The Supreme Court on Monday allowed businessmen to use a powerful law enforcement tool in a lawsuit alleging fraud in tax sales in Cook County, Ill.
The unanimous decision came in a case involving the federal Racketeer Influenced and Corrupt Organizations Act.
The court ruled in favor of two firms alleging that manipulation by competitors had resulted in a disproportionate share of tens of thousands of tax liens going to the competitors.
Tax sales in Cook County enable the collection of unpaid property taxes, giving buyers of tax liens an opportunity to take over property if the owners don't pay up.
The issue for Phoenix Bond & Indemnity Co. and BCS Services Inc. was whether they could sue even though they had not relied on allegedly fraudulent statements the defendants submitted to Cook County. The statements said that each tax buyer was truly independent from other tax buyers in the competitive bidding.
Writing for the court, Justice Clarence Thomas said that nothing in the RICO law required Phoenix and BCS to show that they relied on alleged misrepresentations by a defendant.
Cook County requires that each buyer submit bids only in its name and not through any related entity.
Phoenix and BCS alleged that a number of related entities "packed the room" in tax sales by having relatives in two families bid for the same properties.