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Federal Lawsuit Against Gratiot County and Treasurer Claim Illegal Property Theft

For Immediate Release | Nov 09, 2017

Ithaca, Michigan - On behalf its client Donald Freed, Outside Legal Counsel has recently filed a federal lawsuit challenging the decision and actions of Gratiot County Treasurer Michelle Thomas in what is described in the complaint as governmental theft.

Earlier this year, Seville Township resident Donald Freed did not know that despite making on-going payments to the Gratiot County Treasurer for property taxes, he had a balance of approximately $700 that remained unpaid. In February 2017, the Treasurer obtained tax foreclosure judgment from the Gratiot County Circuit Court which seized property for the unpaid tax. Before it sold, Outside Legal Counsel reached out the Treasurer and her staff to pay off the debt and allow Mr. Freed to keep his home on 35 acres in Seville Township. It was refused. According to the office of the Treasurer, it needed the property to "make a profit." A request for relief from Gratiot County Circuit Court was also refused.

What profit could it mean? Thomas is using a legal process in Michigan which allows county treasurers to seize entire homes and properties for small past due debt amounts, sell the property at auction, and then keep the entire proceeds regardless of the amount of the debt. In other words, it keeps the equity which far exceeds the amount of the past due debt.

For Mr. Freed, his $100,000 home and property was sold at a fire sale for $42,000.00. Gratiot County then kept the entire amount claiming it is entitled to it. In other words, a tax debt that Mr. Freed was willing to pay to make right resulted in a local government official stealing the value of a home and property worth nearly 140 times the amount of the debt. One federal judge has explain this "sort of behavior is called theft."

Philip L. Ellison of Outside Legal Counsel is serving as legal counsel to Mr. Freed.

"This case is troubling. It is troubling because of a public official sworn to uphold the public good and serve the citizenry would actually and intentionally steal from an average citizen who tried to correct an error, even agreeing to immediately pay the entire amount of debt, plus all costs and interest, and yet was still refused," states Ellison.

"The word theft is too positive of word for what has happened; it is a ghastly and horrendous act," states Ellison.

The federal lawsuit was filed in federal court in Detroit, and the County together with Treasurer Thomas were formally served on October 31st. Both have 21 days to respond by counsel.

The lawsuit takes two different legal challenges on the legality of the property seizure-and-sale. The first and foremost is that the process effectuates a "taking"--a legal term for when government seizes or "takes" private property from a citizen and puts it to public use without just compensation in violation of the Fifth Amendment. The second alleges that the property seizure-and-sale violates the prohibition in the Eighth Amendment against excess fines. The Eighth Amendment legal theory has never been formally tried before in federal court for these circumstances.

Counties like Gratiot have been using this process to bring in extra funds to make up for budget shortfalls.

According to Ellison, when the government gets to take nearly 140 times the amount of an underlying debt, it surely must be an excessive fine.

To date, Gratiot County and Treasurer Thomas have not yet responded to the lawsuit.

The case has been assigned to federal Judge Bernard A. Friedman sitting in Detroit.

Related Documents
Complaint - filed October 28, 2017