Orange tackles ‘rigged’ online tax-lien auctions
By David Damron, Orlando Sentinel | |
McClatchy-Tribune Information Services |
The annual events lured local and out-of-town speculators, many of them in attention-grabbing garb as a way to catch Wood's eye and a winning bid.
But the carnival-like bidding auctions overseen by Wood are a thing of the past. Today, they've been replaced by online auctions that allow big, outside financial outfits to overrun these digital venues from sometimes thousands of shell companies and proxies.
That leaves virtually no room for the little guy, say critics, among them
Last year,
"It's effectively rigged," Randolph said. This year,
This little-known but lucrative market of tax-certificate sales exists because every year property owners forget or can't afford to pay their taxes. Yet governments need that delinquent revenue to pay for police, parks or paving.
At next month's annual auction, more than
In the past, auctions were held on courthouse steps, in offices or halls. Investors held hand-scrawled or printed placards with bid numbers, some extra tall or festooned to draw the eye. Bidders ranged from investment-minded snowbirds to well-heeled insurance, bank or investment houses that were rumored to recruit attractive or peppy college kids as stand-ins.
But these auctions had their critics, too. In 2002, Wood reformed the process after the
Over time, county auctions moved online.
"He was going too fast sometimes to tell who won them," Lerman said. "It was all so random."
But the 76-year-old
One of his competitors had 241,121 separate entities to make bids for his company, PFS Financial 1, LLC. Another company in the auction,
"If you're an individual, you have no shot," said
"The local investor once had a one in 40 shot. Now it's one out of 2.2 million."
In
"It's getting out of hand," said the retired computer consultant. "I don't even know why that's legal."
But it is. And an official linked to PFS Financial,
Financial institutions have been able to acquire thousands of tax-identification numbers from the
But the
Cosgrave, who is vice president of acquisitions for
"It's a little bit slower than it was before. But you can still do it," Cosgrave said. "And just because it's harder to do it, doesn't mean it's [the auctions] not competitive or it's unfair."
Cosgrave argued that the move to limit the number of bidding entities -- which
"This shouldn't be a system that burdens local government," Cosgrave said.
Like
According to a report by
"They figured out how to milk the system," said
Gannon and Randolph say that more counties would switch to the single-bidder system she's adopted, but they fear the financial heavyweights who benefit from the more wide open process might sue them. Randolph understands the threat, but is moving forward anyway.
"Their attempt at intimidation has really affected the number of counties who are going to go to this ... and that's their intention," Gannon said. "
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