Theft By Any Other Name

This story is simply unbelievable. It’s got it all: incompetent city government, crony capitalism and stealing a marine’s home for an overdue $134 tax bill:

On the day Bennie Coleman lost his house, the day armed U.S. marshals came to his door and ordered him off the property, he slumped in a folding chair across the street and watched the vestiges of his 76 years hauled to the curb.

Movers carted out his easy chair, his clothes, his television. Next came the things that were closest to his heart: his Marine Corps medals and photographs of his dead wife, Martha. The duplex in Northeast Washington that Coleman bought with cash two decades earlier was emptied and shuttered. By sundown, he had nowhere to go.

All because he didn’t pay a $134 property tax bill.

The retired Marine sergeant lost his house on that summer day two years ago through a tax lien sale — an obscure program run by D.C. government that enlists private investors to help the city recover unpaid taxes.

For decades, the District placed liens on properties when homeowners failed to pay their bills, then sold those liens at public auctions to mom-and-pop investors who drew a profit by charging owners interest on top of the tax debt until the money was repaid.

But under the watch of local leaders, the program has morphed into a predatory system of debt collection for well-financed, out-of-town companies that turned $500 delinquencies into $5,000 debts — then foreclosed on homes when families couldn’t pay, a Washington Post investigation found.

As the housing market soared, the investors scooped up liens in every corner of the city, then started charging homeowners thousands in legal fees and other costs that far exceeded their original tax bills, with rates for attorneys reaching $450 an hour.

Here’s the short version: Coleman is a 76-year-old retired Marine who owned his $197,000 home free and clear. He also has been showing signs of dementia and, at one point, forgot to pay a $134 tax bill. His son eventually paid the bill — plus $183 in interest in penalties. But it was too late. The lien had been sold to a private company that demanded $5000 in legal fees. The son couldn’t come up with the money and court foreclosed. The Maryland firm that bought the house sold it for $71,000.

This is not an isolated incident. You really must read the whole thing if you have the time. Private companies now hold liens on thousands of properties and have foreclosed on hundreds, frequently over very small amounts of money (after inflating them to unpayable sums with often undocumented legal fees). Poor neighborhoods, already hurt by the recession, are being devastated by these seizures. And these are not people who bought homes to flip them or bought homes they couldn’t afford. These are people trying to be responsible who have, for various reasons, missed a tax payment. Or in many cases, haven’t but had liens put on their homes by mistake.

One 65-year-old flower shop owner lost his Northwest Washington home of 40 years after a company from Florida paid his back taxes — $1,025 — and then took the house through foreclosure while he was in hospice, dying of cancer. A 95-year-old church choir leader lost her family home to a Maryland investor over a tax debt of $44.79 while she was struggling with Alzheimer’s in a nursing home.

Other cities and states took steps to curb abuses, such as capping the fees, safeguarding houses owned by the elderly or scrapping tax sales altogether and instead collecting the money themselves.

Moreover, there is no supervision. Many of these private companies have already been prosecuted in other states for breaking laws and rigging bids. And the DC tax office has sold nearly 2000 liens by mistake.

A 48-year-old math teacher paid his taxes in 2007, but the tax office took his $1,400 payment and applied it to the wrong house, crediting an entirely different taxpayer.

A 58-year-old bank employee almost lost her house in 2010 because the tax office mistakenly sent bills and notices to a wooded lot across from a strip shopping center in Virginia — 12 times.

A 69-year-old hat designer was given the wrong payoff amount and ended up in court to save her property, owned by her family since 1943.

Those homeowners found out about the mistakes in time to fight. Ninety-five-year-old Daisy Dolsey, living in a nursing home and struggling with Alzheimer’s, wasn’t so lucky: She lost her $300,000 house over a $44.79 tax debt even after she paid her taxes.

This is an appalling scandal. This should be national news and the DC Council should be getting pilloried for refusing to address the issue. And it’s only a microcosm of government farming out duties to private companies — which might be defensible enough in a vacuum — but not holding those companies to any standard of behavior or any limitations on their authority. And for the companies it’s a gold mine — the Post reports that $5 million in suspiciously organized and unsupervised bids bought liens on 2/3 of a million in properties. They then charged the owners thousands in administrative and legal fees and foreclosed on the homes if the homeowners couldn’t cough it up

This is theft, plain and simple. This is government, industry and lawyers conspiring to rob people and not giving a fig what it does to the city.

And while I’m on my horse about property rights and corrupt government, the problem of asset forfeiture is only getting worse:

Leino is one of thousands of Philadelphia residents who each year find themselves facing the seizure of their possessions — cars, cash and real estate — via “civil asset forfeiture,” a legal construct that lets law-enforcement agencies seize property linked to crime and keep the proceeds. In Pennsylvania, civil forfeiture is carried out primarily under state drug laws. The Philadelphia DA brings 300 to 600 real-estate forfeiture cases per year, and thousands of cases against small amounts of cash seized in police stops that sometimes, but not always, result in arrests — together bringing nearly $6 million into its coffers annually.

In a series of reports for City Paper [“The Cash Machine,” Nov. 29, 2012] and ProPublica, this reporter has documented how the Philadelphia DA has made civil forfeiture into a vast, unaudited revenue stream, profiting from an upside-down legal process through which the DA has the power to bleed property owners dry of financial resources and imperil homeowners with minimal or no evidence of criminal wrongdoing.

Long before the forfeiture action against her house would be completed, and without a judge or jury ever seeing her face, Leino would be forced from her house and made homeless along with her three children. She would lose her most precious possessions, and ultimately be deprived of her family’s most valuable asset — all without Leino ever being accused of any crime.

Her husband, Sam, was accused. On Feb. 22, 2010, police officers arrived at the family’s house, at 2729 Orthodox St. in Bridesburg, to arrest Sam on charges of selling prescription pills. The officers would later testify that they observed Sam handing over small objects in exchange for money outside the house. After executing a search warrant, police recovered various painkillers. (Sandra Leino says her husband was partially disabled from a truck accident and took the painkillers himself, legally, for his pain.)

Sandra Leino and her three children were not accused of any crime; nowhere in police reports is there even a hint that any of them had done anything wrong.

That didn’t stop the DA from filing a motion to seize the Leino’s house that May — and then, for reasons that remain unclear, kicking them out of it the same month. (The DA’s Office responded to inquiries with a short statement describing the forfeiture action, but would not explain why Leino and her family were made to leave). Leino, her husband (out on bail awaiting his trial), and their children were forced from their home with nowhere to go. They stayed in a motel for one week.

While the family navigated a homelessness imposed on them by the District Attorney’s Office, the DA asked the city’s Department of Licenses & Inspections to conduct a “clean and seal” operation on the Leinos’ house. City officials arrived at the house shortly after the forfeiture motion had been filed (not granted) and began throwing out the Leinos’ possessions — among them pictures of the Leinos’ children growing up, antiques they had collected together as a hobby and a 5-gallon jar of pennies the family had filled as a way to save money.

The house was foreclosed on by the bank. Leino was convicted of a single felony charge. Oh, and the officers who brought the charges against Mr. Leino? Four of them were found to be part of drug-dealing ring within the Philadelphia police. Nearly 300 of the cases they brought have been dropped.

I highlight these two stories specifically because they involve people who are working class, not the rich folks that defenders of asset forfeiture and foreclosure corruption always insist are the real targets of the laws. Whenever you give government this kind of gangster power, it will be turned on everyone, but especially on those who do not have the resources for lawyers and publicity. These are poor and working class people, mostly minorities. The only crimes they have committed are missing a tax bill or low-level drug dealing (or living with someone who has done those things). And they are being robbed blind to stuff the coffers of police departments in one case and rich speculators in the other.

This is what happens when you don’t respect property rights and when you give the government authority to just take people’s possessions. You won’t see Donald Trump having his home sold to speculators. You won’t see a rich politician kicked out onto the street if her husband is dealing pain pills (according to four corrupt cops). Michael Bloomberg’s stop-and-frisk wasn’t used on Wall Street execs. Our War on Drugs imprisons lots of poor people but sees rich drug users as “having a problem”. Our War on Prostitution thinks Eliot Spitzer should run for comptroller while survival-level sex workers should be imprisoned and raped.

Arbitrary government power is always turned against the powerless. There are some things we need government to do, but that power should always be supervised, constrained, reviewed and never allowed to play to the personal benefit of the rich and powerful. The nation has forgotten this lesson. But thank God for the Wapo, for the IJ and for independent journalists who are determined to make sure that this abuse and criminality does not go unnoticed.

Comments are closed.

  1. AlexInCT

    Something like this almost happened to a WW2 vet living in my town. Lucky for him the people in town got wind of the shit going on, and we practically stormed our town hall to tell them to cease & disist. As a consequence of that fiasco and the beating that these scumbags took, they passed a law that basically exempted this man and others like him from ever being fucked over by eager bureaucrats and their friends, again. It is dispicable that people in local government allow this shit to actualy happen to decent people, when real tax delinquents, often people that are related to these bureaucrats, get away with murder.

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  2. salinger

    Whenever you give government this kind of gangster power, it will be turned on everyone, but especially on those who do not have the resources for lawyers and publicity

    But isn’t the gist here that government power has been ceded to private firms who are not bound by so many of those nagging regulations?

    I mean privatization – isn’t it always the answer?

    Sure a few folks will get burned but the market won’t stand for such shenanigans will it?

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  3. AlexInCT

    But isn’t the gist here that government power has been ceded to private firms who are not bound by so many of those nagging regulations?

    Did you really ask this idiotic question dude?

    I mean privatization – isn’t it always the answer?

    You do understand the problem isn’t with the involvement of priviate companies, but with the fact bureaucrats think there is money to be made doing them “favors” and then abusing their power/laws, right? Your logic seems to want to blame the girl that dresses provocatively for getting gang raped by thugs. After all, if she wasn’t dressd like a slut the thugs would have ignored her.

    Anyway, what private sector entity fuels the abuses by the IRS, DOJ, State Department, and EPA in the age of Obama? Inquiring minds want to know….

    Sure a few folks will get burned but the market won’t stand for such shenanigans will it?

    Without government protection – government giving itself the ability and power to pick who wins and who loses – this sort of abuse certainly would be the case. There is a fundamental underlying entity shared by all these instances of abuse of power here, but I doubt you will grasp it Sally.

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  4. salinger

    You know – I generally ignore your idiocy – but here we find another occasion where your incongruous thought process is exquisite in its complete stupidity – (along with your prerequisite spelling and grammatical errors.)

    Your logic seems to want to blame the girl that dresses provocatively for getting gang raped by thugs. After all, if she wasn’t dressd like a slut the thugs would have ignored her.

    How does this analogy have anything remotely to do with private companies gouging individuals through buying their public (tax) debts? I’m interested in the thought process that squeezed this one out.

    Do you keep a towel nearby to mop up your drool?

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  5. Hal_10000 *

    Salinger, I’m somewhat in agreement. Privatization has its benefits but a lot of privatization efforts, like this one, have been done with almost no oversight or accountability. DC hasn’t just privatized collections, which might be acceptable. They’ve privatized the entire legal structure.

    In the case of tax defaults and liens, I’m very dubious about privatized collections simply because the power that is assumed in these cases is simply too powerful. You can’t give a private organization unlimited power to charge whatever it wants and seize someone’s house if they can’t pay.

    (In other cases, privatization has been problematic as well. Here in PA, they privatized part of the DMV. But union agreements meant they couldn’t actually pare down the department, so it became more expensive and inconvenient. Privatization is a tool, not a panacea.)

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  6. AlexInCT

    How does this analogy have anything remotely to do with private companies gouging individuals through buying their public (tax) debts? I’m interested in the thought process that squeezed this one out.

    Did you really ask this idiotic question yet again?

    How was that measly debt made availablle for sale Sally? Who decided to fuck this guy over over a $134 tax bill? That’s the question you seem to desperately ignore. That private company would never have gotten a chance to buy that debt if these fucks that screwed this guy over a $134 tax bill had not sold that to them. That solution was what the local government chose to implementm, knowing full well what the results would be, and to pretend that the problem is with the private company, is ludicrous.

    I am not defending the assholes that bought the debt and then screwed this guy over, but this could not have happened without the bureaucratic fucks that sold this guy out over a fucking $134 tax bill. Are you seriously trying to make the idotic case that if government had handled this it would have been any better? I defer you to people that have their lives ruined by the IRS on a daily basis for proof to the contrary.

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  7. salinger

    I defer you to people that have their lives…

    Defer? Is English your second language?

    Who decided to fuck this guy over over a $134 tax bill?

    The private company that bought the debt – period.

    That solution was what the local government chose to implementm, knowing full well what the results would be,

    You are saying that the local govt. who sold the debt knew in advance that the private company was going to gouge the debtor. How do you cope with your omniscience?

    This makes no sense – even in your world. Debt is usually sold for less than face value. What benefit does the seller get other than the price given for the debt?

    Your argument’s monumental ignorance will only be rivaled by the pointless tenacity with which you will now try to twist it into something that approaches logic.

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  8. AlexInCT

    Defer? Is English your second language?

    Oh how mature. At least I speak more than one language. You seem to only do English and stupid. I will run a spell checker from now on to not affect your tender sensibilities. You BA majors need to learn to chill.

    The private company that bought the debt – period.

    Why am I not surprised you would say something idiotic like this?

    You are saying that the local govt. who sold the debt knew in advance that the private company was going to gouge the debtor. How do you cope with your omniscience?

    You do know how debt collectors work don’t you? It’s an industry based on gauging debtors. You turn over uncollected debts to a collector precisely because debt collectors go to extremes and then fuck people over. I guarantee you the people that made the deal with the collectors knew this too. They made the deal with them precisely because these collectors fuck over people, and they felt that anyone that didn’t pay should be fucked over. Pretending that these fucking assholes that turned the debt over thought that some kid glove treatment would follow is not just the height of ludicrousness, it is despicable. Debt collectors fuck people over. That’s what that industry is about. And people that use them do so because they want to fuck someone that they feel fucked them over right back.

    Go back to my first post and read it. Twice. We had the scumbags try to do the same thing to an old vet in my town. They figured since they could not get this guy to fork over some piddly amount of money they would throw him to the wolves. That was supposed to show him and everyone else. We got together and stomped them. Yeah, they too tried real hard to pretend they had no clue a debt collector would fuck someone over, but they got caught lying their ass off.

    I will stress it again: For an example on how your beloved government would treat people look at the IRS. I guarantee you that the IRS does far worse than any private entity could on their best day.

    I dealt with the fucking subhuman idiots that work for that agency and let me tell you, I have never seen a bunch of more vindictive and fucking nasty bunch of goons than them. When I showed them they were wrong, and we are talking about an amount so small it might have well be a rounding error on my tax return, they tried to fuck me over even harder. Lucky for me I could afford a lawyer. If a private entity had done what the IRS tried to do to me I would have sued them for big money. I had no recourse that wasn’t astronomically expensive against them, and that would have only led to yearly audits for the rest of my life.

    Nobody can out asshole a government bureaucrat with delusions of grandeur, and they all suffer from Napoleon complexes. Period.

    Your argument’s monumental ignorance will only be rivaled by the pointless tenacity with which you will now try to twist it into something that approaches logic.

    You can keep acting like a moron and pretend you have anything to stand on Sally, but I will again point you in the direction of the IRS, where we have decades of proof of abuse, mismanagement, and even politically motivated attacks, to see how government would handle this if they were still doing it. This guy is lucky he was not dealing with the government. They wouldn’t only have taken his house, but his SS check too and let him starve just to show him who was boss.

    Now shut up and stop making an even bigger idiot out of yourself.

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  9. AlexInCT

    What kind of gauge do they use?
    Inquiring minds want to know….

    If I told you CM, you would feel less of a man because you aren’t as big as I am….. Know what I am saying :)

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  10. CM

    If I told you CM, you would feel less of a man because you aren’t as big as I am….. Know what I am saying :)

    That’s funny, I was about to make a comment about your dick size to enhance the irony of:

    Oh how mature. At least I speak more than one language. You seem to only do English and stupid.

    But you’ve gone and it done it for me.
    Nobody would believe this if they didn’t see it for themselves.

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  11. Hal_10000 *

    The $134 charge wasn’t the problem. The guy’s son paid that plus interest (and $700 toward legal fees). The problem was the $5000 the company tacked onto it for their “expenses”.

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  12. AlexInCT

    The $134 charge wasn’t the problem. The guy’s son paid that plus interest (and $700 toward legal fees). The problem was the $5000 the company tacked onto it for their “expenses”.

    What part of that’s what collection agencies do don’t you get?

    When someone sends your debt to a collection agency it’s because they want to cause you pain. They have tried to collect and couldn’t, and the money they have spent to get what you owed them is now more than they would get. So it has become about revenge and dissuasion more than anything at that point. They get pennies on the dollar for the money they lost from you, but satisfaction from the massive ass rape they hope the collection agency gives you. Collection agencies are about causing pain and suffering, getting revenge, and scaring others into never getting to the point they have to deal with a connection agency. Let’s not pretend they are bad guys for doing precisely what they are engaged to do.

    I know many people that don’t understand this concept because they have never been the recipient of this shit. I saw this done to a friend over a $35 charge he wouldn’t pay for some incredibly stupid reason. In the end it cost him over $4K, he had to involve lawyers, and his credit score was ruined. He couldn’t even get a credit card after that. This was some 20 years ago to boot. When he realized how hard he was about to get fucked by the collection agency he tried to pay back the people he owed the money to. They called him up to tell him they were sending his money back and to ask him if he needed some Vaseline. He didn’t think it was as funny as I thought it was. That was one shit lesson to learn, I tell you.

    In this case this poor old guy got shafted because the fucking assholes he owed the $134 to decided to show him and his kid who were boss. So they turned it all over to a collection agency and in the process it cost him his house. Pretending that the bad guy is the collection agency for doing what they do, is not just disingenuous, its bullshit. I am not defending them. I find collection agencies to be nothing but legalized mobsters, but I understand their purpose. I am sure if you were the one trying to collect from some asshole and you had no recourse you would wish for something like a collection agency, though.

    Let us not kid ourselves: the town that sent this mans stupid bill to a collection agency is the real evil, because they knew what would happen. Sally can pretend otherwise, but that’s what you get from people that do not understand reality.

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  13. AlexInCT

    But you’ve gone and it done it for me.
    Nobody would believe this if they didn’t see it for themselves.

    Wait a minute…

    That’s not what you were doing there? Well then let me apologize for thinking you were making a penis joke. It sounded like a penis joke opening to me man….

    AND YOU WERE THINKING IT :)

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  14. Biggie G

    The first case is not privatization or the government trying to stick it to some deadbeat. It was a tax sale, plain and simple. They have been going on forever. Tax liens come before the mortgage. Why do you think that your mortgage company sets up an escrow account to pay your property taxes?

    When you see those late night infomercials that promise to teach you how to buy $200000 houses for $10000, this is how they teach you to do it. It used to be a fairly stable way to invest. I think NJ used to guarantee 18% interest, but you had to hold the lien for a year or more and give the person a certain amount of time to repay before you could foreclose. The big difference is now, with really high property values, the vultures come out. No one is bitching about tax sale abuse in Camden or Detroit.

    The tactics these collection agencies use are despicable, but legal. The problem that you have here is that with a house you have valuable collateral. When your credit card debt gets sold to an agency and they tack on fees and interest, you can negotiate and tell them to go screw because they can’t repo that vacation you charged. The tax lien buyers have you over a barrel because they can take your house, and I think many are in the business to do just that.

    I didn’t notice it in the story, but was there an accusation of the local gov’t giving advantages to certain companies to buy these liens? The locals placing liens mistakenly on properties is a whole other issue that unfortunately happens all the time, even in private business. However, when you couple it with predatory investors, it is a recipe for disaster.

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  15. Miguelito

    Our betters in CA are trying to, more or less, remove the ability for ballot initiatives too. Oh, but unions are exempt… shocker. This’ll hit the SCOTUS if it’s signed into law I’m sure. Can’t let the regular folk have any say in this state.

    $10 minimum wage just passed, drivers licenses for illegals, and they’re talking making the whole state a sanctuary state for illegals. Gotta GTFO man.

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  16. AlexInCT

    $10 minimum wage just passed, drivers licenses for illegals, and they’re talking making the whole state a sanctuary state for illegals. Gotta GTFO man.

    I think the mentality of your credentialed elite is to break the states bank before Obama gets out of office, so they can have a better chance of getting a federal bailout….

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