SPRINGFIELD – Donna Maxwell knows the rundown trailer where she’s raised eight children is not much to look at these days.
The property in Springfield, Burlington County turns into a marshy mess when it rains. And the traffic noise from the nearby New Jersey Turnpike is unrelenting.
But it has been Maxwell’s home for 28 years. It’s where she proudly hangs school pictures of her children – four are grown and four still live ther – and it’s where she currently watches her toddler grandson while one of her daughters is at work.
Maxwell’s home, though, is not hers. It belongs to a nearby Christian church, the Fountain of Life, which recently foreclosed on the property.
Maxwell owes back taxes on the property and she fell behind. The church purchased the tax debt from Springfield Township and received a lien on the property. Maxwell currently owes over $50,000 in back taxes on the 1.1 acre property, which tax records show is assessed for $86,000. The annual tax is bill is about $2,400.
The church, which moved the lien into a company called FS Properties 194 LLC, appeared to be heading towards evicting Maxwell and her family in April. But earlier this month, Maxwell heard from FS Properties 194’s lawyer, and there is a deal for her to be allowed to stay, Maxwell said this week.
While all the legal paperwork says FS Properties 194, Maxwell knows that she was really dealing with the Fountain Of Life, the large, sprawling Christian congregation on Columbus Road in nearby Florence that has a school and a fitness center.
Maxwell, before being allowed to stay in her trailer, said some people might be surprised to find out that a Christian church was seeking to boot her from her home, an action that would have likely landed her at the Burlington County welfare office.
“But I’m not surprised,” Maxwell said recently, “With that church, I knew this was coming. They have been cut throat from the beginning.”
The company, FS Properties 194, is one of several set up by Fountain Of Life to invest in tax liens or tax sale certificates, a method that can net an investor up to an 18 percent interest, and can result in foreclosure for the homeowner.
In late February, after Maxwell and another area resident spoke to a Philadelphia television news station about their plight, the church apologized to their congregation in a letter for the “embarrassment” they caused and said they were out of the investment strategy.
The church says it was always going to divest from the tax sale certificate business, and that the media scrutiny was coincidental.
“Several years ago, the Fountain of Life Church began the process of divesting itself from its tax lien portfolio,” Steve Spadaro, a member of the church’s Board of Elders, said in a statement. “While the portfolio was acquired by our previous leadership, we believe that this investment detracts from our mission of ministering to our community and providing social services and help to our neighbors across Central and South Jersey.”
Maxwell, in late February, said the church had not been so Christian in dealing with her debt.
“They’re greedy,” Maxwell said, pointing to a letter that stated the Burlington County Sheriff’s Office would be at he home April 22 to remove her.
A review of court documents shows that church leaders have been in the tax sale certificate business for over 20 years, buying and selling tax liens all over New Jersey. One of the church’s companies, SME Mercer, pleaded guilty to a federal crime in 2012 for rigging the public auction of tax liens in New Jersey.
And the same company settled a civil class-action lawsuit related to the bid rigging for $250,000 recently.
Under New Jersey law, municipalities establish liens on properties in their towns so they can collect taxes, like property, water or sewage taxes.
If a town has delinquent tax bill, they are required to annually offer the liens for sale at a public auction. The buyer receives a tax sale certificate, and may collect on any future payments the property owner makes to the town. And they can eventually foreclose.
A lien is desirable for several reasons. First, the buyer receives an interest rate on future payments to the town, and the liens are continuous until satisfied. All subsequent taxes, plus interest and penalties, are added on to the lien, so the value can grow.
The competitive bidding, according to state law, is supposed to help property owners already suffering financial hardship by driving down the interest rate of the winning buyer. Auctions open at an 18 percent interest rate, but bidders, usually financial companies, desire them so much they will bid each other down, sometimes down to just 1 percent.
Even though the rate is usually driven down, the tax sale certificate owner may choose to pay from their own coffers any subsequent delinquent property taxes, which are then added to the lien, and those subsequent taxes and charges carry an automatic 18 percent interest rate.
New Jersey auctions off $100 to $200 million in liens annually.
Court records show that Fountain Of Life leaders were regulars at tax lien sales all over New Jersey for years.
The church leaders included David Boudwin, who is the current executive pastor of the church, Susan Esposito, CEO of the church’s Fountain Foundation and Paul Graban, a longtime senior pastor who celebrated his 90th birthday last year.
One of their companies, SME Mercer Inc., was snared in a massive federal probe of tax sale certificates in New Jersey that saw several people and companies indicted on charges they violated a federal anti-trust law.
The case alleged that the defendants conspired starting in the late 1990s to eliminate the competitive nature of the public bids so they could decide who would win the auctions and at what interest rate. Defendants were charged in relation to acts committed from 2003 to 2009, court documents said.
Mercer SME Inc. pleaded guilty to a federal crime in 2012 and the corporation was sentenced in April 2013 to two years probation and a $15,000 fine. Esposito was Mercer SME’s president, and she signed the guilty plea agreement.
A class action lawsuit, brought by affected homeowners and resulting from the criminal investigation, targeted SME, which as since settled their portion for $250,000, a Fountain of Life spokeswoman said.
The civil lawsuit alleges Fountain of Life would purchase tax sale certificates at public auctions, assign them to “shell” corporations like Mercer SME, “in order to hide from the public the fact that it was involved.
The church, through a spokesperson, disputes the term “shell” company. The company was established as a corporation to invest the endowment of the non-profit Life Center Academy, which is a private school, according to the church. It would have been irresponsible to allow a non-profit to assume investment liability, a church spokesperson said.
It is unclear from the criminal and civil court documents how many homes the Fountain Of Life companies took to foreclosure.
Maxwell admits she has not paid her property taxes for years, and she can’t pin down exactly when her situation started with Fountain of Life, though it was about five years ago, she said.
She and her husband John Maxwell moved into the trailer nearly 30 years ago and her father-in-law paid off the mortgage. The home is in John Maxwell’s name, she said.
Several years ago, though, hard times got harder. He husband abandoned the family and she could not keep up with the tax payments after she was laid off from her last job at a Westampton warehouse.
Maxwell had previously dealt with another entity who bough her back taxes and had a lien on the property in the early 2000s. She was able to pay it off, though, and she generally knew the process. But when Fountain of Life bought her debt, she said, it all changed.
She knew of the massive church. She once went to a play there.
“It was beautiful,” she said, and reminded her or a Broadway production. Trying to work out a plan, she went to Fountain of Life and encountered Boudwin, who flat out told her there was nothing he could do for her.
On the way out, “He said to me, you can have a bag of food from the pantry,” Maxwell said.
Late last year and earlier this year, the foreclosure notices started arriving. Maxwell said she started seeking help from social services, and still got nowhere with the church.
In late February, with a document on her living room table that said the Burlington County sheriff’s office would arrive April 22 to remove her, she questioned the church’s motive.
“I look at the place and say, Why would you want it? What are you going to do with this place?” she said.
The questions were never answered, and Boudwin could not be reached for comment.
A spokesperson for the church said recently that the church was working with Maxwell.
Maxwell was reluctant, though, to discuss the details, saying only, “The church is working with me.” She does not believe she will be evicted April 22.
In a March 1 letter to their congregation, Fountain of Life’s board of elders wrote that they understood many members had seen the television report, and that they had questions, but that the church has not purchased any liens since 2012 and was “untangling” the church from investment decisions “over twenty years ago.
“Though the buying and selling of tax liens are a legal investment strategy, the church leadership believes that is a practice that our church should never have been involved in and we are sorry about it.”