Reported by Bill Kelly, STATEWIDE Correspondent

Thousands of Nebraskans behind on their property taxes are now in debt to someone other than the county treasurer. There is the chance for huge profits for private companies willing to buy the delinquent taxes from counties. This spring, one company bought millions of dollars worth of these tax certificates. But a STATEWIDE investigation showed that there may be more going on than big-time investors looking for big-time profits.
   An assistant director with the state banking department told us he has some questions he wants to ask an out-of-state company offering Nebraskans behind in their property taxes a chance to pay them back a little at a time.

   Maybe it's a loan.
   Maybe it isn't.
   But anyone charging more than 16% interest does need to get a state permit. So how is it that a private company can have control over your back taxes? It begins with a state law that turns your debt into their profit.
   There's a farm near Ithaca, Nebraska, an out-of-business bar in Wayne, and a home in Ceresco -- all these landowners got behind in paying their property taxes. To pay off the debt, they'll have to pay the local county treasurer, right?
   Not anymore.
   All three properties and thousands more in Nebraska now owe their property taxes to a private company in the state of Michigan -- a company that turned the hard times of delinquent taxpayers into a very lucrative investment opportunity. County treasurers all over Nebraska have never seen anything like it.

   [James Fauver:] "Thank you, sir."
   [Taxpayer:] "I'm glad it wasn't any worse than that."
   James Fauver, treasurer in Saunders County, was working in his courthouse office when he had a visitor. "One of the gentlemen came in and introduced himself a few weeks ago, and then one morning out of the clear blue sky three fellows showed up and wanted to go through our files. This was a company out of Michigan."
The files they plowed through listed all the properties in the county behind in taxes. It was very clear they knew what they were looking for, picking and choosing specific kinds of holdings.
   [Fauver:] "We have no choice. If anybody want to our files, they're public records. They can go through them. They can buy what they want."
   Then they handed the treasurer a list of delinquent property taxpayers. These mysterious out-of-towners then did something amazing -- they wrote a check for over half a million dollars to Saunders County, in effect, paying off the taxes for all these properties.
   [Fauver:] "This is going to be quite a boost to those schools that are affected, the cities, villages, townships, county, their share of the dollars. It will be a tremendous boost to everyone concerned. Because it's almost like money -- money out of the sky, you know, somebody came along and wrote a half million dollar check and now we've got to distribute it. And that's going to be a great impact on those taxing entities."

In Wayne County the amounts may have been smaller, but still shocked county officials.
   [Bill Kelly:] "You've been treasurer how long?"
   [Leon Meyer:] "Twenty-four years."
   [Kelly:] "Have you ever seen anything like this?"
   [Meyer:] "No, it's the first time. Yeah, this is the first time."
   [Kelly:] "Surprising to you?"
   [Meyer:] "Yeah, really."
   [Kelly:] "Could you show us the paper work?"
   [Meyer:] "Oh, yeah, sure."
   Leon Meyer had never filled out a tax certificate purchase form. In just one day, he was filling out dozens.
   [Meyer:] "Now, see, that's -- this was the first -- the letter that they brought around."
   The letter sent out to county treasurers properly states that buying delinquent taxes is an investment. While currently rare, it is entirely legal. But the letter also said something that made Leon Meyer a little uneasy. It discourages county treasurers from notifying county taxpayers that Equivest is about to buy, or has already bought, a person's tax obligation -- and graciously points out that since no law requires spreading the word, it would only involve unnecessary costs to the county.
   The sale and tax or certificate on their property should not cause undue alarm either to the taxpayer or to the treasurer. Well --
   Bill Kelly:]  "Why do you think they didn't want taxpayers alerted?"
   [Meyer:] "Well, so that they probably could pick up more taxes. Yeah, they'd be picking up more taxes."

   Will taxpayers in Nebraska know to whom they're in debt?
   Maybe not.
   There's nothing in the law that says you have to notify these folks.
   The Saunders County Treasurer did not tell the taxpayers in his county, but James Fauver does think anyone who hasn't paid up their taxes is making a big mistake when a bank loan could save them a lot of money.
   [Fauver:] "But it's a shame, you know, that people don't -- aren't cognizant enough to come in and pay those taxes, because, gee, they can go to the bank and borrow that money a lot easier than paying that 14%."
   [Bill Kelly:] "And it does add up."
   "It really adds up."

   Wayne county treasurer, Leon Meyer -- he's now retired -- did send out a note to taxpayers affected by the Equivest purchases.
   [Meyer:] "There are delinquent taxes on property which you own. This sales tax can be stopped only by the owner's quick action of paying these taxes as soon as possible."
   [Bill Kelly:]  "You feel like it's important to let these people know?"
   "Oh, yes, definitely."
   "Why is that?"
   "Well, okay. They issue us a check, say, for $100,000 at 14% interest. That's $14,000 a year if they go for a year. That's $14,000 that will be going out of Wayne County to Lansing, Michigan."
   "In other words, when you take money away from taxation, what does that do to your taxes?"
   "My taxes. That I'm a citizen here, see. It's going to raise the taxes of Wayne County."

State law permits a 14% penalty to encourage people to pay their property taxes. Equivest uses that to make a substantial profit from those who often just cannot afford to pay.
   Is it right making this money on the poorest people in the county?
   That's part of the system?"
   "That's part of the system."

   And Equivest tells us the company may be back as long as there's money to be made here. According to Mr. Foote, it all depends on interest rates and fast changing financial markets.
   For STATEWIDE, I'm Bill Kelly.