suspicious activity reports if the source of a buyer’s funds could be connected to criminal activity. But it isn’t clear whether L’Abbate’s companies faced any scrutiny at all in securing the mortgages.
The GTOs came in the wake of numerous stories detailing the growing trend of anonymous shell companies buying up high-end real estate in major U.S. cities such as New York and Miami. The influx of outside cash has distorted the real estate markets in these cities, driving up the price of housing and driving out local residents in cities like Miami that are favored by investors and foreign buyers. But the modest homes scooped up by the four men all were below the threshold that would require reporting.
The men balked at any suggestion that their purchases were illicit and explained their focus on Florida as strictly a business decision.
“[W]hen the mortgage crisis hit the U.S., I saw a unique opportunity to invest in real estate,” Velardo said.
Velardo was ultimately acquitted in one of the probes, dubbed “Metropolis.” Despite an initial four-year sentence on a tax charge in the second probe — “Black Money” — that charge was ultimately dropped on appeal for exceeding the statute of limitations and the other charges were dropped, as well. L’Abbate and Musarella, meanwhile, face a new trial after appealing their initial sentences on a tax charge in the “Black Money” probe, while the other charges have been dropped.
‘The ‘Ndrangheta calls the shots’
The ‘Ndrangheta doesn’t get the headlines of its more famous peers, the Sicilian Mafia and the Neapolitan Camorra, but law enforcement experts say its influence is far greater. Italian officials believe it controls up to 80% of the cocaine trade between Colombia and Europe. The group has accumulated massive wealth — one 2014 estimate pegged its annual revenue as roughly $70 billion, more than McDonald’s and Deutsche Bank combined and around 3% of Italy’s total gross domestic product that year — but it’s members have historically cut a lower profile than their peers in other Italian crime syndicates.
The group’s origins are murky. The FBI dates the beginning of the ‘Ndrangheta to the 1860s when a group of banished Sicilian outlaws settled in Calabria, but regional lore and some historical references trace its origins to the 16th century with the arrival of three Spanish knights, each of whom went on to found a syndicate: the ‘Ndrangheta, the Camorra and the Mafia. The group captured international attention due to a series of kidnappings, the most high-profile of which was the 1974 abduction of American oil magnate J. Paul Getty’s grandson, the subject of the 2017 movie “All the Money in the World.”
The ‘Ndrangheta dominates its home region of Calabria, the foot and toe of Italy’s boot-shaped peninsula and one of the poorest regions in the country.
A glimpse of the scenery in the Italian region of Calabria.
“If Calabria were not part of Italy, it would be a failed state,” wrote J. Patrick Truhn, the former U.S. consul general in Naples, in a classified 2008 diplomatic cable titled “Can Calabria Be Saved?” later released by Wikileaks.
“Throughout Calabria, we heard the same laments over and over: the ‘Ndrangheta calls the shots and there is little hope for the region.”
Truhn, who retired from the State Department in 2013, told the Herald that the ‘Ndrangheta’s success in the region stems in part from its ability to provide services that local governments cannot.
“One aspect of the ‘Ndrangheta’s enduring success is that they get something done,” he said. “Public services are hopelessly ineffective in much of southern Italy.”
The unique structure of the ‘Ndrangheta, whose members are blood relatives connected to various clans within the organization, has historically made it nearly impenetrable to law enforcement.
“This group is without a doubt the hardest organized crime group to infiltrate,” said Joe Cicini, a former FBI agent in South Florida who has extensive experience investigating organized crime.
Cicini said the FBI would regularly get tips that the group was involved in real estate and other businesses in South Florida but was never able to flip any of the group’s members to build a case.
“We were always told ‘That money comes from Calabria,’ but we could never prove it,” Cicini said. “If you don’t have somebody on the inside explaining it, it’s all a theory.”
Notorious friends
None of the three men charged in connection to the Calabrian developments were convicted of being direct members of the ‘Ndrangheta. The men deny any connection to the group.
Velardo’s whereabouts were murky when he was charged in the two investigations in March, 2013. He claimed to be living in Tunisia and soon after popped up in Belize, where he was briefly detained by authorities for allegedly failing to declare more than $20,000 in cash.
Velardo declined to say where he lives when asked by the Herald.
“As my business ventures require a lot of traveling, I currently do not have a fixed residence,” he said in a written response to questions sent by the Herald.
Prosecutors in the “Metropolis” and “Black Money” investigations said that Velardo worked closely with men tied to another of Europe’s most notorious organizations. He had created a company to market the seaside properties to foreign customers in the United Kingdom, Ireland, Russia and elsewhere with a former member of the Irish Republican Army, Henry James Fitzsimons, who had served prison time in the 1970s for bombing a hotel in Belfast.
Italian real estate developer Antonio Velardo, right, and his Irish business partner Henry James Fitzsimons accepting an award on behalf of their company VFI Overseas Property at the 2009 CNBC European Property Awards. PRweb.com
Prosecutors also alleged Velardo had worked closely in Italy with Antonio Cuppari, who prosecutors said was part of the ‘Ndrangheta’s powerful Morabito clan and Antonio Maccarone, the son-in-law of one of the leaders of another powerful ‘Ndrangheta sect, the Mancuso clan.
In the wiretapped call picked up with Iasiello, Velardo makes clear that Maccarone is “a very important person in Calabria.” He discusses buying a gold chain for Maccarone’s son on the occasion of his baptism, and a Rolex for Maccarone, insisting that the gifts be genuine articles that are “certified,” lest he be driven out of Calabria.
The conversation with Iasiello occurred in March 2011, a year before companies tied to Velardo began buying properties in Florida.
Velardo said he was drawn to invest in Florida because he saw a good business opportunity, and because he had family in the state and had spent time there.
“For me it was an obvious choice, as I knew the area well and had been there many times,” he told the Herald. “Even though many investors were running away from and afraid of the real estate crisis, I knew that this was a unique opportunity.”
His companies continued buying properties after Velardo was charged in 2013. Velardo’s name appeared on most property and corporate records for early transactions, but within months of the criminal charges, Velardo’s name was largely replaced by another Italian man, Antonio Naddeo.
“While I was on trial in Italy, I did not feel that it was appropriate to be the sole manager and CEO of my companies in the U.S.,” Velardo said.
The majority of the homes purchased by these companies, which included APAX Investments (later renamed American Wise Investments), Jafi Holding Corporation and DGI USA Real Estate Investment, were in South Florida. Miami-Dade County accounted for nearly half of all the homes purchased, the Herald found.
These companies purchased more than 75 properties between 2012 and 2017, for a total of more than $7.6 million. The homes were modest, with a median price of $85,000, and many of them were purchased in foreclosure. Velardo’s companies have sold most of the homes, bringing in more than $13 million, a 74% return, though it isn’t clear how much they spent to rehabilitate or maintain the properties.
Velardo’s companies sold more than a third of the properties to other companies they were linked to, sometimes in a matter of days and for a steep markup.
For example, on Aug. 8, 2013, APAX America 01 LLC purchased a two- bedroom house in the West Little River neighborhood of Miami for $74,000 and turned around and sold it to a company called Lodgings in Florida Corp five days later for a 62% markup. The sale is listed by Miami-Dade’s property appraiser as occurring between affiliated parties.
The National Association of Realtors lists immediate sales with a dramatic change in value as one of the potential red flags that may indicate money laundering.
The bulk of properties purchased by companies tied to Velardo appeared to have been bought through cash transactions, with the exception of three properties listed on a 2015 mortgage between two of Velardo’s companies and FL Lodgings Corp., a company with a similar corporate structure to Lodgings in Florida. The mortgage filing indicates that APAX secured a $640,000 mortgage from FL Lodgings in 2013 for no interest and that the mortgage was satisfied in 2020.
Velardo said he has no connection to the companies and that there was nothing unusual about the transactions.
“They belong to different individual investors who formed U.S.-based companies to invest in U.S. real estate,” Velardo said. “The sales to those buyers were legitimate, properly recorded, and in compliance with U.S. and Florida law.”
‘The darkness went away’
As Iasiello tells it in a slick biographical video posted to one of his various real estate websites, the glut of foreclosed South Florida properties following the Great Recession offered him a form of redemption when his jewelry business in Italy fell on hard times.
“The darkness went away and the light was coming to my life,” Iasiello says.
Iasiello, a licensed real estate broker, exhaustively and cheerfully documents his work buying, rehabilitating and flipping these homes, providing daily video diaries of the work and line item breakdowns of the entire cost — and profit — associated with some of his projects. He even describes his efforts to evict some of the tenants who occupy the homes he acquires.
Iasiello has had a lot to document.
The Miami Herald’s analysis of South Florida property records turned up more than 50 homes scooped up by companies associated with Iasiello since 2013 for a total of more than $7 million, working out to less than $150,000 per home, on average. Nearly all were all-cash transactions and the properties were typically held for less than a year. Some of the homes were purchased by companies that listed Iasiello’s attorney, Louis Stinson Jr., in the paperwork, Stinson deferred to Iasiello when contacted by the Herald about the properties.
Less clear is where the money comes from. The normally loquacious Iasiello, who was not charged in either probe, has had little to say when asked about his investors.
“No comment,” he said. “I am a working guy, I pay my tax.”
Pandora Papers trail
Iasiello is listed as a beneficial owner for a British Virgin Islands company called Accent Wealth Development Limited, according to the Pandora Papers. The leaked documents list a Miami address and indicate that it was engaged in real estate investment.
Iasiello was listed as an owner of the company alongside L’Abbate, the lawyer, and Musarella, the accountant, who were charged in Italy alongside Velardo in the “Black Money” probe.
L’Abbate and Musarella, both from Calabria, were also listed as beneficial owners for several other companies registered in the British Virgin Islands, the Pandora Papers show. One was called USA Tax Lien Investment Ltd, and registration paperwork indicated that the company’s income would come from real estate consulting work, with anticipated clients from across Europe.
In now-leaked October 2012 correspondence, L’Abbate said that the funds for registering several of the companies would be coming from LTB Consulting Tunisia. Two months later, Velardo submitted paperwork to the state of Florida in which he listed a company called LTB Consulting SuarL, based in Tunisia, as one of the three shareholders for one of the companies he had used to purchase Florida real estate. L’Abbate and Iasiello were his two other partners in the venture, which Velardo said ended in late 2012.
Accent Wealth Development was also short-lived. L’Abbate says the 2013 charges and resulting notoriety spelled the end of Accent Wealth Development.
“We decided to split,” L’Abbate said. “I didn’t want to drag down anyone else with this problem.”
Lending ‘gap’
While their partnership might have been short-lived, companies tied to L’Abbate, Musarella and Iasiello did all purchase properties in 2014 tied to the same man: David Franza.
Franza told the Herald he had no recollection whether the three men were acting in concert and no knowledge of the criminal charges against L’Abbate and Musarella.
“As far as anything about any of their past activities, I didn’t know anything about it,” he said.
A Miami Gardens home purchased by Accent Investments RE, LLC from a Franza-affiliated company is the only property the Herald found associated with Musarella.
The home L’Abbate purchased from a Franza-connected company was one of several in South Florida.
Companies tied to him bought nine properties, for a total of $1.3 million, between March of 2013 and October of 2015, and L’Abbate took out mortgages on seven of the nine properties.
Lenders are supposed to vet borrowers to try to determine the source of their funds and ensure compliance with anti-money-laundering laws, but L’Abbate said he didn’t encounter difficulties purchasing the properties, despite the sentencing in Italy, because the legal process for his case is still ongoing.
“The criminal record cannot be updated until there is a final decision,” said L’Abbate, a lawyer by training.
The lender and title company that approved the bulk of the mortgages each pointed to the other when asked about whether they had vetted L’Abbate’s companies.
Richard Stanton, the president of the Miami-based Principal Lenders Group Inc., which issued several mortgages to L’Abbate’s company, said he had “no idea” about the charges against L’Abbate and that the lender relies on title companies to perform a check on buyers.
“We actually have it in the instructions package for the title company,” he said.
Not so, says Working Title, LLC, the Coral Gables title company that worked on these mortgages.
“If somebody is buying property in Florida, there’s no background check done on a buyer, unless a lender does one,” said Cookie Slingbaum, a national sales manager at Working Title. “All we check is the seller.”
Lakshmi Kumar, the policy director for the anti-money-laundering non-profit advocacy group Global Financial Integrity, said that the charges against L’Abbate should still have raised red flags but that smaller lenders like the ones used by L’Abbate aren’t as equipped to spot potential money laundering or other suspicious financing.
“Outside of the large financial institutions, a lot of these guys are ill-equipped to do [anti-money-laundering] due diligence,” Kumar said. “It’s a gap.”
Deena Sabry of the Miami Herald, Leo Sisti and Paolo Biondaniof L’Espresso and David Szakonyi of the Anti-Corruption Data Collective contributed to this story.
This story was originally published December 7, 2021 10:00 AM.
Ben Wieder is a data and investigative reporter in McClatchy’s Washington bureau. He worked previously at the Center for Public Integrity and Stateline. His work has been honored by the Society of American Business Editors and Writers, National Press Foundation, Online News Association and Association of Health Care Journalists.
Shirsho Dasgupta is a data reporter at the Miami Herald/McClatchy D.C. Bureau. He won a National Headliner Award for a series on a coup in Venezuela and his coverage of COVID in Florida’s prisons won a Sunshine State Award and a Green Eyeshade Award in 2021. His work has also won honors from the Military Reporters & Editors Association, the Overseas Press Club and the D.C. chapter of the Society of Professional Journalists. He holds Master’s degrees in English and Journalism.
